getfilecondor resources

7/21/2019 GetFilecondor Resources

http://slidepdf.com/reader/full/getfilecondor-resources 1/91

A COPY OF THIS PRELIMINARY PROSPECTUS HAS BEEN FILED WITH THE SECURITIES REGULATORY

AUTHORITIES IN BRITISH COLUMBIA, ALBERTA AND ONTARIO BUT HAS NOT YET BECOME FINAL FOR

THE PURPOSE OF THE SALE OF SECURITIES. INFORMATION CONTAINED IN THIS PRELIMINARY

PROSPECTUS MAY NOT BE COMPLETE AND MAY HAVE TO BE AMENDED. THE SECURITIES MAY NOT

BE SOLD UNTIL A RECEIPT FOR THE PROSPECTUS IS OBTAINED FROM THE SECURITIES REGULATORY

AUTHORITIES.

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim

otherwise.

PRELIMINARY PROSPECTUS

INITIAL PUBLIC OFFERING DATED: October 25, 2005

CONDOR RESOURCES INC. (the "Company")

Suite 910 – 885 Dunsmuir Street

Vancouver B.C.

V6C 1N5

Offering: 5,000,000 Common Shares (the “Shares”) without par value

Price: $0.40 per Share

No. of Shares Price to Public(1) Agent’s Commission Net Proceeds to

Company(2)

Per Share n/a $0.40 $0.032 $0.368

Total Offering 5,000,000 $2,000,000 $160,000 (3) $1,840,000

(1) The price of the Shares has been determined by the Company in negotiation with the Agent.

(2) Before deduction of expenses of this issue estimated to be $80,000, which together with the Agent's

Commission will be paid by the Company. See item 4 “Use of Proceeds”.(3) The agent for the Offering, Bolder Investment Partners, Ltd. (the “Agent”), will also receive non-

transferable Share purchase warrants (the “Agent’s Warrants”) equal in number to 10% of the number ofShares sold. Each Agent’s Warrant will entitle the Agent to purchase one Share at the price of $0.40 per

Share, for a period of 12 months from the date the Shares are listed and called for trading on the TSXVenture Exchange. In addition, the Agent has received a non-refundable work fee of $10,000 (plus GST).

The Agent is also to receive 50,000 common shares from the treasury of the Company upon completion of

the Offering as a corporate finance fee (the “Corporate Finance Fee”). This prospectus qualifies the grantof the Agent’s Warrants and the issuance of the Corporate Finance Fee. See item 15 “Plan of Distribution”.

THERE IS NO MARKET THROUGH WHICH THESE SECURITIES MAY BE SOLD AND

PURCHASERS MAY NOT BE ABLE TO RESELL SECURITIES PURCHASED UNDER THE

PROSPECTUS. THE COMPANY HAS APPLIED TO LIST ITS SHARES OFFERED UNDER THIS

PROSPECTUS ON THE TSX VENTURE EXCHANGE. LISTING IS SUBJECT TO THE COMPANY

FULFILLING ALL OF THE LISTING REQUIREMENTS OF THE TSX VENTURE EXCHANGE. SEE ITEM 15“PLAN OF DISTRIBUTION”.

AN INVESTMENT IN A NATURAL RESOURCE ISSUER INVOLVES A SIGNIFICANT DEGREE OF

RISK. THE DEGREE OF RISK INCREASES SUBSTANTIALLY WHERE THE ISSUER’S PROPERTIES

ARE IN THE EXPLORATION AS OPPOSED TO THE DEVELOPMENT STAGE, AS IN THE PRESENT

INSTANCE. SEE ITEM 16 "RISK FACTORS".



ii

NO PERSON IS AUTHORIZED BY THE COMPANY TO PROVIDE ANY INFORMATION OR TO MAKE

ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTIONWITH THIS ISSUE AND THE SALE OF THE SECURITIES OFFERED BY THE COMPANY.

THE AGENT CONDITIONALLY OFFERS THE SHARES FOR SALE ON A COMMERCIALLY

REASONABLE BASIS IF, AS AND WHEN ISSUED BY THE COMPANY AND DELIVERED AND

ACCEPTED BY THE AGENT IN ACCORDANCE WITH THE TERMS AND CONDITIONS CONTAINED INTHE AGENCY AGREEMENT REFERRED TO UNDER ITEM 15 “PLAN OF DISTRIBUTION” AND SUBJECT

TO APPROVAL OF CERTAIN LEGAL MATTERS ON BEHALF OF THE COMPANY BY VECTORCORPORATE FINANCE LAWYERS AND ON BEHALF OF THE AGENT BY McCULLOUGH O’CONNOR

IRWIN LLP.

UPON COMPLETION OF THIS OFFERING, 5,000,000 SHARES WITHOUT PAR VALUE WILL BE HELD BYTHE PUBLIC, REPRESENTING 44.50% OF THE 11,235,196 THEN ISSUED AND OUTSTANDING SHARES

AS COMPARED TO 4,511,892 SHARES WITHOUT PAR VALUE THAT WILL THEN BE BENEFICIALLY

OWNED BY PROMOTERS, INSIDERS, HOLDERS OF PERFORMANCE SHARES OR ESCROWSECURITIES, AS A GROUP, REPRESENTING 40.16% OF THE 11,235,196 THEN ISSUED AND

OUTSTANDING SHARES. SEE ITEM 12 “DIRECTORS AND OFFICERS”.

Agent

Bolder Investment Partners, Ltd.

800 – 1450 Creekside DriveVancouver, B.C. V6J 5B3

Tel: (604) 714-2300 Fax: (604) 714-2301



TABLE OF CONTENTS

Item Heading Page No.

NOTE REGARDING FORWARD LOOKING STATEMENTS....... ............ ........... ........... ........... ........... ........... ......... i1. CORPORATE STRUCTURE.........................................................................................................................1

1.1 Name and Incorporation....................................................................................................................1

1.2 Intercorporate Relationships .............................................................................................................12. GENERAL DEVELOPMENT OF BUSINESS ..............................................................................................1

2.1 Three Year History............................................................................................................................12.2 Significant Acquisitions and Significant Dispositions.......................................................................2

3. NARRATIVE DESCRIPTION OF THE BUSINESS.....................................................................................2

3.1 General..............................................................................................................................................23.2 Description of Mineral Properties.....................................................................................................3

4. USE OF PROCEEDS....................................................................................................................................324.1 Proceeds..........................................................................................................................................32

4.2 Funds Available ..............................................................................................................................32

4.3 Principal Purposes...........................................................................................................................325. SELECTED CONSOLIDATED FINANCIAL INFORMATION AND MANAGEMENT'S

DISCUSSION AND ANALYSIS .................................................................................................................33

5.1 Annual Information .........................................................................................................................335.2 Dividends ........................................................................................................................................345.3 Management’s Discussion and Analysis .........................................................................................34

6. DESCRIPTION OF THE SECURITIES DISTRIBUTED ...........................................................................44

6.1 Shares..............................................................................................................................................446.2 Agent’s Warrants ............................................................................................................................45

6.3 Modification of Terms ....................................................................................................................457. CONSOLIDATED CAPITALIZATION ......................................................................................................45

8. OPTIONS TO PURCHASE SECURITIES ..................................................................................................45

9. PRIOR SALES..............................................................................................................................................4610. ESCROWED SECURITIES .........................................................................................................................47

11. PRINCIPAL SHAREHOLDERS..................................................................................................................4812. DIRECTORS AND OFFICERS....................................................................................................................48

12.1 Name, Address, Occupation and Security Holding .........................................................................4812.2 Corporate Cease Trade Orders or Bankruptcies..............................................................................4912.3 Penalties or Sanctions .....................................................................................................................50

12.4 Individual Bankruptcies ..................................................................................................................5012.5 Conflicts of Interest.........................................................................................................................50

12.6 Management of the Company..........................................................................................................50

13. EXECUTIVE COMPENSATION ................................................................................................................5114. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS........................................................53

15. PLAN OF DISTRIBUTION .........................................................................................................................5315.1 Name of Agent ................................................................................................................................53

15.2 Disclosure of Market Out................................................................................................................5315.3 Commercially Reasonable Efforts Offering ....................................................................................53

15.4 Listing Application..........................................................................................................................54

15.5 Determination of Price ....................................................................................................................5416. RISK FACTORS...........................................................................................................................................54

17. PROMOTERS...............................................................................................................................................6118. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS.............................61

19. AUDITORS, TRANSFER AGENTS AND REGISTRARS.........................................................................62

19.1 Auditors...........................................................................................................................................6219.2 Transfer Agent and Registrar ..........................................................................................................62

20. MATERIAL CONTRACTS..........................................................................................................................6221. EXPERTS .....................................................................................................................................................63

21.1 Interest of Experts ...........................................................................................................................63



ii

22. OTHER MATERIAL FACTS.......................................................................................................................63

23. PURCHASERS’ STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION ................................6324. FINANCIAL STATEMENTS.......................................................................................................................63

AUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM THE DATE OF

INCORPORATION TO FEBRUARY 29, 2004 AND FOR THE YEAR ENDED FEBRUARY 28,2005 TOGETHER WITH THE AUDITOR'S REPORT THEREON

UNAUDITED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED AUGUST 31,2005

CERTIFICATE OF THE DIRECTORS AND PROMOTERS OF THE COMPANY

CERTIFICATE OF THE AGENT



NOTE REGARDING FORWARD LOOKING STATEMENTS

This Prospectus contains forward-looking statements which reflects management’s expectations regarding theCompany’s future growth, results of operations, performance and business prospects and opportunities. Wherever

possible, words such as “anticipate”, “believe”, “plan”, “expect”, “intend” and similar expressions have been used toidentify these forward-looking statements. These statements reflect management’s current beliefs and are based on

information currently available to management. Forward-looking statements involve significant risks anduncertainties. A number of factors could cause actual results to differ materially from the results discussed in the

forward-looking statements, including those listed in the “Risk Factors” section of this Prospectus. Although the

forward-looking statements contained in this Prospectus are based upon what management believes to be reasonableassumptions, the Company cannot assure prospective purchasers that actual results will be consistent with these

forward-looking statements. These forward-looking statements are made as of the date of this Prospectus, and theCompany assumes no obligation to update or revise them to reflect new events or circumstances.



PROSPECTUS SUMMARY

The following is a summary of the principal features of this distribution and should be read together with the more

detailed information and financial data and statements contained elsewhere in this Prospectus. Capitalized terms

used in this summary are defined elsewhere in the Prospectus.

The Company

Condor Resources Inc. was incorporated on November 26, 2003 under the Company Act (BritishColumbia). The Company is engaged primarily in the business of evaluating, acquiring and exploring natural

resource properties in Chile. See item 3 “Narrative Description of the Business”. The natural resources beingtargeted are copper and gold.

Principal Properties

Since incorporation, the Company has acquired five properties totalling 164 sq km (16,400 hectares or

40,525 acres). All of the properties were acquired by staking and are 100% owned by the Company’s 99% owned

Chilean limited liability partnership, with no underlying royalties.

All of the Company’s presently held mineral properties are situated in Chile. However, the Company mayseek to acquire interests in other countries in the Americas.

The Offering

Offering: 5,000,000 Shares.

Price: $0.40 per Share. See item 15 “Plan of Distribution”.

This Prospectus also qualifies the grant of the Agent's Warrants and the

Corporate Finance Fee. See item 15 “Plan of Distribution”.

Gross Proceeds: $2,000,000

Available Funds: The estimated net proceeds to be derived from the sale of the securities offered

hereunder, before deduction of the expenses of this issue, will be $1,840,000,

which when added to the Company’s working capital deficit as at September30, 2005 of approximately $20,000, will total $1,820,000.

The Company will apply the available funds as follows:

Purpose for which funds are raised Amount(1)

1. Exploration Programs:

Escudo Project – IP Surveying $ 153,375Escudo Project – Drilling Program 956,250

Corona Project - Mapping, prospecting, sampling 57,500

2. Administration expenses in the amount of

$21,000 per month for the Company over a period of 12 months 252,000

3. Estimated expenses of this issue (including

legal, audit, printing and listing fees) (est.) 80,000



ii

6. To pay agent’s selling expenses (est.) 10,000

7. Unallocated working capital to fund ongoing

operations 310,875

Total: $ 1,820,000

See item 4 “Use of Proceeds”.

Agent’s Commission

The Company will, at the closing of the Offering (i) pay to the Agent a commission equal to 8% of theaggregate gross proceeds of the Offering and (ii) issue to the Agent that number of share purchase warrants (the

“Agent’s Warrants”) equal in number to 10% of the aggregate number of Shares issued in connection with the

Offering, each such Agent’s Warrant entitling the holder to acquire one Common Share at the price of $0.40 perCommon Share for a period of 12 months from the date on which the Company’s Shares commence trading on the

TSX Venture Exchange. The Company has paid a non-refundable work fee of $10,000 plus GST to the Agent andwill issue 50,000 common shares from treasury to the Agent upon completion of the Offering as the Corporate

Finance Fee.

Risk Factors

The success of the Company's business is subject to a number of factors, including risks normally

encountered in the mining industry such as operating hazards and risks, exploration risks, increasing environmentalregulation, competition with companies having greater resources, lack of operating cash flow, foreign currency

fluctuations and other factors.

All of the Company's properties are in the exploration phase. If the exploration programs being carried outdo not justify further work, the Company may abandon its entire interest in one or more properties and the

exploration expenses will be written off.

None of the Company's properties contains a known body of commercial ore and the Company's planned

work programs will be exploratory in nature.

The price of base and precious metals has fluctuated widely and therefore the economic viability of any of

the Company's properties cannot be accurately predicted. See item 16 “Risk Factors”.

Key Personnel

Management: Patrick J. Burns President, Chief Executive Officer and Director

Graham H. Scott Corporate Secretary and DirectorLyle Davis Director

John E. Robins DirectorPaul Larkin Chief Financial Officer

Messrs. Burns and Robins are professional geologists. Each of these two

persons has had over 20 years' experience in resource exploration in North orSouth America.



iii

See item 12 "Directors and Officers".

Financial Statements

The audited financial statements for the period from the date of incorporation (November 26, 2003) to

February 29, 2004 and for the year ended February 28, 2005, together with the auditor’s report thereon, and

unaudited financial statements for the six-month period ended August 31, 2005 are attached hereto.

Conversion Rates

The conversion rates used throughout this Prospectus have been calculated on the basis of US$1.00 toCdn.$0.80. As of the date of this Prospectus, the conversion rate is US$1.00 to Cdn.$0.8435 [Oct.14/05].

Capitalization

At August 31, 2005, the Company had 6,185,196 Shares issued and outstanding. Upon completion of the

Offering, there will be 11,235,196 Shares issued and outstanding, assuming no exercise of the Agent's Warrants.The authorized capital of the Company is an unlimited number of Shares without par value. 850,000 Shares are

subject to options in favour of the directors, senior officers, consultants and employees of the Company.

See item 8 “Options to Purchase Securities”.

Selected Financial Information

Prior to this Offering, the Company had raised $496,299 from the sale of its common shares for cash during its stageas a private company. The audited balance sheet as at February 28, 2005 shows $306,664 as having been invested in

mineral properties as at that date, all of which was paid in connection with the acquisition and exploration of the

Company's Chilean properties.

From the date of incorporation (November 26, 2003) to February 28, 2005, the Company earned no revenue andincurred general and administrative expenses in the amount of $84,051 being the net loss for the period

resulting in a basic and diluted loss per common share of $0.05 At February 28, 2005, the Company had

assets recorded at $492,677.

The Company’s audited financial statements for the period from the date of incorporation (November 26, 2003) to

February 29, 2004 and for the year ended February 28, 2005, together with the auditor's report thereon and unauditedfinancial statements for the six-month period ended August 31, 2005 are attached hereto and form a part hereof. See

item 24 “Financial Statements”.



CONVERSION TABLE

In this prospectus a combination of Imperial and metric measures are used with respect to mineral

properties located in Chile. Conversion rates from Imperial measure to metric and from metric to Imperial are

provided below:

Imperial Measure = Metric Unit Metric Measure = Imperial Unit

2.47 acres 1 hectare 0.4047 hectares 1 acre

3.28 feet 1 metre 0.3048 metres 1 foot

0.62 miles 1 kilometre 1.609 kilometres 1 mile

0.032 ounces (troy) 1 gram 31.1 grams 1 ounce (troy)

1.102 tons (short) 1 tonne 0.907 tonnes 1 ton

0.029 ounces (troy)/ton 1 gram/tonne 34.28 grams/tonne 1 ounce (troy/ton)



GLOSSARY

Adularia A moderate to low-temperature mineral of the alkali feldspar

group, a common accessory mineral found in low sulphidationquartz veins.

Ag Silver.

Alteration Changes in the chemical or mineralogical composition of a

rock caused by hot aqueous solutions.

Alunite A hydrated aluminum potassium sulphate formed by the actionof sulphuric acid-bearing solutions on potassium-rich volcanic

rocks during the oxidation and leaching of metal sulphidedeposits.

Aphanitic An igneous rock texture in which the grain or crystalline

structure is too fine to be seen by the unaided eye, generallycaused by rapid cooling of extrusive rock.

Argillic Pertaining to clay or clay minerals. Argillic alteration occurs

when certain minerals in a rock are converted to minerals ofthe clay group.

As Arsenic.

Assay An analysis to determine the proportions of metals or other

valuable commodities in a sample.

Au Gold.

Ba Barium.

Bedrock Solid rock exposed at the surface of the earth or overlain by

unconsolidated material, weathered rock or soil.

Breccia A rock composed of angular fragments.

Chalcocite blanket A copper-rich horizon or secondary enrichment zone often

overlying primary copper deposits in northern Chile. It

commonly forms from the alteration of primary copperminerals that are attacked above the water table by oxygen and

a chalcocite blanket corresponds to the present or past watertable level.

Epithermal A hydrothermal, or fluid-borne mineral deposit and associatedalteration formed within about 1 km below the earth’s surfaceand in the temperature range of 50° to 200° C, occurring

mainly as veins.

Float Isolated or displaced fragments of rock.

g/t Grams per tonne, equivalent to parts per million.



ii

GPS Geographic Positioning System. A relatively accurate method

of calculating position on the earth’s surface utilizing satellitesignals.

ICP Inductively Coupled Plasma Method. A geochemical

analytical method where a sample solution is induced into the

core of an inductively coupled argon plasma.

IOCG Iron oxide-copper-gold, a type of gold deposit.

Igneous rock A rock solidified from molten or partly molten material

(magma), one of the three main classes of earth-forming rocks.

IP geophysical survey Induced Polarization. A type of ground geophysical survey

used to explore for sulphide deposits, that can be effective

with veins.

Low Sulphidation A classification of hydrothermal mineral deposits or alteration

containing relatively low content of sulphur-rich minerals,

often used to describe mineral deposits of quartz-adulariaassociation.

Mineralization The presence of minerals of possible economic value and also

the process by which concentration of economic mineralsoccurs.

mt metric tonne

Ore A mineral or aggregate of minerals which can be commercially

mined at a profit.

Outcrop A geological formation or structure that appears at the surface

of the earth; bedrock that is not covered.

Pedimento A mineral exploration concession or claim, generally of 2-years duration.

Porphyry Igneous rock composed of large crystals, called phenocrysts,

in a fine grained matrix.

Propylitic A low-pressure-temperature alteration around many orebodies.Generally consists of epidote, chlorite and magnesium-iron-

calcium carbonates, involved in the partial replacement ofwall-rock minerals.

QFP Quartz-Feldspar porphyry.

Qualified Person An individual who (a) is an engineer or geoscientist with at

least five years of experience in mineral exploration, minedevelopment or operation or mineral project assessment, or

any combination of these; (b) has experience relevant to thesubject matter of the mineral project and the technical report;

and (c) is a member in good standing of a professional

association as defined in National Instrument 43-101, s. 1.2.



iii

Quartz A common earth-forming mineral composed of silica and

oxygen.

REE Rare earth elements.

Resistivity Electrical resistivity, one of the readings measured by an IP

geophysical technique.

Rhyolite A type of igneous rock which commonly contains quartz and potassium feldspar crystals.

Sb Antimony.

Sericitic A fine-grained variety of muscovite mica (aluminum-

potassium silicate) often associated as an alteration productrelated to porphyry copper deposits.

Sulphides A class of minerals composed of one or more metals and

sulphur such as pyrite, sphalerite and galena.

Tuff A general term for all consolidated pyroclastic volcanic rocks.

UTM Universal Transverse Mercator, a map projection allowing for

the precise location of points by coordinates.

Vein A mineral deposit formed as hot fluids pass through fracturesin rock. The hot fluid may contain dissolved minerals which

may pass out of solution and are deposited, filling or partly

filling the fractures, forming veins.

Volcanic rock A finely crystalline or glassy igneous rock resulting from

volcanic action at or near the earth’s surface, either ejected

explosively, i.e. pyroclastic, or extruded as lava.



1

1. CORPORATE STRUCTURE

1.1 Name and Incorporation

Condor Resources Inc. (the “Company”") was incorporated on November 26, 2003 under the name “ScotiaGold Resources Inc.” pursuant to the Company Act (British Columbia). The Company changed its name to “Condor

Resources Inc.” on March 17, 2004. On November 29, 2004, the Company filed Notice of Articles under the Business Corporations Act (British Columbia).

The head office of the Company is situated at:

Suite 910 – 885 Dunsmuir Street

Vancouver, B.C. V6C 1N5Canada

The Company’s field office in Chile is situated at:

Travesia de la Plaza No. 03007

Depto. No. 301, Jardines del Sur

AntofagastaChile

and its registered and records office is situated at:

1040-999 West Hastings Street

Vancouver, B.C. V6C 2W2Canada

1.2 Intercorporate Relationships

The Company formed Minera Condor Limitada (the “Chilean Subsidiary”), a limited liability partnership

owned as to 99.99% by the Company and as to 0.01% by Patrick J. Burns, to act as its operating arm for interests inChile. The Chilean Subsidiary’s principal office is located at Miraflores 222, Piso 24, 8320198 Santiago, Chile. All

of the Company’s Chilean properties are 100% owned directly by the Chilean Subsidiary.

The interests of the Company and the Chilean Subsidiary are reflected in this Prospectus on a consolidated

basis.

2. GENERAL DEVELOPMENT OF BUSINESS

2.1 Three Year History

The Company commenced operations in 2003. The principal business of the Company is the acquisition,exploration and, if warranted, development of natural resource properties of merit, with a focus on Chile. The

Company has interests in five exploration properties situated in Chile.

In late 2003, the founders of the Company began to acquire mineral properties in Chile, with the intention

of transferring the ownership of the properties to a corporate entity. The beneficial interests in the five propertieswere transferred to the Company’s Chilean Subsidiary in September 2004.

The Company intends to seek and acquire additional properties worthy of exploration and development in

Chile and elsewhere in the Americas.



2

2.2 Significant Acquisitions and Significant Dispositions

By agreement dated September 22, 2004 (the “Purchase Agreement”) made between Patrick J. Burns

(“Burns”) and Jimmy E. Toler (“Toler”) (collectively, the “Vendor”) and the Company, the Company acquired a

100% interest in and to certain mining interests located in Chile in consideration of the payment of US$35,000 incash to Toler and the issuance to the Vendor (Burns as to 3,000,000 Shares and Toler as to 1,000,000 Shares) of an

aggregate of 4,000,000 Shares at a deemed price of $0.01 per Share. On January 31, 2005, the Company issued toToler an additional 200,000 Shares in full and final payment of the US$35,000 payable to him under the Purchase

Agreement.

The mining interests acquired by the Company pursuant to the Purchase Agreement comprise the EscudoProperty, the Corona Property, the Cristal Property, the Royal Property and the Becker Property. Of these, the

Escudo and the Corona Properties are the most significant. All of the properties were staked by the Vendor. As of

the date of this Prospectus, a 100% interest in each of the five properties is held by the Company’s ChileanSubsidiary.

The Escudo Property is comprised of 33 contiguous claims (Escudo 1 – 33) covering a total of 98 square

kilometres. It is located in the high Atacama Desert, some 245 kilometres southeast of Antofagasta near the southern

limit of Chile’s Second Region. The claims extend from 25° 27’ to 34’ south latitude and from 69° 05’ to 12’ west

longitude.

The Corona Property is comprised of six claims or “pedimentos”, each measuring one kilometre by three

kilometres for a total of 18 square kilometres. They are named Corona I to Corona VI. Five of the claims arecontiguous, and the sixth lies three kilometres to the south. The property is located approximately 270 kilometres

north of Santiago and 10 kilometres north and west of the town of Combarbala, in Chile’s Region IV. It lies between

31° 2’ and 31° 10’ south latitude and between 71° 4’ and 71° 7’ west longitude.

The Cristal Property comprises 10 contiguous claims, Cristal I to X, totalling 28 square kilometres in

Chile’s Region 1, and approximately 70 kilometres NNE of the port city of Arica.

The Royal Property consists of five contiguous claims, Royal I through V, covering 15 square kilometres,and located approximately 346 kilometres south of Santiago, and northwest of the town of Parral in Chile’s Region

VII.

The Becker Property comprises two contiguous claims, Becker I and II, totalling 6 square kilometres andlocated west of the city of Talca, also in southern Chile’s Region VII, some 258 kilometres south of Santiago.

Standard reporting requirements and holding payments must be completed to maintain the properties in

good standing, as required by the provincial Department of Mines. The aggregate annual costs to maintain the fiveChilean properties in good standing, comprising the holding costs and the rental of the surface rights, is

approximately US$28,000.

The mineral properties located in Chile comprise the only assets held by the Company.

3. NARRATIVE DESCRIPTION OF THE BUSINESS

3.1 General

The Company is a resource exploration company. Using the net proceeds of the Offering, the Company

intends to carry out “grass-roots” exploration for gold and copper properties in Chile, and to advance such propertiesthrough further exploration in order to bring the properties to a stage where the Company can attract the participation

of a major resource company which has the expertise and financial capability to take such properties to commercial

production.



3

Land Ownership Rights

Chile enacted legal provisions in the 1980 constitution to stimulate the development of mining, while at the

same time guaranteeing the property rights of both local and foreign investors. While the state owns all mineral

resources, exploration and exploitation of these resources is allowed via mining concessions, which are granted bythe courts. A Constitutional Organic Law, enacted in 1982, places both rights and obligations on concessions; these

can be mortgaged or transferred and the holder is entitled to the right to explore (pedimentos) as well as to exploit(mensuras). A concession is obtained by filing a claim and includes all minerals that may occur within its area. The

concession holder also has the right to defend his ownership against the state and third parties.

Mining claims in Chile are acquired in the following manner:

• Pedimento: A pedimento is an exploration claim precisely defined by UTM coordinates with

north-south and east-west boundaries. These may range in size from a minimum 100 hectares to amaximum of 5000 hectares, with a maximum length-to-width ratio of 5:1. A pedimento is valid for

a maximum period of 2 years, following which the claim may be reduced in size by at least 50%,

and renewed for an additional 2 years, provided that no overlying claim has been staked. Claimtaxes are due annually in March; if the taxes on a pedimento are not paid, the claim can be restored

to good standing by paying double the annual claim tax by or before the following year. In Chile,

new pedimentos are permitted to overlap pre-existing claims, however, the previously staked orunderlying claim always takes precedence as long as the claim holder maintains his claim in good

standing and converts the pedimento to a manifestacion within the initial 2-year period.

• Manifestacion: During the 2-year life of a pedimento, it may be converted at any time to amanifestacion. Once this is filed, the claim holder has 220 days to file a “Solicitud de Mensura”, or

“Request for Survey” with the court of jurisdiction, and advising surrounding claim holders by

publishing such request in the Official Mining Bulletin. This advises surrounding claim holders,who may contest the claim if they believe their pre-established rights are being encroached upon.

The option also exists to file a manifestacion directly on open ground, without going through the pedimento filing process.

• Mensura: The claim must be surveyed by a government-licensed surveyor within 9 months of the

approval of the “Request for Survey”. Once surveyed, during which time any surrounding claimowners may be present, the survey documents are presented to the court and reviewed by

SERNAGEOMIN, the National Mining Service. Assuming that everything has been done correctlyand is in order, the court adjudicates the application as a permanent property right (a mensura), the

equivalent to a “patented claim”.

Each of the above stages of claim acquisition in Chile require the completion of several steps (application, publication, inscription payments, notarization, tax payments, legal fees, “patente” payments, extract publication,

etc) prior to the application being declared by the court as a new mineral property. Details of the full requirements inthe claim-staking process are documented in Chile’s mining code. Most companies working in Chile retain a mining

claim specialist to carry out and review the claim staking process and ensure that their land position is kept secure.

3.2 Description of Mineral Properties

A. Escudo Property, Region II, Chile

The Company engaged Richard Culbert, Ph.D., P. Eng., of Gibsons, B.C., to undertake a review of the

Escudo Project, which is material to the proposed Offering. Dr. Culbert is at arm’s length to the Company. TheCompany is satisfied that Dr. Culbert is a Qualified Person as required under the terms of National Instrument 43-

101.



4

The Company's interest in the Escudo Property is the subject of a report (the “Escudo Report”), dated October 14,

2004, prepared by Dr. Culbert. Dr. Culbert confirms that the discussions set out herein under the headings “PropertyDescription and Location”, “Accessibility, Climate, Local Resources, Infrastructure and Physiography”, Prospecting

History”, “Geological Setting”, “Deposit Types”, “Exploration”, “Sampling Method and Approach”, “Sample

Preparation, Analysis and Security”, “Adjacent Properties”, “Interpretations and Conclusions”, and“Recommendations” are extracted from, or are accurate paraphrasings of, sections of the Escudo Report. The Escudo

Report is available for review under the Corporation’s profile on the SEDAR database at www.sedar.com. Theexploration activities carried out by the Company were directly supervised by Dr. Culbert.

Summary

The Escudo Property constitutes a contiguous claim block of 98 square kilometres. It is located in the high

Atacama Desert of northern Chile, some 245 kilometres southeast of the city of Antofagasta. The claims cover a

basin marking the intersection between the Culampaja Lineament and a branch of the West Fissure fracture belt,along which most of the world-class copper porphyry deposits of Chile are situated.

Atacaman porphyry deposits are typically leached to a depth of 200-300 metres, with much of the copper so

mobilized forming a chalcocite blanket at depth, which is a major factor in their economic importance. Because ofthis leaching, and of the detrital overburden which covers most of the basin, neither geological nor geochemical

surveys are of much use here. The primary method of searching for this style of mineralization is with deep-probinginduced polarization (IP) geophysics, which can map the approximate distribution of disseminated sulphides at depth(with some caveats). These surveys cannot differentiate pyrite from copper sulphides, but in the trajectory of the

West Fissure belt, there is a good chance of copper being an important constituent of porphyry style mineralization.

Four lines of IP-resistivity survey were run across the Escudo Property by Quantec Geofisica Ltda. ofAntofagasta. This revealed a classical IP anomaly at an appropriate depth, measuring 4 to 6 kilometres in width and

at least 5.5 kilometres in length. A report by Quantec’s chief geophysicist in Chile, comparing this anomaly to thoseover the Collahuasi deposits prior to mining, has shown a similarity in size and other important characteristics.

Historically, all large IP anomalies associated with the West Fissure have been drilled, and there is no doubt

that the anomaly on the Escudo Property is a viable drill target. A two phase program is recommended, the first

being further IP geophysics to better define drill targets, and the second a fairly large drill program, as the actual

copper-rich “core” in porphyry systems tends to entail a relatively small and sometimes elusive part of the hugegeophysical anomalies.

Atacaman copper porphyries are not easy targets, their size and depth resulting in expensive exploration programs, commensurate with the potential rewards. A program of further geophysical surveys is recommended,

followed by approximately twenty deep, reverse circulation drill holes. The cost of this program is estimated to beslightly under $US 900,000.



5

Figure 1

24°

25°

26°

27°

7 0 °

6 9 °

6 8 °

D O

M E

Y K

O

R A

N G E

Plato de

ExploradoraDeposit

ElSalvador

AguaVerde

EscondidaMine

Potrerillos

Sopa

ANTOFAGASTA

Copiapo

Taltal

A R G E N T I N A

PACIFIC

OCEAN

C H I L E

ESCUDO

PROPERTY

Figure No. 1

CONDOR RESOURCES INC.

ESCUDO PROPERTYCHILE

LOCATION MAP AND

Date: Aug, 2004

FEATURES MENTIONED IN TEXT50 1000

Kilometres

SOUTH

AMERICA

SANTIAGO

C H I L E

PROPERTY

Property Description and Location

The Escudo Property is comprised of 33 contiguous claims (Escudo 1-33) covering a total of 98 square

kilometres. It is located in the high Atacama Desert, some 245 kilometres southeast of Antofagasta near the southern

limit of Chile’s Second Region. The claims extend from 25 deg. 27’ to 34’ south latitude and from 69 deg. 05’ to12’ west in longitude. (see Figure 1).

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The Escudo Property is reached via a road which leaves the Pan American Highway 15 kilometres north of

Agua Verde and about 210 kilometres south of Antofagasta. The road is marked Aguas Calientes at the turnoff, andis unpaved but in moderately good condition. This is followed for about 76 kilometres, at which point jeep tracks

south lead to the northern property boundary in 5 kilometres. All of the central basin and most other parts of the

claim block can be reached by an appropriate four-wheel drive vehicle.

Elevations within the property run from 3,500 metres to over 4,000 metres, so that most people will requiresome acclimatization before doing strenuous work. This elevation also ensures that the area is generally cold and

often windy, with temperatures typically falling below freezing at night. It is also very dry, although some lightsnowfalls may be expected in winter due to the proximity to high mountains on the east.



6

Due to the aridity and elevation, vegetation is limited to scattered tufts of poa grass and a few small shrubs

along washes. The vicuna, a cameloid of the high Andes, is the only animal larger than small rodents and foxes thatare likely to be encountered. There is a spring in the North Chaco wash to northwest of the claims, which would

suffice for purposes of camping and perhaps drilling. A major mining operation would need to look eastward for

larger water supplies, but this location is more fortunate than most Atacaman sites in having salars and open lakesnear Campamento Plato de Sopa about 30 kilometres to the east.

Gasoline and diesel (but little else) is available from the above-mentioned Aqua Verde site on the Pan

American Highway. The coastal town of Taltal, 80 kilometres farther to the south, can supply food and some otherservices, but Antafogasta would be the natural base for operations, being a fully equipped city based on mining.

Prospecting History

Neither the Company nor Dr. Culbert is aware of any previous exploration on the Escudo Property. There

are no signs of drilling or of a previous induced polarization survey, and it seems unlikely that other methods would

be used to seriously explore for a porphyry deposit in an Atacaman basin.

Geological Setting

The important porphyry deposits of northern Chile lie within a zone of some 30 to 50 kilometres width thatis marked by a mega-fracture which is usually referred to as the West Fissure, although also called the Domeyko

Fault System, especially in Chilean literature. This complex fault zone extends from at least 19 to 28 degrees ofsouth latitude, although many authors extend it northward into southern Peru as well as farther to the south. Some of

the world’s most important copper deposits lie on this line, including Chuquicamata, Collahuasi, Escondida and El

Salvador.

The origin and history of the West Fissure and its varied movements are still a subject of some debate, but it

has certainly been active since the Eocene, and may possibly date back to the late Paleozoic. Further discussion of

this fracture and its relationship to major copper porphyry deposits maybe found in Camus, 2003; Richards, 2003and Sillitoe, 1989, among many others.

The West Fissure is not a single fault line, but rather a complex belt of fracturing with several splays. It

also intersects some major northwest trending fractures, and such intersections appear to have played an importantrole in localization of some of the larger copper porphyry deposits (for example, Richards et al, 2001). Although

Chuquicamata has been sliced by a strand of the West Fissure itself, other major deposits appear to be more directly

associated with splays or secondary structures.

South of the Escondida Deposit, the West Fissure belt is split by a narrow line of hills known as the

Cordillera Domeyko. The main part of the belt runs to the west of this range, forming a regional depression known

as the “Central Valley” (Depresion Intermiedia), and most of the exploration carried out in this sector of the WestFissure has been along that trend. The branch to the east of the Domeyko Range passes southward through the valley

of the Rio Frio and is evident in the Escudo Property as a prominent north-northeast trending fault complex. Fromgeology maps, satellite photos and previous geophysical surveys in this region, that particular fracture system

appears to be continuous from Escudo southward to the Exploradora Deposit (Jordan, 2004).

The Escudo Property is located where this fault zone meets a major component of the CulampajaLineament, which is one of the more important of the northwest trending structures, and seems to extend from thevicinity of the Baja de Alumbrera copper porphyry deposit in Argentina to the Guanaco gold mining camp to west of

the Cordillera Domeyko (Richards et al, 2001, Richards 2003).

Descriptive interpretation is complicated by the fact that just north of the latitude of the Escudo property,the Domeyko Range abruptly terminates, and the trace of the West Fissure through the area south of this is not clear.

The Military Geographic Institute, which is responsible for topographic maps and their nomenclature, have furtherconfused the situation by showing the Cordillera Domeyko as being offset here some 10 km. to the east, to form part



7

of the main Andes chain. This actually puts it to the east of the Escudo Property. There is no such offset in the

geology, however, and the two Domeyko segments should not be confused.

Structural elements in the area include two “principal lineaments”. One of these runs almost east-westalong the north fork of Chaco Wash, which lies immediately north of the Escudo Property. The second runs from

this southward through the property itself. Satellite photographs further suggest a prominent east-west lineament

crossing the property, presumably related to the Chaco line to the north (see Figure 2). The three principal structuralorientations are nicely revealed in an outcrop of resistant Paleozoic rhyolites which breaks through the detritus in an

eastern arm of the basin (sample site 5, Figure 2). There are three clear directions of fracturing, with discontinuousquartz veinlets. One of these is southwest (Culampaja parallel), a second is north-south (The West Fissure trend)

and the third runs at about 80 degrees, sub-parallel to the Chaco and air photo lineaments.



8

Figure 2

x 3881

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

x 3980

4 2 5 0

x4782

4 7 5 0

3 7 5 0

x3775

x3759

4 1 5 0

x 3723

x

x

3500

x4213

x 4147

4078

x

x 4053

x 4061

x 4061x 4363

x 3802

x 3653

x 3906

x3852

x 3642

x 3517

x3506

x 3638

x 3645

3 5 0 0

x 3618

x 3668

x 3663

x3734x 3804

x3707

x 3848

x3957

x 4126

x5045

x4620

x4710

x 4459

4104

x 4077

x 4204

x4202

x4525

x4570

x 4522

x 3853

x4057

4147

3710

4203

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

7186

87

88

89

90

91

92

814807978 84 85 868382 89 90

91

87 88

94 95 9692 93

77

97

N

1

2

3

4

67

8

9

10

11

5

5

8

Quebrada Chaco Norte

Q u e b r a d a

Q u e b r

a d a

ChacoC h a c o

S u r

S u r

Cerro Amarillo

Cerro El Chaco

CerroCreston

CHACOVOLCANO

B

A

D

C

0 1 2

Kilometres

3 4

STRUCTURES

A. Principal trace of the Culampaja Lineament

B. Major NNE Fracture, visible in geophysics and satellite photos.Regional, likely related to West Fissure

C. Chaco E-W, Lineament

D. Chaco parallel lineament, visible in satellite photos

La Table Formation rhyolites

ESC8 Sample site

ESC5 Outcrop sample site SAMPLE SITES

Date: Aug, 2004

LIMITED GEOLOGY AND

ESCUDO PROPERTY, CHILE


Figure No. 2



9

Figure 3


Q u e b r a d a

Q u e b

r a d a C

h a c o

C h a c o

S u r

Sur

x 3881

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

x 3980

4 2 5 0

x4782

4 7 5 0

3 7 5 0

x 3775

x 3759

4 1 5 0

x3723

x

x

3500

x4213

x 4147

4078

x

x 4053

x 4061

x4061x 4363

x 3802

x 3653

x 3906

x 3852

x3642

x3517

x3506

x 3638

x 3645

3 5 0 0

x 3618

x 3668

x 3663

x 3734x 3804

x 3707

x 3848

x 3957

x 4126

x5045

x 4620

x4710

x 4459

4104

x 4077

x 4204

x 4202

x 4525

x 4570

x 4522

x 3853

x 4057

4147

3710

4203

Decoupled Inversion, Plan View

Date: Aug, 2004

Based on survey by Quantec Geofisica Ltda.

INDUCED POLARIZATION SUMMARY



Figure No. 3

0 1 2

Kilometres

3 4

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

7186

87

88

89

90

91

92

814807978 84 85 868382 89 90

91

87 88

94 95 9692 93

77

97

N

Cerro Amarillo

Cerro El Chaco

Cerro Creston

CHACOVOLCANO

LEGEND

IP LINE

(Note gap between line pairs)

Polarizability at depth

> 2.0

> 3.0



10

Figure 4

Cerro Amarillo

Cerro El Chaco

Cerro Creston

CHACOVOLCANO


Q u e b r a d a

Q u e b

r a d a C

h a c o

C h a c o

S u r

Sur

x 3881

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

3 7 5 0

x 3980

4 2 5 0

x4782

4 7 5 0

3 7 5 0

x 3775

x 3759

4 1 5 0

x3723

x

x

3500

x4213

x 4147

4078

x

x 4053

x 4061

x4061x 4363

x 3802

x 3653

x 3906

x 3852

x3642

x3517

x3506

x 3638

x 3645

3 5 0 0

x 3618

x 3668

x 3663

x 3734x 3804

x 3707

x 3848

x 3957

x 4126

x5045

x 4620

x4710

x 4459

4104

x 4077

x 4204

x 4202

x 4525

x 4570

x 4522

x 3853

x 4057

4147

3710

4203

FROM INVERTED DATA

Date: Aug, 2004

Based on survey by Quantec Geofisica Ltda.

LOW RESISTIVITY FEATURES



Figure No. 4

0 1 2

Kilometres

3 4

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

7186

87

88

89

90

91

92

814807978 84 85 868382 89 90

91

87 88

94 95 9692 93

77

97

N

IP LINES

LEGEND

C H A

N N E L

DEEP

LOW(FAULT)

C H A N N E L

In conclusion, the Escudo Property covers a basin which appears to be a nexus of structural complexity,related to an important eastern component of the West Fissure fracture belt. It is generally agreed that complex



11

fracturing is important with regard to “structural preparation” in the localization of porphyry deposits (Cornejo et al,

1997; Richards et al, 2001).

Most of the rocks surrounding the central basin are members of the Jurassic Profeta Formation comprised oflimestones and limy shales and sandstones, with beds of siliceous tuffs. Those seen in the field were notably fissile,

and aragonite veining was observed. The other important lithology here is the Paleozoic La Table Formation

dominated by rhyolites. This occurs mainly on the eastern side of the property, forming Cerro Amarillo and terrainto the south thereof. Outcrops in the vicinity of sample sites 8 to 10 (see Figure 2) exhibited sulphide cavities,

brecciation and resilicification, hematite staining and minor quartz veining. The eastern contact of the La Tablarhyolites is mapped as a thrust fault.

On the northern edge of the property, a thin layer of platy ignimbrites may be seen to unconformably overly

the Jurassic strata. These were not observed in other marginal outcrops, but may have been preserved in the main basin. The detritus covering this basin is largely volcanic debris from the Mt. Chaco stratovolcano, which rises to

over 5000 metres to east-northeast of the property. Around the basin margins, however, there is also a surprising

amount and variety of epithermal silica float, some composites of which were sampled for precious metals.

Deposit Types

The porphyry copper deposits of the Atacama Desert are among the most important of the world, and needlittle in the way of introduction. In 2001, the Journal Economic Geology devoted Volume 96 to this subject, and an

even more recent source is a book on Chilean copper porphyries published by the Chilean Geology and MiningService (Camus, 2003).

Very briefly, the porphyry deposits are thought to result from emanations at the end of a magmatic phase,

and in this area are likely to date from the late Eocene or early Oligocene. In a typical porphyry, alteration zones

occur outward in annular fashion from a potassic core through combinations of argillic, sericitic and propyliticalterations, which are often modified by structure, by host lithologies or by multiple phases of mineralization. Deep

leaching of the Atacama porphyries has removed virtually all metallic minerals from surface outcrops, focusingimportance on interpretation of alterations and relict mineral castings in a highly weathered environment. In the case

of the Escudo property, however, outcrops over the area of geophysical anomalies are extremely limited in any case.

This deep leaching is one of the more distinctive and economically important characteristics of the copper porphyry deposits of the Atacama Desert, thought to be the result of climatic conditions around the early Miocene.

While this has made them difficult to detect, and leads to costly initial stripping, it is the resulting secondary

enrichment blankets, dominantly of chalcocite, which have made them such valuable targets. Although variable indepth, this mineralization typically begins two to three hundred metres below the present surface, and may be deeper

in areas detrital accumulation.

Exploration

In view of the depth of leaching and overburden, an induced polarization survey is the only serious optionfor detecting disseminated mineralization at depth. Given the poor conductivity of the surficial layers in the Atacama

Desert, this is not a simple task. The soils must be soaked with water for suitable contacts, and considerable currents

and electrode spacings must be employed for the required deep response patterns.

Four lines of induced polarization and resistivity measurements (totalling 43.2 km.) were run in an east-westdirection across the main body of the Escudo Property by Quantec Geophysica Limitada. The resulting report, by

their senior geophysicist Joe Jordan, was submitted in April, 2004.

The lines were laid out using a combination of chaining and GPS (Provisional South America 1956 Datum).A Zonge GDP-16 receiver was employed with a 30 kWatt generator and a “base” 0.25 Hz. frequency domain signal.

A dipole spacing of 300 metres was used, expanded through six separations. Two truckloads (about 16 thousand



12

liters) of water were required to produce appropriate electrical contact in the dry soils, and satisfactory amperages

were achieved.

The instrument used automatically removes electromagnetic coupling effects, using higher harmonicfrequencies. This allows the operator to monitor repeatability of the results while in the field. To pass from the raw,

decoupled data to cross-sections of resistivity and chargeability, a mathematical procedure known as inversion must

be applied. There are, however, no unique solutions, and it should be kept in mind that a great number of possiblechargeability—conductivity distributions will yield any given set of measurements. The computer program used is

from the University of British Columbia Geophysical Inversion Facility, which seeks a solution with the simpleststructure in two dimensions.

Sampling Method and Approach

Eleven rock chip samples were taken during the property examination. Most of these were of hydrothermal

alteration products, and were taken mainly to test for precious metals. Although vein deposits are often found

peripheral to copper porphyries, this sampling should not be viewed as part of the evaluation of Escudo as a possible porphyry target.

Sample Preparation, Analysis and Security

All samples were taken by Dr. Culbert and delivered by him to the ALS-Chemex Laboratory in Antofagasta.

Here they were crushed, and following an aqua regia extraction, gold was measured by induction coupled plasma--mass spectrometer (ICPMS) and 30 other elements by conventional ICPAES. The laboratory uses both standards

and blank samples for control. Sample descriptions and pertinent analyses are given in Appendix III to the Escudo

Report.

Adjacent Properties

The Escudo Property lies in the segment of the Chilean Copper Belt between the Escondida and El SalvadorDeposits. Just 50 kilometres south-southwest of the property is the Exploradora copper porphyry, which has been

drilled and is being held by the Chilean Government under CODELCO. Reserves have not been released, but it isreported to be in excess of 100 million tons. There are also a number of precious metal deposits and prospects in the

area (Boric et al, 1990; Multinational Andean Project, 2001), the most prominent of which is the Vaquillas silvermine (now closed) to the west northwest.

With respect to immediately adjacent ground, the Chilean subsidiary of Phelps Dodge Corporation holds

the territory on the south, and since the time of staking of Escudo, BHP- Billiton has taken the ground to both east

and north. There is also a large holding of CODELCO to the northeast.

Interpretations and Conclusions

The three-point decoupled inversions profiles (effectively chargeability cross sections) are shown with theabbreviated geophysical report of Appendix I to the Escudo Report. All four lines show a strong anomaly of roughly

6.5 km width, starting at a depth of 300 to 400 metres. The southernmost line also shows a second anomaly at itseast end, which appears to be smaller (1.5 km.) but may continue beyond the survey line. A summary of the IP

anomalies at depth is shown in Figure 3, and the resistivity features located in Figure 4.

The lines have been run in two pairs, with the northern pair separated by 1.5 km. and the southern by 1.0

km. Between these pairs there is a 3.0 km. space, which makes it difficult to trace structures in plan view with anycertainty. It would appear, however, that the anomaly extends north-south over the full 5.5 km. distance between the

outermost lines. The anomaly does appear to be reduced on its western side in the southernmost line, although thisline itself extends two kilometres less in that direction.



13

These geophysical anomalies are fully compatible with a large porphyry deposit which has been leached to

depth. In the centre two lines there is even a central core to the anomaly of slightly reduced chargeability, whichmight correspond to a central potassic alteration zone, and one line shows a kilometre wide anomaly above this core,

which might be interpreted as secondary enrichment. This pattern has, in fact, been observed in other copper

porphyry deposits. Jordan (2004) has analysed the similarities of this response to those from the 200 line kilometresof IP surveys over the deposits of the Collahuasi camp, their data having been released. Some of the similarities are

striking. The abstract and summary of that report are given in Appendix II to the Escudo Report.

There are, however, other interpretations which must be kept in mind. There is some possibility that the polarizability is due to some lithology other than a porphyry. The most likely culprit in this region would be pyritic

black shales, but in that case the zones of chargeability and low conductivity should match, which they do not. Large

zones of epithermal alteration are known to be associated with fractures in this general region, and host someimportant precious metal deposits. The 300-400 metre geophysically barren zone above the anomalies may represent

leaching of sulphides for secondary enrichment, or it may be some lithology which prevented leaching. And finally,even if the geophysical anomaly is the result of porphyry mineralization, it is not necessarily with economic copper

grades.

Some information is also available in the conductivity data. The low resistivity anomaly which occupiesmuch of the northern two lines is best interpreted as a wide band of multiple faults, running in a north northeast

direction. This apparently locates a regional fault system which has been encountered in other geophysical surveys,is visible in satellite photos, and was observed by Dr. Culbert in the field in the form of abruptly upturned stratawhere exposed by wash gullies. As discussed above, the geophysical report suggests that this corresponds to the

splay of the West Fissure running down the east side of the Domeyko Range. The structures may appear to fade outat depth in the resistivity profiles, but this is due to rapidly decreasing resolution of structural detail downward. The

other intriguing feature on the resistivity sections, is an isolated, highly conductive channel which appears in all fourlines. It is quite large, being roughly a kilometre wide and half that in vertical extent. On the northern lines, it runs

above the eastern part of the polarization anomaly, and on the southern lines it coincides with the previously

mentioned anomaly above the central core. It might be simply a buried channel carrying saline (conductive) waters.It might also be connected in some way with secondary enrichment. A third possibility is that it might be one of the

“exotic copper channels” such as the Turquesa deposit adjacent to El Salvador, in which heap-leachable copperminerals have been deposited in paleo-channels draining weathering copper porphyries (Munchmeyer, 1996). Field

examinations over this anomaly showed no physical features, but there appeared to be an unusual amount of argillic

alteration in the nearby surface float.

To sum up the results of the geophysical survey, they are exactly what is to be expected over a large, buriedand deeply leached porphyry copper deposit in the Atacama Desert, although as always, there are other possible

interpretations.

The sample composites taken did not yield significant precious metal values, the most prominent anomalies being in antimony. These are presented in Appendix III to the Escudo Report, but are not relevant to evaluation of

the property as a porphyry copper target.

Recommendations

Historically, all induced polarization anomalies of significant size associated with the West Fissure fracture

belt have been drilled, and there is no doubt that Escudo is a viable drill target. It must be realized, however, thatwhile the geophysical anomalies associated with porphyry deposits may be large, the zone of economic copper

concentration tends to be relatively small (typically one square kilometre) and often elusive. Hence it will benecessary to plan for a program of at least 20 drill holes, and to gather as much information in advance as possible in

terms of further geophysical surveys.

A two-phase program of exploration is therefore recommended. The first being to complete testing of the property with induced polarization, and the second being drilling. While it is customary to specify that the second

phase is dependent on the results of the first, in this case it is difficult to see how drilling would not be



14

recommendable in view of the present data, and the geophysics is viewed more as a method of determining the best

placement of drill holes.

Recommended IP Surveys

It is recommended that induced polarization surveying of the property be completed at a line spacing of

roughly a kilometre. This would include

Line 7185 North 9 km

Line 7181 12 km

Line 7180 12 kmLine 7177 9 km

Line 7176 9 kmLine 7175 6 km

Line 7174 6 kmTOTAL 63 line kilometres.

With some leeway for mobilization, etc., the cost for the Zonge instrument survey is US$900 per kilometre

or US$56,700.

In addition to the Zonge, there is a Titan instrument available. This does 5 km. arrays with 25 electrodes at

each setting, giving greater depth penetration, better detail, and additionally collects magneto-telluric data at night.At a price (including mobilization) of roughly US$2,500 per line kilometre it is not recommended for the main

survey, but would be very useful in areas of greatest potential as drill targets, based on the Zonge data. Dr. Culberthas recommended budgeting four sets (i.e. 20 km) of Titan work, estimated at US$50,000.

Estimated cost of Geophysical Phase US$ 106,700

With a 15% contingency US$ 122,700

Recommended Drilling

A program of 20 reverse circulation drill holes is envisioned in this phase, the objective being to find a zone

of secondary copper enrichment, and if possible to make an initial evaluation of its thickness, grade and the tenor ofunderlying sulphide mineralization.

Given the altitude, even with an auxiliary compressor it will be possible to drill reverse circulation holes to

only roughly 500 metres depth. This will cost about $US 27,000 per hole. That should be sufficient depth todetermine if the oxides above the sulphide zone contain appreciable copper. If so, it may be necessary to continue

down another two hundred metres using NQ diamond drilling to evaluate both the oxide and upper sulphide zones.This would cost only slightly less then the original hole, so that it would effectively count as two holes for purposes

of budgeting.

BUDGET ESTIMATES FOR DRILLING US$

Environmental impact study, permitting 13,000Mobilization and demobilization 15,000

Drilling contract 540,000Access and drill pads (Grader for 50 hrs.) 12,500Geologist, 2-1/2 months 30,000

Geological assistant 12,500Copper assays, transport (150 at $24) 3,600

Truck rental and upkeep 7,000Camp and logging supplies, storage 2,000

Food, supplies for geological crew 6,500

Transportation and report 7,500



15

BUDGET ESTIMATES FOR DRILLING US$

Contingency (15%) 97,400

SUBTOTAL 747,000

Phase two total cost estimate US$765,000TOTAL ESTIMATE FOR BOTH PHASES US$887,700

B. Corona Property, Region IV, Chile

The Company engaged Richard Culbert, Ph.D., P. Eng., of Gibsons, B.C., to undertake a review of theCorona Project, which is material to the proposed offering. Dr. Culbert is at arm’s length to the Company. The

Company is satisfied that Dr. Culbert is a Qualified Person as required under the terms of National Instrument 43-101.

The Company's interest in the Corona Property is the subject of a report (the “Corona Report”), dated

October 14, 2004, prepared by Dr. Culbert. Dr. Culbert confirms that the discussions set out herein under theheadings “Property Description and Location”, “Accessibility, Climate, Local Resources, Infrastructure and

Physiography”, “History”, “Geological Setting”, “Deposit Types”, “Exploration”, “Sampling Method andApproach”, “Sample Preparation, Analysis and Security”, “Adjacent Properties”, “Interpretation and Conclusions”,“Ranges of Elements Indicative for Epithermal and/or IOCG Styles of Mineralization”, and “Recommendations” are

extracted from, or are accurate paraphrasings of, sections of the Corona Report. The Corona Report is available forreview under the Corporation’s profile on the SEDAR database at www.sedar.com. The exploration activities

carried out by the Company were directly supervised by Dr. Culbert.

Summary

The Corona Property is comprised of a contiguous block of five claims covering 15 square kilometres, with

a three square kilometre claim situated three kilometres farther south. It is located northwest of the town ofCombarbala, some 270 kilometres north of Santiago.

The property was staked by the Company to cover a major portion of a large epithermal alteration zone.The north-south elongation of the claim block reflects partial control by faults associated with a regional graben behind the coastal ranges of north-central Chile. The southern sectors of the alteration exhibit massive, fine silica,

cut by large fracture zones with silica-hematite matrix breccias. The larger and more interesting northern sector of

the property features swaths of similar silica-hematite and major zones of iron oxide – kaolin within a regionalalteration of a style known locally as “combarbalite”. This is a complex mixture of minerals dominated by a sodic

alunite, and is named for the nearby town of Combarbala where it is quarried for its colour and carving properties inthe tourist trade. The alteration zone is surrounded by many small copper oxide and vein gold workings. The

western lobe of the alteration is held by the government department ENAMI for kaolin mining, and the property isflanked on the east by a reservoir, with alteration extending beyond.

In order to evaluate the Corona Property, Dr. Culbert roughly mapped the area and collected 59 wash

sediment and 56 rock composites, which were analyzed for gold and 41 other elements. Such gold anomalies as

were returned are associated with known vein and copper oxide workings peripheral to the alteration, and the property is not considered to be a target for epithermal gold exploration.

On the other hand, there are several characteristics of both the site and the geochemistry that suggest that

Corona is a viable target for iron oxide-copper-gold (IOCG) deposits. A modest program to map and evaluate acentral sector of the property is recommended. Its objective is to clarify the IOCG characteristics to the extent that

one of the larger companies exploring for this style of deposit in Chile would find it attractive to option the propertyand carry out the geophysical surveys required to develop drill targets for this valuable but compact, and often blind,

style of mineralization. A one month program at an estimated cost of $US 46,000 is recommended.



16

Figure 5

SOUTH

AMERICA

SANTIAGO

C H I L E

PROPERTY

31°

30°

32°

7 1 °

7 0 °

R o a d t o E l I n d i o

P a n a m e r i c a n

H i g h w a

y

I n t e r n a t i o n a l H i g h w a y

CORONA

PROPERTY

C H I L E

Figure No. 1


CORONA PROPERTYCHILE

LOCATION MAP, WITH

Date: Aug, 2004

SITES DISCUSSED IN TEXT

SOUTH

AMERICA

SANTIAGO

C H I L E

PROPERTY

A R G E N T I N A

PACIFIC

OCEAN

Kilometres

0 25 50

Punitaqui X

CombarbalaX

IllapelX

El BronceX

El SoldadoX

ValparaisoX

OVALLE

X Andacollo

La Serena

Property Description and Location

The Corona Property is comprised of six claims or “pedimentos”, each measuring one kilometre by three

kilometres for a total of 18 square kilometres, and named Corona I to Corona VI. Five of the claims are contiguous,and the sixth lies three kilometres to the south. (Figure 6).

The property is located approximately 270 kilometres north of Santiago and 10 kilometres north and west of

the town of Combarbala. It lies between 31 deg 2’ and 31 deg.10’ south latitude and between 71 deg. 4’ and 71 deg.7’ west longitude. UTM co-ordinates employed are based on the “South American 56” datum, as this is the one used

to defined properties in Chile.



17

Figure 6

1 1 0 0

1 0 0 0

9 0 0 8

0 0

7 0 0

1 2 0 0

9 0 0 1

0 0 0

1 1 0 0

1 2 0 0

1 3 0 0

7 0 0

8 0 0

1073

1265

1220

934

1112

1176

1170

1032

1095

904 1024

1118

1040

1145

1012

971

868

865

1312

1346

1152

1230

1044

918

923

758

742

758

674

820

822

970

815

862

873

972

949

677

64

62

6560

58

56

54

9 8

9 9

3 0 0

0 1

0 5

0 2

0 6

0 3

0 7

0 4

0 8

Co.Colorado

Co. Botija

Co. Negro

Co.La Campana

Co.La Dura

Co. Colorado

Co.La Bandera

Co.Negro

Co.Colorado

Co.El Macho

Co.La PesteLa Colorada

CerroBlanco

L a C

o i p a

Q u e b r

a d a

Q u e

b r a d a

L a

C i e

n a

g a

R

I

C

B A B A

R

I O

P A

M

A

O

O M

R L A

Reservoir

Cogoti

P O W E R L I N E

ToCombarbala

ToPunitaqui

LOMALA

VARILLUDA

C O R D O N

C O L O R A

D O

C O L O R A D O

R I D

G E

N

Kilometres

AND LAYOUT

Date: Aug, 2004

PROPERTY TOPOGRAPHY

CORONA PROPERTY, CHILE


Figure No. 2



18

Accessibility, Climate, Local Resources, Infrastructure and Physiography.

The town of Combarbala is a four to five hour drive on paved roads from Santiago. An unpaved road

(labeled D-605) connects this town with the village of Punitaqui to the north. This road crosses the southernmost

claim and then runs within a few kilometres to the west of the main claim block. Secondary jeep tracks reach almostto the edge of the property between Cerros Blanco and La Campana and to the north of Cerro Colorado. There is

also a rough road which skirts the north end of the claims. Horses were found useful in reaching the less accessible parts of the property.

The main claim block covers a moderately rugged area whose highest point is Cerro Botija at 1220 metres

and whose lowest elevations lie to the east along the Pama River and Cogoti Reservoir at roughly 700 metres. Theclimate is semi-arid, with temperatures rising into the 30’s on warmer days, and falling below freezing occasionally

on winter nights.

There are few trees on the property, the tallest and most common vegetation being the Quisco Cactus

(Echinopsis chilensis) which can reach to seven metres. There are a variety of shrubs and bushes dispersed over thearea, the most common, and least welcome, being litre (Lithrea caustica) a large bush to which many people have a

reaction similar to the effects of poison oak. Native wildlife other than birds were not encountered, and have likely been extirpated. A few wild burros, and untended goats were the only mammals of any size evident. In view of the

widespread mining which has taken place in the area, there are not likely to be any environmental concerns withrespect to vegetation or wildlife. On the other hand, the proximity to the Cogoti Reservoir, used for both irrigationand drinking water, will be of concern in planning any large mining or milling projects within the present property

boundaries.

Two small villages of Soruco and El Sauce lie along the road immediately west of the main claim block,and two power lines also follow this road, crossing the southernmost claim. Only rudimentary items would be

available at these villages, but most food and hardware supplies may be obtained in Combarbala. In increasing size,the city of Ovalle is accessible by paved road in two hours to the north, and Santiago itself is about twice that to the

south. Cogoti Reservoir and Pama River near the property’s eastern edge are the obvious sources of water. The area

has a long tradition of mining, and labour with relevant expertise is available.



19

Figure 7

C o l o r a d

o R i d

g e

R i d g e

ToCombarbala

ToPunitaqui

Cerro

Cerro

ColoradoCerro

Botija

Blanco

P O W E R L I N E

L a

C i e n

a g a

L a

C o i p

a

R I O

C O M

B A R

B A L A

kaolinmine

15

64

62

6560

58

9 8

9 9

3 0 0 0

1 0 2

0 3

0 4

65

66

63

61

59

0 5

57

56

LEGEND

fracture and breccia zonesMassive,fine silica, with hematitic

Heterogeneous "combarbalitic" alteration

with many silica, kaolin and hematitic systems

Observed zone of fine silica,typically with hematitic breccias

Observed zone of kaolinization,

typically with limonite sericite and shearing

Massive feldspar porphyry andesite. A San Lorenzo intrusive?

FS

FS

FPA

FPA

FPA

FPA

FPA

FPA

KK

K

K

K

K

K

K

FPA

K

FS

FPA

K

N

0

Kilometres

1 2

Date: Aug, 2004

PROPERTY GEOLOGY



Figure No. 3

C o

r d o

n

C o l o r a d o

Reservoir

Cogoti

Suroco

ElSauce

quartzites

Cretaceous

Volcanics

F l a

t s N

o O

. C .

Cobbles



20

History

This entire region has been searched by local miners for surface occurrences of copper oxides or gold veins,

and several of their small workings lie within or adjacent to the present property. As far as the Company and Dr.

Culbert are aware, the first staking of this part of the alteration zone by a major company was by the Chilean branchof Homestake Mining Company. Shortly thereafter, Homestake was taken over by Barrick Gold Corporation, and its

Chilean office closed. Sr. Edmundo Hernandez, the chief geologist for that office, restaked and maintained claimshere for some years thereafter. Representatives of Rio Tinto are also known to have sampled in the region.

Geological Setting

The Corona Property falls on the Illapel 1:250,000 scale mapsheet, whose geology was mapped for the

government by Rivano and Sepulveda (1991). This work shows that the property lies almost entirely over a large

zone of hydrothermal alteration, within lower Cretaceous strata adjacent to a large area of plutonic rocks belongingto the Cretaceous Calanga Group, which are mainly granodiorites and quartz diorites. On the northwest border of

the altered area there is also a plug assigned to the Cretaceous--Paleocene aged San Lorenzo Group intrusions, whichtend to be porphyries of andesitic composition.

The map defines the regional Cretaceous strata of this area as the Quebrada Marquesa Formation of mixed

marine and continental origin. They are mainly argillites, siltstones and sandstones, often calcareous, but volcanicand conglomeritic units are also involved. This is underlain by the Arqueros Formation of similar age, dominated by

flows and breccias of andesitic composition. These two Cretaceous units correspond to the Chilcas Formation

farther south in the Santiago area, and that name is used here also by some authors, for example Alvarez and DeGramont, 1992. One small area of quartzites were the only metasediments observed within the property, and the

Cretaceous elsewhere is volcanic, largely in the southern claim.

The altered zone is large (roughly 50 sq. km.) and complex. It is not likely a result of the Chalanga plutons,whose relationship to Quebrada Marquesa Formation of similar age does not appear to be intrusive. Field

observations suggest that it is directly related to the San Lorenzo andesitic intrusion, but controlled by structures,dominantly north--south oriented fractures. Those in turn appear to be related to formation of a regional graben

between the coastal ranges and the Andes proper.

The property is almost entirely underlain by various styles of hydrothermal alteration. The southern part ofthe main claim block (under Cerro Blanco) is comprised virtually entirely of a grey to white, aphanitic silica, andalthough much of this area is covered by talus from Cerro Blanco, very little else appears in the detritus. Two stage

silicification textures, hematitic shear zones, voids and drusy cavities are common. Some sectors also show relictsulphide cavities.

This massive silica trend continues south from the property into an area from which gold values were

reported by Hernandez (2004), but which is now held by another party. It enters the north end of the southern claim but appears to end abruptly. It is likely responsible, however, for the silica sills and stockworks which mark the

volcanic rocks farther south along that trend. It may also be responsible for their silicification, and the distinctive

red-brown weathering which accompanies it. These units of the Marquesa Formation are dark, slightlymetamorphosed and non-porphyritic, and distinct from the porphyry andesite encountered father north.

Northward, the massive silica regime ends near UTM 6559, and the main body of the property is underlain by a more complex altered terrain. This is dominated by a distinctive white-to-cream coloured alteration with ironand manganese oxide patterns. Its silica content is variable, and in places there is the greasy sheen of pyrophyllite.

This is known locally as “combarbalitic alteration”, after examples which are mined near Combarbala and carved for

sale under the name combarbalite. That material is known to be a variable intergrowth of Na-alunite, pyrophyllite,kaolin and quartz with metal oxide colouration patterns.

Through this altered regime, run large and small bands of the fractured silica, and also shear zones and

other sectors of intense argillic alteration to kaolin, likely with alunite. Both systems are accompanied by surprising



21

amounts of iron oxides, those adjacent to the argillic zones being mainly hematite, limonite (and jarosite) with

sericite, while fractures and breccias in the silica bands typically have a quartz-hematite matrix.

In fact, Rivano (1991) lists an iron deposit by the name of La Colorada within the claim area. Most of thesilica dykes and kaolinized belts are structurally controlled, the major orientation being north-south near vertical.

Slickensides in the fracture zones indicated that movements were also near vertical. A second important orientation

is at about 50 deg., again vertical to steeply dipping.

Descending to either north or east of the mountainous area of alterations, one reaches a massive andesite porphyry, likely related to the San Lorenzo intrusions. In some marginal localities, the porphyry texture is visible in

sectors least affected by the combarbalitic alteration. The contacts with the massive andesite tend to run up valleys,suggesting that it underlies the altered area, although later dykes tend to confuse interpretation. In general, however,

the main sector of the property appears to be a regional zone of more or less combarbalitic alteration formed in theupper parts of a San Lorenzo andesitic intrusive complex, and cut by secondary belts of epithermal alteration, both

siliceous and argillic, along prominent fault structures. Widespread brecciation and iron oxide flooding both

accompanied and followed the main phase of silica emplacement.

Deposit Types

Small to moderate sized copper and gold deposits abound in this region, some having been worked since prehistoric times. Three of the gold mines in this central belt are considered “major” (Davidson and Mpodozis,

1991; Sillitoe, 1991), but in examining these for a likely model, each is distinctly different. Andacollo, to the north,(110 mt Au produced) is considered a metasomatic manto deposit adjacent to a copper-gold porphyry. El Bronce

mining camp to the south (over 24 mt Au) is considered a low-sulphidization system of epithermal veins. Closest in

proximity, and perhaps most relevant, is the Punitaqui mine (approx. 30 mt Au) which lies 48 km. to the north-northwest. This is a large, pluton-related vein emplaced in a north-south fault zone, and was also mined for copper

and mercury. These and other deposits emphasize the wide variety of mineralization in this region.

Closer to the property, copper, silver and gold has been mined from north-south vein systems and otherstructures in this vicinity. Rivano (1991) lists several of these, and other workings were observed by the author.

There is also a Cu-Mo breccia pipe at El Sauce, three kilometres to west of the property, and copper and gold have

been mined from a breccia pipe farther west near Quilitapia.

Copper oxide localities are prevalent in the massive andesites near the alteration zone. Some of these have

been exploited on a small scale, and in some of the cases briefly examined, the copper minerals were accompanied in

some cases by specular hematite and lesser magnetite.

Exploration

A total of eight days were spent examining and sampling the property. During this period, some of themajor structures and alterations were mapped, and a total of 56 rock chip samples and 59 dry wash sediment samples

were taken. The samples are described briefly in Appendices I and II to the Corona Report, and located in Figures 7and 8. Geological observations are presented in Figure 9, while Figure 10 displays results from the southern claim.

Sampling Method and Approach

As this area lacks a previously defined mineralized structure, sampling was carried out on a reconnaissance

basis. Zones defined by intense alteration or brecciation were chip sampled, directly or from debris. In some cases,

a composite of varied alteration or mineralization styles was taken from dry wash float. Clearly, only a tiny portionof this huge alteration zone could be tested in this way, however, and for a more regional coverage, silt samples were

employed.



22

Sample Preparation, Analysis and Security

All samples were collected by Dr. Culbert and personally delivered to the ALS Chemex laboratory in

Antofagasta. Here the rock chips samples were crushed and split, and the silt samples screened to extract the -80

mesh fraction for analysis. Gold levels in the parts per billion range were tested by aqua regia extraction, followed by ICP-MS (Induction-Coupled Plasma--Mass Spectrometry) finish. Analyses for a further 30 elements was carried

out with the same extraction followed by ICP-AES. ALS Chemex uses both blanks and standards to maintain qualityin their analyses.



25

Figure 10

55

54

53

52

51

5065

3 00 01 02 03 3 00 030201

5065

51

52

53

54

55

003

55

54

53

52

51

5065

01 02 03

4344

45

42(7,103)

(32,35)(10,38)

(<5,68)

41(162,1140)

56

(117,83)

R o a d

f r o m C o m

b a r b a l a

f r o m C o m

b a r b a l a

R o a d

R o a d

f r o m C o m

b a r b a l a

R I O

P A M A

R I O

P A M A

P A M A

R I O

P A M A

R I O

R I O

P A M A

R I O

P A M A

P o w e r L i n e

P o w e r L i n e

P o w e r L i n e

(3,56) 57

39(5,96)

(33,101)

(-,416)40

41

(10,54)58

59(6,71)

44(24,67)

43(10,165)

42(30,72)

GEOLOGY ROCK SAMPLES SILT SAMPLES

55

(<5,11)

57(7,22)

46Cu

(57,1.86%)

NO O.C.

Massive fine silica, with hematitic fracture

and breccia zones.

Silicified Cretaceous volcanic rocks,with fine silica sills and stockworks.Scattered Cu oxide showings

LEGEND

Rock samples of the COR Group

LEGEND

Outcrop

Wash float composite

Silt samples of the SCOR Group

(ppb Au, ppm Cu)

Silt sample

LEGEND

(ppb Au, ppm Cu)

0 1 2

Kilometres


Date: Aug, 2004

SOUTHERN CLAIM OF THE



Figure No. 6

Adjacent Properties

The main, northern body of the claims is adjoined on the west by a large property of the government serviceENAMI, covering the northwestern lobe of the regional alteration zone. At one time, kaolin was mined from sectors

of this property, and also some barite, but there is no activity at present. Whether ENAMI found any gold here is notknown, but among the abandoned machinery is the remains of a trapiche, a small mill used to grind ore with mercury

to extract gold. Although not sampled or mapped, this area appears to have a similar geology to the main alteration

zone of the Corona Property.

To the west of the southern leg of the main claim block is a large property of Compania Minero del Pacifico

(CAP), which covers Cerro Blanco and volcanic terrain to west thereof. This is almost exclusively an iron mining

company, and it is not clear whether their claims are to cover an iron-oxide manto, or if they have some interest inthe huge silica exposure capping Cerro Blanco.

In addition, for the southern claim, there are several small holdings adjacent or extending into that property,

covering small copper or copper-gold workings. At the extreme south end, gold was once extracted from veins in thevolcanic rocks in what is known as the Arenilias District. There is no present activity, but some old claims are still

held, and if future work on the southern claim is warranted, these inroads must be delimited.

Finally, the three kilometre section of the siliceous alteration between the main and southern claim group

has been staked by another party. This is known (Hernandez, 2004) to have yielded gold values, but apparently fromstructures of limited size.



26

Interpretation and Conclusions

The Corona Property covers much of a large and complex alteration zone, exhibiting sectors of massive to

drusy aphanitic silica, kaolinization (likely with alunite), extensive iron oxide development, and a regional

“combarbalitic” alteration which has elsewhere been shown to be dominated by a sodium alunite. It appears to beassociated, at least in part, with a large intrusion of porphyry andesite, of the San Lorenzo Intrusions, and is more or

less surrounded by small copper oxide and gold workings. The alterations are structurally controlled, likely byfractures related to regional graben formation.

In view of these characteristics, the property should be evaluated both for epithermal gold potential, and

also as a possible iron oxide-copper-gold (IOCG) target. To this end, the trace elements characteristic for both typesof deposit have been monitored. The ranges for pertinent elements, for both rock and silt samples, are listed below.

(Values for copper taken directly from old workings are excluded).

Rock Samples Silt Samples

Au <5 to 162 ppb <5 to 306 ppb

Ag 0.04 to 4.61 ppm 0.04 to 8.9 ppm

As 2 to 3370 ppm 6 to 73 ppmBa 20 to 1640 ppm 70 to 1000 ppm

Bi 0.3 to 824 ppm 0.03 to 21.3 ppmCe 1.3 to 36.7 ppm 9.75 to 37.3 ppm

Co 0.6 to 46.7 ppm 3 to 37 ppm

Cu 11 to 1140 ppm 40 to 252 ppmFe 10 samples over 15% 3.9 to 17%

Hg 0.1 to 4.61 ppm <.01 to 1.77 ppmLa <0.2 to 19.2 ppm 3.8 to 17.9 ppm

Mn 23 ppm to >1% 147 to 3360 ppm

Mo 1.1 to 254 ppm 0.4 to 10.4 ppmP 40 to 3510 ppm 240 to 1260 ppm

Pb 1 to 1075 ppm 5 to 62 ppmSb 0.2 to 66.8 ppm 0.14 to 3.5 ppm

Sr 4.4 to 796 ppm 39 to 463 ppm

Te 0.06 to 64.4 ppm 0.02 to 1.79 ppmTl <.02 to 6.34 ppm 0.03 to 1.26 ppm

U 0.01 to 3.73 ppm 0.2 to 3.27 ppmY 0.3 to 20.7 ppm 2.57 to 13.75 ppm

Zn <2 to 422 ppm 22 to 213 ppm

Ranges of Elements Indicative for Epithermal and/or IOCG Styles of Mineralization

With respect to the rock samples, the highest gold value was from a composite of vein materials in a small

wash on the southwest margin of the southern property, near a granodiorite intrusion. The quartz had sulphide clasts,and was not as fine grained as the main silica bodies. It is unlikely that it represents a style of mineralization of

interest to an international company. The second highest gold value is also from the southern claim, and of

marginally more interest. Again it is from a composite of siliceous float in a wash, near the southern end of the

massive quartz terrain. The steam follows a large basalt dyke within the silica. The highest gold value from the mainclaim block (53 ppb) was a composite of mixed hematitic silica and kaolinized float from a tributary to lowerQuebrada La Coipa.

Copper values tend to roughly correlate with iron oxide content. This in turn was very high in many cases,

with ten samples returning leachable iron over the 15% limit for the type of analysis employed. Anomalous values inthe other pertinent trace elements are scattered, but the strongest groupings tend to occur either marginal to the

kaolinized zones, or from an unexplored (and partly unstaked) area on upper “Colorado Ridge”.



27

Turning to the silt geochemistry, the suite of elements showing anomalies proved similar to the rock

samples, although at a more muted level as might be expected. There is again a rough correlation between iron(which ran up to over 10%) and both copper and molybdenum. Background levels in barium, strontium, cobalt and

lead were strongly elevated, as were the rare earth and epithermal indicator elements.

The highest gold value (306 ppb) was from the dump tailings at one of the small copper oxide workings

around the periphery of the alteration complex. This does little to enhance the property as an epithermal gold prospect, but supports reports that copper and gold were mined both separately and together at various sites in the

area.

It is concluded that despite widespread epithermal alteration and impressive development ofcryptocrystalline quartz, the gold values returned from sampling do not support further work on the model of an

epithermal gold deposit. The highest gold values returned were from the southern claim block, and were related tovein and other mineral concentrations of limited size, which may be held by local miners and which are not of

interest to an international company.

The Corona Property, however, has many of the characteristics of a good iron oxide-copper-gold (IOCG)

target. There has been considerable activity looking for these, associated with major fractures in the coastal rangesof northern Chile. While most of this exploration has been directed farther north, there are indications that the IOCG

belt extends south to perhaps the latitude of Valparaiso, and includes the El Soldado deposit 190 km south ofCombarbala.

IOCG deposits around the world have proved quite variable, and many of their more decisive characteristics

do not extend much beyond the compact ore deposit itself, making field exploration difficult. There follows,

however, an impressive list of characteristics of the Corona locality which suggest an IOCG target:

1. It involves a large zone of sodic alteration. This is based on published analyses of combarbalite, showing it

to be dominated by a sodium-alunite. (The alkali minerals are not dissolved in aqua regia, so the ICP data

is not relevant here.)

2. It is associated with major north-south fractures bounding a regional graben. Similarities may be drawn tothe Atacama Fault complex associated with IOCG deposits farther north.

3. There are small copper and gold workings scattered around the periphery of the alteration zone.

4. There is a great deal of iron oxides associated with both siliceous fracture zones and argillically altered

shear belts. More than half of the silt samples from the main claim block ran over 7% iron. Three featureswithin the property are named “Colorado” for the red-brown colour of the rust.

5. Geochemical values for copper (and molybdenum) were high, and roughly correlate with iron.

6. Background values of barium and strontium are high, and barite veinlets have been noted.

7. In addition to the trace elements common to most epithermal systems (As, Sb, Te, Ti etc.), certain elements

typical of IOCG deposit were also anomalous, namely cobalt, bismuth, manganese and REE. The high

background levels of the rare earth indicator elements (Ce, La and Y) in the silt samples is especiallystriking. Uranium, (another IOCG tracer) was not particularly strong, but not all indicators can be expectedat any one target.

Recommendations

A moderate, single phase program of roughly a month’s duration is recommended, with the objective of

defining IOCG characteristics over a portion of the claim block, to the extent that one of the larger companies



28

searching for these deposits in Chile would be willing to option the property and carry out the necessary geophysical

survey to define drill targets. The following work is suggested:

1. A major portion of the samples defining IOCG character come from the upper watershed of La Coipa wash(an abrupt and complex valley), together with Colorado Ridge to the southeast. This sector of the property

should be mapped, prospected and sampled in some detail. Two or three weeks work would be involved for

a geologist and assistant.

2. In particular, the La Colorada iron oxide prospect (Rivano, 1991), denoted as occurring in the ColoradoRidge area, should be located and evaluated in view of IOCG characteristics.

3. A whole-rock assay and petrographic study of the combarbalitic alteration is recommended.

4. The iron mining group CIA Minero del Pacifico (who hold Cerro Blanco and the territory to west of the

southern part of Corona’s main claim block) should be contacted to see if their interest here is really in aniron deposit. It is known that there has been some drilling in the vicinity of Cerro Negro, and this might be

of importance to IOCG definition.

5. The government bureau ENAMI should be contacted to see if they have information of interest which they

may have collected in the area northwest of Corona during their mining of kaolin (and barite) there.

6. The alteration zone, including hematitic concentrations, extends to the east of the Cogoti Reservoir, into

ground which is largely open. This area should be examined and sampled on a reconnaissance level, whichwill require somewhat over one week.

BUDGET ESTIMATE U.S.$

Wages – Field Geologist, one month 12,000

Wages – Field assistant 3,500Food, lodging and supplies 4,000

Truck rental, fuel, horses 3,000Transport and analysis of 300 samples 7,500

Petrographic study 1,000

Claim upkeep for six months 3,500Travel and accommodation 1,500

Research and negotiation 1,000Report 3,000

Subtotal 40,000

Contingency (15%) 6,000

TOTAL ESTIMATE 46,000

C. Other Properties

The Company has a 100% interest in three additional properties in Chile. The following is a summary ofeach such property. The location of all of the Company’s properties is shown in figure 11. It is not anticipated that

any funds derived from the Offering will be allocated to these properties.



29

Figure 11

ROYAL

BECKER

CRISTAL

PropertiesCondor Resources



30

Cristal Property

Like Escudo, the Cristal property is located along the West Fissure, north of the Collahuasi / Ujina porphyry copper

district and near the Peruvian border. The Cristal target is covered by young volcanics (ignimbrites) but two deeply

incised N-S trending valleys, strands of the West Fissure, a few kilometres to the south, expose a classic Chilean porphyry copper sequence of altered quartz-feldspar porphyry (“QFP”) intrusive rock exhibiting abundant stockwork

quartz veining, at least three phases of brecciation, and limonites after pyrite and copper minerals. A ‘relict sulphide’study conducted in the early 1990’s revealed abundant bornite and chalcopyrite along with pyrite encapsulated

within quartz grains in the QFP. Exposures of propylitic alteration in andesite, and a former Ag-Pb-Zn district arealso evident to the SW of the target. This area is interpreted to be the pyritic halo surrounding an enriched porphyry

copper system, the centre of which is postulated to be located to the north under the ignimbrite cover – the focus of

the Cristal claims. This project is contiguous with claims owned by Codelco to the east and Mantos Blancos (AngloAmerican) to the south.

Figure 12

Royal Property

The Royal project is located south of Santiago and comprises a large rock geochemical Au-Cu-Mo anomaly in

quartz-sericite altered sediments exposed around the edge of a 2 km wide covered basin. Localized QFP intrusiveand quartz-limonite stockwork veining has been found intruding the sedimentary sequence along the NW side of the

basin. The original sampling was conducted in 1995 and out of some 80 samples, 40 returned copper values inexcess of 100 ppm, with spot highs of 801, 868, 1951 and 2664 ppm (0.27%). The surprise was molybdenum, with

very anomalous values. Considered anomalous in the 10 to 15 ppm range, 35 samples returned values in excess of 50



31

ppm Mo, with a peak value of 1187 ppm (0.12% Mo). The highest gold values returned 1.09 and 3.78 g/t Au.

Apparently controlled by the intersection of N-S and NW-SE linears, the majority of this target is under cover andopen to the south.

Figure 13

Becker Property

Situated south of Santiago, the Becker project is a potential “Bonanza-style” gold vein system within Cretaceous

andesites proximal to an intrusive granodiorite-diorite contact. Past exploration discovered a zone measuring some1500 by 1200 metres within which occurs a significant number of quartz fragments and boulders to 4 metres in

diameter. Follow up work encountered six quartz veins with strike lengths up to 350 metres and widths varying from

0.5 to 4 m. Previous sampling returned anomalous gold values along the entire vein lengths, with peak values of23.5, 37.2, 40.7, 63.5, 70.0 and 79.0 g/t Au. No geophysics or drilling have ever been carried out on this project, nor

has it been mapped in detail; thus the true nature of the prospect, including the total number of veins and theextension of the system along strike and down-dip, is unknown.



32

Figure 14

4. USE OF PROCEEDS

4.1 Proceeds

The estimated net proceeds to be derived from the Offering, before deduction of the expenses of the

Offering, will be $1,840,000.

4.2 Funds Available

The Company will receive net proceeds from the Offering of $1,840,000, which will be combined with itsworking capital deficit of approximately $20,000 as of September 30, 2005, for a total of $1,820,000 in Funds

Available.

4.3 Principal Purposes

The Funds Available will be allocated as follows:



33

Purpose for which funds are raised Amount(1)

1. Exploration Programs:

Escudo Project – IP SurveyingEscudo Project – Drilling Program

Corona Project – Mapping, prospecting, sampling

$ 153,375$ 956,250

$ 57,500

2. Administrative expenses in the amount of $21,000 per month for the Company over

a period of 12 months

$ 252,000

3. Estimated expenses of this issue (including legal, audit, printing, and listing fees)(estimated)

$ 80,000

4. To pay agent’s selling expenses (estimated) $ 10,000

5. Unallocated working capital to fund ongoing operations $ 310,875

Total: $ 1,820,000

The General and Administration expenses for the 12-month period following the completion of the offering

are as follows:

Category Average Monthly Total 12-Month Total

Salaries and Benefits

Legal and accounting

Corporate expensesRent, taxes and utilities

Telephone and faxTravel, lodging, meals

Miscellaneous costs

Bank and finance chargesInsurance

Computer equipment, software, misc.Recruiting, training, employee relations

$ 10,000

1,500

2,0001,500

5002,000

1,000

2002,000

3000

$ 120,000

18,000

24,00018,000

6,00024,000

12,000

2,40024,000

3,6000

TOTAL: $ 21,000 $ 252,000

The Company will spend the Funds Available on the completion of this Offering to carry out its proposed

exploration and development programs set out in item 3.2A “Escudo Property” and 3.2B “Corona Property”. Theremay be circumstances where, for sound business reasons, a re-allocation of funds may be necessary. The Company

will only redirect the funds to other properties on the basis of a written recommendation from an independent,

professional geologist or engineer.

The Company’s working capital available to fund ongoing operations will be sufficient to meet itsadministration costs for at least 12 months.

5. SELECTED CONSOLIDATED FINANCIAL INFORMATION AND MANAGEMENT'S

DISCUSSION AND ANALYSIS

5.1 Annual Information

The Company was incorporated on November 26, 2003. Patrick Burns, who has more than 25 yearsexperience in mineral exploration in South America, took the initiative in founding the Company for the purpose ofacquiring and exploring for copper and gold deposits in Chile. With the assistance of co-founder, Jimmy E. Toler,

five properties were staked during the latter half of 2003 and early 2004. The properties were transferred to the

Company in September 2004, in consideration of 4,000,000 Shares of the Company, and the settlement of out of pocket costs in the amount of US$35,000 through the issuance of 200,000 common shares.



34

5.2 Dividends

No dividends have been paid on any Shares of the Company since the date of incorporation nor is it

intended to pay a dividend on any of its Shares in the immediate future. Dividends will, in all probability, only be

paid in the event the Company successfully brings one of its properties into production.

5.3 Management’s Discussion and Analysis

A. From Incorporation to February 29, 2004

Overall Performance

Condor Resources Inc. was incorporated on November 26, 2003 under the Company Act (BritishColumbia). The Company is engaged primarily in the business of evaluating, acquiring and exploring natural

resource properties in Chile. The natural resources being targeted are copper and gold.

The Company is an exploration stage company and has produced no revenues to date.

During the period ended February 29, 2004, the Company raised $167,299 through share subscriptions

received. At February 29, 2004 no shares had yet been issued.

During the period ended February 29, 2004, the Company expended a total of $31,220 on its mineral

properties. This amount was made up of $12,500 in consulting fees to the Company’s President, $10,154 in amounts paid for personnel and labour, and $8,566 was spent on property related travel and transportation.

Selected Annual Results

The summary historical financial information presented below has been derived from the date of

incorporation to February 29, 2004.

STATEMENT OF

FROM THE DATE OF

INCORPORATION

(NOVEMBER 26, 2003)TO FEBRUARY 29,

2004

OPERATIONS AND DEFICIT DATA AUDITED

Revenues NIL

Total expenses $ 3,004

Net loss $ (3,004)

Basic and diluted net loss per share $ -

Weighted average number of shares outstanding -

BALANCE SHEET DATA As at February 29, 2004

Cash and cash equivalents $ 166,776

Working capital $ 133,075

Total assets $ 197,996

Stockholders' equity $ 164,295

In the period ended February 29, 2004, the Company was in an early acquisition and exploration stage with

regards to its mineral properties. The Company had no revenues and incurred a loss of $3,004. Professional fees of$2,285 were paid for legal and company start up fees. As the Company was newly incorporated, expenditures during

the period were minimal. The Company incurred office expenses of $344 and regulatory fees of $375.



35

As at February 29, 2004, the Company had total assets of $197,996. The assets were made up of cash of

$166,776 and an amount for mineral properties of $31,220.

Results of Operations

The Company incurred a net loss of $3,004 for the date of incorporation to February 29, 2004. During this

period, there were no revenues as the Company was still in an acquisition and exploration stage. Whereas theseresults are for the initial year of operations for the Company, no comparison to prior years can be made.

The current focus for the Company is the acquisition and exploration of mineral properties located in Chile.

The Company does not currently have the required financial resources to complete an exploration and

development program on its properties; accordingly, there is uncertainty whether or not it will be able to procure therequired financial resources. Management believes that it will be able to raise the necessary capital to fund its

exploration and development program through the issuance of seed stock and an Initial Public Offering for gross proceeds of approximately $2,000,000.

Liquidity

At February 29, 2004, the Company had a deficit of $3,004. The Company expects to incur losses for atleast the next 24 months. There can be no assurance that the Company will ever make a profit. To achieve

profitability, the Company must advance one or more of its properties through further exploration in order to bringthe properties to a stage where the Company can attract the participation of a major resource company, which has the

expertise and financial capability to take such properties to commercial production.

At February 29, 2004, the cash position of the Company was $166,776. Additional financing will berequired to fund the cost of continued acquisitions, and exploration development of the Company’s mineral

properties located in Chile.

There are currently no long-term debts, capital lease obligations, operating leases or purchase obligations.

Capital Resources

The Company has no major commitments for capital expenditures. Except as otherwise disclosed in thisMD&A, there are currently no other identified sources of new capital. Additionally, the Company currently has no

established credit lines with chartered banks or other financial institutions.

Off Balance Sheet Transactions

There are currently no off balance sheet arrangements which could have a material effect on current or

future results of operations, or the financial condition of the Company.

Related Party Transactions

As at February 29, 2004, an amount of $22,748 was due to directors and a law firm in which a director of

the Company is a partner.

During the period, the Company incurred the following transactions with directors, officers and a firm in

which a director is a partner:

• Paid or accrued consulting fees capitalized to deferred exploration costs of $12,500 to an officer and

director of the Company.

• Paid or accrued deferred legal costs of $2,285 to a law firm in which a director is a partner.



36

Proposed Transactions

The Company intends to initially raise approximately $500,000 through the issuance of seed stock and an

additional $2,000,000 through an Initial Public Offering. As at February 29, 2004, the Company had seed stock

subscriptions receivable of $167,299. The authorized capital of the Company consists of an unlimited number ofshares without par value.

The Company intends to file a preliminary prospectus within the next 12 months.

Confidentiality agreements may be entered into from time to time, with independent entities to allow for

discussions of the potential acquisition and or development of certain properties.

Critical Accounting Estimates

The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and

liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and thereported amount of revenues and expenses during the period. Actual results could differ from these estimates.

Financial Instruments

The Company's financial instruments consist of cash, receivables, 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 these financial instruments. The fair value of these financialinstruments approximates their carrying values, unless otherwise noted.

Other MD&A Requirements

The Company is primarily engaged in the business of evaluating, acquiring and developing natural resource

properties in Chile. As at February 29, 2004, the Company had Mineral properties with a carrying value of $31,220on its balance sheet. The following table illustrates the breakdown of this amount:

2004

Acquisition costs incurred $ -

Deferred exploration costs -

Consulting 12,500

Personnel and labour 10,154

Travel and transportation 8,566

Total mineral properties $ 31,220

B. Year-ended February 28, 2005

Overall Performance

The Company was organized to take advantage of the property acquisition opportunities that have become

available in Chile following a long period of depressed metal prices.

Patrick Burns, the president of the Company, has over 25 years of mining experience in Latin America,including 17 years in Chile. Mr. Burns recognized that many prospective properties were becoming available, and

with the financial backing of Jimmy E. Toler, embarked on a property research and acquisition program.



37

The Company explores for minerals with a strong emphasis on copper and gold, and has no operating

property. The Company has no earnings and therefore finances these exploration activities by the sale of shares.The key determinants of the Company's operating results are the following:

(a) the state of capital markets, which affects the ability of the Company to finance its exploration activities;

(b) the write-down and abandonment of mineral properties as exploration results provide further informationrelating to the underlying value of such properties; and

(c) market prices for copper and gold.

Condor Resources Inc. was incorporated on November 26, 2003 under the Company Act (BritishColumbia). The Company is engaged primarily in the business of evaluating, acquiring and developing natural

resource properties in Chile.

Since incorporation, the Company has acquired five properties totalling 164 sq km (16,400 hectares or

40,525 acres). All of the properties were acquired by staking and are 100% owned by the Company, with nounderlying royalties. All of the Company’s presently held mineral properties are situated in Chile; however, the

Company may seek to acquire interests in other countries in the Americas.

The Company is currently seeking to have its shares of common stock listed on the TSX Venture Exchange.The Company is an exploration stage company and has produced no revenues to date.

During the period ended February 28, 2005, the Company raised $329,000 through the issuance of seed

stock and converted subscriptions received during the prior year into share capital. At February 28, 2005, there were6,185,196 shares issued and outstanding.

During the period ended February 28, 2005, the Company expended a total of $230,333 on its mineral

properties. This amount was made up of acquisition costs of $45,111, consulting fees of $40,009, $9,006 for drafting

services, $81,388 in amounts paid for personnel and labour, $67,779 was spent on samples, and $32,151 was spenton property related travel and transportation.

Selected Annual Results


incorporation to February 29, 2004 and the year ended February 28, 2005.

STATEMENT OF

YEAR ENDED

FEBRUARY 28, 2005

FROM THE DATE OF

INCORPORATION

(NOVEMBER 26, 2003)

TO FEBRUARY 29,

2004

OPERATIONS AND DEFICIT DATA AUDITED AUDITED

Revenues NIL NIL

Total expenses $ 81,247 $ 3,004 Net loss $ (81,247) $ (3,004)

Basic and diluted net loss per share $ (0.05) $ -

Weighted average number of shares outstanding 1,774,247 -



38

BALANCE SHEET DATA As at February 28, 2005 As at February 29, 2004

Cash and cash equivalents $ 154,095 $ 166,776

Working capital $ 129,795 $ 133,075

Total assets $ 492,677 $ 197,996

Stockholders' equity $ 457,159 $ 164,295

In the period ended February 28, 2005, the Company was in an early acquisition and exploration stage with

regards to its mineral properties. The Company had no revenues and incurred a loss of $81,247. Administrative

services in the amount of $8,025 were incurred during the year as the Company initiated a new administrativeservices contract ($2,500 per month). Management fees of $12,509 were paid to the CEO in connection with a new

employment contract, which began January 1, 2005. The Company incurred office and supplies expenses in theamount of $4,435. Professional fees amounted to $31,878 and were related to legal costs incurred by the Company.

The Company spent $5,000 to initiate a corporate website and expended $19,400 on company related travel and

entertainment.

As at February 29, 2005, the Company had total assets of $492,677. The assets were made up of cash of

$154,095 and an amount for mineral properties of $306,664.


For the period from incorporation on November 26, 2003, to February 28, 2005, the Company experienced

a net loss of $84,251. Included in these expenses are costs paid to consultants and contractors for the review ofvarious properties, costs associated with travel to the project, and costs associated with due diligence of the property

including the cost of maintaining an exploration office in Chile. Other expenses in the period related to costsassociated with the set-up of a company, and travel to and from Chile.

The Company incurred a net loss of $81,247 during the year ended February 28, 2005. During this period,

there were no revenues as the Company was still in an acquisition and exploration stage. Whereas these results are

for the first completed year of operations for the Company, no comparison to prior years can be made.

The current focus for the Company is the acquisition and exploration of mineral properties located in Chile.


development program on its properties; accordingly, there is uncertainty whether or not it will be able to procure the

required financial resources. Management believes that it will be able to raise the necessary capital to fund itsexploration and development program in the next 18 months through the issuance of seed stock and an Initial Public

Offering (“I.P.O.”) for gross proceeds of approximately $2,000,000.

Liquidity

During the period ended February 28, 2005 the Company incurred costs associated with resource propertyexploration of $230,333.

At February 28, 2005, the Company had a deficit of $84,251. The Company expects to incur losses for at

least the next 24 months. There can be no assurance that the Company will ever make a profit. To achieve profitability, the Company must advance one or more of its properties through further exploration in order to bringthe properties to a stage where the Company can attract the participation of a major resource company, which has the


At February 28, 2005, the cash position of the Company was $154,095. Additional financing will berequired to fund the cost of continued acquisitions, and exploration development of the Company’s mineral

properties located in Chile. The Company has retained Bolder Investment Partners Ltd. to act as Agent in the



39

Company’s I.P.O. of 5,000,000 shares at $0.40 per share. The Company is currently in the process of filing a

preliminary prospectus in connection with its I.P.O..


The Company expects that the net proceeds from the I.P.O. will be sufficient to pay for the continued

exploration of the Company’s properties and working capital for at least the next 18 months.

Capital Resources

The Company has no major commitments for capital expenditures. Except as otherwise disclosed in this

MD&A, there are currently no other identified sources of new capital. Additionally, the Company currently has no


Off Balance Sheet Transactions

There are currently no off balance sheet arrangements which could have a material effect on current orfuture results of operations, or the financial condition of the Company.

Related Party Transactions

Included in cash at February 28, 2005 is $5,554 held in trust by a law firm in which a partner is a director of

the Company.

As at February 28, 2005, an amount of $14,693 was due to directors and a firm in which a director is a partner.

During the year ended February 28, 2005, the Company entered into the following transactions with related

parties:

• Paid or accrued consulting fees capitalized to deferred exploration costs of $40,000 to an officer and

director of the Company.

• Paid or accrued management fees of $12,509 to an officer and director of the Company.

• Paid or accrued deferred legal costs of $19,878 to a law firm in which a director is a partner.

• Acquired mineral properties from directors of the Company, issuing 4,000,000 common shares valued at

$400 and issuing 200,000 common shares valued at $44,711 (US$35,000) as the settlement of out-of- pocket costs to the Vendor.


There are currently no proposed transactions, except as otherwise disclosed in this MD&A. Confidentiality

agreements may be entered into from time to time, with independent entities to allow for discussions of the potential

acquisition and or development of certain properties.


The preparation of financial statements in accordance with Canadian generally accepted accounting

principles requires management to make estimates and assumptions that affect the reported amount of assets andliabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the

reported amount of revenues and expenses during the period. Actual results could differ from these estimates.



40





Other MD&A Requirements


properties in Chile. As at February 28, 2005, the Company had mineral properties with a carrying value of $306,664on its balance sheet. The following table illustrates the breakdown of this amount:

FEBRUARY 28, 2005

FROM THE DATE OF

INCORPORATION

(NOVEMBER 26, 2003) TO

FEBRUARY 29, 2004

Acquisition costs incurred $ 45,111 $ -

Deferred exploration costs

Balance, beginning of period 31,220 -Consulting 40,008 12,500

Drafting, surveying and permits 29,208 -

Sampling 67,779 -

Travel and field costs 93,338 18,720

230,333 31,220

Balance, end of period 261,553 31,220

Total mineral properties $ 306,664 $ 31,220

C. Interim Period Ended August 31, 2005

Overall Performance

The Company is currently seeking to have its shares of common stock listed on the TSX Venture Exchange.

The Company is an exploration stage company and has produced no revenues to date. At August 31, 2005, therewere 6,185,196 shares issued and outstanding.

During the six month period ended August 31, 2005, the Company expended a total of $47,121 on its

mineral properties as detailed below.

August 31, February 28,

2005 2005

Acquisition costs incurred $ 45,111 $ 45,111


Balance, beginning of period 261,553 31,220

Consulting - 40,008

Drafting, surveying and permits - 29,208



41

August 31, February 28,

2005 2005

Sampling - 67,779

Travel and field costs 47,121 93,338

47,121 230,333

Balance, end of period $ 308,674 $ 261,553

Total mineral properties $ 353,785 $ 306,664



incorporation to February 29, 2004, the year ended February 28, 2005, and the six months ended August 31, 2005.

STATEMENT OF

SIX MONTHS ENDED

AUGUST 31, 2005

YEAR ENDED

FEBRUARY 28, 2005

FROM THE DATE OF

INCORPORATION(NOVEMBER 26, 2003)

TO FEBRUARY 29, 2004

OPERATIONS AND DEFICIT DATA AUDITED AUDITED

Revenues NIL NIL NIL

Total expenses $ 70,925 $ 81,247 $ 3,004

Net loss $ -70,925 $ -81,247 $ -3,004

Basic and diluted net loss per share $ –0.01 $ -0.05 $ -

Weighted average number of shares outstanding 6,185,196 1,774,247 -

BALANCE SHEET DATA As at August 31, 2005 As at February 28, 2005 As at February 29, 2004

Cash and cash equivalents $ 24,083 $ 154,095 $ 166,776

Working capital $ -17,389 $ 129,795 $ 133,075

Total assets $ 427,706 $ 492,677 $ 197,996

Shareholders' equity (deficit) $ 386,234 $ 457,159 $ 164,295

During the six months ended August 31, 2005 the Company continued its efforts with respect to its properties in Chile. The Company expended $47,121 in travel and field costs on its properties. Management fees

were $37,500 (contract payment of $5,000 USD per month) and the Company incurred administrative expenses inthe amount of $16,050 (contracted payment of $2,500 plus GST per month). In the period ended February 28, 2005,

the Company was in an early acquisition and exploration stage with regards to its mineral properties. The Companyhad no revenues and incurred a loss of $81,247. Administrative services in the amount of $8,025 were incurred

during the year as the Company initiated a new administrative services contract ($2,500 per month). Management

fees of $12,509 were paid to the CEO in connection with a new employment contract, which began January 1, 2005.The Company incurred office and supplies expenses in the amount of $4,435. Professional fees amounted to $31,878

and were related to legal costs incurred by the Company. The Company spent $5,000 to initiate a corporate websiteand expended $19,400 on company related travel and entertainment.

As at August 31, 2005, the Company had total assets of $427,706. The assets were made up of cash of

$24,083, deferred financing costs of $49,838 and an amount for mineral properties of $353,785.



42

Summary of Quarterly Results

Period Revenues

Income (loss)

for the period

Basic

income(loss) per

share

31/05/2005 nil $ (51,153) $ (0.01)

31/08/2005 Nil $ (19,772 $ (0.00)

Quarterly results have not been prepared prior to the year ended February 28, 2005, as a result, the resultsdiscussed here are for the years ended February 29, 2004 and February 28, 2005; and the first two quarters ended

May 31, 2005 and August 31, 2005. For the period from incorporation on November 26, 2003, to February 28, 2005,the Company experienced a net loss of $84,251. Included in these expenses are costs paid to consultants and

contractors for the review of various properties, costs associated with travel to the project, and costs associated with

due diligence of the property including the cost of maintaining an exploration office in Chile. Other expenses in the period related to costs associated with the set-up of the Company, and travel to and from Chile.

The Company incurred a net loss of $81,247 during the year ended February 28, 2005. During this period,

there were no revenues as the Company was still in an acquisition and exploration stage. The current focus for theCompany is the acquisition and exploration of mineral properties located in Chile.


development program on its properties; accordingly, there is uncertainty whether or not it will be able to procure therequired financial resources. Management believes that it will be able to raise the necessary capital to fund its

exploration and development program in the next 18 months through the issuance of seed stock and an Initial Public

Offering (“I.P.O.”) for gross proceeds of approximately $2,000,000.

Liquidity

During the period ended August 31, 2005 the Company incurred costs associated with resource propertyexploration of $47,121.

At August 31, 2005, the Company had a deficit of $155,176. The Company expects to incur losses for at

least the next 24 months. There can be no assurance that the Company will ever make a profit. To achieve profitability, the Company must advance one or more of its properties through further exploration in order to bring

the properties to a stage where the Company can attract the participation of a major resource company, which has the


At August 31, 2005, the cash position of the Company was $24,083. Additional financing will be required

to fund the cost of continued acquisitions, and exploration development of the Company’s mineral properties located

in Chile.


The Company expects that the net proceeds from the I.P.O. will be sufficient to pay for the continuedexploration of the Company’s properties and working capital for at least the next 18 months.



43

Capital Resources

The Company has no major commitments for capital expenditures. Except as otherwise disclosed in this

MD&A, there are currently no other identified sources of new capital. Additionally, the Company currently has no


Off-Balance Sheet Transactions

There are currently no off balance sheet arrangements which could have a material effect on current orfuture results of operations, or the financial condition of the Company.

Transactions with Related Parties

Included in accounts payable at August 31, 2005 is $35,030 due to directors and a firm in which a director

is a partner.

During the six month period ended August 31, 2005, the Company entered into the following transactionswith related parties:

• Paid or accrued consulting fees of $37,500 to an officer and director of the Company.

• Paid or accrued deferred legal costs of $29,138 to a law firm in which a director is partner.

• Paid or accrued administrative services of $16,050 to an officer and CFO of the Company.


There are currently no proposed transactions, except as otherwise disclosed in this MD&A. Confidentiality

agreements may be entered into from time to time, with independent entities to allow for discussions of the potential

acquisition and or development of certain properties.


The preparation of financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and

liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and thereported amount of revenues and expenses during the period. Actual results could differ from these estimates.





Other Information


properties in Chile. As at August 31, 2005, the Company had mineral properties with a carrying value of $353,785on its balance sheet (See 1.2 for a breakdown of these amounts).

The following illustrates the details of the Company’s Capital Stock as at August 31, 2005.



44

• On September 22, 2004, the Company issued 4,000,000 shares valued at $400 pursuant to the acquisition ofmineral properties (Note 3).

• On January 1, 2005, the Company issued 200,000 common shares valued at $44,711 for payment of debtincurred on the property acquisition (Note 3).

• On February 15, 2005, the Company issued 1,985,195 common shares for proceeds of $496,299, $167,299of which were received in the 2004 fiscal period.

Number

of Shares Amount

AuthorizedUnlimited common shares without par value

IssuedBalance as at inception, November 26, 2003 and February 29, 2004 1 $ 1

For property acquisition 4,000,000 400

For debt 200,000 44,711 For cash 1,985,195 496,299

Balance as at February 28, 2005 6,185,196 $ 541,411

There have been no changes to the Capital Stock of the Company since February 28, 2005.

At August 31, 2005, the Company had the following stock options outstanding enabling holders to acquirethe following:

Type

Number

of Shares

Exercise

Price Expiry Date

Directors’/Officers’ options 850,000 $ 0.40 5 years from listing date

6. DESCRIPTION OF THE SECURITIES DISTRIBUTED

6.1 Shares

The authorized capital of the Company consists of an unlimited number of Shares without par value ofwhich 6,185,196 Shares were outstanding as of September 30, 2005. The Offering consists of 5,000,000 Shares at a

price of $0.40 per Share. Pursuant to the Agency Agreement, the Agent is also to receive 50,000 Shares from the

treasury of the Company upon completion of the Offering as a corporate finance fee (the “Corporate Finance Fee”).This prospectus qualifies the issuance of the Corporate Finance Fee. See item 15 “Plan of Distribution”.

The holders of Shares are entitled to vote at all meetings of shareholders of the Company, to receive dividends

if, as and when declared by the directors and, subject to the rights of holders of any shares ranking in priority to or on a parity with the Shares, to participate rateably in any distribution of property or assets upon the liquidation, winding-up or

other dissolution of the Company.

The Shares are not subject to any future call or assessments and do not have any pre-emptive rights orredemption rights.



45

6.2 Agent’s Warrants

Pursuant to the Agency Agreement, the Agent will receive non-transferable Share purchase warrants (the

“Agent’s Warrants”) equal in number to 10% of the number of Shares sold. Each Agent’s Warrant will entitle the

Agent to purchase one Share at the price of $0.40 per Share, for a period of 12 months from the date the Shares arelisted and called for trading on the Exchange. The Agent’s Warrants are non-transferable. Holders of Agent’s

Warrants do not have any voting right or other right attached to Common Shares until the Agent’s Warrants are properly exercised as provided for in the warrant certificate. The warrant certificate contains provisions designed to

protect the holders of Agent’s Warrants against dilution upon the occurrence of certain events. An adjustment in thenumber of Common Shares issuable upon exercise of the Agent’s Warrants and/or the exercise price per Common

Share will be made in the event of the subdivision or consolidation of the Common Shares or a stock dividend or

other distribution of Common Shares or securities convertible or exchangeable into Common Shares, is made toholders of all or substantially all of the Common Shares. In addition, the warrant certificate also provides for an

adjustment in the class and/or number of securities issuable upon exercise of the Agent’s Warrants and/orsubscription price in the event of: a reclassification or other change in the Common Shares; a capital reorganization

of the Company; or a consolidation, merger or amalgamation of the Company with another corporation or entity; or

the transfer of all or substantially all of the assets and undertaking of the Company.

6.3 Modification of Terms

The rights attached to the Shares of the Company may only be modified according to the Business

Corporations Act (British Columbia).

7. CONSOLIDATED CAPITALIZATION

The Company has sold securities for cash in its non-reporting stage as set out below.

In February 2005, the Company accepted subscriptions for 1,985,195 Shares at $0.25 per Share. The

Shares were issued on February 15, 2005.

Stock Options

In January 2005, the Company adopted a Stock Option Plan, and granted options to purchase an aggregateof 850,000 Shares of the Company at a price of $0.40 per Share for a period expiring on the fifth anniversary of theListing Date. See item 8 “Options to Purchase Securities”.

8. OPTIONS TO PURCHASE SECURITIES

Options

In January 2005, the Company adopted a Stock Option Plan and granted options to purchase an aggregate

of 850,000 Shares of the Company at a price of $0.40 per Share for a period expiring on the fifth anniversary of the

date on which the Shares of the Company are first listed and called for trading on the TSX Venture Exchange (the“Listing Date”).

The stock options were granted as follows:

Name of Optionee Position Held Number of Shares under Option

Patrick Burns Director 200,000

Lyle Davis Director 150,000

John Robins Director 150,000

Graham H. Scott Director 100,000

Patrick Gorman Consultant 50,000



46

Name of Optionee Position Held Number of Shares under Option

Art Soregaroli Consultant 50,000

Paul Larkin Officer 100,000

John Paul Larkin Consultant 25,000

Carlos Rojas Pizarro Employee 25,000

TOTAL: 850,000

The aforesaid options are non-assignable and have been granted as incentives and not in lieu of any

compensation for services.

There was no market for the Company's securities at the time the options were granted and the market valueas of that date has been determined at $0.40 per Share based upon the proposed offering price.

In addition to the options granted by the Company, Mr. Burns has granted an option to each of Messrs.

Davis, Scott and Larkin, entitling each of them to purchase up to 250,000 shares, as and when such shares are

released from escrow, at a price of $0.05 per share.

A. Fully Diluted Share Capital

In respect of all of the stock options and the Agent’s Warrants, the Stock Option Plan or warrant certificatescontains, or will contain, provisions providing for an adjustment of the number of Shares available for purchase in

the event of any alteration in the capital stock of the Company such that the stock option or warrant shall, followingsuch alteration, entitle its holder to acquire the same number of Shares at any equivalent exercise price as it did

before the alteration.

The following table discloses the Company’s fully diluted share capital, after giving effect to the Offeringhereunder:

Shares Issued or Allotted Number of Shares Percentage of Total

Issued as of the date of this Prospectus

Founders’ Stock (4,000,000)

Property Acquisition Costs (200,000)Seed Stock (1,985,196)

6,185,196 49.15%

Stock Options 850,000 6.75%

Offering 5,000,000 39.73%

Agent’s Warrants 500,000 3.97%

Agent’s Corporate Finance Fee 50,000 0.40%

Total: 12,585,196 100.00%

9. PRIOR SALES

The following is a summary of the Shares sold for cash by the Company during the 12-month period priorto the date of this Prospectus:

Number of Shares Price per Share Total Commissions Paid Net Cash Received

1,985,195 $0.25 Nil (1) $496,298

With respect to stock options granted to insiders and their associates, see item 8 "Options to Purchase

Securities" and item 15 "Plan of Distribution".



47

10. ESCROWED SECURITIES

In accordance with National Policy 46-201, Escrow for Initial Public Offerings, (the “Policy”) all Shares of

an issuer owned or controlled by the issuer’s “principals”, as defined in the Policy, will be escrowed at the time of

the issuer’s initial public offering (the “IPO”), except where such Shares represent less than 1% of the issuer’s totalissued and outstanding Shares after giving effect to the IPO. Pursuant to the Policy, and pursuant to an agreement

(the “Escrow Agreement”) entered into among Patrick J. Burns, Jimmy E. Toler, Graham H. Scott, John E. Robinsand Krista Scott (the “Principals”), the Company and Pacific Corporate Trust Company (the “Trustee”), a total of

4,511,892 Shares (the “Escrowed Shares”) will be deposited in escrow with the Trustee as escrow agent on theclosing of the IPO. The Escrowed Shares will represent approximately 40.16% of the issued Shares after giving

effect to the Offering.

The Company is classified as an “emerging issuer” under the Policy, and the Escrowed Securities will be

released to the Principals under the following schedule:

• 10% of each Principal’s holdings will be released on the Listing Date;

• 15% six months following the Listing Date;

• 15% twelve months following the Listing Date;

• 15% eighteen months following the Listing Date;

• 15% twenty-four months following the Listing Date;• 15% thirty months following the Listing Date; and

• 15% thirty-six months following the Listing Date.

The Policy provides that if the Company becomes an “established issuer” during the currency of the escrow

agreement, the release of Shares from escrow will be accelerated such that all of the escrowed Shares will bereleased at prescribed intervals over a period of 18 months.

As of the date of this Prospectus, set forth below are details of the number of Shares held in escrow:

Name of Principal

No. of Shares held in Escrow and

deemed issue price per Share

Percentage of

Issued Shares

prior to the

distribution

Percentage of

Issued Shares

after the

distribution

Patrick J. Burns 2,750,000 (1) at $0.0140,000 at $0.25

2,790,000

45.11% 24.83%

Jimmy E. Toler 1,000,000 at $0.01

200,000 at $0.2551,892 at $0.25

1,251,892

20.24% 11.14%

Graham H. Scott 60,000 at $0.25 0.97% 0.53%

John E. Robins 250,000 at $0.01

100,000 at $0.25350,000

5.66% 3.12%

Krista Scott 60,000 at $0.25 0.97% 0.53%

TOTAL 4,511,892 72.95% 40.15%

(1) Mr. Burns has granted an option to each of Messrs. Davis, Scott and Larkin, entitling each of them to

purchase up to 250,000 shares, as and when such shares are released from escrow, at a price of $0.05 pershare. Each of Messrs. Davis, Scott and Larkin is a principal of the Company.

The escrow restrictions provide that the Escrowed Securities may be transferred within escrow to an

individual who is a director or senior officer of the Company, subject to the approval of the directors of the

Company, or to a person or company that before the proposed transfer holds more than 20% of the voting rights



48

attached to the Company’s outstanding securities, or to a person that after the proposed transfer will hold more than

10% of the voting rights attached to the Company’s outstanding securities and that has the right to elect or appointone or more directors or senior officers of the Company.

The complete text of the escrow agreement is available for inspection at the registered and records office of

the Company.

11. PRINCIPAL SHAREHOLDERS

As at the date of this Prospectus, the number of Shares of the Company owned by each person or company

who has or is known by the Company to have (a) direct or indirect beneficial ownership of, (b) control or directionover, or (c) a combination of direct or indirect beneficial ownership of and control or direction over, voting securities

that will constitute more than 10% of the issued Share capital of the Company prior to and after the distribution is as

follows:

Name

Designation

of Class

Type of

Ownership

No. of

Securities

Owned

Percent of

Issued

Securities of

Class prior to

the

distribution

Percent of

Issued

Securities of

Class after

the

distribution

Patrick J. Burns Common Direct and beneficial

2,790,000 (1) 45.11% 24.83% (2)

Jimmy E. Toler Common Direct and

beneficial

1,251,892 (1) 20.24% 11.14% (2)

(1) The securities are owned both of record and beneficially.

(2) On a fully diluted basis, Patrick J. Burns would hold 22.17% after the distribution and Jimmy E. Tolerwould hold 9.95%. See item 8 “Options to Purchase Securities”.

12. DIRECTORS AND OFFICERS

12.1 Name, Address, Occupation and Security Holding

The following are the full names, municipality of residence, positions with the Company and principaloccupations within the preceding five years, the dates of their appointment or election and their holdings of common

shares (including those over which they exercise control) of all of the directors and executive officers of theCompany:

Name and Municipality

of Residence

Current Position with

Company

Principal Occupation for the

Preceding Five Years

No. of

Common

Shares

Patrick J. Burns(1)

Salta, Argentina

President, Chief Executive

Officer and director, from

Feb. 2, 2004 to present

President of the Company. Prior to

February 2, 2004, an independent

geological consultant

2,790,000

Graham H. Scott

Vancouver, B.C.Director and Corporate

Secretary, from Dec. 1,

2003 to present

Lawyer; Principal, Vector Corporate

Finance Lawyers from July 1, 2001 to

date

60,000



49

Name and Municipality

of Residence

Current Position with

Company

Principal Occupation for the

Preceding Five Years

No. of

Common

Shares

Lyle Davis(1)

North Vancouver, B.C.

Director, from Feb. 2, 2004

to present

Principal of Elardee Group Capital

Inc., a business consulting practice

which provides corporate finance,

project management, and generaladvisory services for public and private companies

Nil

John E. Robins(1)

Lions Bay, B.C.

Director, from April 5, 2004

to present

Principal of Hunter Exploration

Group, a private exploration andventure capital group, 1990 – present;

self-employed professional geologist

and entrepreneur, 1990 – present;Chairman, Committee Bay Resources

Ltd., 2004 – present; President, Northern Empire Minerals Ltd. (now

Storn, 1999 – 2003

350,000

Paul Larkin

Vancouver, B.C.

Chief Financial Officer,

from Nov. 1, 2004 to present

President of New Dawn Group, a

private administrative and financialservices company, and a director of

several public companies

Nil

(1) Member of Audit Committee

The directors are elected at each annual general meeting to hold office until the next annual general meetingor until their successors are duly elected or appointed, unless such office is earlier vacated in accordance with the

Articles of the Company or a director becomes disqualified to act as a director.

Upon completion of the offering, 3,200,000 Shares of the Company will be beneficially owned, directly or

indirectly, by all the directors and executive officers, as a group, representing 28.48% of the then issued andoutstanding voting securities (11,235,196 Shares).

12.2 Corporate Cease Trade Orders or Bankruptcies

Other than as described below, none of the directors, officers or promoters of the Company is, or within the

past ten years prior to the date hereof has been, a director, officer, or promoter of any other issuer that, while that person was acting in that capacity:

(a) was subject to a cease trade or similar order or an order that denied the issuer access to any statutory

exemptions for a period of more than 30 consecutive days; or

(b) was declared bankrupt or made a voluntary assignment in bankruptcy, made a proposal under anylegislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings,

arrangements or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold

the assets of the person.

Paul Larkin was the President and a director of Setanta Ventures Inc., which was subject to a cease-tradeorder for failure to file acceptable financials and was subsequently delisted when no reactivation asset was acquired.

Lyle Davis was a director of Sitec Ventures Corp. from October 1999 until November 5, 2003. Sitec was

cease traded on June 3, 2003 for failure to file its December 31, 2002 audited financials statements. Sitecsubsequently filed it December 31, 2002 audited financial statements, as well as its March, June and September 2003

interim statements. Mr. Davis was a director of Consolidated Epix Technologies Limited from June 1999 until its



50

merger with Saxon Energy Services in November 2004. Consolidated Epix was suspended on October 29, 2001 for

failure to maintain Tier Maintenance requirements and was reinstated for trading August 18, 2003.

12.3 Penalties or Sanctions

None of the directors, officers or promoters of the Company has, within the ten years prior to the date hereof, been

subject to any penalties or sanctions imposed by a court or securities regulatory authority relating to the trading insecurities, promotion or management of a publicly traded issuer, or theft or fraud.

12.4 Individual Bankruptcies

None of the directors, officers or promoters of the Company has, within the ten years prior to the date hereof, been

declared bankrupt or made a voluntary assignment into bankruptcy, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangements, or compromise with

creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

12.5 Conflicts of Interest

Certain directors and officers of the Company are and may continue to be involved in the mining and

mineral exploration industry through their direct and indirect participation in corporations, partnerships or jointventures which are potential competitors. Situations may arise in connection with potential acquisitions and

investments where the other interests of these directors and officers may conflict with the interests of the Company.As required by law, each of the directors of the Company is required to act honestly, in good faith and in the best

interests of the Company. Any conflicts which arise shall be disclosed by the directors and officers in accordancewith the Business Corporations Act (British Columbia) and they will govern themselves in respect thereof to the best

of their ability with the obligations imposed on them by law.

12.6 Management of the Company

The following sets out additional biographical information for each member of management of the

Company:

Patrick J. Burns, Age 56, President, Chief Executive Officer and Director

Mr. Burns is an exploration geologist with more than 25 years experience in Latin America, including 17 years in

Chile. Mr. Burns has enjoyed a successful track record highlighted by his direct involvement in the discoveries of the

Escondida, Escondida Norte and Zaldivar porphyry copper deposits (and was the first Project Manager of all three)and discovery of the San Cristobal gold deposit. He was also a part of the Sustut deposit discovery team while with

Falconbridge in northern B.C. Mr. Burns has significant experience in managing junior resource companies in LatinAmerica and an extensive South American contact base.

Graham H. Scott, Age 58, Corporate Secretary and Director

Mr. Scott is the principal of VECTOR Corporate Finance Lawyers and practices corporate and commercial law, with

emphasis on securities law and mining law. He represents many Canadian public companies which are listed on the

TSX and TSX Venture Exchanges, in addition to clients in the corporate finance business. Called to the bar in 1981,Mr. Scott is listed as “consistently recommended” in the area of Mining in LEXPERT.CA, a directory of Canadian

lawyers based on a survey of the legal community. In addition, he is listed in The International Who’s Who ofMining Lawyers published by London-based Law Business Research Ltd.

Lyle Davis, P.Eng. (Alberta), MBA, Age 50, Director

Mr. Davis is an independent director of the Company and devotes approximately 10% of his time to the Company.Mr. Davis is a principal of Ellardee Group Capital Inc., a firm he founded in 1999 to provide corporate finance,



51

advisory, and management services of public companies, and which now has a number of private company clients as

well. He previously worked in the corporate finance divisions of Ernst & Young and C.M. Oliver and Company, both in Vancouver. Mr. Davis spent approximately ten years with the Vancouver Stock Exchange, in their corporate

finance division, and their trading operations department. He is a member of the Association of Professional

Engineers, Geologists and Geophysicists of Alberta, and has been a guest lecturer at UBC on the application ofoption pricing theory to business valuation.

John E. Robins, P.Geo., Age 46 Director

Mr. Robins is an independent director of the Company and devotes approximately 10% of his time to the Company.

Mr. Robins has 20 years experience in mineral exploration in Canada, the U.S. and Latin America. He is a memberof the Association of Professional Engineers and Geoscientists of B.C., Prospectors and Developers Association of

Canada, Northwest Mining Association and the B.C. and Yukon Chamber of mines. A director of several publiccompanies, Mr. Robins is also a principal of the Hunter Exploration Group, a private exploration and venture capital

entity that has staked over 20 million acres of mineral claims in Canada since 1988.

Paul Larkin, Age 55, Chief Financial Officer

Mr. Larkin will devote 20% of his time to the company. Mr. Larkin is President of the New Dawn Group, an

investment and financial consulting firm located in Vancouver, British Columbia. New Dawn is primarily involvedin corporate finance, merchant banking and administrative management of public companies. Mr. Larkin held

various accounting and banking positions for over a decade before founding New Dawn in 1983. He is currentlyPresident of Tyner Resources Ltd. (TSX-V) and serves on the boards of a number of public and private companies.

13. EXECUTIVE COMPENSATION

A. Executive Compensation

During the period from incorporation (November 26, 2003) to February 28, 2005, the Company had one

Named Executive Officer (for the purposes of applicable securities legislation), namely Patrick J. Burns, the

President and Chief Executive Officer.

The following table sets forth, for the period indicated, the compensation of the Named Executive Officer:

Annual Compensation Long Term Compensation

Awards Payouts

Name andPrincipal

Position Year (1) Salary ($)

Bonus

($)(2)

Other

AnnualCompen-

sation ($)

SecuritiesUnder

Options/

SARs(3)

granted

($)

RestrictedShares or

Restricted

ShareUnits

($)

LTIP(4)

payouts

($)

All OtherCompen-

sation ($)

Patrick J. Burns,President and

Chief ExecutiveOfficer

20042005

12,50052,509

N/A N/A

N/A N/A

Nil200,000

Nil Nil

Nil Nil

Nil Nil

Notes: (1) For the period from incorporation (November 26, 2003) to February 29, 2004 and for the yearended February 28, 2005.

(2) Bonus amounts are paid in cash in the year following the fiscal year in which they were earned.

(3) Stock appreciation rights.(4) Long-term incentive plan.



52

B. Options and Stock Appreciation Rights ("SARs")

No incentive stock options were granted to the Named Executive Officer from incorporation (November 26,

2003) to February 29, 2004.

During the financial year ended February 28, 2005 (the “Financial Period”), the following incentive stock

options were granted to the Named Executive Officer:

Name

Securitiesunder

Options/SARsgranted (#)(1)

Percentage of

TotalOptions/SARs

granted toEmployees in

FinancialPeriod(2)

Exercise or

Base Price($/Security)

Market Value

of Securitiesunderlying

Options/SARson the Date of

Grant($/Security)

ExpirationDate

Patrick J. Burns 200,000 27.59% $0.40 $0.40 (3) (4)

(1) On January 28, 2005, a total of 850,000 options to purchase Shares were granted to directors (as to600,000), officers (as to 100,000), consultants (as to 125,000) and employees (as to 25,000) of the

Company. The options granted to the Named Executive Officer (as to 200,000) were granted to such person in his capacity as a director and officer of the Company.(2) Reflected as a percentage of 725,000 options granted to directors, officers, employees and the Named

Executive Officer.(3) There was no market value for the Company’s securities at the time the options were granted and the market

value as of that date has been determined at $0.40 per Share based upon the proposed offering price.

(4) Fifth anniversary of the Company’s Listing Date.

There are no assurances that the incentive stock options described above will be exercised in whole or in

part.

C. Pension Plan

The Named Executive Officer does not participate in any defined benefit or actuarial plan.

D. Termination of Employment, Change in Responsibilities and Employment Contracts

There are no employment contracts between the Company and any of its subsidiaries and the Named

Executive Officer save and except as set forth below:

Pursuant to a consulting agreement (the “Burns Consulting Agreement”), dated January 1, 2005, betweenthe Company and Patrick J. Burns (“Burns”), Burns agreed to provide geological consulting services to the Company

and to act as President and Chief Executive Officer of the Company for a two-year term commencing on January 1,2005. The fee payable to Burns is US$5,000 per month, exclusive of Canadian GST. If there is a change in control

of the Company, Burns may terminate the Burns Consulting Agreement and has the right to receive 200% of the

amount due to him for the remainder of the term of his agreement.

There is no compensatory plan or arrangement, including payments to be received from the Company orany of its subsidiaries, with respect to the Named Executive Officer.

E. Compensation of Directors

During the Financial Period, no compensation was paid or is payable by the Company to the directors of the

Company, other than the Chief Executive Officer (the “Other Directors”), or the Company’s subsidiary, for theirservices:



53

(a) in their capacity as directors, including any amounts payable for committee participation or special

assignments pursuant to any standard or other arrangements; or

(b) as consultants or experts,

except as consultants or experts as set forth below and as otherwise herein disclosed.

The Company has no pension plan or other arrangement for non-cash compensation to the Other Directors,except incentive stock options. During the Financial Period the Other Directors were granted incentive stock options

to purchase up to 400,000 Shares of the Company exercisable for a term of five years following the Listing Date.

14. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

During the most recently completed financial year, none of the directors and executive officers of the

Company or each of their respective associates or affiliates is or has been indebted to the Company (other thanroutine indebtedness) in excess of $25,000 at any time for any reason whatsoever, including the purchase of

securities of the Company or any of its subsidiaries.

15. PLAN OF DISTRIBUTION

15.1 Name of Agent

Offering

The Company, through its agent, Bolder Investment Partners, Ltd. (the “Agent”), of 800 – 1450 Creekside Drive,

Vancouver, B.C., V6J 5B3, hereby offers to the public 5,000,000 Shares at a price of $0.40 per Share. The closingof the Offering (the “Closing”) will take place on a day, determined by the Agent in consultation with the Company,

which will be no later than 90 days from the date (the “Effective Date”) on which a receipt is issued by the British

Columbia Securities Commission (the “Commission”) for the final prospectus of the Company, or such later date asmay be agreed to by the Agent, the Company and the Commission.

15.2 Disclosure of Market Out

The obligations of the Agent under the Agency Agreement may be terminated at any time prior to the sale

of any of the Shares at the Agent's discretion on the basis of its assessment of the state of the financial markets andmay also be terminated at any time upon the occurrence of certain stated events.

15.3 Commercially Reasonable Efforts Offering

Offering and Appointment of Agent

The Company by an agreement, dated October , 2005 (the "Agency Agreement") appointed the Agent as

its agent to offer, on a commercially reasonable efforts basis, the 5,000,000 Shares in the provinces of British

Columbia, Alberta and Ontario. Following the Effective Date, the Company and the Agent will set the date for the

Closing.

The Company will, at the closing of the Offering (i) pay to the Agent a commission equal to 8% of the

aggregate gross proceeds of the Offering and (ii) issue to the Agent that number of share purchase warrants (the“Agent’s Warrants”) equal in number to 10% of the aggregate number of Shares issued in connection with the

Offering, each such Agent’s Warrant entitling the holder to acquire one Common Share at the price of $0.40 per

Common Share for a period of 12 months from the date on which the Company’s Shares commence trading on theTSX Venture Exchange. The Company has paid a non-refundable work fee of $10,000 plus GST to the Agent and



54

will issue 50,000 common shares from treasury to the Agent upon completion of the Offering as the Corporate

Finance Fee.

Selling Group Participation

The Agent reserves the right to offer selling group participation in the normal course of the brokerage

business to selling groups of other licensed broker-dealers, brokers and investment dealers, who may or who may not be offered part of the commissions or bonuses derived from this Offering.

Right of First Refusal and Right of Participation

The Company has granted the Agent a right of first refusal to provide all future equity financing to the

Company for a period of 12 months from the date on which the Company’s Shares commence trading on the TSXVenture Exchange. Upon receipt from the Company of notice of any proposed equity financing, the Agent shall

have 10 days to exercise its right of first refusal. In the event that the Agent declines to exercise the right of firstrefusal with respect to any proposed equity financing, it will retain a right of participation for up to 15% of such

financing.

Miscellaneous

There are no payments in cash, securities or other consideration being made, or to be made, to a promoter,

finder or any other person or company in connection with the Offering.

The directors, officers and other insiders of the Company may purchase Shares from the Offering.

Other

The Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the"U.S. Securities Act"), and such securities may not be offered or sold to a person in the United States unless an

exemption from the registration requirements of the U.S. Securities Act is available.

15.4 Listing Application

The Company has applied to list the Shares being sold under the Offering on the TSX Venture Exchange.Listing will be subject to the Company fulfilling all the listing requirements of the TSX Venture Exchange.

15.5 Determination of Price

The price of the Shares offered under this Prospectus was determined by the Company in consultation with

the Agent.

16. RISK FACTORS

AN INVESTMENT IN A NATURAL RESOURCE ISSUER INVOLVES A SIGNIFICANT

DEGREE OF RISK. THE DEGREE OF RISK INCREASES SUBSTANTIALLY WHERE THE ISSUER’S

PROPERTIES ARE IN THE EXPLORATION AS OPPOSED TO THE DEVELOPMENT STAGE. TheCompany’s exploration activities are subject to the risks normally encountered by companies which develop and

mine base and precious metals. All of the Company’s properties are in the exploration stage. A number of factors,including metal prices, the further discovery of ore reserves and the grade of newly discovered ore are beyond the

Company’s control.

These securities are suitable only for those purchasers who are willing to rely upon the ability,

judgement and integrity of the management and directors of the Company and who can afford a total loss of

their investment. The securities offered hereby are considered speculative due to the nature of the Company's



55

business and the present stage of its development. A prospective investor should consider carefully the following

factors:

Country Risk

Activities in Chile are subject to currency (foreign exchange) fluctuations which may adversely affect the

value of the Company’s exploration funds, notwithstanding that the Chile Peso exchange rate has remained relativelystable for two years.

Chile has a long history of mining, is foreign investor friendly, and boasts as Latin America’s longest-

standing democracy. In fact, the 7 th Annual (2004) Survey of Mining Companies, released by the Fraser Institute, places Chile with the highest rank on the Overall Investment Attractiveness Index.

The majority of Chile’s foreign investment comes from the United States, Canada and Spain, most of it

going into the mining sector as well as the electrical and service industries. The country has benefited fromexceptionally sound management over more than two decades and has enjoyed growth rates well above the rest of

Latin America over that period, while maintaining low and stable inflation.

Chile’s credit rating remains the best in Latin America. Under President Ricardo Lagos, the Chilean

government has placed sovereign bonds in international markets four times, with country risk premiums amongst thelowest in the developing world.

The following summary on Chile’s economy is quoted directly from the CIA factbook (CIA, 2004):

Chile has a market-oriented economy characterized by a high level of foreign trade. During the early

1990s, Chile’s reputation as a role model for economic reform was strengthened when the democratic government

of Patricio Aylwin, which took over from the military in 1990, deepened the economic reform initiated by the

military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because

of tight monetary policies implemented to keep the current account deficit in check and because of lower export

earnings – the latter a product of the global financial crisis. A severe drought exacerbated the recession in 1999,

reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative

economic growth for the first time in more than 15 years. Despite the effects of the recession, Chile maintained its

reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating inSouth America. By the end of 1999, exports and economic activity had begun to recover, and growth rebounded to

4.2% in 2000. Growth fell back to 3.1% in 2001 and 2.1% in 2002, largely due to lackluster global growth and the

devaluation of the Argentina peso, but recovered to 3.2% in 2003. Unemployment, although declining over the past

year, remains stubbornly high, putting pressure on President Lagos to improve living standards. One bright spot

was the signing of a free trade agreement with the US, which took effect on 1 January 2004. In 2004, GDP growth

is set to accelerate to more than 4% as copper prices rise, export earnings grow, and foreign direct investment picks

up.

Political Regulatory Risks

Any changes in government policy may result in changes to laws affecting ownership of assets, mining policies, monetary policies, taxation, rates of exchange, environmental regulations, labour relations, repatriation of

income and return of capital. This may affect both the Company’s ability to undertake exploration and developmentactivities in respect of present and future properties in the manner currently contemplated, as well as its ability tocontinue to explore, develop and operate those properties in which it has an interest or in respect of which it has

obtained exploration and development rights to date. The possibility that future governments may adoptsubstantially different policies, which might extend to expropriation of assets, cannot be ruled out.

As an example, in 2004 there was a move by the Chilean government to introduce a 5 percent Royalty tax

on operating income derived from the sale of mineral products from producing mines in the country. Thegovernment hopes to pass this proposal into law this year, President Ricardo Lagos’ last year in office. The initial



56

proposal was voted down by the Congress, and has been revamped as the ‘Royalty 2’ Bill. The new proposal

represents the first real consensus achieved by central government officials and regional politicians on the issue. Thenew agreement calls for a 4% tax on profits that will remain the fixed tax rate for 12 years, rather than 15.

There is also consideration for a lower, stair-stepped tax rate for companies whose profit margin falls below

eight percent.

Nature of Mineral Exploration and Mining

There is no known mineral resource on any of the Company’s properties. Development of a property will

occur only if satisfactory exploration results are obtained. Mineral exploration and development involves a highdegree of risk and few properties which are explored are ultimately developed into producing mines. There is,

therefore, no assurance that the Company’s mineral exploration and development activities will result in anydiscoveries of bodies of commercial ore. The long-term profitability of the Company’s operations will be in part

directly related to the cost and success of its exploration programs, which may be affected by a number of factors out

of the Company’s control.

Substantial expenditures are required to establish reserves through drilling and, if warranted, to develop the

mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may

be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will bediscovered in sufficient quantities to justify commercial operations, or at all, or that the funds required for

development can be obtained on a timely basis. Mineral exploration is subject to a high degree of risk, which even acombination of experience, knowledge, and careful evaluation may not be able to overcome.

Exploration and Development Risks

Mineral exploration and mining involve considerable financial and technical risk. Substantial expenditures

are usually required to establish ore reserves, to evaluate metallurgical processes and to construct mining and

processing facilities at a particular site. It is impossible to assure that the current exploration programs planned bythe Company will result in profitable commercial mining operations, as few properties that are explored are

ultimately developed into producing mines. Unusual or unexpected geological formations, unstable groundconditions that could result in cave-ins or land slides, floods, environmental pollution, power outages or fuel

shortages, labour disruptions, fires, explosions, personal injuries and the inability to obtain suitable or adequatemachinery, equipment or labour are risks associated with the conduct of exploration programs and the operation ofmines.

Mineral Deposits and Production Costs; Metal Prices

The economics of developing mineral deposits are affected by many factors including variations in the

grade of ore mined, the cost of operations, and fluctuations in the sales price of products. The value of theCompany’s mineral properties is heavily influenced by metal prices. Metal prices can and do change by substantial

amounts over short periods of time, and are affected by numerous factors beyond the control of the Company,

including changes in the level of supply and demand, international economic and political trends, expectations ofinflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative

activities and increased production arising from improved mining and production methods and new discoveries.

There can be no assurance that the prices of mineral products will be sufficient to ensure that the Company’s properties can be mined profitably. Depending on the price received for minerals produced, the Company maydetermine that it is impractical to commence or continue commercial production.

The grade of any ore ultimately mined from a mineral deposit may differ from that predicted from drilling

results. Production volumes and costs can be affected by such factors as the proximity and capacity of processing

facilities, permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties,unusual or unexpected geological formations and work interruptions. Short-term factors relating to ore reserves,

such as the need for orderly development of ore bodies or the processing of new or different grades, may also have



57

an adverse effect on the results of operations. Moreover, there can be no assurance that any gold or other minerals

recovered in small-scale laboratory tests will be achieved under production scale conditions. Although precautionsto minimize risks will be taken, processing operations are subject to hazards such as equipment failure or failure of

tailings impoundment facilities, which may result in environmental pollution and consequent liability.

Additional Financing

The Company has no source of operating cash flow to fund all of its exploration and development projects

and will require additional financing to continue its operations. There can be no assurance that such financing will beavailable at all or on favourable terms. Failure to obtain such additional financing could result in delay or indefinite

postponement of the Company’s exploration and development programs, resulting in the possible dilution or loss ofmineral property interests. Any such financing will dilute the ownership interest of the Company’s shareholders at

the time of the financing, and may dilute the value of their shareholdings.

Limited Business History

The Company has only recently commenced operations and has no history of operating earnings. The

likelihood of success of the Company must be considered in light of the problems, expenses, difficulties,complications and delays frequently encountered in connection with the establishment of any business. The

Company has limited financial resources and there is no assurance that additional funding will be available to it forfurther operations or to fulfil its obligations under applicable agreements. There is no assurance that the Company

can generate revenues, operate profitably, or provide a return on investment, or that it will successfully implement its

plans.

Permits and Licenses

The operations of the Company will require licenses and permits from various governmental and non-governmental authorities. The Company has obtained, or will obtain, all necessary licenses and permits required to

carry on with activities that it is currently conducting or which it proposes to conduct under applicable laws andregulations. However, such licenses and permits are subject to change in regulations and in various operating

circumstances. There can be no assurance that the Company will be able to obtain all necessary licenses and permits

required to carry out exploration, development and mining operations at its proposed projects.

Other Regulatory Requirements

The operations of the Company are subject to laws and regulations governing prospecting, development,mining, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, land use,

environmental protection, mine safety and other matters. The Company believes it is in substantial compliance withall material laws and regulations that currently apply to its activities. There can be no assurance, however, that all

permits which the Company may require for construction of mining facilities and conduct of mining operations,

particularly environmental permits, will be obtainable on reasonable terms or that compliance with such laws andregulations would not have an adverse effect on the profitability of any mining project that the Company might

undertake.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement

actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or becurtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment,or remedial actions. Parties engaged in mining operations 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 violations of

applicable laws or regulations and, in particular, environmental laws.

Amendments to current laws, regulations and permits governing operations and activities of miningcompanies, or more stringent implementation thereof, could have a material adverse impact on the Company and



58

cause increases in capital expenditures or production costs or reduction in levels of production at producing

properties or require abandonment or delays in development of new mining properties.

Environmental Factors

All phases of the Company’s operations are subject to environmental regulation in the various jurisdictions

in which it operates. Environmental legislation is evolving in a manner which will require stricter standards andenforcement, increased fines ad penalties for non-compliance, more stringent environmental assessments of proposed

projects and a heightened degree of responsibility for companies and their officers, directors and employees. Thereis no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s

operations. Environmental hazards may exist on the Company’s properties which are unknown to the Company at present which have been caused by previous or existing owners or operators of the properties.

Unknown Environmental Risks for Past Activities

Exploration and mining operations involve a potential risk of releases to soil, surface water and

groundwater of metals, chemicals, fuels, liquids having acidic properties and other contaminants. In recent years,

regulatory requirements and improved technology have significantly reduced those risks. However, those risks havenot been eliminated, and the risk of environmental contamination from present and past exploration or mining

activities exists for mining companies. Companies may be liable for environmental contamination and naturalresource damages relating to properties that they currently own or operate or at which environmental contamination

occurred while or before they owned or operated the properties. However, no assurance can be given that potential

liabilities for such contamination or damages caused by past activities at these properties do not exist.

Competition

The mineral exploration and mining business is competitive in all of its phases. The Company competeswith numerous other companies and individuals, including competitors with greater financial, technical and other

resources than the Company, in the search for and the acquisition of attractive mineral properties. The ability of theCompany to acquire properties in the future will depend not only on its ability to develop its present properties, but

also on its ability to select and acquire suitable properties or prospects for mineral exploration. There is no

assurance that the Company will continue to be able to compete successfully with its competition in acquiring such

properties or prospects.

As the price of gold increases the amount of new exploration activity is increasing as well as the number of

new exploration companies. This will lead to more competition and will make it more difficult for the Company toacquire good quality projects.

No Assurance of Title to Property

The Company has not conducted surveys of the claims in which it holds interests and therefore, the precise

area and location of such claims may be in doubt. There is no assurance that the interests of the Company in any ofits properties may not be challenged or impugned.

However, Chile enacted legal provisions in the 1980 constitution to stimulate the development of mining,

while at the same time guaranteeing the property rights of both local and foreign investors. While the state owns allmineral resources, exploration and exploitation of these resources is allowed via mining concessions, which aregranted by the courts. A Constitutional Organic Law, enacted in 1982, places both rights and obligations on

concessions; these can be mortgaged or transferred and the holder is entitled to the right to explore (pedimentos) aswell as to exploit (mensuras). A concession is obtained by filing a claim and includes all minerals that may occur

within its area. The concession holder also has the right to defend his ownership against the state and third parties.

Mining claims in Chile are acquired in the following manner:



59

• Pedimento: A pedimento is an exploration claim precisely defined by UTM coordinates withnorth-south and east-west boundaries. These may range in size from a minimum 100 hectares to a

maximum of 5000 hectares, with a maximum length-to-width ratio of 5:1. A pedimento is valid fora maximum period of 2 years, following which the claim may be reduced in size by at least 50%,

and renewed for an additional 2 years, provided that no overlying claim has been staked. Claim

taxes are due annually in March; if the taxes on a pedimento are not paid, the claim can be restored

to good standing by paying double the annual claim tax by or before the following year. In Chile,new pedimentos are permitted to overlap pre-existing claims, however, the previously staked orunderlying claim always takes precedence as long as the claim holder maintains his claim in good

standing and converts the pedimento to a manifestacion within the initial 2-year period.

• Manifestacion: During the 2-year life of a pedimento, it may be converted at any time to a

manifestacion. Once this is filed, the claim holder has 220 days to file a “Solicitud de Mensura”, or

“Request for Survey” with the court of jurisdiction, and advising surrounding claim holders by publishing such request in the Official Mining Bulletin. This advises surrounding claim holders,

who may contest the claim if they believe their pre-established rights are being encroached upon.The option also exists to file a manifestacion directly on open ground, without going through the

pedimento filing process.

• Mensura: The claim must be surveyed by a government-licensed surveyor within 9 months of theapproval of the “Request for Survey”. Once surveyed, during which time any surrounding claimowners may be present, the survey documents are presented to the court and reviewed by

SERNAGEOMIN, the National Mining Service. Assuming that everything has been done correctly

and is in order, the court adjudicates the application as a permanent property right (a mensura), theequivalent to a “patented claim”.

Each of the above stages of claim acquisition in Chile requires the completion of several steps (application,

publication, inscription payments, notarization, tax payments, legal fees, “patente” payments, extract publication,etc) prior to the application being declared by the court as a new mineral property. Details of the full requirements in

the claim-staking process are documented in Chile’s mining code. Most companies working in Chile retain a mining

claim specialist to carry out and review the claim staking process and ensure that their land position is kept secure.

Dependence on Key Individuals

The Company is dependent on a relatively small number of key personnel, particularly Patrick Burns, itsPresident, the loss of any one of whom could have an adverse effect on the Company. The Company does not

maintain key-person insurance on the life of Mr. Burns. In addition, while certain of the Company’s officers anddirectors have experience in the exploration of mineral producing properties, the Company will remain highly

dependent upon contractors and third parties in the performance of its exploration and development activities. There

can be no guarantee that such contractors and third parties will be available to carry out such activities on behalf ofthe Company or be available upon commercially acceptable terms.

Management

The Company is a relatively new company and has no proven history of performance or earnings and its

ability to develop into a viable business enterprise is largely dependent upon its management. Although theCompany’s management has considerable experience in the mining exploration business in South America, the

Company represents the first time that management has operated a junior resource company.

Enforceability of Claims

The Company is organized under the laws of British Columbia. However, its principal office is located inChile. The Company’s assets are in Chile. It may not be possible for purchasers of Offered Shares in this offering to

effect service of process within Canada upon the directors and officers who reside outside of British Columbia. It



60

may also not be possible to enforce against the Company or its directors and officers who reside outside of British

Columbia judgments obtained in Canadian courts predicated upon the civil liability provisions of the securities lawsof British Columbia, Alberta or Ontario.

Conflicts of Interest

Some of the directors and officers of the Company are directors and officers of other companies, some ofwhich are in the same business as the Company. Some of the Company’s directors and officers will continue to pursue

the acquisition, exploration and, if warranted, the development of mineral resource properties on their own behalfand on behalf of other companies, and situations may arise where they will be in direct competition with the

Company. The Company’s directors and officers are required by law to act in the best interests of the Company. Theymay have the same obligations to the other companies in respect of which they act as directors and officers. Discharge of

their obligations to the Company may result in a breach of their obligations to the other companies, and in certain

circumstances this could expose the Company to liability to those companies. Similarly, discharge by the directors andofficers of their obligations to the other companies could result in a breach of their obligation to act in the best interests

of the Company. Such conflicting legal obligations may expose the Company to liability to others and impair its abilityto achieve its business objectives.

Insurance

The Company does not have comprehensive general liability insurance to adequately protect itself against

certain risks commonly associated with mineral exploration. Even with insurance, the Company will remain at risk

and will be potentially subject to liability for hazards which it cannot insure against or which it may elect not toinsure against because of premium costs or other reasons.

Influence of Third Party Stakeholders

The lands in which the Company holds an interest, or the exploration equipment and road or other means of

access which the Company intends to utilize in carrying out its work programs or general business mandates, may besubject to interests or claims by third party individuals, groups or companies. In the event that such third parties

assert any claims, the Company’s work programs may be delayed even if such claims are not meritorious. Such

delays may result in significant financial loss and loss of opportunity for the Company.

Fluctuation in Market Value of the Company’s Common Shares

There is currently no market for the Company’s common shares and there can be no assurance that an activemarket will develop or be sustained after this offering. The lack of an active public market could have a material

adverse effect on the price of the Company’s common shares. This offering should be considered highly speculativedue to the fact that the Company was only recently incorporated. The price of these securities to the public and the

commission to the Agent was established by negotiation between the Company and the Agent, and may not be

indicative of fair market value or future market prices.

The market price of a publicly-traded stock is affected by many variables not directly related to the

corporate performance of the Company, including the market in which it is traded, the strength of the economy

generally, the availability and attractiveness of alternative investments, and the breadth of the public market for the

stock. The effect of these and other factors on the market price of the Company’s common shares on the Exchangein the future cannot be predicted.

Substantial number of authorized but unissued shares

The Company has an unlimited number of common shares which may be issued by the Board of Directorswithout further action or approval of the Company’s shareholders. While the Board of Directors is required to fulfil

its fiduciary obligations in connection with the issuance of such shares, the shares may be issued in transactions with



61

which not all shareholders agree, and the issuance of such shares will cause dilution to the ownership interests of the

Company’s shareholders.

Dividends

The Company has not, since the date of its incorporation, declared or paid any dividends on its Shares and

does not currently intend to pay dividends. Earnings, if any, will be retained to finance further growth anddevelopment of the business of the Company.

Resale of Shares

The continued operation of the Company will be dependent upon its ability to generate operating revenues

and to procure additional financing. There can be no assurance that any such revenues will be generated or that otherfinancing can be obtained. If the Company is unable to generate such revenues or obtain such additional financing,

any investment in the Company may be lost. In such event, the probability of resale of the Shares purchased would be diminished.

17. PROMOTERS

Under the definition of "promoter" contained in Section 1 of the Securities Act (British Columbia), PatrickJ. Burns (“Burns”) is the promoter of the Company in that he took the initiative in founding and organizing the

Company and by virtue of having received more than 10% of the common stock of the Company.

The promoter has received nothing of value from the Company or any of its subsidiaries, and has noentitlement to receive any such value except as set forth elsewhere in this prospectus, specifically:

• Burns acquired 3,000,000 Shares of the Company at a deemed price of $0.01 per Share inconsideration for the transfer to the Company of the Properties. All of these Shares are held in escrow.

See item 10 “Escrowed Securities” and item 2.2 “Significant Acquisitions”.

The Company granted to Burns in his capacity as a director of the Company, incentive stock options to purchase up to an aggregate of 200,000 Shares in the capital stock of the Company. See item 8 "Options to Purchase

Securities" for further details with respect thereto.

See item 13 "Executive Compensation", with respect to the Consulting Agreement entered into with Burns.

18. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Within the three years prior to the date hereof, none of the following persons have had any interest in any

material transactions in which the Company is involved, except as otherwise disclosed herein:

(a) any director or senior officer of the Company;

(b) any security holder named in the section captioned "Principal Holders of Securities"; and

(c) any associate or affiliate of any of the foregoing persons.

See item 2.2 “Significant Acquisitions”, item 3.2 A "Escudo Property", item 3.2 B “Corona Property”), item8 "Options to Purchase Securities", item 10 "Escrowed Securities", item 13 " Executive Compensation", and item 20

"Material Contracts".



62

19. AUDITORS, TRANSFER AGENTS AND REGISTRARS

19.1 Auditors

The auditor of the Company is:

Davidson & Company1200, 609 Granville Street

Vancouver, B.C. V7Y 1G6

19.2 Transfer Agent and Registrar

The Registrar and Transfer Agent for the Company is:

Pacific Corporate Trust Company10th Floor, 625 Howe Street

Vancouver, B.C. V6C 3B8

20. MATERIAL CONTRACTS

Except for contracts made in the ordinary course of the Company's business, the only material contracts

entered into by the Company or any of its subsidiaries since its incorporation are as follows:

1. Agency Agreement, dated , 2005, between the Company and Bolder Investment Partners, Ltd.

pertaining to the distribution of 5,000,000 Shares at a price of $0.40 per Share. See item 14 "Plan

of Distribution".

2. Escrow Agreement, dated , 2005, between the Company, Pacific Corporate Trust Company (the"Transfer Agent") and certain shareholders of the Company referred to in item 10 "Escrowed

Securities" whereunder the Transfer Agent agreed to hold 4,611,892 common shares in escrow.

3. Chilean Properties Sale and Purchase Agreement, dated September 22, 2004, between theCompany and Patrick J. Burns and Jimmy E. Toler whereunder the Company acquired a 100%

interest in the Chilean Properties. See item 2.2 "Significant Acquisitions".

4. Stock Option Agreements, dated January 28, 2005, between the Company and each of thefollowing persons (collectively the "Optionees") whereunder the Company granted to the

Optionees the option to purchase up to a total of 850,000 Shares at $0.40 per Share for nominal

consideration:

Name of Optionee Capacity No. of Optioned Shares

Patrick Burns Director 200,000

Lyle Davis Director 150,000

John Robins Director 150,000

Graham H. Scott Director 100,000Patrick Gorman Consultant 50,000

Art Soregaroli Consultant 50,000

Paul Larkin Officer 100,000

John Paul Larkin Consultant 25,000

Carlos Rojas Employee 25,000

See item 8 "Options to Purchase Securities".



63

5. Consulting Agreement, dated January 1, 2005, with Patrick J. Burns. See item 13 “Executive

Compensation”.

6. Administrative Services Contract, dated December 1, 2004, between the Company and MontpelierHoldings Ltd. (“Montpelier”) whereunder Montpelier agreed to provide administrative and

corporate services to the Company for an initial term of one year, and thereafter annually, in

consideration of payment by the Company of $2,500 per month. The contract may be terminated by either party on the giving of one months’ written notice.

Copies of the foregoing contracts may be inspected at 1040 - 999 West Hastings Street, Vancouver, British

Columbia, during normal business hours while primary distribution of the Shares offered hereunder is in progress.

21. EXPERTS

21.1 Interest of Experts

Richard Culbert prepared Technical Reports on each of the Escudo and Corona Properties, the contents of

which are referred to under “Issuers with Mineral Projects”. Dr. Culbert has no direct or indirect interest in the property of the Company, nor does he hold any direct or indirect interest in the Company or its associates or

affiliates, and he is not entitled to receive any such interest.

Certain legal matters relating to this offering will be passed upon on behalf of the Company by VectorCorporate Finance Lawyers and on behalf of the Agent by McCullough O’Connor Irwin LLP.

Income tax consequences to purchasers are not viewed as a material aspect of the offering of the Shares

hereunder. Purchasers should consult their own tax and legal advisors for advice with respect to the income tax andother consequences associated with their acquisition of securities under this prospectus.

22. OTHER MATERIAL FACTS

A. Other

There are no other material facts relating to the securities offered by this Prospectus which are not previously disclosed under the foregoing captions.

23. PURCHASERS’ STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION

Securities legislation in certain of the provinces of Canada provides purchasers with the right to withdrawfrom an agreement to purchase securities. This right may be exercised within two business days after receipt or

deemed receipt of a prospectus and any amendment. The securities legislation in several of the provinces further provides a purchaser with remedies for rescission in some jurisdictions, or damages, if the prospectus and any

amendment contains a misrepresentation or is not delivered to the purchaser, provided that the remedies forrescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of

the purchaser's province. The purchaser should refer to any applicable provisions of the purchaser’s province for

particulars of these rights or consult with a legal adviser.

24. FINANCIAL STATEMENTS

Attached to and forming a part of this Prospectus are:



64

(a) the audited financial statements of the Company presenting the financial position of the Company for the

period commencing November 26, 2003 and ending February 29, 2004 and for the year ended February 28,2005, together with the auditor's report thereon; and

(b) unaudited financial statements of the Company for the six-month period ended August 31, 2005.



AUDITORS' CONSENT

We have read the prospectus of Condor Resources Inc. (the "Company") dated _____________ relating to the saleand issue of 5,000,000 common shares of the Company at a price of $0.40 per share to raise $2,000,000. We havecomplied with Canadian generally accepted standards for an auditor's involvement with offering documents.

We consent to the use in the above mentioned prospectus of our report to the directors of the Company on theconsolidated balance sheets of the Company as at February 28, 2005 and February 29, 2004 and the consolidatedstatements of operations and deficit and cash flows for the year ended February 28, 2005 and the period fromincorporation on November 26, 2003 to February 29, 2004. Our report is dated April 1, 2005 (except as to Note 11which is as of _____________________).

Vancouver, Canada Chartered Accountants

DATE




CONSOLIDATED FINANCIAL STATEMENTS

AUGUST 31, 2005



AUDITORS' REPORT

To the Directors of

Condor Resources Inc.

We have audited the consolidated balance sheets of Condor Resources Inc. as at February 28, 2005 and February 29, 2004and the consolidated statements of operations and deficit and cash flows for the year ended February 28, 2005 and the period

from incorporation on November 26, 2003 to February 29, 2004. These financial statements are the responsibility of the

Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. 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 February 28, 2005 and February 29, 2004 and the results of its operations and its cash flows for the year ended

February 28, 2005 and the period from incorporation on November 26, 2003 to February 29, 2004 in accordance withCanadian generally accepted accounting principles.

Vancouver, Canada Chartered Accountants

April 1, 2005

(except as to Note 11, whichis as of _____________________, 2005)




CONSOLIDATED BALANCE SHEETS

August 31,

2005

February 28,

2005

February 29,

2004

(Unaudited)

ASSETS

Current

Cash $ 24,083 $ 154,095 $ 166,776

Receivables - 11,218 -

24,083 165,313 166,776

Deferred financing costs (Note 11) 49,838 20,700 -

Mineral properties (Note 3) 353,785 306,664 31,220

$ 427,706 $ 492,677 $ 197,996

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current

Accounts payable and accrued liabilities $ 41,471 $ 35,517 $ 33,700

Shareholders’ equity

Capital stock (Note 4) 541,411 541,411 1

Share subscriptions received (Note 4) - - 167,299

Deficit (155,176) (84,251) (3,004)

386,235 457,160 164,296

$ 427,706 $ 492,677 $ 197,996

Nature and continuance of operations (Note 1)

Commitment (Note 10)

Subsequent events (Note 11)

On behalf of the Board:

Director Director

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




CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

Six Month

Period EndedAugust 31,

2005

Six Month


2004

Year EndedFebruary 28,

2005

From the

Date of

Incorporation(November 26,

2003) toFebruary 29,

2004

(Unaudited) (Unaudited)

EXPENSES

Administrative services $ 16,050 $ - $ 8,025 $ -

Management fees 37,500 11,250 12,509 -Office and supplies 1,056 1,281 9,435 344

Professional fees 5,120 2,815 31,878 2,285

Regulatory fees - - - 375Travel and entertainment 11,199 8,715 19,400 -

Loss for the period (70,925) (24,061) (81,247) (3,004)

Deficit, beginning of period (84,251) (3,004) (3,004) -

Deficit, end of period $ (155,176) $ (27,065) $ (84,251) $ (3,004)

Basic and diluted loss per common share $ (0.01) $ (24,061) $ (0.05) $ (3,004)

Weighted average number of common shares

outstanding 6,185,196 1 1,774,247 1





CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Month


2005

Six Month


2004

Year EndedFebruary 28,

2005

From the

Date of

Incorporation(November 26,

2003) toFebruary 29,

2004


CASH FLOWS FROM

OPERATING ACTIVITIES

Loss for the period $ (70,925) $ (24,061) $ (81,247) $ (3,004)

Changes in non-cash working capital items:

(Increase) decrease in receivables 11,218 - (11,218) -Increase (decrease) in accounts payable and

accrued liabilities (23,184) (18,110) (18,883) 33,700

Net cash provided by (used in)

operating activities (82,891) (42,171) (111,348) 30,696

CASH FLOWS FROM

INVESTING ACTIVITIES

Mineral property costs (47,121) (138,757) (230,333) (31,220)

Net cash used in investing activities (47,121) (138,757) (230,333) (31,220)

CASH FLOWS FROM

FINANCING ACTIVITIES

Capital stock issued - 44,000 329,000 1

Share subscriptions received - - - 167,299

Net cash provided by

financing activities - 44,000 329,000 167,300

Change in cash for the period (130,012) (136,928) (12,681) 166,776

Cash, beginning of period 154,095 166,776 166,776 -

Cash, end of period $ 24,083 $ 29,848 $ 154,095 $ 166,776

Cash paid for income taxes $ - $ - $ - $ -

Cash paid for interest $ - $ - $ - $ -

Supplemental disclosure with respect to cash flows (Note 6)





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSAUGUST 31, 2005

1. NATURE AND CONTINUANCE OF OPERATIONS

Condor Resources Inc. (the “Company”) was incorporated in British Columbia on November 26, 2003. TheCompany is currently in the process of preparing a prospectus for an upcoming Initial Public Offering (“IPO”) in

which the Company proposes to list its common shares on the TSX Venture Exchange (“TSX-V”). The Company’s

primary business is the acquisition and exploration of mineral property interests. The Company has not yetdetermined whether its properties contain mineral resources that may be economically recoverable. The Company is

considered to be an exploration stage company.

These financial statements have been prepared in accordance with Canadian generally accepted accounting

principles with the assumption that the Company will be able to realize its assets and discharge its liabilities in the

normal course of business rather than through a process of forced liquidation.

The financial statements do not included any adjustments relating to the recoverability and classification of recordedasset amounts and classification of liabilities that might be necessary should the Company be unable to continue inexistence.

The Company’s continuing operations, as intended, are dependent upon its ability to complete the IPO financing andto generate profitable operations in the future.

August 31,

2005

February 28,

2005

February 29,

2004

(Unaudited)

Working capital (deficiency) $ (17,389) $ 129,795 $ 133,076

Deficit (155,176) (84,251) (3,004)

2. SIGNIFICANT ACCOUNTING POLICIES

Consolidation

These financial statements include the accounts of the Company and its 99.99% owned subsidiary, Minera Condor

Limitada.

All significant inter-company transactions and balances have been eliminated on consolidation.

Use of estimates

The preparation of financial statements in accordance with Canadian generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amount of assets and liabilities, and

the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of

revenues and expenses during the period. Actual results could differ from these estimates.





2. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Foreign currency translation

The monetary assets and liabilities of the Company that are denominated in foreign currencies are translated at the

rate of exchange at the balance sheet date and non-monetary items are translated at historical rates. Revenues and

expenses are translated at the average exchange rate for the year. Exchange gains and losses arising on translationare included in the statement of operations.

Deferred financing costs

Costs directly identifiable with the raising of capital will be charged against the related capital stock. Costs related

to shares not yet issued are recorded as deferred financing costs. These costs will be deferred until the issuance ofthe shares to which the costs relate, at which time the costs will be charged against the related capital stock orcharged to operations if the shares are not issued. Deferred financing costs consist primarily of corporate finance

fees, legal fees and sponsorship fees.

Mineral properties

All costs related to the acquisition, exploration and development of mineral properties are capitalized by property. Ifeconomically recoverable ore reserves are developed, capitalized costs of the related property are reclassified as

mining assets and amortized using the unit of production method. When a property is abandoned, all related costs

are written off to operations. If, after management review, it is determined that the carrying amount of a mineral property is impaired, that property is written down to its estimated net realizable value. A mineral property is

reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be

recoverable.

The amounts shown for mineral properties do not necessarily represent present or future values. Their recoverability

is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain thenecessary financing to complete the development, and future profitable production or proceeds from the disposition

thereof.

Asset retirement obligations

The CICA Handbook, section 3110, Asset retirement obligations, focuses on the recognition and measurement ofliabilities related to legal obligations associated with the retirement of property, plant and equipment. Under this

standard, these obligations are initially measured at fair value and subsequently adjusted for the accretion of discount

and any changes in the underlying cash flows. The asset retirement cost is to be capitalized to the related asset and

amortized into earnings over time. Adoption of this standard has not affected the Company’s financial statements.

Stock-based compensation

The Company accounts for the granting of stock options to employees and non-employees using the fair value

method whereby all awards to employees and non-employees will be recorded at fair value on the date of grant. TheCompany estimates the fair value of each stock option at the date of grant using the Black-Scholes option pricing

model. Any consideration paid by the option holders to purchase shares is credited to capital stock.





2. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Future income taxes

Future income taxes are recorded using the asset and liability method whereby future tax assets and liabilities are

recognized for the future tax consequences attributable to differences between the financial statement carryingamounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured

using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability

settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the periodthat substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely

than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.

Loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similarinstruments. Under this method the dilutive effect on loss per share is recognized on the use of the proceeds thatcould be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be

used to purchase common shares at the average market price during the period. For the periods presented, this

calculation proved to be anti-dilutive.

Loss per share is calculated using the weighted average number of common shares outstanding during the period.

3. MINERAL PROPERTIES

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certainclaims as well as the potential for problems arising from the frequently ambiguous conveyancing historycharacteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to

the best of its knowledge, title to all of its properties are in good standing.

Chilean

Properties

August 31,

2005

Chilean

Properties

February 28,

2005

Chilean

Properties

February 29,

2004

(Unaudited)

Acquisition costs incurred $ 45,111 $ 45,111 $ -


Balance, beginning of period 261,553 31,220 -

Consulting - 40,008 12,500

Drafting, surveying and permits - 29,208 -

Sampling - 67,779 -

Travel and field costs 47,121 93,338 18,720

47,121 230,333 31,220

Balance, end of period 308,674 261,553 31,220

Total mineral properties $ 353,785 $ 306,664 $ 31,220





3. MINERAL PROPERTIES (cont’d…)

Chilean Properties

The Company entered into an agreement dated September 22, 2004, with two directors of the Company (collectively

the “Vendor”) to acquire a 100% working interest in certain mineral claims located in Chile known as the Escudo property, the Corona property, the Cristal property, the Royal property, and the Becker property. Under the terms of

the agreement, the Company issued 4,000,000 common shares valued at $400 and issued 200,000 common shares

valued at $44,711 (US$35,000) for the property and for the settlement of costs incurred, respectively, to the Vendorduring the year ended February 29, 2005.

4. CAPITAL STOCK

Numberof Shares Amount

Authorized

Unlimited common shares without par value

Issued

Balance as at inception, November 26, 2003 and February 29, 2004 1 $ 1

For property acquisition 4,000,000 400 For debt 200,000 44,711

For cash 1,985,195 496,299

Balance as at February 28, 2005 and August 31, 2005 (Unaudited) 6,185,196 $ 541,411

On September 22, 2004, the Company issued 4,000,000 shares valued at $400 pursuant to the acquisition of mineral

properties (Note 3).

On January 1, 2005, the Company issued 200,000 common shares valued at $44,711 for payment of debt incurred on

the property acquisition (Note 3).

On February 15, 2005, the Company issued 1,985,195 common shares for proceeds of $496,299, $167,299 of which

were received in the period ended February 29, 2004.

Stock options

At the Company’s special Meeting of Shareholders held on January 18, 2005, shareholders approved an incentive

stock option plan (the “Plan”) whereby the Company may grant stock options to eligible employees, officers,

directors and consultants at an exercise price to be determined by the board of directors, provided the exercise priceis not lower than the market value at time of issue. The Plan provides for the issuance of up to 10% of the

Company’s issued common shares as at the date of grant with each stock option having a minimum term of five

years. The board of directors has the exclusive power over the granting of options and their vesting shall occur uponthe date of grant.





4. CAPITAL STOCK (cont’d…)

Stock options (cont’d…)

During the year ended February 28, 2005, 850,000 stock options were granted which will have an effective grant

date of the IPO completion date, exercisable at $0.40 per share for a period of five years following the completion ofthe IPO. Additionally, 750,000 stock options were granted on shares held by a principal shareholder to directors of

the Company, which will have an effective grant date of the IPO completion date, exercisable at $0.05 per share for a

period of five years following the completion of the IPO, subject to release of such shares from escrow. Since theoptions have been granted by the principal shareholder as compensation, they will be valued using the Black-Scholes

option pricing model.

5. RELATED PARTY TRANSACTIONS

Included in cash as at August 31, 2005 is $Nil (unaudited) (February 28, 2005 - $5,554; February 29, 2004 - $Nil)

held in trust by a law firm in which a partner is a director of the Company.

Included in accounts payable at August 31, 2005 is $35,030 (unaudited) (February 28, 2005 - $14,693; February 29,

2004 - $22,748) due to directors and a firm in which a director is a partner.

During the six month period ended August 31, 2005, the Company entered into the following transactions with

related parties:

a) Paid or accrued consulting fees capitalized to deferred exploration costs of $Nil (unaudited) (February 28, 2005

- $40,000; February 29, 2004 - $12,500) to an officer and director of the Company.

b) Paid or accrued management fees of $37,500 (unaudited) (February 28, 2005 - $12,509; August 31, 2004 - $Nil(unaudited); February 29, 2004 - $Nil) to an officer and director of the Company.

c) Paid or accrued deferred legal costs of $29,138 (unaudited) (February 28, 2005 - $Nil; February 29, 2004 -

$Nil) and legal fees of $Nil (unaudited) (February 28, 2005 - $19,878; August 31, 2004 - $2,815 (unaudited)

February 29, 2004 - $2,285) to a law firm in which a director is partner.

d) Paid or accrued administrative services of $16,050 (unaudited) (February 28, 2005 - $8,025; August 31, 2004 -

$Nil (unaudited); February 29, 2005 - $Nil) to an officer and CFO of the Company.

e) Acquired mineral properties of $Nil (February 29, 2004 - $45,111; February 28, 2003 - $Nil) from directors ofthe Company (Note 3).

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

6. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

The significant non-cash transaction of the Company for the six month period ended August 31, 2005 (unaudited)

consisted of the accrual of deferred financing costs of $29,138.





6. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (cont’d…)

The significant non-cash transactions of the Company for the year ended February 28, 2005 included:

a) issuance of 200,000 common shares valued at $44,711 for amounts owing for the acquisition of mineral

properties;

b) issuance of 4,000,000 common shares valued at $400 for acquisition of mineral properties; and

c) the accrual of deferred financing costs of $20,700.

There were no significant non-cash transactions for the six month period ended August 31, 2004 (unaudited).

There were no significant non-cash transactions for the period from incorporation on November 26, 2003 to

February 29, 2004.

7. INCOME TAXES

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

August 31,

2005

August 31,

2004

February 28,

2005

February 29,

2004


Loss for the period $ (70,925) $ (24,061) $ (81,247) $ (3,004)

Expected income tax recovery $ (25,250) $ (8,566) $ (28,924) $ (1,069) Non-deductible items 21,858 7,436 16,664 198

Other items (737) - (1,474) -Unrecognized benefit of non-capital losses 4,129 1,130 13,734 871

Income tax recovery $ - $ - $ - $ -

The significant components of the Company's future income taxes assets are as follows:

August 31,

2005

February 28,

2005

February 29,

2004

(Unaudited)

Future income tax assets: Non-capital loss carryforwards $ 18,700 $ 13,100 $ 871

Undeducted share issue costs 5,100 5,900 -Resource deductions 47,300 25,400 -

71,100 44,400 871

Valuation allowance (71,100) (44,400) (871)

Net future income tax assets $ - $ - $ -





7. INCOME TAXES (cont’d…)

The Company has available for deduction against future taxable income non-capital losses of approximately $52,000(unaudited). These losses, if not utilized, will expire through to 2015. In addition, the Company has resource

expenditures of approximately $486,000 (unaudited) available to reduce taxable income in future years. Future tax

benefits which may arise as a result of these non-capital losses and resource expenditures have not been recognizedin these financial statements and have been offset by a valuation allowance.

8. FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash, receivables, and accounts payable and accrued liabilities.Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, or credit

risks arising from these financial instruments. The fair value of these financial instruments approximates their

carrying values, unless otherwise noted.

Currency risk

The Company’s largest non-monetary assets are its mineral interest in Chile. The Company could accordingly be atrisk for foreign currency fluctuations and developing legal and political environments.

The Company does not maintain significant cash or other monetary assets or liabilities in Chile.

9. SEGMENTED INFORMATION

The Company’s primary business is the acquisition and exploration of mineral properties. All capital assets are

located in Chile.

10. COMMITMENT

The Company entered into an agreement with an officer and director to provide geological consulting and executive

services to the Company for US$5,000 per month for two years, commencing January 1, 2005. If terminated as aresult of new management, the director has the right to receive 200% of the balance due to him for the remainder of

the term.

11. SUBSEQUENT EVENTS

The Company is in the process of filing a prospectus for its IPO to raise up to $2,000,000 through the issuance of5,000,000 common shares at a price of $0.40 per share and is seeking a listing on the TSX-V.

Upon the close of the IPO, the Company will pay to an Agent a commission equal to 8% of the aggregate gross

proceeds and issue Agents’ Warrants for up to 10% of the shares issued through the IPO. Each Agents’ Warrant will

entitle the Agent to acquire one common share at a price of $0.40 exercisable for a period of twelve months from thedate the Company’s shares commence trading on the TSX-V. The Company will also issue 50,000 common shares

as a corporate finance fee. To date, the Company has incurred $49,838 for costs associated with the financing.



CERTIFICATE OF THE DIRECTORS AND PROMOTERS OF THE ISSUER

The foregoing constitutes full, true and plain disclosure of all material facts relating to the securities offered

by this prospectus as required by Part 9 of the Securities Act (British Columbia), Part 9 of the Securities Act

(Alberta) and Part XV of the Securities Act (Ontario), and the regulations thereunder.

DATED: October 25, 2005

Condor Resources Inc.

"Patrick J. Burns” “Paul Larkin”

Patrick J. Burns Paul LarkinPresident and Chief Executive Officer Chief Financial Officer

On behalf of the Board of Directors

"Lyle Davis” “Graham H. Scott”

Lyle Davis Graham H. ScottDirector Director

Promoter

"Patrick J. Burns”

Patrick J. Burns



CERTIFICATE OF THE AGENT

To the best of our knowledge, information and belief, the foregoing constitutes full, true and plain

disclosure of all material facts relating to the securities offered by this prospectus as required by Part 9 of the

Securities Act (British Columbia), Part 9 of the Securities Act (Alberta) and Part XV of the Securities Act (Ontario),and the regulations thereunder.

DATED: October 25, 2005

Bolder Investment Partners, Ltd.

By:

“Paul Woodward”

Authorized signatory

getfilecondor resources

Documents