U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 20-F

_________________________

[   ]

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

[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.1934

For the fiscal year ended

August 31, 2006

[   ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR1934.

[   ]

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 16(d) OF THE TRANSACTION PERIOD FROMSECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from ______________ TOto ___________________.

Commission File Number 000-50634

TAN RANGETANZANIAN ROYALTY EXPLORATION CORPORATION

(Exact name of Company as specified in its charter)

ALBERTA, CANADA

(Jurisdiction of Incorporation or Organization)

93 Benton Hill Road

Sharon, Connecticut

06069  U.S.A.

(Address of principal executive offices)

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

Common Shares, without Par Value

(Title of Class)

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

Common Shares, without Par Value

(Title of Class) NONE

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

The number of outstanding Common Shares as of August 31, 20052006 was 84,776,054.

86,241,075.

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

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

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  days.

[X ]Yes  [   ]No

Not applicable

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

Large accelerated filer  [  ]

Accelerated filer  [ X  ]

Non-accelerated filer  [   ]

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

Item 17  [X]

Item 18  [   ]

(Applicable only to issuers involvedIf this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in bankruptcy proceedings duringRule 12b-2 of the past five years)Exchange Act).  [   ] Yes  [ X ] No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the Company has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  

NOT APPLICABLE

TABLE OF CONTENTS

Cautionary Note to U.S. Investors Concerning Estimates of Measured and Indicated Mineral Resources

1

Currency

1

Foreign Private Issuer Filings

1

Glossary of Technical Terms

2

Part I

6

Item 1.

 Identity of Directors, Senior Management and Advisors

6

Item 2.

Offer Statistics and Expected Timetable

6

Item 3.

Key Information

6

A.

Selected Financial Data

6

B.

Capitalization and Indebtedness

8

C.

Reasons for the Offer and Use of Proceeds

8

D.

Risk Factors

8

Item 4.

Information on the Company

11

A.

History and Development of the Company

11

B.

Business Overview

1514

Plan of Operations

1514

Governmental Regulations

1716

C.

Organization Structure

1817

D.

Property, Plant and Equipment

1817

Itetemia Property

1817

Luhala Property

2625

Lunguya Project Area

3129

Tulawaka Project Area

3432

Lake Victoria Goldfield Properties

3633

Item 5.

Operating and Financial Review and Prospects

4644

A.

Operating Results

4644

B.

Liquidity and Capital Resources

4846

C.

Research and Development, Patents and License, etc.

4947

D.

Trend Information

4947

E.

Off Balance Sheet Arrangements

5047

F.

Tabular Disclosure of Contractual Obligations

5048

Item 6.

Directors, Senior Management and Employees

5048

A.

Directors and Senior Management

5048

B.

Compensation

5553

C.

Board Practices

56

D.

Employees

5760

E.

Share Ownership

5761

Item 7.

Major Shareholders and Related Party Transactions

5862

A.

Major Shareholders

5862

B.

Related Party Transactions

5962

- ii -

C.

Interest of Experts and Counsel

6064

Item 8.

Financial Statements

6064

A.

Consolidated Statements and Other Financial Information

6064

B.

Significant Changes

6164

Item 9.

The Offering and Listing

6164

A.

Offering and Listing Details

6164

B.

Plan of Distribution

6265

C.

Markets

6266

D.

Selling Shareholders

6266

E.

Dilution

6266

F.

Expenses of the Issue

6366

Item 10.

Additional Information

6366

A.

Share Capital

6366

B.

Articles of Association and Bylaws

6467

C.

Material Contracts

6569

D.

Exchange Controls

6670

E.

Taxation

6871

F.

Dividends and Paying Agents

7578

G.

Statement by Experts

7578

H.

Documents on Display

7578

I.

Subsidiary Information

7579

Item 11.

Quantitative and Qualitative Disclosures About Market Risk

7579

Item 12.

Description of Securities Other than Equity Securities

7680

Part II

7680

Item 13.

Defaults, Dividend Arrearages and Delinquencies

7680

Item 14.

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

7780

Item 15.

Controls and Procedures

7781

Item 16.

[Reserved]

7781

Item 16 A.

Audit Committee Financial Expert

7781

Item 16 B.

Code of Ethics

7782

Item 16 C.

Principal Accountant Fees and Services

7782

Item 16 D.

Exemptions from the Listing Standards for Audit Committees

7782

Item 16 E.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

7782

Part III

7882

Item 17.

Financial Statements

7882

Item 18.

Financial Statements

7882

Item 19.

Exhibits

7882

Cautionary Note to U.S. Investors Concerning Estimates of Measured
and Indicated Mineral Resources

The Company advises U.S. Investors that while the terms “measured mineral resources” and “indicated mineral resources” (see: “Glossary of Technical Terms – Canadian Terminology” herein) are recognized and required by Canadian securities regulations, the U.S. Securities and Exchange Commission does not recognize them.  U.S. investors are cautioned not to assume that any part or all of mineral resources in these categories will ever be converted into mineral reserves.

Currency

All references to dollar amounts are expressed in the lawful currency of Canada, unless otherwise specifically stated.

Foreign Private Issuer Filings

As a foreign private issuer registered under section 12(g)12(b) of theSecurities Exchange Act of 1934 (the “Exchange Act”), the Company is subject to section 13 of the Exchange Act, and is required to file Annual Reports on Form 20-F and Reports of Foreign Private Issuer on Form 6-K with the Commission.  However, the Company is exempt from the proxy rules under section 14 of the Exchange Act, and the short-swing profit rules under section 16 of the Exchange Act.

Glossary of Technical Terms

Part I

Item 1.

Identity of Directors, Senior Management and Advisors

A.

Directors and Senior Management:

Not Applicable.

B.

Advisers

Not Applicable.

Item 2.

Offer Statistics and Expected Timetable

Not Applicable.

Item 3.

Key Information

A.

Selected Financial Data

The following tables set forth and summarize selected consolidated financial data for the Company prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). For each of the last five fiscal years, the tables also summarize certain corresponding information prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”).  Canadian GAAP, as applied to the Company, materially differs from U.S. GAAP, as set forth in Note 11 to the consolidated financial statements of the Company.  Unless stated otherwise, reference to dollar amounts shall mean Canadian dollars.

For each of the years in the five year period ended August 31, 2005,2006, the information in the tables was extracted from the more detailed audited financial statements of the Company.

The selected financial data should be read in conjunction with Item 5, “Operating and Financial Review and Prospects” and in conjunction with the consolidated financial statements of the Company and the notes thereto contained elsewhere in this Annual Report.  The Company’s fiscal period ends on August 31 of each year.

The following is a summary of certain selected financial information for the Company’s five most recently completed fiscal years (in Canadian dollars, except number of shares):

Exchange Rates

The Company’s accounts are maintained in Canadian dollars.  In this Annual Report, all dollar amounts are expressed in Canadian dollars, except where otherwise indicated.  The following table sets forth information as to the period end, average, the high and the low exchange rate for Canadian Dollars (“CDN”) and U.S. Dollars for the periods indicated based on the noon buying rate in New York City for cable transfers in Canadian Dollars as certified for customs purposes by the Federal Reserve Bank of New York (Canadian dollar = US$1):

The following table sets forth the high and low exchange rate for the past six months.  As of August 31, 2005,2006, the exchange rate was CDN $1.1893$1.1066 for each US$1.

B.

Capitalization and Indebtedness

Not Applicable.

C.

Reasons for the Offer and Use of Proceeds

Not Applicable.

D.

Risk Factors

In addition to other information presented in this Annual Report, the following should be considered carefully in evaluating the Company and its business.  This Annual Report contains forward-looking statements that involve risk and uncertainties.  The Company’s actual results may differ materially from the results discussed in the forward-looking statements.  Factors that might cause such a difference include, but are not limited to, those discussed below and elsewhere in this Annual Report.  The management of the Company have identified the following risk factors, listed in the view of management in order from most significant to least significant:

We have incurred net losses since our inception and expect losses to continue.  We have not been profitable since our inception.  For the fiscal year ended August 31, 2005,2006, we had a net loss of $2,931,063$4,326,722 and an accumulated deficit on August 31, 20052006 of $23,778,398.$28,105,120.  The Company has not generated revenues from operations during fiscal year 20052006 and does not expect to generate revenues from operations until one or more of its properties are placed in production. There is a risk that none of the Company’s properties will be placed in production, and that the Company’s operations will not be profitable in the future.

Our exploration activities are highly speculative and involve substantial risks.  All of the Company’s properties are in the exploration stage and no proven mineral reserves have been established.  The Company’s exploration work may not result in the discovery of mineable deposits of ore in a commercially economical manner.  There may be limited availability of water, which is essential to milling operations, and interruptions

may be caused by adverse weather conditions.  The Company’s operations are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air quality standards, pollution and other environmental protection

controls.  The Company’s exploration activities are subject to substantial hazards, some of which are not insurable or may not be insured for economic reasons.

We cannot accurately predict whether commercial quantities of ores will be established.  Whether an ore body will be commercially viable depends on a number of factors beyond the control of the Company, including the particular attributes of the deposit such as size, grade and proximity to infrastructure, as well as mineral prices and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection.  We cannot accurately predict the exact effect of these factors, but the combination of these factors may result in a mineral deposit being unprofitable.  The Company has no mineral producing properties at this time.  The Company has not defined or delineated any proven or probable reserves or resources on any of its properties.  Although the mineralized material estimates included herein h avehave been carefully prepared by the Company, or, in some instances have been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and there is a risk that a particular level of recovery of gold or other minerals from mineralized material will not in fact be realized or that an identified mineralized deposit, if any, will not ever qualify as a commercially mineable or viable reserve.

We may not be able to establish the presence of minerals on a commercially viable basis.  Our ability to generate revenues and profits is expected to occur through exploration of our existing properties as well as through acquisitions of interests in new properties.  We will need to incur substantial expenditures in an attempt to establish the economic feasibility of mining operations by identifying mineral deposits and establishing ore reserves through drilling and other techniques, developing metallurgical processes to extract metals from ore, designing facilities and planning mining operations.  The economic feasibility of a project depends on numerous factors beyond our control, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined using a given facility, the proximity of the mineral deposits to a user of the minerals, and the market price of the minerals at the time of sale.  Our existing or future exploration programs or acquisitions may not result in the identification of deposits that can be mined profitably.

Our competition is intense in all phases of our business.  The Company competes with many companies possessing greater financial resources and technical facilities than itself for the acquisition of mineral interests, as well as for the recruitment and retention of qualified employees.

Our exploration activities are subject to various federal, state and local laws and regulations. Laws and regulation govern the development, mining, production, importing and exporting of minerals; taxes; labor standards; occupational health; waste disposal; protection of the environment; mine safety; toxic substances; and other matters.  We require licenses and permits to conduct exploration and mining operations.  Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a substantial adverse impact on the Company.  Applicable laws and regulations will require the Company to make certain capital and operating expenditures to initiate new operations.  Under certain circumstances, the Company may be required to close an operation once it is started until a particular problem is remedied or to under takeundertake other remedial actions.

We have uninsurable risks.  We may be subject to unforeseen hazards such as unusual or unexpected formations and other conditions.  The Company may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it may elect not to insure.  The payment of such liabilities may have a material, adverse effect on the Company’s financial position.

We depend on key management personnel.  The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its management including James E. Sinclair, Chairman and Chief Executive Officer, Victoria Luis,Regina Kuo-Lee, Chief Financial Officer and Jonathan Deane, President.  Investors must be willing to rely to a significant extent on their discretion and judgment.  We do not have

employment contracts with the Chairman and Chief Executive Officer or the Chief Financial Officer.  We maintain key-man life insurance on the Chairman and Chief Executive Officer but not on the Chief Financial Officer or President of the Company.

We depend on consultants and engineers for our exploration programs.  The Company has relied on and may continue to rely upon consultants for explorationdevelopment, construction and operating expertise.  Substantial expenditures are required to construct mines, to establish ore reserves through drilling, to carry out environmental and social impact assessments, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the exploration infrastructure at any suite chosen for exploration.  We may not be able to discover minerals in sufficient quantities to justify commercial operation, and we may not be able to obtain funds required for exploration on a timely basis.

We are subject to the volatility of metal and mineral prices.  The economics of developing metal and mineral properties are affected by many factors beyond our control including, without limitation, the cost of operations, variations in the grade ore or resource mined, and the price of such resources.  The market prices of the metals for which we are exploring are highly speculative and volatile.  Depending on the price of gold or other resources, the Company may determine that it is impractical to commence or continue commercial production.  The price of gold has fluctuated widely in recent years.  The price of gold and other metals and minerals may not remain stable, and such prices may not be at levels that will make it feasible to continue the Company’s exploration activities, or commence or continue commercial production.

Our business activities are conducted in Tanzania. Our mineral exploration activities in Tanzania may be affected in varying degrees by political stability and government regulations relating to the mining industry and foreign investment in that country.  The government of Tanzania may institute regulatory policies that adversely affect the exploration and development (if any) of the Company’s properties.  Any changes in regulations or shifts in political conditions in this country are beyond the control of the Company and may adversely affect its business.  Investors should assess the political and regulatory risks related to the Company’s foreign country investments.  Our operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, foreign exchange controls, income taxes, expropriationexpropriati on of pr operty,property, environmental legislation and mine safety.

We may not have clear title to our properties.  Acquisition of title to mineral properties is a very detailed and time-consuming process, and the Company’s title to its properties may be affected by prior unregistered agreements or transfers, or undetected defects.  Several of the Company’s prospecting licenses are currently subject to renewal by the Ministry of Energy and Minerals of Tanzania.  In result, there is a risk that we may not have clear title to all our mineral property interests, or they may be subject to challenge or impugned in the future.

We have requirements for and there is an uncertainty of access to additional capital.  At August 31, 2005,2006, the Company had cash of  $1,395,468$3,174,549 and working capital of $1,388,906.$2,838,273.   The Company will continue to incur exploration costs to fund its plan of operations and intends to fund its plan of operations from working capital and equity subscriptions from the Company’s Chairman and C.E.O.  Ultimately, the Company’s ability to continue its exploration activities depends in part on the Company’s ability to commence operations and generate revenues or to obtain financing through joint ventures, debt financing, equity financing, production sharing agreements or some combination of these or other means.

We have no cash flow from operations and depend on equity financing for our operations.The Company’s current operations do not generate any cash flow.  Any work on the Company’s properties may require additional equity financing.  If the Company seeks funding from existing or new joint venture partners, its project interests will be diluted.  If the Company seeks additional equity financing, the issuance of additional shares will dilute the current interests of the Company’s current shareholders.  We may not be able to obtain additional funding to allow the Company to fulfill its obligations on existing exploration properties.  Our failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and the

possible partial or total loss of the Company’s potential interest in certain properties or dilution of the Company& #146;sCompany’s interest in certain properties.

Conflicts of interest may arise among our board of directors.  Marek J. Kreczmer, Ulrich E. Rath,   Anton Esterhuizen and Norman Betts, directors of the Company, are also directors, officers, or shareholders of other companies that are similarly engaged in the business of acquiring, developing, and exploiting natural resource properties.  Mr. Kreczmer became a Directoris President and PresidentCEO of Northwestern Mineral Ventures Inc. as of October 14, 2005.a Canadian company exploring for uranium in Canada and Niger and precious metals in Mexico.    He is a director of Golden Patriot Mining Inc., a Canadian company exploring for minerals in India.Mexico. Mr. Kreczmer is also a Director of Soho Resources Corp., a Canadian company exploring for mineralsdeveloping a gold deposit in Mexico, and a Director of Northern Canadian Minerals Inc., a Canadian company exploring for minerals in Canada.Mexico.  Mr. Rath is the President and CEO and a director of Chariot Resources Ltd., a Canadian company exploring for mineral sminerals in Peru.  Mr. EsterhuizenEster huizen is the Managing Director of Pangea Exploration (Pty.) Ltd., a South African company exploring for minerals in Africa and South America.  He is also a Director of Northwestern Mineral Ventures Inc.  Dr. Betts is a director of Slam Exploration Inc., a Canadian company exploring for minerals in the Provinces of Ontario and New Brunswick in Canada. Such associations may give rise to conflicts of interest from time to time if the Company were to enter into negotiations to acquire an interest in a mineral project in which their other companies hold an interest, or the Company were to enter into negotiations to sell or joint venture an interest in its mineral properties to any of these companies.  The directors of the Company are required to act honestly and in good faith with a view to the best interests of the Company and disclose any interest which they may have in any project or opportunity of the Company.  If a conflict of interest arises at a meeting of the board of directors, any director in a conflict will dis closedisclose his interest and abstain from voting on such matter.

Penny stock rules may make it more difficult to trade the Company’s common shares.  The Securities and Exchange Commission has adopted regulations which generally define a “penny stock” to be any equity security that has a market price, as defined, less than US$5.00 per share or an exercise price of less than US$5.00 per share, subject to certain exceptions.  Our securities may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors such as, institutions with assets in excess of US$5,000,000 or an individual with net worth in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 jointly with his or her spouse. For transactions covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receivere ceive the purchaser’s written agreement of the transaction prior to the sale.  Consequently, the rule may affect the ability of broker-dealers to sell our securities and also affect the ability of our investors to sell their shares in the secondary market.

Failure to Maintain Effective Internal Controls Could Have a Material Adverse Effect on Our Operations.  We are in the process of documentingrequired to document and testingtest our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal controls over financial reporting and commencing with the Company’s 2007 fiscal year, a report by our Independent Auditors addressing these assessments. During the course of our testing we may identify deficiencies which we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for our  annual compliance with the requirements of Section 404.  In addition, ifIf we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internalinte rnal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helpinghelp prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.

Item 4.

Information on the Company

A.

History and Development of the Company

The Company was originally incorporated under the corporate name “424547 Alberta Ltd.” in the Province of Alberta on July 5, 1990, under theBusiness Corporations Act (Alberta).  The name was changed to

“Tan Range Exploration Corporation” on August 13, 1991.  The name of the Company was again changed to“Tanzanian Royalty Exploration Corporation”on February 28, 2006.  The Company is also registered in the Province of British Columbia as an extra provincial company under theCompany Act (British Columbia) on August 5, 1994

however, in 2004 the Company did not maintain its extra provincial registration in the Province of British Columbia  since the principal executive office and its executive personnel are located in Sharon, Connecticut..

The principal executive office of the Company is located at 93 Benton Hill Road, Sharon, Connecticut, 06069, U.S.A., and its telephone number is (860) 364-1830.

The Company is a mineral resource company with exploration stage properties, which means that the Company is engaged in the search for mineral deposits and that the properties are not in development or production.

Cautionary Note to U.S. Investors Concerning Estimates of
Measured and Indicated Mineral Resources

As an Alberta corporation, the Company is subject to certain rules and regulation issued by Canadian securities administrators.  The Company files this Annual Report as its Annual Information Form (AIF) with theBritish Columbia, Alberta and Ontario Securities Commissions via the System for Electronic Document Analysis and Retrieval (“SEDAR”).  Under the AIF, the Company is required to provide detailed information regarding its properties including mineralization, drilling, sampling and analysis, security of samples and mineral resource and mineral reserve estimates.  Further, the Company describes its properties utilizing mining terminology such as “measured mineral resources” and “indicated mineral resources” that are required by Canadian regulations but are not recognized by the United States Securities and Exchange Commission (& #147;Commiss ion (“SEC”).  For clarification, the Company has no properties that contain “reserves” as defined by either the SEC or Canadian regulations, and is providing the following information on inferred mineral resources, in part,  in order to meet its requirements under National Instrument 43-101 adopted by the Canadian securities administrators.  U.S. investors are cautioned not to assume that any part or all of mineral resources will ever be converted into reserves.

The Itetemia Property, located in Tanzania, consists of seven (7)  contiguous prospecting licenses.  One prospecting licence  is subject to a 3% net smelter royalty.  The Company has a 90% interest in one of the other prospecting licences which is subject to a 2% royalty interest.  The Company’s Itetemia concession is our most advanced property (the “Itetemia Property”).  This propertyProperty contains an inferred mineral resource of 500,000 tonnes grading 7 g/t gold, using a 2 g/t gold cut-off.

The Itetemia Property consists of seven (7) contiguous prospecting licenses.  One concession is subject to a 3% net smelter royalty.  The Company has a 90% interest in another of the concessions, which concession is subject to a 2% royalty interest.cut-off  (see page 25 herein for further details).

In November 2004, Barrick advised the Company that it was returning the Itetemia properties which were covered by an option and joint venture agreement dated May 31, 1999 as amended April 24, 2001 between the Company and Barrick Gold Corporation (“Barrick”),.  Barrick was granted the exclusive option to earn an undivided 60% interest in the Itetemia Project.  In exchange for the option, Barrick agreed to provide funding to the Company totalling $4,000,000, which has been completed.  The Company will now explore the properties further itself or enter into a new joint venture agreement with another mining company.

The Company’s Luhala property, also located in Tanzania, consists of ten (10)six (6) contiguous prospecting licenses.

The Luhala property was the focus of an exploration program under an option agreement dated April 25, 1999 with Newmont Overseas Exploration Limited (“Newmont”).  This property contains an inferred mineral resource of 9,390,000 tonnes, averaging 1.0 g/t gold, using a 0.5 g/t gold cut-off.  Newmont terminated their option on the property during the year 2000,2000.  The Company continues its ongoing exploration program on the Luhala property (see page 27 for current exploration details).

The Kigosi Project area encompasses approximately 1,078 square miles and includes fourteen (14) prospecting licenses.  In September 2006 the Company is now exploring the property further itself.

During the fiscal year ended 2003, theannounced that its drill rig will be moved to Kigosi to begin drilling.  The Company alsopreviously discovered three new gold occurrences on the Kigosi Property (forming a part of the Company’s Lake Victoria Goldfield Properties held through Tanzam)it’s subsidiary, Tanzania American International Development Corporation (“Tanzam”).  Two of the three occurrences are located at the north end of a three kilometre long northwest trending structure that may be responsible for concentrating the mineralization reported at the northern and southern limits of this prominent geological feature (see: “Lake Victoria Goldfield Properties” below for further details).  At the present time the Company is exploring 141 mineral resource properties in the Lake Victoria Greenstone Belts region of

Tanzania.  Exploration activity throughout fiscal 2004 was spent undertaking a first pass BLEG soils program over the Tanzam licenses in the Lake Victoria Goldfields Properties project area.  This work was conducted on eight licenses within six locations; namely, Geita, Ushirombo West, Biharamulo, Biharamulo North, Shinyanga, and Nyanzaga North.  The Shinyanga and Nyanzaga North project areas returned encouraging results that require detailed follow-up.

Heavy mineral indicator sampling and ground magnetic follow-up was conducted during fiscal 2004 on aeromagnetic targets identified on the Tanzam properties.  Work was completed on the Kanagele, Lunguya, and Ushirombo project areas, where 34 anomalies were ground proofed and sampled for indicator minerals.  The results from the sampling program are being used to further refine exploration methodologies.

The Company currently has royalty agreements with threetwo industry partners covering 345 prospecting licences; two ofoneof these prospecting licences are under agreement with Barrick Gold Corporation; 15 prospecting licences with Ashanti Goldfields Limited; and 174 prospecting licenses with Northern Mining Explorations.

At the present time, the Company’s land position totals 121 prospecting licenses in the Lake Victoria Greenstone Belt and Kabanga/Kagera Nickel Belt regions of Tanzania covering an area of approximately 10,762 square kilometres.    

Significant Acquisitions and Significant Dispositions

The Company’s principal capital expenditures and divestitures (including interests in other companies and amounts invested) for the last three fiscal years are described as follows:

Fiscal Year EndedDuring the year ended August 31, 2003

The Company’s exploration work for the 2002 fiscal year and up to February 28, 2003 identified two gold-bearing mineralized quartz reefs on the Lunguya Property, located in the Lake Victoria Goldfields area of Tanzania (the “Lunguya Property”), ranging in thickness from 1.3 metres and extending for at least 350 metres along strike.  The two structures, designated as the East and West reefs, are about 50 feet apart and are roughly parallel to the mafic-granite contact (see: “Lunguya Property” under Item 4D for further details).

The Company also discovered three new gold occurrences on the Kigosi Property (forming a part of the Company’s Lake Victoria Goldfield Properties held through Tanzam).  Two of the three occurrences are located at the north end of a three kilometre long northwest trending structure that may be responsible for concentrating the mineralization reported at the northern and southern limits of this prominent geological feature (see: “Lake Victoria Goldfield Properties” below for further details).

The Company has also signed royalty and option agreements on nine (9) (which have now been divided into 12) prospecting licenses in the Lake Victoria goldfields area of Tanzania with Northern Mining Explorations/Explorations Minieres du Nord (“MDN”).  In December 2003 MDN returned one of the subject prospecting licenses to the Company and in December 2004, MDN returned another of the subject prospecting licenses to the Company.  In December 2005 and March 2006, MDN returned an additional six prospecting licenses.  There are currently11currently 4 prospecting licensees subject to this agreement.  Under the agreements,agreement, MDN holds the right to earn 100% of the Company’s underlying interest in the licenses for an up-front cash payment of US$80,000, plus US$1.8 million in option payments and US$1.5 million in property expenditures over the five year life of the agreements.agreeme nts.  MDN must also complete a feasibility study and make a production decision by December 31, 2008 and achieve production within 18 months or be subject to cash penalties in lieu of royalty payments.  The Company retains the right to escalating net smelter royalties on commercial production that are tied to the price of gold and range from 0.5% below US$250 per ounce to a maximum of 2% at US$380 per ounce.  The first year’s commitments call for option payments of US$160,000 and an exploration expenditures of US$200,000.  

In July, 2003, the Company closed royalty agreements with Ashanti Goldfields Company Limited (“Ashanti”) on nine (9) (and now 15) prospecting licenses of the Company in the Kigosi property area (also forming a part of the Company’s Lake Victoria Goldfield Properties held through Tanzam).  Under the terms of these royalty agreements, Ashanti has the right to earn 100% of the Company’s underlying interests in the subject prospecting licenses, for staged cash payments totalling US$200,000 in the first year, plus minimum cash payments of US$930,000 over the remaining life of the five year agreement.  Ashanti must also incur aggregate property expenditures of US$800,000 in the first two years of the agreements of which US$300,000 must be expended in the first year.  In years three, four, and five of the agreements, Ashanti must complete 6,000, 8,000, and 10,000 metres of diamond drilling, r espectively.  Ashanti and the Company have verbally agreed to a delay in some of these payments pending the conversion of a six month access permit to a twelve month access permit.

The Ashanti royalty agreements also call for Ashanti to complete a bankable feasibility report and make a positive production decision on or before the fifth anniversary of the effective date of the agreements.  Ashanti is liable for cash penalties should gold output at production not reach a minimum annual threshold of 50,000 ounces per year.

The Company retains the right to escalating net smelter royalties in commercial production that are tied to the price of gold, and range from 0.5% below US$250 per ounce to a maximum of 2% at US$380 per ounce.

All of the above investments have been made abroad and were financed internally.

During the fiscal year ended August 31, 2003, the Company incurred $1,151,327 in property acquisition costs and exploration work on its mineral resource properties (net of $184,965 in option payments received) of which $450,912 was incurred on the Lunguya Property.  The Company also wrote-off $1,031,436 in exploration expenditures, of which $729,309 related to claims relinquished within the Itetemia Property area.

Fiscal Year Ended August 31, 2004

During the fiscal year ended August 31, 2004, the Company’s exploration office in Tanzania formed a new section called the “Regional Studies Group” whose mandate is to acquire new ground, based on geologically sound research.  The primary objective in forming this group is to upgrade the Company’s property position in Tanzania for further exploration. Three new project areas within the Lake Victoria greenstone gold belts have been chosen to date and the Company’s land position now totals 121 prospecting licenses, covering an area of approximately 8,200 square kilometres.  One license in the Biharamulo North Project Area was returned to its owner during the year, but was written off in the previous fiscal year.

Exploration activity throughout the 2004 fiscal year was spent undertaking a first pass BLEG soils program over the Tanzam licenses in the Lake Victoria Goldfields Properties project area.  This work was conducted on eight licenses within six locations; namely, Geita, Ushirombo West, Biharamulo, Biharamulo North, Shinyanga, and Nyanzaga North.  The Shinyanga and Nyanzaga North project areas returned encouraging results that will require detailed follow-up next quarter.

Heavy mineral indicator sampling and ground magnetic follow-up was conducted during the year on aeromagnetic targets identified on the Tanzam properties.  Work was completed on the Kanagele, Lunguya, and Ushirombo project areas, where 34 anomalies were ground proofed and sampled for indicator minerals.  The bulk of this work program is now completed and only eight anomalies remain to be sampled.  The results from the sampling program are being used to further refine exploration methodologies.

A significant reorganization was undertaken at the Tanzam corporate office in Dar es Salaam during the period.  Virtually all of the administrative activities associated with Tanzam and Tancan are now being handled by the office in Dar es Salaam, where some of the Company’s most skilled and experienced personnel reside.

For the year ended August 31, 2004, the Company incurred$1,180,850 (net)  for exploration on existing properties.

Fiscal Year Ended August 31, 2005

In September 2004 the Company signed another option and royalty agreement with Northern Mining Explorations/Explorations Minieres du Nord (“MDN”) on three (3) prospecting licences (which have now been divided into 6) in the Lake Victoria Greenstone Belt.  Under the agreement, MDN holds the right to acquire 100% of the Company’s underlying interests in the licenses for staged cash payments totalling US$35,000 in the first year plus minimum payments of US$415,000 over the remaining life of the 5 year agreement.  MDN must also incur aggregate property expenditures of US$75,000 before the second anniversary.  In years 3, 4 and 5, MDN must complete 500, 700 and 12,000 meters of diamond drilling respectively.  The agreement also calls for MDN to complete a Bankable Feasibility Study and positive Production Decision on or before the 5th anniversary of the effective date of the agreement. &nbs p;MDN is liable for cash penalties should gold output at production not reach a minimum annual threshold of 50,000 ounces per annum.

The Company retains the right to escalating net smelter royalties in commercial production that are tied to the price of gold, and range from 0.5% below US$250 per ounce to a maximum of 2% at US$380 per ounce.

Exploration activity throughout fiscal 2005 consisted of programs carried out on several of the Company’s Lake Victoria Greenstone Belt Properties in Tanzania.  

In April 2005 the RC/RAB drill rig purchased by the Company was delivered and drilling commenced shortly thereafter.  The Company purchased the drill rig primarily for availability and custom design for function. Presently, the availability in Tanzania for contract exploration drilling is tight.  Further, the Company believes that its operators of the equipment will be of a higher quality than those services provided by an unrelated contractor.  

Also during fiscal 2005, the Company acquired additional prospecting licenses, including 7 licenses covering an area of  4,434 sq.km. in the Kabanga Nickel region. In October 2006 the Company reported it had prioritized exploration targets on its holdings in the Kibara Nickel Belt following an examination of historical data.

The Company entered into a Purchase and Sale Agreement (the “Agreement”) with Ashanti Goldfields Cayman Limited (“Ashanti”) dated September 26, 2006 for the repurchase of its rights to the Kigosi property, including all related camp and equipment, along with the purchase of a non-associated property, the Dongo, from Ashanti in a transaction valued at US$900,000. The price of the acquisition will be satisfied by the issuance to Ashanti a total of 180,058 common shares of the Company, in two tranches and subject to certain conditions consisting of (i) the issuance and allotment of 160,052 common shares to be issued in consideration of the

transfer to the Company of the Kigosi Rights, as defined in the Agreement and (ii) subject to receipt of ministerial consent from the Tanzanian government to the transfer from Ashanti to the Company of the Dongo Rights, as defined in the Agreement, the issuance and allotment to Ashanti of 20,006 common shares of the Company.

The Company’s exploration activities for the 2006 fiscal year continued with the Company’s RC/RAB drill on several of the Company’s properties located throughout the Lake Victoria Greenstone Belt.  Diamond drilling programs were carried out on the Company’s Luhala and Itetemia properties.  There were no significant property acquisitions during the period.  

For the year ended August 31, 2005,2006 the Company reported a net loss of $2,931,063.$4,326,722.  A total of $1,629,932$1,690,402 of mineral properties and deferred exploration expenses was written off relating to abandoned mineral properties.  During the year the Company purchased a drill rig and entered into a capital lease with respect to the drill  rig.   The Company’s total capital lease obligation as at August 31, 20052006 is $209,645.$156,364.  The Company incurred deferred exploration expenditures of $1,515,911$2,545,075 (net) during the year ended August 31, 2005.2006.

B.

Business Overview

The Company is a natural resource company, which since its incorporation has engaged in the acquisition of interests in and the exploration of natural resource properties.  The Company commits its own resources to the initial evaluation of mineral properties and in select situations, if and when warranted, the Company will enter into joint venture agreements with other corporations to further the exploration of such properties, in exchange for annual rental/option payments and post-production royalty payments.  At present, the Company’s natural resource activities do not generate any income from production.

The Company’s general area of interest has been in the exploration of gold properties in regional East Africa.  The Company has explored gold properties in Ethiopia, Tanzania, Zambia, Swaziland and South Africa. At the present time, the Company is exploring 141121 mineral resource properties in the Lake Victoria Greenstone Belt and KabangaKabanga/Kagera Nickel Belt regions of Tanzania.  Tanzania remains the prime focus of the Company’s activities.  Other corporations, including Barrick Gold Corporation (“Barrick”), Ashanti Goldfields Limited (“Ashanti Goldfields”), Northern Mining Explorations, and Newmont Overseas Exploration Corporation have funded  mostsome  of the  work on the Company’s properties in this area since 1999 under option arrangements, with the exception of properties explored by subsidiary company Tanzania American International Development CorporationCorpor ation 2000 Limited (“Tanzam”) which were privately funded.  The Company currently has joint venture and royalty agreements with its threetwo industry partners covering a total of 345 prospecting licences: 21 with Barrick, 15 with Ashanti Goldfields, and 174 with Northern Mining Explorations.

In the Company’s view, this joint venture and royalty strategy offers investors leverage to gold prices with lower risk and shareholder dilution.  Future production royalties from any producing properties discovered by the Company’s joint venture partners would provide the Company with a direct interest in the mine’s cash flow, with exposure to any benefits from new discoveries and production growth, but without the capital obligations, and environmental and social liabilities, associated with direct ownership.

Plan of Operations

Exploration Activities

All of the properties in which the Company holds an interest are in the exploration stage only.  Mineral exploration and development involves a high degree of risk and few properties, which are explored, are ultimately developed into producing mines.  There is no assurance that the Company’s mineral exploration activities will result in any discoveries of commercial bodies of 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 beyond the control of the Company.

By way of general description of the Company’s operating activities, the Company’s business operations involve using known or published geological and geophysical data to locate mineral resource properties meriting further exploration or development.  Once identified, the Company must stake and apply for registration to title

of the mineral properties, or negotiate the acquisition of such properties from any third party owners.  Upon registration or acquisition of title, the Company then designs a program of preliminary exploration which can involve grid mapping, geophysical and magnetic surveying, geochemical surveying, geological sampling, grab sampling, assaying and other forms of prospecting as circumstances may require.  Based on the preliminary results, mineral properties are ranked according to merit for further exploration work, which may involve further mapping, more detailed geophysicalgeop hysical and geochemical surveying, and trenching to identify potential drill targets.  If mineralization is indicated which merits further investigation, drill targets are selected, and a diamond drilling program for underground sampling and assaying will commence.

Based on the drilling program results, the Company will develop models of the underlying geology and mineralized zones for more detailed testing.  After further drilling, some mineralized zones may be classified as inferred or indicated mineral resources.  With sufficient infill drilling, these inferred or indicated mineral resources can be confirmed as a measured mineral resource, upon which a pre-feasibility study can be prepared by a qualified, independent mining engineer or geologist to determine whether mining activities are economic in the circumstances of the particular property.  A pre-feasibility study must be completed under the requirements of National Instrument 43-101 in Canada in order for mineral reserves to be designated.  A final or bankable feasibility study must be completed for the designation of reserves under the SEC’s Industry Guide 7.  If the bankable feasibility st udyfeasibili ty study is favorable, the Company can then use the feasibility study to seek out the necessary financing from a merchant banker or other financial institution for mine construction and development. A further mine feasibility study would be prepared to confirm the appropriate mining method based on the metallurgical studies of the ore, and to develop a mining plan.

At any point along this plan of operation, the Company may seek to interest larger mining companies in its mineral properties, which show potential for further development.  It is highly unlikely that the Company would pursue any particular property through to mineral production by itself.  By exploring and developing properties to a point where major mining companies are interested, the Company will leave the risk of mine development and operations to those companies, while retaining a carried interest or royalty from any future production.

During 20052006 fiscal year, the Company continued evaluation of all prospecting licenses in its portfolio with a view of offering some of them for royalty agreements to other mining companies.  The evaluation of their potential comprises geological mapping, soil sampling and geophysical interpretations.  Currently, prospecting licenses which have potential diamond targets are being prospected using ground magnetic surveys, followed by loam sampling and analysis for indicator minerals.

The Company  continued its efforts for the “farming-out” of identified properties for royalty agreements with other mining companies, and continue to examine and review other exploration opportunities in Tanzania.

Exploration

The Company’s principal exploration properties are currently all located in the United Republic of Tanzania, Africa.  The government of Tanzania is a stable, multi-party democracy.  Mineral exploration in Tanzania is affected by local climatic, political, and economic conditions.  The Company’s properties have year round access, although seasonal winter rains from December to March may result in flooding in low lying areas, which are dominated by mbuga (black organic rich laustrine flood soils).  Further, most lowland areas are under active cultivation for corn, rice, beans and mixed crops by subsistence farmers.  As a result, the area has been deforested by local agricultural practices for many years.  The seasonal rains and deforested areas can create a muddy bog in some areas, which can make access more difficult, and could impede or even prevent the transport of heavy equipme nteq uipment to the Company’s mineral properties at certain times of the year between December to March.

Competition

The mining industry in which the Company is engaged is in general, highly competitive.  Competitors include well-capitalized mining companies, independent mining companies and other companies having financial

and other resources far greater than those of the Company.  The Company competes with other mining companies in connection with the acquisition of gold and other precious metal properties.  In general, properties with a higher grade of recoverable mineral and/or which are more readily mineable afford the owners a competitive advantage in that the cost of production of the final mineral product is lower.  Thus, a degree of competition exists between those engaged in the mining industries to acquire the most valuable properties.  As a result, the Company may eventually be unable to acquire attractive gold mining properties.

Dependence on Customers and Suppliers

The Company is not dependent upon a single or few customers or supplier for revenues or its operations.

Governmental Regulations

The Company’s mineral interests in Tanzania are initially held under prospecting licenses granted pursuant to theMining Act, 1998 (Tanzania) for a period of up to three years, and are renewable two times for a period of up to two years each.  We must pay annual rental fees for our prospecting licenses based on the total area of the license measured in square kilometres, multiplied by US$20.00 per sq. km.  There is also an initial one-time “preparation fee” of US$200.00 per license.  Upon renewal, we pay a renewal fee of US$200.00 per license.  Renewals of our prospecting licenses can take many months and even years to process by the regulatory authority in Tanzania.

All prospecting licenses in Tanzania also require the holder to expend funds in the employment and training of Tanzanian personnel, which expenditures typically amount to US$5,000 per year, and in exploration expenditures, which are set out in theMining Act, 1998 (Tanzania).  At each renewal, at least 50% of our licensed area must be relinquished.  If the Company wishes to keep the relinquished one-half portion, it must file a new application for the relinquished portion.

We must hold a mining license to carry on mining activities, and a mining license will only be granted to the holder of a prospecting license over the area.  A mining license is granted for a period of 25 years or the life of the mine.  It is renewable for a period not exceeding 15 years.  We do not hold any mining licenses, only prospecting licenses.  Prospecting and mining license holders must submit regular reports in accordance with mining regulations.  Upon commercial production, the government of Tanzania imposes a royalty on the gross value of all production at the rate of 3% of all gold produced.  The applicable regulatory body in Tanzania is the Ministry of Energy and Minerals.

In July 1999, environmental management and protection regulations under theMining Act, 1998 (Tanzania) came into force.  An environmental impact statement and an environmental management plan must accompany special mining license, mining license and gemstone mining license applications for mineral rights.  In addition to the establishment of environmental regulations, the Tanzanian Government has improved management procedures for effective monitoring and enforcement of these regulations by strengthening the institutional capacity, especially in the field offices.  The Government has provided rules for the creation of reclamation funds to reinstate land to alternative uses after mining and it has developed guidelines for mining in restricted areas, such as forest reserves, national parks, sources of water and other designated areas.  These regulations have not had any material adverse effecte ffect on the Company’s operations, which are exploration in nature at this time.

C.

Organization Structure

The Company has the following sixfour subsidiaries:

(1)

The remaining 10% interest is held by Stamico.

(2)

The remaining 40% interest is held by Northern Mining Consulting Ltd.

(3)

The remaining 20% interest is held by Bungu Minerals Ltd.

D.

Property, Plant and Equipment

The Company’s business is the acquisition and exploration of mineral properties, with a primary focus on exploring for gold properties in Tanzania.  The Company funds its activities by way of the sale and issuance of its securities to accredited investors.  The Company also obtains operating funds through sales of and options to sell its various mineral property interests to other parties, retaining a royalty interest.  The Company’s properties are without a known body of commercial ore, with no established reserves, and the Company’s activities to date on such properties have been exploratory in nature.

Itetemia Property

The following discussion regarding the geological information on the Itetemia Property is summarized from a technical report prepared in accordance with the requirements of NI 43-101F1 dated May 2, 2001 entitled, “Independent Review of the Itetemia Project, Lake Victoria Greenstone Region, Tanzania” by Michael J. Michaud, M.Sc. P. Geo. of Steffen Robertson and Kirsten Consulting (Canada) Inc. (the “Itetemia Report”).  The reader is referred to the complete text of the Itetemia Report, which is available online atwww.sedar.com, filed on March 10, 2003 under the heading, “Engineering Report and Certificate of Qualifications”.

Property Description and Location

The Itetemia Property currently consists of seven (7) contiguous prospecting licenses, covering approximately 17479.34 km².  The seven (7) prospecting licenses now comprising the Itetemia Property are held in the names of the following companies and expire as indicated:

*

While the license has expired, the Company has applied for a renewal and has no reason to believe that such renewal application will not be granted in the ordinary course.

The Itetemia and Ngula prospecting licenses have been renewed once and may be renewed once more,twice, each time for a period of two years. The rental payments and minerals permitted to be pursued under such licenses are summarized below:

*

First renewal annual rental fees =US$30/sq.km.

**

Second renewal annual rental fees = US$50/sq.km.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The Itetemia Property is located in the Mwanza Region of the Lake Victoria Greenstone Region, Tanzania, approximately 90 kilometres by air southwest of the city of Mwanza, situated on the south shore of Lake Victoria.  The property is accessed via local roads from Geita or by plane from Mwanza to an airstrip accommodating the neighbouring Bulyanhulu Mine, owned by Barrick.  The Barrick airstrip is 3.75 km west of the western boundary of the Itetemia prospecting license, and approximately 4 km northeast of the Nyamykonze village. Local resources are available at Mwanza, located on the southern shore of Lake Victoria.

The topography in the region and on the property consists of large flat-lying areas surrounded by numerous small hills. The hills have elevations of up to 100 m above local terrain.  The hills are thickly vegetated and access is only possible along cut lines.  Little outcrop exists on the property. The climate is similar to the rest of the region.  The rainy season starts in November and lasts to the middle of April, but precipitation is irregular from one season to another. The dry seasons are usually hot. Mwanza, located along the southern shore of Lake Victoria, can, and has, provided limited supplies for mining and exploration operations in the area.  Dwellers in the area of the Itetemia Project, such as the neighbouring Nyamykonze village, are traditionally subsistence farmers and ranchers, and have limited mining experience from the Bulyanhulu operation and numerous small scale activities.activities .  Water for the purpose of mining and processing is not readily available in the region; however, a pipeline from Lake Victoria built by Barrick for its Bulyanhulu Mine, provides an adequate supply.

The large, relatively flat terrain surrounding the known gold mineralization may be suitable for potential tailings and waste rock storage and for heap leach pads and a potential processing plant. Electric power is available via the national grid within 5 km; due to the unreliability of such power, alternative forms of residual or back-up power would be necessary for mining or processing operations, such as diesel power generation used by Barrick at its Bulyanhulu mine.

Ownership

Prior Ownership

Only two of the prospecting licenses comprising the Itetemia Property, namely, Itetemia and Itetemia North, were previously held by third parties.  With respect to the Itetemia prospecting license, the interest of the Company was acquired from State Mining Corporation of Tanzania (“Stamico”) pursuant to a joint venture agreement dated July 12, 1994 (the “Stamico Venture Agreement”).  The Stamico Venture Agreement obligated the Company to make two initial payments of Tsh1,000,000 and US$7,200, both of which were satisfied. With respect to the Itetemia North prospecting license, the interest of the Company was acquired from RSR (Tanzania) Limited by agreement dated April 20, 1995 (the “RSR Royalty Agreement”). The RSR Royalty Agreement obligated the Company to pay a sum of US$35,000, which payment was made.

The Company’s Interest

Prior to the Barrick Venture Agreement (defined below), four of the prospecting licenses comprising the Itetemia Property, namely, Itetemia Village, Mwingilo, Ngula and Itetemia East, were indirectly 100% held by the Company; in the case of the Itetemia North prospecting license, the Company held an indirect 100% interest therein, through Tancan, subject only to the 2% NSR Royalty payable pursuant to the RSR Royalty Agreement. In the case of the Itetemia prospecting license, Tancan acquired its interest pursuant to the Stamico Venture Agreement, as amended June 18, 2001 and July 2005, which provides, among other things, that:

1.

Tancan had to pay Stamico, on execution of the Stamico Venture Agreement, the sum of US$7,200 (as an advance against the 2% gross revenue royalty) and TS1,000,000.

2.

Tancan and Stamico were to form a joint venture company for the purpose of holding the prospecting license that shall be held 10% by Stamico (with no obligation to contribute) and 90% by Tancan, which was effected through the formation of Itetemia Mining Co.

3.

Stamico is entitled to acquire an additional 20% interest in the joint venture company by paying a sum equal to 20% of the cost of placing the property into commercial production based on the feasibility study submitted to the Government of Tanzania for such purpose.

4.

Tancan shall assist Stamico in raising the required capital to exercise the right referred to in (3) above.

5.

Tancan was to expend the sum of US$25,000 in the first year and US$50,000 annually thereafter in relation to the training of Tanzanian personnel.

6.

Upon commencement of commercial production, Stamico shall receive a 2% gross revenue royalty, which shall be increased to a 2.5% gross revenue royalty should a mine on the Itetemia prospecting license produce recoverable gold in excess of 12 grams per tonne.

7.

Tancan shall pay to Stamico, as an advance against the 2% gross revenue royalty, the sum of US$7,200 on or before every anniversary of the Stamico Venture Agreement up until the development phase, upon and after which the annual sum of US$10,000 shall be paid as an advance against such royalty.

8.

Tancan shall show preference to Stamico for the provision of local materials and services during the period of mining operations.

9.

As amended July 2005, Tancan shall pay to Stamico the sum of US$15,000 on or before July 12 of 2006 and 2007and ending upon commercial production, provided that commercial production commences by December 31, 2007, failing which the aforementioned payment shall be revisited and US$20,000 thereafter.

10.

Tancan may assign its rights under the agreement, subject to the prior written consent of Stamico.

By an option and joint venture agreement dated May 31, 1999 as amended April 24, 2001 between the Company and Barrick (the “Barrick Venture Agreement”), Barrick agreed to provide funding to the Company totalling $4,000,000.  

On November 23, 2004 Barrick advised that they would return the Itetemia PropertyProspecting Licences (with the exception of PL 2374/03 which is held under the BEALBarrick Exploration Africa Limited (“BEAL”) Agreement) to the Company.

The Company has deferred total net costs (after any recoveries and write offs) of $5,906,131 on the Itetemia Property to August 31, 2005.  The Company plans to carry out exploration work on the property, as Barrick has returned the Itetemia Property to the Company.

History

The exploration history of the Itetemia Property from 1988 to 1999 may2005may be summarized as follows:

Itetemia Exploration History Synopsis

Very little exploration work has been carried out on the Itetemia East, Itetemia Village and Mwingilo prospecting licenses.  Only limited mapping and soil sampling have been carried out.  At present, no work is being carried out on the Ngula prospecting license.

2001 Exploration Program

During 2001, the Company carried out, on behalf of Barrick, the following exploration program.  Barrick provided the funds for the 2001 program to the Company through share subscriptions, as provided in the Barrick Venture Agreement.  Pursuant to the Barrick Venture Agreement, 80% of the funds subscribed for are required

to be incurred in respect of the Itetemia Property.  The total cost of the 2001 program, including support services was $554,046.

In May 2001, the Company reported that two holes, totalling approximately 1,100 meters, were drilled to evaluate the down dip potential of gold mineralization in the Golden Horseshoe Reef deposit. The results of this drilling are summarized in the following table:

The recent deep core drilling of the Golden Horseshoe has confirmed that gold mineralization over widths of approximately 50 meters has been traced from surface to a vertical depth of 440 meters. The gold mineralization occurs primarily within two discrete gold zones, the South and North zones, and appears to plunge 55° to the northwest. Gold mineralization intersected in Hole GHDD-26 indicates that the geologic structure hosting the gold mineralization of the Golden Horseshoe Reef deposit may transect the felsic package of rocks. This suggests that the gold mineralization may extend further to the west, beyond the basaltic rocks that were previously thought to represent the western limit of the gold mineralization.

The Company is of the opinion that the drill results correlate well with the geology and gold mineralization identified by previous surface trenching and shallow core drilling. Additional drilling is required to provide adequate information of the continuity of the geometry and grade of the gold mineralization for updating the current resource estimate.

2002 to 2004 Exploration Work

During the 2002 fiscal year, the Company has carried out only minor surface work on the Itetemia Property at a cost of $443,603.  No drilling was conducted and no significant new results were reported.  During the 2003 fiscal year, the Company incurred only minor geochemical and geophysical work of $13,910 on the Itetemia Property.  

2005 Exploration Work

The Company received reports from Barrick detailing the exploration work they conducted on the Itetemia Property to November 2004.  

Geology

Regional

The Lake Victoria area contains 12 Archean Nyanzian greenstone belts which are surrounded by and have been interrupted by numerous granitic intrusions.  The Nyanzian belts comprise a volcano-sedimentary sequence composed of mafic to felsic volcanics (lavas and tuffs), BIF and shales. The greenstone belts have been grouped into locally distinct geographic regions.  One of these regions is the Southwest Mwanza Region which includes a large area south of town of Mwanza, located on the south shore of Lake Victoria.  There are five greenstone belts in the Southwest Mwanza Region, one of which is the Ushirombo belt. The Ushirombo belt is an east-west trending belt, the eastern end of which is located approximately 25 km west of the southern end of Smith Sound on Lake Victoria. The eastern end of the belt is arcuate in shape and trends northerly tangential to the northwestern flank of the Siga Hills.

Property

The Itetemia Property is underlain by the northerly trending eastern portion of the Ushirombo Nyanzian greenstone belt.  Granite underlies the eastern and northern portions of the property.  The greenstone/granite contact trends northerly through the east-central portion of the Itetemia prospecting license and through the central portion of the Itetemia East prospecting license onto the Itetemia Village license; at which point, the contract tends westerly through the Mwingilo license cutting the northeast corner of the Ngula license. Sixty percent of the Itetemia, Itetemia North and Ngula licenses are underlain by the Nyanzian greenstone belt.  The remaining 40% is underlain by granite.  Granite variably underlies 90 to 100% of the Itetemia East, Itetemia Village and Mwingilo prospecting licenses. The mbuga soil covers 10 to 40% of the property.

Lithology

The lithologies encountered on the Itetemia and Itetemia North prospecting licenses can be divided into three volcano-sedimentary domains: (i) Northeast Domain, (ii) Central Domain and (iii) Southwest Domain. The granite truncates these domains to the east. The Northeast Domain is composed of basalt, felsic flows, thick to thin sequences of argillite and dykes/sill of gabbro.  The domain is up to 3 km thick, exhibits a north to north-northeasterly trend and has numerous extensive HLEM conductors.  The conductors are related to argillite dominantly located in one horizon at the top of the sequence.  A massive sulphide unit/zone is situated at the bottom of this horizon marking change in the volcanism.

Mineralization

The sulphide mineralization encountered on the Itetemia Property comprise massive to semi-massive, stringers, veins and veinlets, disseminated and nodular mineralization.  The types of mineralization are (i) sulphides associated with volcanism activity; (ii) remobilized sulphides associated with deformation (shear hosted); and (iii) sulphides associated with sedimentation.  The gold and metallic contents associated with this mineralization are variable and the relation between the grades and the mineralized type is not well known at this stage.

The massive to semi-massive sulphide mineralization seems to be related to volcanism.  It occurs in two areas on the Property.  One area is located in the northern part of the licenses and has been intersected by the hole ITDD-06.  More than 30 m. of sulphides were intersected at the contact between a QFP and an argillite horizon separating two pillowed basalts.  The sulphide content ranges from 10 to 90% pyrrhotite, 2 to 5% pyrite, trace to 5% sphalerite, trace to 1% copper.

The Golden Horseshoe Reef mineralization occurs as massive sulphide veins locally ranging from 15-30 cm wide.  Sulphides dominantly appear in veins/veinlets less than 5 cm wide in felsic volcanic rocks.  Five to

thirty percent pyrite-pyrrhotite is common over sections of 1 to 15 m along the holes.  They are sub-concordant

and parallel to the schistosity.  The strong shearing at the Golden Horseshoe Reef probably represents a remobilization of the sulphides.

Mineral Resource Estimation

Cautionary Note to U.S. Investors Concerning Estimates of
Measured and Indicated Mineral Resources

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

In 1998, Minestart Management Inc. (“Minestart”) was retained by Tancan to prepare a mineral resource estimation for the Golden Horseshoe Reef.  The mineral resource was calculated based on 13 diamond drill holes which were drilled at 25 m. intervals along strike for approximately 300 m. and to a depth of approximately 50 m. The mineral resource was calculated using polygons on cross-sections incorporating a 2 g/t gold cutoff and a constant bulk density of 2.7 tonnes/cubic meter. Minestart estimated the mineral resource for the Golden Horseshoe Reef to be 500,000 tonnes grading 7 g/t gold.  As an integral part of its review, the Company hired Steffen, Robertson and Kirsten Consulting (Canada) Inc. (“SRK”) to review the mineral resource estimate prepared by Minestart, and SRK provided the following observations:

·

SRK believes there is a need for more near-surface and down-dip information in order to better define the controls on the mineralization and the geometry of the mineralized horizon. With respect to the density, SRK notes that the bulk density was used for estimating the bulk tonnage. Given the climate and the weathering environment, the density of sulfide rich rocks and volcanics could vary considerably and based on their experience it may be required to weigh the assays during compositing and estimating the bulk tonnage of the mineralized and unmineralized zones.

·

With respect to the 2.0 g/t cutoff grade used in the estimation, SRK believes that initially, it might be possible to mine the reef by way of a very narrow and shallow open pit.  However, it is more likely that given the higher grade mineralization, narrow widths and current limited strike length the Golden Horseshoe Reef would be more amenable to underground mining methods.  As such, the cutoff grade of 2.0 g/t gold initially used to estimate the mineral resource may be too low.

·

With respect to the diamond drilling core recovery, SRK considers the NQ size to be appropriate and that it has been appropriately split using a diamond saw.  The split core remains in good condition and is stored on-site in a proper facility. The rock quality is very good. The core recovery is excellent.

SRK believes the mineral resource estimation prepared by Minestart to be an inferred mineral resource as defined by standards set by the Canadian Institute of Mining, Metallurgy and Petroleum (see: “Glossary of Technical Terms – Canadian Terminology” at page 5 herein).

Exploration

During the 2006 exploration season, the Company initiated exploration work at Itetemia for its own account in September 2005 and conducted a second-in-house evaluation of the GHR, the primary zone hosting gold values.  The Company completed four diamond drill holes on the Itetemia Project with one of the better holes returning 2.5 metres grading 6.13 g/t and 4.0 metres averaging 6.75g/t. Another hole returned an even higher grade intercept of 4.0 metres grading 11.1 g/t. The drill program succeeded in confirming the existence of a continuous economically attractive  pay shoot  down to a depth of 450 metres, representing a total down plunge distance of 550 metres.

The Company has incurred total net costs (after any recoveries and write offs) of $6,393,041 on the Itetemia Property to August 31, 2006.  

THE ITETEMIA PROPERTY IS WITHOUT KNOWN MINERAL RESERVES AND ANY PROPOSED PROGRAM IS AN EXPLORATORY SEARCH FOR ORE.

Luhala Property

The following discussion regarding both the LuhlalaLuhala and Lunguya Properties below is summarized from a technical report prepared in accordance with the requirements of NI 43-101F dated February 28, 2003 entitled, “Report on the 2002 Exploration of the Luhala Concessions and the Lunguya Concessions, Lake Victoria Goldfields District, North-Central Tanzania” by Dr. Jim L. Oliver, Ph.D., P. Geo. (the “Luhlala“Luhala and Lunguya

2002 Report”).  The reader is referred to the complete text of the Luhala and Lunguya 2002 Report, which is available atwww.sedar.com, filed on March 10, 2003 under the heading, “Other”.

Property Description and Location

The Luhala property is located in Misungwi District of Mwanza Region of Tanzania(see property location map).  It lies approximately 70 kilometres south of the city of Mwanza.  The Luhala property consists of ten (10)six (6) prospecting licenses (namely, Luhala PL 1451/00, Luhala PL 2519/04, Luhala PL 3315/05, Shilalo PL 2297/03, Ngobo PL 1559/00 Ngobo PL 2680/04, Ngobo PL 3493/05;and Sima PL 1560/00, Sima PL 2681/04 and Sima PL 3494/05)00).  These prospecting licenses are in good standing with respect to required filings and payments with the Government of Tanzania.

The Company has a 100% interest in the Luhala prospecting license, and has the right to acquire a 100% interest in the Ngobo and Sima prospecting licenses by making a series of payments to the property holder, Widescope Promotion Ltd. (“Widescope”), totaling US$120,000 over six years for the Ngobo license and US$84,000 over six years for the Sima license.license, which payments have now been completed.  Widescope retains a 2% net smelter returns royalty on both the Ngobo and Sima licenses, which the Company may buy back, in each case, one-half (i.e. 1%) for US$1,000,000. For the Shilalo license, the Company has earned the right to acquire  a 100% interest by having madeamade a series of payments to the property owner totaling US$16,000.  The Shilalo property owner retains a 2% net smelter return royalty, of which the Company may buy back one-half (i.e.1%) for US$ 250,000.

Each of the prospecting licenses forming the Luhala property has the following mandatory annual work and rental payments:

*First renewal annual rental fees = US$30/sq.km.

  ** Second renewal annual rental fees = US$50/sq.km.

The Luhala property covers an area of approximately 128 76square kilometers.  The target on the Luhala property is gold stockwork mineralization associated with felsic rock units in dilational structures.  There is widespread gold mineralization on the property over a 6.25 square kilometer area.

The Company has incurred total net costs (after any recoveries) of $3,147,878 on the Luhala Property  to August 31, 2005.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

Access to the Luhala Property is via the main Mwanza – Shinyanga road, which is a single lane, good to excellent quality, asphalt highway.  Approximately 45 kms south of Mwanza, a dirt road from a junction at the settlement of Manawa, leads southwest to the town of Misasi.  The property has year round access, although

seasonal winter rains, December to March, may result in flooding in low lying areas which are dominated by mbuga (black organic rich laustrine flood soils).  Most lowland areas are under active cultivation, corn, rice, beans and mixed crops, by subsistence farmers.  Low scrub and thorn bushes cover the small hills.  The area has been, for many years, deforested by local agricultural practices.

At Luhala, the mean elevation is approximately 1,200 m above sea level, with a series of small sub-rounded hills, rising up to one hundred metres above the surrounding plain.  These hills are typically formed by either resistive iron formations or felsic volcanic rocks.  Mafic volcanic rocks weather recessively and are typically only exposed in trenches through well formed laterite profiles.  Laterite development is extensive with brick-red laterites overlying weak mottled zones and saprolites at a depth of approximately 3-5 m’s.  Deep weathering penetrates 45 - 60 m’s vertically within the subsurface.

An enthusiastic and competent labor force is available through the surrounding villages, and local people have been routinely hired during the trenching, drilling and soil sampling programs conducted on this property.  However, no other significant infrastructure is available.

History

Luhala has had a significantly more protracted exploration history than Lunguya, beginning with the initial exploration by the then Tanganyikan Geological Survey in 1947.  The exploration history of Luhala may be summarized as:

LUHALA EXPLORATION HISTORY SYNOPSIS

The sole activities conducted on the Luhala project during 2002 were mapping and surface sampling. No drilling programs were completed on the property in 2002.  The work programs at Luhala to date have greatly enhanced the Company’s understanding of the geological and structural environment on the property.  Drill  targets on the Kisunge hill based on an updated geological model, were drilled in 2004. A shallow, 14-hole drill program at Luhala was completed in September 2004 which was designed to validate a new structural model for a large surface gold-in-soil geochemical anomaly that was identified earlier on the property.

2005 Exploration Work

In preparation for the 2005 drill program on the Luhala Project, all RAB, RC, DDH holes and trenches were re-logged, areas with complex geology were ground-proofed and a geological interpretation map was produced. Drill roads and pads have been prepared for approximately 4,000 metres of drilling (50 holes).

RC drilling with the Company’s RC/RAB drill commenced in October 2005.  

Geology

Luhala is found within the eastern portion of the Buhungukira Belt, a local place name assigned to one to the eight greenstone belts in the Lake Victoria District.  These rocks are believed to be the eastern continuation of the Geita  Greenstone Belt and consist of dominantly Upper Nyanzian rock sequences.

In the Luhala area, the predominant structural grain is dominated by an early deformational event which has deformed all supracrustal rocks into tight, south to southwest plunging, west overturned, synforms and antiforms.  The short limbs of these folds may have east-west strikes and modest, 40 degree south dips. The long limbs of these folds have north to northeast strikes and generally much steeper, 60 – 80 degree, and east dips.

At Luhala, three principal mineralized zones have been identified. These include Kisunge Hill, Shilalo South, and Shilalo West.  All of the three principal mineralized areas are linked by a common southwest plunging antiform, the limbs of which are separated by 500 to 800 m’s and converge just south of Line 6200 E and 3800 N.  Mineralization to Kisunge Hill is associated with a chert – felsic volcanic contact.  As Shilalo South, structurally controlled gold mineralization closely tracks the position of a massive to locally well-bedded chert or cherty iron formation.  The results of diamond drilling in Shilalo West strongly outline the importance of the felsic volcanic - chert – structural sites and gold association.  For example, borehole LSD – 08A is collared in the hangingwall to the Shilalo West mineralized zone, traverses the host rhyolite-chert litholog y,lithology, and terminates in the footwall.  This borehole intersected significant gold mineralization of 3.55 g/t Au over 5 m near the hangingwall contact of the felsic volcanic rocks, and is mineralized repeatedly at over one gram ranges throughout much of the felsic host interval, which in this borehole is over 35 metres thick.

The felsic volcanic rock package at Shilalo West once again presents an excellent structural site for the development of dilatant sites and gold mineralization.  As at Shilalo South, a well defined planar, brittle-ductile structural zone was not identified at Shilalo West.  Gold distribution is likely related to volumes of extensional and shear extensional veinlets, which are developed within the felsic volcanic rocks at or near, the felsic volcanic “red tuff” contact.

Exploration

ExplorationDrilling with the Company’s combination RC/RAB drill commenced in October 2005.  In December 2005, the Company announced initial results from a 29 hole RC/RAB drilling program at Luhala has includedthat significantly expanded the following material work:resource potential on the property.   During this phase of drilling, a specific emphasis was placed on determining the structural controls for the higher grade mineralization, producing a 3-D model of the mineralization for follow-up in 2006.

1.

A Phase 4 drill program was initiated at Luhala in February 2006, with the first results reported shortly thereafter in March. The developmentdrill program included 40 RC holes, representing some 2,519 metres of drilling within the Kisunge Central, West, Northeast and Southeast Zones. The Kisunge Central and West Zones were found to combine to form the Kisunge Central Zone.  Drilling of the Kisunge East Zones confirmed the presence of a strong, 1:5,000 scale geological map base tiedhigher grade zone of rocks that extends from the Kisunge Northeast Zone to sub-surface geological data. The geological base has strong predictive value and may be usedwest of the Kisunge Southeast Zone. These rocks form a steeply plunging anti-clinorium, a regional fold (bend) structure that is composed of smaller folds. This whole zone was subsequently referred to guide and interpret bothas the results of historical drilling and plan future programs.Kisunge Main Zone.

2.Among the better results returned from the Kisunge Central Zone were 4.0 metres of 6.0 g/t and 5. 0 metres grading 5.18 g/t. Notable results from the Kisunge Main Zone included 7.0 metres averaging 6.83 g/t and 5.0 metres grading 5.18 g/t.

Results from the Phase 5 drill program were released in April 2006 and confirmed that the Kisunge Main Zone hosted anomalous gold values along a strike length of 1,200 metres, excluding a zone some 200 metres wide where a barren dyke cut across the mineralized trend.  The holes in the Main Zone were designed to intersect and test the gold potential in the most prospective stratigraphic package (rock unit) at a shallow depth as

no trenching had been conducted in this area before to establish near-surface mineral potential.  The best values from the Kisunge Main Zone in Phase 5 included 4.0 metres averaging 5.69 g/t along with 3 metres grading 3.29 g/t.   A Phase 6 drill program was completed in April 2006 and included 15 RC drill holes representing some 986 metres of drilling. All the RC holes were drilled in the Main Zone as no access was available to further test the Kiginga anomaly due to heavy rainfall. Three holes were drilled on the eastern limb of the Main Zone and 12 holes on the southern limb. Among the better values reported were: 3.0 metres of 2.50 g/t, 2.0 metres grading 2.39 g/t and 6.0 metres averaging 2.35 g/t.  A Phase 7 drill program was completed in August 2006 with the results reported immediately after the company’s fiscal year end. This particular phase consisted of nine diamond drill holes aggregating some 99 1 metres, all of which tested the eastern limb of the Kisunge Main Zone.

Because diamond drilling conductedproduces a cylindrical core sample, invaluable structural information was obtained during 2001this program which showed the gold deposit to have a shallow dip that will require further RC drilling for definition purposes. Some of the most notable results from this program included 3.0 metres @ 7.89 g/t, 2.44 metres averaging 3.90 g/t and 1.44 metres @ 10.95 g/t.

The Company has incurred total net costs (after any recoveries) of $4,079,789 on the Luhala property was successful in “ground truthing” the interpreted structural style and conclusively demonstrating the association of multi-gram per tonne gold mineralization at well defined structural and stratigraphic sites, particularly antiform – synform closures near felsic volcanic –  tuff contacts.Property  to August 31, 2006.

Mineralization

At Luhala, gold mineralization is associated with zones of diffuse silicification, localized around small cm and mm scale fractures within competent chert and felsic volcanic rock units.  Major discordant vein

structures are not identified and planar high strain zones are absent.  The width of these intersections may be estimated as approximately true width but this may only be ascertained through the construction of a complete set of geological sections which reconcile sub-surface and surface geological data.  Currently these kinds of sections are available for only a few of the total required areas.

No specific gravity data have been calculated for any of the rocks cored in these intervals and without strong cross sectional control, no reliable resource estimates for any of the principal mineralized zones at Kisunge, Shilalo South and Shilalo West may be calculated.

Drilling

Drilling programs were completed on the Luhala prospecting license in 2001, consisting of nine diamond drill holes, totaling 1,865 metres with an average depth of 207 metres.  The holes were planned along the three best RAB section lines (7400E, 7600E and 8000E) on Kisunge Hill, as well as some testing of a lower ranked target on the Shilalo South.  Some gold mineralization was encountered, including 4.3 metres at 1.84 g/t, 8.5 metres at 1.23 g/t, and 14.4 metres at 5.72 g/t, using a 1g/t cut-off.  Diamond drilling has shown that these gold zones doare not continue at depth.steep.  The distribution of gold at Kisunge would appear to be flat or near flatto moderately dipping.  There is insufficient drill hole coverage to tie up the numerous different rock types found at depth.  Most of the drill holes stopped in fresh rock, but it is not possible to model the significance of these rock types at depth.

No drilling programs were conducted during 2002 or 2003 on the Luhala Property, but a further US$100,000 in RC drilling was performed during the 2004 exploration season.  The Kisunge hill area was targeted where trenching in 2001 identified numerous zones of surface mineralization.

In March-April, 2004, old trenches from L7400E to L7600E as well as the trench on L8000E were cleaned to expose the floor of the trench for remapping. Four new trenches were excavated, the first along L7650E. The remaining three trenches were excavated along E-W lines to determine if N-S structures (similar to that shown at Kisunge outlier) might have a determining control on gold mineralization at Kisunge hill.

The trenches intersected the following positive results:

T7650E

12.4 g/t Au / 9m including 16.6 g/t Au / 6m

T4180N

1.27 g/t Au / 8m

T4265N

8.43 g/t Au / 2m

T4290N

2.82 g/t Au / 29m including 4.69 g/t Au / 11m

BasedAs detailed above under Exploration, RC/RAB and diamond drilling programs continued on these results 14 shallow RC holes were drilled on Kisunge returning the following better results:

KISUNGE WEST ZONE:

Section 1:

Hole No

From

Intersection

Grade

Including

      From

LRC-19:

0m

      40m

2.40 g/t

8m @ 4.45g/t              30m

LRC-20:

2m

      39m

1.69g/t

7m @ 3.86g/t

       28m

57m

        3m

1.09g/t

65m

        5m

1.25g/t

 (end of hole).

LRC-21:

26m

      14m

1.81g/t

4m @ 2.67g/t

       33m

62m

        4m

1.10g/t

LRC-22:

46m

      12m

0.92g/t

Section 2:

Hole No

From

Intersection

Grade

Including

      From

LRC-25:

10m

      26.5m

1.10g/t

6m @ 2.11g/t              28m

NB, hole ends in gold zone.

KISUNGE CENTRAL ZONE:

Section 4:

Hole No

From

Intersection

Grade

Including

      From

LRC-26:

 3m

       8m

4.48 g/t

LRC-27:

11m

       8m

1.91g/t

4m @ 3.04g/t

        11m

                                LRC-28:

 2m                                 6m                    1.26g/t

                                20m                              14m                    1.28g/t                   3m @ 2.09g/t                 26m

Section 5:

Hole No

From

Intersection

Grade

Including

      From

LRC-23:

   1m

       12m

1.42g/t

4m @ 3.26g/t

        5m

 23m

         2m

1.11g/t  (end of hole)

KISUNGE EAST ZONE:

Section 6:

Hole No

From

Intersection

Grade

Including

      From

LRC-24:

  52m

       4m

3.29g/t (end of hole)

LRC-29:

  44m

       5m

0.85

This mineralization will be followed up with a more detailed RC program.  The above technical information for the 2004 trenching and drilling program was reviewed and verified by Mr. Peter Chadwick, M.Sc., the Company’s qualified person for the Luhala Property.property throughout fiscal 2006.

THE LUHALA PROPERTY IS WITHOUT KNOWN MINERAL RESERVES AND ANY PROPOSED EXPLORATION PROGRAM IS AN EXPLORATORY SEARCH FOR ORE.

Lunguya Project Area

Property Description and Location

The Lunguya Property is located in the Kahama District of Tanzania(see property location map), and the Company’s interest therein is held indirectly through Tanzam.  The Lunguya Property is situated in the Lake Victoria Greenstone Belts, approximately 100 kms by air to the southwest of Mwanza and about 15 kms south of  Bulyanhulu.  The Lunguya Property consists of seven (7)eight (8)  prospecting licenses (namely, the Lunguya 1766/01 and 2828/04, Lunguya East 1887/02 and 3273/05, Shilela North 2059/02 and 4074/06, Shilela  2472/04 and Lunguya West PL 2193/03).  These prospecting licenses are in good standing with respect to required filings and payments with the Government of Tanzania, although the Lunguya East prospecting license (1887/02) is under application for renewal.Tanzania.

With respect to Lunguya PL 1766/02, in January, 2003, a Shareholder’s Agreement was entered into wherein a new company, Lunguya Mining Company Limited (“LMC”), was created to form a joint venture between Northern Mining Consultancy Company Limited (“NMCCL”), Tanzam and LMC.  Tanzam has a 60% shareholding and NMCCL has the remaining 40% shareholding in LMC.

The Lunguya Property covers an area of 323 square kilometers.  There are no work requirements, and property payments on each of licenses are as follows:

* First renewal annual rental fees = US$30/sq.km.

Through prospecting and mining option agreements, the Company has options to acquire interests ranging from 60% to 75% in the seven (7)eight (8)  licenses.  To maintain the options, the Company is required to make certain expenditures and fund all exploration costs of the properties.  During the fiscal year ended August 31, 2003, the Company abandoned one of the licenses, and wrote-off $35,342 in costs deferred to such license.  There are no royalties to the original license holder.  At Shilela North, through a Prospecting and Mining Option Agreement signed by Tanzam dated June 25, 1999, the Company has a right to obtain a 70% working interest in this project and no royalties are required.  The payment schedule is identical at Shilela.  At Lunguya East, the Company can earn up to a 70% interest and no royalty is required.  For PL 1990/02, through a Prospecting and Mining Option AgreementAgree ment dated Jun eJune 10, 1999, the Company can earn a right to obtain a 75% working interest in this project and no royalty is required; an initial payment of US$50,000 was made and no annual payments are required.

Internal to the Lunguya prospecting license (1766/01) is a small approximately 1.0 square kilometre primary mining license (“PML”).  The PML is currently held by Mr. Joseph Magunila who is exploiting the Nyamakwenge Reefs.  Negotiations for control and the validity of this license is currently under discussion with

relevant private and government third parties.  Portions of the currently known veins at Lunguya and some of the RC and Lunguya diamond drilling, conducted by the Company in 2002, lie within this mining license.

The Company has deferred total net costs (after any recoveries and write offs) of $2,793,161 on the Lunguya Property to August 31, 2005.  The Company carried out limited exploration in 2005 undertaking regional biogeochemical (BGC) surveys across the entire Project Area.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The Lunguya Property can be reached by plane from Mwanza to an airstrip accommodating Bulyanhuylu or by road via Geita up to the Bulyanhulu/Kahama road intersection. From Kahama, the property is located approximately 8 kms to the south, toward Lunguya village. Secondary roads and trails traverse the property. The Nyamakwenge Reef, located in the northeastern part of the property, can be accessed using a 12 kms dirt tract passing to the north of the property.  Climate and elevation are similar to the Luhala Property.

Very little outcrop (less than 1%) has been identified at Lunguya.  The entire property is flat and covered largely by granitic sands and grey orange laterities derived from granitic sources.  Like Luhala, Lunguya is

actively cultivated, but also is being actively mined by a few score artisenalartisanal miners along the trend of the Nyamakwenge Reefs.  No significant infrastructure, power or water is available on site.  However, the entire infrastructure of the region including electricity, air transport, health clinics, schools, and improved road networks, have been greatly improved due to the proximity to Barrick’s Bulyanhulu mine, some 20 kms to the north.

History

Exploration in the Lunguya area has had a much briefer history than the exploration of the Luhala area.  Reconnaissance overviews of this area are documented, but no significant historical exploration activities are known to the Company.  The license was acquired by the Company in 2001 and a program of bulk leach extractable gold (BLEG) sampling, geological mapping, rock sampling, reverse circulation (RC) and diamond drilling was initiated.

Geology

The very limited outcrop exposures on the Lunguya concession necessitate development of a geological and interpretive environment largely based on geophysical interpretations.

Regionally, Lunguya is located near the eastern terminus of the inner volcanic arc, lower Nyanzian, of the Sukumaland Greenstone belt.  The succession is dominated by tholeiitic volcanic rocks containing lesser felsic tuffaceous rocks and  argillaceous horizons cut by thin quartz porphyry dykes and sills.  The thick, banded iron formation and felsic flows characteristic of the outer arc Upper Nyanzian sequence are absent. Most of the map scale granite – greenstone contacts strike north-south.  No information is available with respect to the orientation of sub-surface contacts.

At Lunguya, all currently known, auriferous structural zones track at an oblique angle, the eastern granodiorite-mafic volcanic contact.  Auriferous veins strike at 020° to 030° with the dominant intrusive volcanic contact trending at approximately 360°.  On the property scale, two 330° trending fault  structures are interpreted to offset the Lunguya vein into two fault repeated vein segments, having strike lengths of  approximately 180 and 300 m.  A few score artesinalartisanal miners have exploited these veins to a depth not exceeding 30 vertical m’s subsurface. A second set of auriferous reefs, the Nyikoboko Reefs, are located 12 kilometres to the south. This area is associated with a smaller set of largely inactive artisanal dumps and workings.

Based on the aeromagnetic data a new model has been proposed whereby a large NS trending shear zone is believed to exist below a thick black cotton soil (mbuga) cover. The thin veins associated with the Nyikoboko and Nyamakwengwe reefs probably represent secondary structures from the main shear. This idea has been tested using biogeochemistry and results are pending.

Exploration

Exploration at Lunguya has included the following material work:

1.

Rock geochemical surveys were successful in defining the principal mineralized trends of auriferous vein systems at Lunguya.  Reconnaissance mapping programs have established a spatial relationship of granite greenstone contacts to the localization of auriferous quartz veins.  The proximity of these contacts is clear at both the Nyamakewnge and Nyikoboko Reefs.

2.

Diamond drilling programs on the Nyamakwenge and Nyikoboko Reefs have been successful in demonstrating excellent geological continuity of the vein systems. Continuity of gold grades within  these vein systems is more problematic.

3.

In combination with geological mapping, diamond drill programs have established the strong likelihood that the Western and Eastern Reefs at Nyamakwange represent a common, fault repeated vein system with dextral and reverse offsets.  The re-constructed length of the known segments of this vein system is approximately 475 m’s.  The vein ranges in thickness, cross sectional indicated, from 1.0 to 8.0 m’s.

4.

Using right handed or dextral offsets, several apparently unrelated geochemical anomalies may be tied to interpreted dextral fault offsets of the Lunguya vein system.

2005 Exploration Work

During the 2005 exploration period, an auger drilling program was initiated on the Lunguya project area to test various anomalies reported in previous exploration programs. The aim of this particular program was to start testing some of the less attractive RAB drill targets while waiting the arrival of the drill rig in Mwanza.  The Company carried out limited exploration in 2005 undertaking regional biogeochemical (BGC) surveys across the entire Project area.

Limited exploration activities were carried out on the Lunguya property during fiscal 2006.  The greater portion of the shear zone is covered by mbuga, and to test the idea biogeochemistry was conducted in 2003 over the mbuga on a 400m x 50m grid system where some 2,291 samples were collected. Abundant one point gold anomalies with pathfinder support have been identified. These will be tested with IP in the 2007 dry season.

The Company has deferred total net costs (after any recoveries and write offs) of $2,826,034 on the Lunguya Property to August 31, 2006.  

Mineralization

Lunguya is a mineralized brittle ductile strain zone, developing internal to a major granite-greenstone contact. Gold is associated with one fault offset vein which is likely broken into two segments, the Western and Eastern reefs.  Lesser veins are also present.  Initial sampling of artisenalartisanal vein waste dumps indicated the presence of well mineralized dump samples.  The site contained greater than 200 of these small pits-shafts ranging from 1 to 20 metres deep.

Diamond drill and RC programs at Lunguya have demonstrated excellent geological continuity of the Nyamakwenge West and East Reefs but weaker continuity of grade.  The difficulty in obtaining representative gold grades from small core samples of vein material containing coarse particulate gold is a well documented phenomenon.  Significant assays obtained during the 2002 diamond drill program at Lunguya are summarized in Table 4 of the Luhala and Lunguya 2002 Report.  Widths in these boreholes are approximately true widths and the boreholes have been collared roughly perpendicular to the strike and dip of the mineralized structural zones.

Drilling

Two programs of drilling where initiated on the Lunguya property during 2002. This included a seven hole RC program totaling 535 metres completed in late August 2002.  A follow-up diamond drill program consisting of 1175 metres, in 18 boreholes was completed in November and December of 2002.

Core recovery measurements where made on site by geotechnician of the Company.  RC boreholes (LGRC 01 – 07) utilized the same grid system as the diamond drill program.  The location of all drill collars were marked with concrete monuments.  Drilling was concentrated on the Lunguya Reefs (11 boreholes) with three boreholes completed on the Nyikoboko Reefs.  A series of geological cross-sections and plans (Figures 10 to Figure 18 in the Luhala and Lunguya 2002 Report), summarize the results of these programs.  Both RC and diamond drill data are combined on these sections.  Drill collar locations for 12 diamond holes and 7 RC holes on the Nyamakwenge Reefs are shown on Figure 9 of the Luhala and Lunguya 2002 Report.  Drill logs for diamond drill holes are compiled on Appendix III and for RC holes in Appendix IV of the Luhala and Lunguya 2002 Report.  Assay results for diamond dril ldiam ond drill holes are compiled in Appendix V and RC assay data in Appendix VI of the Luhala and Lunguya 2002 Report.

THE LUNGUYA PROPERTY IS WITHOUT KNOWN MINERAL RESERVES AND ANY EXPLORATION PROGRAM IS AN EXPLORATORY SEARCH FOR ORE.

Tulawaka Project Area

The Tulawaka Project is located in the Biharamulo District of Kagera Region of Tanzania and is approximately 160 kilometers west-southwest of Mwanza town.Mwanza.  The Tulawaka Project consists of fifteen (15)

nine (9) prospecting licenses, including three (3)six (6) licenses held through Tanzam.   These prospecting licenses are in good standing with respect to required filings and payments with the Government of Tanzania.  The Company has incurred $1,429,503$955,269 in total costs on the Tulawaka Project to August 31, 2005.  Twelve2006.  Two of the Tulawaka prospecting licences are under option to MDN.  

The Tulawaka Project covers an area of approximately 391297 square kilometers.  The property lies on an east-west magnetic trend, between the Kakindu gold discovery (Ashanti) and the Tuluwaka gold discovery (Pangea).  RAB (rotary air blast) drilling on the Mnekezi property intersected mineralized chert sequences which included intersections of 5 meters @ 0.26 grams/tonne gold, 3 meters @ 0.24 grams/tonne gold and 1 meter @ 0.37 grams/tonne gold.  The majorityMuch of this project has been joint ventured to MDN.

2005 Exploration Work

In October 2005, MDN announced significant drill intersections from their initial drill program in the Tulawaka Area:

MDN noted that the holes were drilled at 60° to the horizontal and were sited “heel-to-toe” on the drill fences to ensure they completely overlapped.  Target depth was 70 metres and the drill fences were spaced approximately 150 metres apart.  The drilling employed RAB and RC techniques.

The discovery area is located approximately 15 kilometres from the Tulawaka Gold Mine (Barrick 70% - MDN 30%) and extends for a strike distance of approximately 0.4 kilometres and across a width of 0.3 kilometres. It was tested initially by four drill fences comprising 23 drill holes for a total of 1,475 metres. MDN reported that the target evaluated in the drill program was previously unknown and still remains open along strike and at depth.

According to MDN, a follow up drilling program is being arranged in order to further investigate the gold mineralization that has just been discovered and to probe two additional targets in other nearby Prospecting Licenses.

The recent program tested three targets, two of which revealed significant gold intersections as reported above. Located about 10 kilometres from an earlier discovery made by MDN in the region, MDN describes the latest find as “an entirelyentirel y different gold occurrence.”

MDN said “both gold discoveries are interpreted as being associated with shear zones that are close to the contact of volcanic and granitic rocks, and both remain open on strike and at depth. We are confident that yet more significant gold occurrences will be found in this region, which has remained virtually unexplored until now”.

Samples from the MDN drill program were prepared and analyzed by Humac Laboratories in Tanzania. The anomalous results were subsequently independently checked by the ALS Chemex laboratory in South Africa. The drilling program was carried out under the direction of Geologist Brian Lloyd, supervised by Carlos

Bertoni, P.Geo., a Qualified Person under NI 43-101.

In October 2005, MDN announced a significant gold discovery on a Prospecting License (PL) held under option from the Company in the Tulawaka region of Tanzania.  In March 2006, MDN announced assay results from the Isozibi gold discovery on PL2182/03 which is located about 17 kilometres northwest of the Tulawaka gold mine’s process plant. The discovery is known to extend for approximately one kilometre along strike and across a width of 0.9 kilometres. This previously unknown gold occurrence is associated with fracture zones in iron formations, a particularly attractive environment for the emplacement of gold deposits.  The discovery was tested by 26 RC drill holes for a total of 2,582 metres. Among the most significant drill intersections from this initial drill program were 2.0 metres averaging 4.4 g/t and 1.0 metre grading 3.25 g/t.

On November 15, 2006, MDN announced significant assay results from the RC drill program they carried out on the Viyonza Zone, which includes the Nyantimba license optioned from the Company.

THE TULAWAKA PROPERTY IS WITHOUT KNOWN MINERAL RESERVES AND ANY EXPLORATION PROGRAM IS AN EXPLORATORY SEARCH FOR ORE.

Lake Victoria Goldfield Properties

The following discussion regarding the Lake Victoria Goldfield Properties below is summarized in part from a technical report prepared in accordance with the requirements of NI 43-101F dated March 21, 2002 entitled, “Project Technical Review on 52 Prospecting Licenses, Lake Victoria Goldfields Tanzania” by Stephen R. McMullan, P. Geo. of  Poseidon Geophysics (Pty) Ltd. (the “52 PL Report”).  The reader is referred to the complete text of the 52 PL Report, which is available atwww.sedar.com, filed on March 28, 2002 under the heading, “Technical Reports”.

Property Description and Location

Tanzam, a privately held mineral investment company wholly-owned by the Company, currently holds various interests in 141121 prospecting licenses in the Lake Victoria Goldfields Belts of north-western Tanzania (the “LVGB”) in order to explore for economic mineral deposits.

Tanzam engaged Geodass (Pty) Limited of Johannesburg, South Africa (now Fugro Airborne Surveys (Pty) Limited) to undertake and manage an integrated mineral exploration program in the LVGB in August 1999. The exploration program was designed primarily to explore for gold mineralisation, without bias for mode of occurrence. Other commodities including base metals, diamonds and industrial minerals were also considered and suitable exploration methods were adopted for a multi-commodity approach.

As of the date hereof, Tanzam holds interests in the following licenses: