MIRASOL RESOURCES LTD.

Transcription

1 MIRASOL RESOURCES LTD. (A Development Stage Company) INTERIM CONSOLIDATED FINANCIAL STATEMENTS 31 MARCH 2007 EXPRESSED IN CANADIAN FUNDS The statements have not been reviewed by the Company s auditor.

2 MIRASOL RESOURCES LTD. Statement 1 (An Exploration Stage Company) Interim Consolidated Balance Sheets As at 31 March As at 30 June ASSETS Current Cash $ 4,917,803 $ 5,604,472 Receivables and advances 103, ,884 5,021,243 5,714,356 Equipment, net (Note 4) 109,780 8,443 $ 5,131,023 $ 5,722,799 LIABILITIES Current Accounts payable and accrued liabilities $ 131,643 $ 111,208 Due to related parties (Note 6) 10,074 10, , ,282 SHAREHOLDERS' EQUITY Share Capital (Note 7) Authorized: Unlimited common shares without par value Issued and fully paid: 25,374,769 (24,219,681) common shares 8,262,308 7,830,643 Contributed surplus 770, ,029 Deficit - Statement 2 (4,043,565) (2,711,155) ON BEHALF OF THE BOARD: 4,989,306 5,601,517 $ 5,131,023 $ 5,722,799 signed "Mary Little", Director signed "Nick Demare", Director See Accompanying Notes

3 MIRASOL RESOURCES LTD. Statement 2 (An Exploration Stage Company) Interim Consolidated Statements of Operations and Deficit Unaudited - Prepared by Management Three Months Ended 31 March Nine Months Ended 31 March Operating Expenses Stock compensation $ 41,825 $ 23,554 $ 328,617 $ 70,662 Consultants and contractors 49,179 28, ,993 85,550 Professional fees 17,597 10,334 64,757 29,678 Office and miscellaneous 49,618 12,753 85,797 21,471 Shareholder information 27,097 19,699 62,462 43,335 Travel 49,147 13,161 86,330 23,827 Information Technology ,375 - Investor Relations 20,000-45,000 - Listing and filing fees 9,056 5,104 18,948 14,786 Amortization (2,785) - 2, , , , ,309 Other Items Exploration costs 377, , , ,533 Foreign exchange (gain) (10,805) 10,414 10,284 (21,341) Interest and bank charges - net (43,552) 184 (138,139) , , , ,864 Loss for the Period (583,574) (307,147) (1,332,410) (832,173) Deficit - Beginning of the Period (3,459,991) (1,833,279) (2,711,155) (1,308,253) Deficit - End of Period $ (4,043,565) $ (2,140,426) $ (4,043,565) $ (2,140,426) Loss per Share - Basic and Diluted $ (0.02) $ (0.02) $ (0.05) $ (0.06) Weighted Average Number of Shares Outstanding 25,444,256 13,006,614 24,662,337 12,944,387 See Accompanying Notes

4 MIRASOL RESOURCES LTD. Statement 3 (An Exploration Stage Company) Interim Consolidated Statements of Cash Flow Unaudited - Prepared by Management Three Months Ended 31 March Nine Months Ended 31 March Operating Activities Loss for the period $ (583,574) $ (307,147) $ (1,332,410) $ (832,173) Items not affected by cash - Stock compensation 41,825 23, ,617 70,662 Amortization 5,912-11,604 - Amortization included in exploration expenses 5, , (530,786) (283,260) (983,438) (760,787) Changes in: - Receivables and advances (9,846) (25,910) 6,444 (23,400) - Accounts payable and accrued liabilities (48,144) (15,521) 20,435 (18,047) Cash used in operating activities (588,776) (324,691) (956,559) (802,234) Investing Activities Purchase of property, plant and equipment 2,201 - (121,692) - Cash used in investing activities 2,201 - (121,692) - Financing Activities Share capital issued 117,614 70, ,582 78,895 Share issuance costs (10,000) Advances from (repayments to) related parties (25,082) Cash received from financing activities 117,614 70, ,582 43,813 Net increase (decrease) in Cash (468,961) (254,116) (686,669) (758,421) Cash - Beginning of period 5,386, ,754 5,604,472 1,240,059 Cash - End of Period $ 4,917,803 $ 481,638 $ 4,917,803 $ 481,638 See Accompanying Notes

5 MIRASOL RESOURCES LTD. (An Exploration Stage Company) Interim Consolidated Schedule of Resource Property Costs For the Period Ended 31 March 2007 Unaudited - Prepared by Management Schedule Three Months Ended 31 March Nine Months Ended 31 March Sascha Option payment received $ - $ - $ (56,588) $ - Consultants and salary 1,589 14,327 6,411 48,117 Camp and general 1,517 (1,619) 6,226 9,461 Travel ,654 Assays and sampling Mining rights and fees - 4, ,658 3,110 17,579 (43,199) 92,890 Claudia Option payment received - - (84,746) - Consultants and salary 6,135 9,288 24,853 27,644 Camp and general 144 6,263 16,776 18,585 Mining rights and fees ,729 7,808 Travel 224 8,736 8,236 8,825 Assays and sampling ,384 8,775 6,607 25,122 (21,768) 71,637 Joaquin Option payment received - - (56,588) - Consultants and salary 3,910 11,687 11,518 23,593 Camp and general 2, ,209 3,276 Assays and sampling ,939 Mining rights and fees 8 3, ,262 Travel ,384 15,610 (41,286) 43,255 Santa Rita Option payment received - - (84,746) - Consultants and salary ,734 4,250 15,616 Mining rights and fees ,003 3,242 Assays and sampling ,532 Camp and general Travel ,577 (76,877) 20,542 Espejo Consultants and salary 10,548-18,179 - Assays and sampling Travel Camp and general ,479-19,110 - Surfer Consultants and salary Zoe Consultants and salary Nico Camp and general 17, , Assays and sampling 12, , Consultants and salary 14,407 5,044 27,902 8,217 Travel 2, , Mining rights and fees ,025 7,020 76,464 10,233 Generative exploration 300, , , ,976 Costs for the Period $ 377,197 $ 183,848 $ 607,079 $ 563,533 See Accompanying Notes

6 Mirasol Resources Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements 31 March 2007 Unaudited Prepared by Management 1. Nature of Business The Company s main business is acquiring and exploring mineral properties, principally located in Argentina, with the objective of identifying mineralized deposits economically worthy of subsequent development, mining or sale. The business of mining and exploration involves a high degree of risk and there can be no assurance that current exploration programs will result in profitable mining operations. The Company has no source of revenue, and has significant cash requirements to meet its administrative overhead and maintain its mineral interests. The recoverability of amounts shown for resource properties is dependent on several factors. These include the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development of these properties, and future profitable production or proceeds from disposition of mineral properties. Also, the Company will have to raise additional funds for future corporate and administrative expenses and to undertake further exploration and development of its mineral properties. While the Company has been successful in the past at raising funds, there can be no assurance that it will be able to do so in the future. 2. Significant Accounting Policies These interim financial statements follow the same accounting policies and methods of their application as the most recent annual financial statements. These interim financial statements should be red in conjunction with the audited financial statements as at 30 June 2006, except as stated below: Change in accounting policy: Effective July 1, 2006 the Company has adopted the following accounting policy with respect to exploration expenditures and acquisition payments: Acquisition and Exploration Costs Acquisition and exploration costs are expensed as incurred as the Company is in the process of exploring its mineral tenements and has not yet determined whether these properties contain ore reserves that are economically recoverable. If and when the Company s management determines that economically extractable proven or probable mineral reserves have been established, the subsequent costs incurred to develop such property, including costs to further delineate the ore body will be capitalized. This change in accounting policy requires the Company to restate the comparative figures presented in these interim consolidated financial statements as in the period prior to July 1, 2006 the Company s policy was to capitalize all mineral acquisition and exploration costs.

7 Mirasol Resources Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements 31 March 2007 Unaudited Prepared by Management The following is a summary of the accounts which have been affected as a result of the restatement for the change in accounting policy as at June 30, 2006: Deficit, end of period as previously reported $ 2,028,776 Restatement for change in accounting policy exploration expenditures 682,379 Deficit, end of period as restated $ 2,711,155 Resource Property Costs, end of period as previously reported $ 682,379 Restatement for change in accounting policy exploration expenditures (682,379) Resource Property Costs, end of period as restated $ - 3. Fair Value of Financial Instruments The Company s financial instruments consist of cash, accounts payable and amounts due to related parties. Unless otherwise noted, it is management s opinion that the Company is not exposed to significant interest, currency or credit risks arising from the financial instruments. The fair value of these financial instruments approximates their carrying value due to their short-term maturity or capacity of prompt liquidation. Foreign exchange risk The Company holds cash balances and incurs payables that are denominated in Argentinean Pesos. These balances are subject to changes in the exchange rate between the Canadian Dollar and the Argentinean Peso, which would result in a currency gain or loss to the Company. 4. Equipment Cost $ Accumulated Amortization $ Net Book Value As at 31 March 2007 $ Net Book Value As at 30 June 2006 $ Exploration equipment $ 109,923 10,013 99,910 3,172 Computer hardware $ 11,516 1,646 9,870 5,271 $ 121,439 11, ,780 8,443

8 Mirasol Resources Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements 31 March 2007 Unaudited Prepared by Management 5. Resource Property Costs Cumulative resource expenditures per project under active exploration are as follows: Acquisition Costs Exploration Costs Option Payments Balance as at 31 March 2007 Balance as at 30 June 2006 Sascha Property, Argentina $ 17,020 $ 351,289 $ (56,588) $ 311,721 $ 354,920 Nico Property, Argentina 8, , ,554 43,090 Claudia Property, Argentina 32, ,789 (84,746) 146, ,023 Joaquin Property, Argentina ,080 (56,588) 29,783 71,069 Santa Rita Property, Argentina 3,157 49,989 (84,746) (31,600) 45,277 a) Sascha and Joaquin Properties $ 61,199 $ 797,182 $ (282,668) $ 575,713 $ 682,379 The Company owns a 100% interest in the Sascha and Joaquin properties situated in the Santa Cruz Mining District, Argentina. The purchase price was the issuance of 3,000,000 common shares of the Company valued at the actual cost incurred by the related parties being $7,500 to acquire the property and a cash payment of $3,936. Company signed an option agreement with Coeur d Alene Mines ( Coeur ) for the exploration of its 100%-owned Sascha and Joaquin gold-silver projects in Santa Cruz Province, southern Argentina. The Letter of Intent provides for an agreement to give Coeur the option to earn an initial 51% in both projects by expending a total of US$ 8,000,000 in exploration over four years, of which $800,000 will be incurred in the first year, and cash payments to Mirasol totaling US$800,000. After earn-in, Coeur may elect to fund a bankable feasibility study to increase its interest to 61%, at which point Mirasol may elect to maintain a participatory 39% interest or permit Coeur to increase its interest to 71% by providing mine financing at commercial terms to Mirasol. Coeur will operate the exploration programs with collaboration from Mirasol. b) Claudia and Santa Rita Properties The Company owns a 100% interest in the Claudia and Santa Rita properties situated in the Santa Cruz Mining District, Argentina. The Company signed an option and joint venture agreement with a subsidiary of the Hochschild Mining Group ("Hochschild") to explore the Company s 100%-owned Claudia and Santa Rita gold-silver projects located in Santa Cruz Province, Patagonia, Argentina. The Letter of Intent provides for a joint venture agreement to give Hochschild the option to earn 51% in Claudia and Santa Rita in exchange for a US$3,500,000 investment in the Santa Rita Property and $6,000,000 investment in the Claudia Property in exploration over four years, and cash payments totaling US$950,000 over the same period. In addition, Hochschild may increase its interest to 65% in either or both projects by completing a bankable feasibility study, and further increase its ownership to 75% by providing mine financing at commercial terms to the Company. At each decision point, the Company may elect to retain a participating interest. Hochschild will operate the exploration program.

9 Mirasol Resources Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements 31 March 2007 Unaudited Prepared by Management c) Nico Property The Company acquired a 100% interest in certain mining interests situated in the Santa Cruz Mining District, Argentina, by staking. d) Espejo Property The Company acquired a 100% interest in certain mining interests situated in the Santa Cruz Mining District, Argentina, by staking. 6. Related Party Transactions Except as noted elsewhere in these financial statements, related party transactions are as follows: a) The amount owing to related parties is to directors of the Company. The amount was incurred in the ordinary course of business. The amount is unsecured, non-interest bearing and has no specific terms of repayment. Repayment is expected within the next fiscal year and therefore has been classified as a current liability in these financial statements. b) The following represents the details of related party transactions paid or accrued during the period ended 31 March: Consulting fees paid to a company controlled by an officer of the Company $ 221,850 $ 161,252 Accounting fees paid to an officer of the Company $ 24,500 $ 22, Share Capital a) Details of share capital are as follows: Authorized: Unlimited common shares without par value Shares Amount Issued and allotted: Balance 30 June ,892,181 $ 2,379,232 Exercise of share purchase warrants 5,815,000 3,057,625 Exercise of agents options 500, ,000 Shares issued for private placement 5,000,000 2,500,000 Exercise of options 12,500 4,375 Fair value of options exercised - 3,125 Share issuance costs - (288,714) Balance 30 June ,219,681 7,830,643 Exercise of share purchase warrants 994, ,363 Exercise of agents warrants Exercise of options 160,000 56,000 Fair value of options exercised - 40,000 Fair value of agents warrants - 83 Balance 31 March ,374,769 $ 8,262,308

10 Mirasol Resources Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements 31 March 2007 Unaudited Prepared by Management b) Issued capital includes 1,800,000 (2005 2,700,000) shares held in escrow. These shares are subject to the terms of escrow agreement. These shares will be released as follows: 10% on the listing date (released), and 15% each six months thereafter, of which 60% remains to be released. c) Details of contributed surplus: 31 March June 2006 Balance beginning of period $ 482,029 $ 84,581 Fair value of stock-based compensation 328, ,185 Fair value of agent warrants exercised (83) 65,388 Fair value of options exercised (40,000) (3,125) Balance end of period $ 770,563 $ 482,029 d) Share Purchase Options The Company has established a share purchase option plan whereby the board of directors may, from time to time, grant options to directors, officers, employees or consultants. Options granted must be exercised no later than five years from the date of grant or such lesser period as determined by the Company s board of directors. The exercise price of an option cannot be less than the Discounted Market Price as defined in the policies of the Exchange. Options begin vesting on the grant date based on a schedule outlined in the share purchase option plan. A summary of the Company s options, which includes options issued under the Company s stock option plan and agent s options, at 31 March 2007 and the changes for the period are as follows: Exercise Price Outstanding 30 June 2006 Granted Exercised Expired or Cancelled Outstanding 31 March 2007 Expiry date Cdn$0.35 1,102, ,000 10, ,500 4 May 2010 Cdn$ , , , March 2011 Cdn$ , ,000 9 May 2011 Cdn$ , , May 2011 Cdn$ , , July 2009 Cdn$ , , November ,017,500 70, ,000 52,500 1,875,000 Weighted average exercise price $0.49 $0.65 $0.35 $0.47 $0.51 On 17 July 2006, the Company granted 50,000 stock options to a consultant of the Company. The stock options are exercisable at $0.65 for a period of three years in accordance with the company s stock option plan. These options had an estimated value of $15,634. On 20 November 2006, the Company granted 20,000 stock options to a consultant of the Company. The stock options are exercisable at $0.66 for a period of three years in accordance with the company s stock option plan. These options had an estimated value of $9,820 on the grant date

11 Mirasol Resources Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements 31 March 2007 Unaudited Prepared by Management The fair value of the options granted is estimated on its date of grant using the Black-Scholes option-pricing model with the following assumptions: Options Issued 17 July 2006 Options Issued 20 November 2006 Expected dividend yield 0.00% 0.00% Expected stock price volatility 75% 75% Risk-free interest rate 4.25% 3.91% Expected life of options 3 years 3 years e) Warrants As at 31 March 2007, the following share purchase warrants were outstanding: Number Price per Share Expiry Date Warrants 637,500 $ May 2007 Agent s Unit Warrants 349,562 $ October 2007 Warrants 2,427,850 $ October 2007 f) Share Bonus Plan 3,414,912 During the prior year, the Company established a share bonus plan for senior management. The Company can issue 500,000 shares for each 500,000 ounces of gold or gold equivalent of Indicated Mineral Resource, as defined in National Instrument , up to 1,000,000 shares in total under the plan on any property in which the Company has an interest that is not less than 20%. 8. Segmented Information Details on a geographical basis are as follows: For the Period Ended 31 March 2007 Canada South America Total Loss for the Period ended 31 March 2007 $ (725,331) $ (607,079) $ (1,332,410) Assets $ 4,982,578 $ 204,803 $ 5,187,381 Equipment $ 17,740 $ 92,040 $ 109,780

12 Mirasol Resources Ltd. (A Development Stage Company) Notes to Interim Consolidated Financial Statements 31 March 2007 Unaudited Prepared by Management 9. Commitments a) By agreement dated 1 September 2004 and subsequent amended, the Company entered into a consulting agreement with a director and officer of the Company to act as the President and C.E.O. of the Company. Compensation will be US$10,000 per month. This agreement is effective until September b) By agreement dated 1 September 2004 and subsequently amended, the Company entered into a consulting agreement with a director to act as the Exploration Manager of the Company. Compensation will be US$9,000 per month. This agreement is effective until September c) By agreement dated 1 September 2004 and subsequently amended, the Company entered into a consulting agreement with an officer of the Company to act as the Vice-President of Exploration of the Company. Compensation will be US$500 per day for days worked. The officer has agreed to devote not fewer than 100 business days during each year to the business and affairs of the Company. This agreement is effective until September d) By agreement dated 12 May 2006, the Company entered into a consulting agreement with Ascenta Capital Partners Inc. of Vancouver, BC, to provide investor relations and financial communications services. Ascenta will receive a monthly retainer of $5,000 for a 12-month term subject to termination by either party with 30 days written notice. The Company has also issued as compensation to Ascenta an option to purchase 150,000 common shares at an exercise price of $0.76 per share which will be effective for a period ending 30 days after the termination of the contract. The options granted will vest in accordance with the TSX Venture Exchange guidelines and the Company s stock option plan. 10. Subsequent Events a) Subsequent to 31 March, 2007, a total of 808,506 warrants were exercised for cash of $588,628. b) On May 22, 2007 the Company closed a non-brokered private placement of 2,000,000 units at a price of $1.00 per unit for gross proceeds of $2.0 million. Each unit consists of one common share and one share purchase warrant entitling the holder to purchase an additional common share of the Company at a price of $1.50 per share until May 22, No broker or finders fees were paid and all securities are subject to a four-month hold. The proceeds will be used to fund Mirasol s exploration programs in Argentina and Chile, for corporate purposes and for general working capital.

13 FORM F1 MANAGEMENT DISCUSSION AND ANALYSIS FOR MIRASOL RESOURCES LTD. Our Management s Discussion and Analysis Introduction Prepared May 22, 2007 for the three months ended 31 March Monetary amounts are stated in Canadian funds unless otherwise noted. The following discussion of the Company s financial condition and results of operations should be read in conjunction with its interim consolidated financial statements and related notes for the period ended 31 March This section contains forward-looking statements that involve risks and uncertainties. The Company s actual results may differ materially from those discussed in forward-looking statements as a result of various factors, including those described under and Forward-Looking Information. Forward-Looking Information This management discussion and analysis ( MD&A ) contains certain forward-looking statements and information relating to Mirasol Resources Ltd. ( Mirasol or the Company ) that are based on the beliefs of its management as well as assumptions made by and information currently available to Mirasol. When used in this document, the words anticipate, believe, estimate, expect and similar expressions, as they relate to Mirasol or its management, are intended to identify forward-looking statements. This MD&A contains forward-looking statements relating to, among other things, regulatory compliance, the sufficiency of current working capital, the estimated cost and availability of funding for the continued exploration and development of the Company s exploration properties. Such statements reflect the current views of Mirasol with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievement of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Aside from factors identified in the annual MD&A, additional important factors, if any, are identified here. Overview Mirasol Resources Ltd. (TSXV-MRZ) is an exploration and development company focused on discovery and acquisition of new, high-potential precious metals deposits in the Americas. Mirasol Argentina SRL and Minera Del Sol SA, the Company s subsidiaries, currently hold 100% of the rights of seven exploration projects. In addition, the Company has a 99% interest in two joint ventures, Cabo Sur SA and Punta Verde SA which own 100% of the rights to two exploration projects. The Hochschild Mining Group owns the remaining 1% of the two joint ventures. Altogether the nine exploration projects total more than 180,000 hectares in Santa Cruz Province, in the Patagonia region of southern Argentina. The Company offers shareholders access to growth from the early stages, a portfolio of 100%-owned high quality projects in various stages of exploration, and a focus on emerging regions with high potential for discovery.

14 Current Highlights On May 22, 2007, the Company announced it closed a non-brokered private placement of 2,000,000 units at a price of $1.00 per unit for gross proceeds of $2.0 million. Each unit consist of one common share and one share purchase warrant entitling the holder to purchase an additional common share of the Company at a price of $1.50 per share until May 22, No broker or finders fees were paid and all securities are subject to a four-month hold. The proceeds will be used to fund Mirasol s exploration programs in Argentina and Chile, for corporate purposes and for general working capital. On March 27, 2007, the Company announced that its joint venture partner Coeur d Alene Mines ( Coeur ) commenced drilling at its 100%-owned Sascha gold-silver Project located within the Santa Cruz Province, Argentina. On March 5, 2007, the Company announced it had commenced an exploration program in the Tertiary Arc of Chile and Argentina. The program targets epithermal and porphyry deposit types exemplified by numerous larger and giant porphyry copper deposits in the region. On January 16, 2007, the Company announced the acquisition of 15,400 hectare Espejo project located in the Santa Cruz province. The 100% company owned Espejo property encompasses a gravel covered area identified as prospective for epithermal gold-silver mineralization. The Company has planned an exploration program to begin in early 2007 to outline potential drill targets. On January 10, 2007, the Company announced that its shares had been accepted for listing on the Frankfurt Stock Exchange under the trading symbol M8R. On October 3, 2006, the Company announced it had signed a binding Letter of Intent with a subsidiary of the Hochschild Mining Group ("Hochschild") to explore the Company s 100%- owned Claudia and Santa Rita gold-silver projects located in Santa Cruz Province, Patagonia, Argentina. The Letter of Intent provides for a joint venture agreement to give Hochschild the option to earn 51% in Claudia and Santa Rita in exchange for a US$3,500,000 staged exploration investment in the Santa Rita Property and $6,000,000 investment in the Claudia Property over four years, and staged cash payments totaling US$950,000 over the same period. In addition, Hochschild may increase its interest to 65% in either or both projects by completing a bankable feasibility study, and further increase its ownership to 75% by providing mine financing at commercial terms to the Company. At each decision point, the Company may elect to retain a participating interest. Hochschild will operate the exploration program, and on finalization the joint venture will be known as Cabo Sur SA and Punta Verde SA. On February 26, 2007 the Company announced that the definitive option and joint venture agreement had been signed.. On September 14, 2006 the Company announced the signing of a Letter of Intent with Coeur d Alene Mines ( Coeur ) for the exploration of its 100%-owned Sascha and Joaquin gold-silver projects in Santa Cruz Province, southern Argentina. The Letter of Intent provides for an agreement to give Coeur the option to earn an initial 51% in both projects by expending a total of US$ 4,000,000 in exploration in each of the Joaquin and Sascha Properties over four years, of which $800,000 will be incurred in the first year, and staged cash payments to Mirasol totaling US$800,000. After earn-in, Coeur may elect to fund a bankable feasibility study to increase its interest to 61%, at which point Mirasol may elect to maintain a participatory 39% interest or permit Coeur to increase its interest to 71% by providing mine financing at commercial terms to Mirasol. Coeur will operate the exploration programs with collaboration from Mirasol. On November 20, 2006, the Company announced that the definitive option and joint venture agreement had been signed.

15 Activities on Mineral Projects Activities during the three months ended 31 March 2007 were focused on exploration activities on the Company s gold-silver prospects. A test magnetometry survey was undertaken at the Claudia Project. Reconnaissance exploration continued at the Espejo property, located near Panamerican Silver s Manantial Espejo development project. Gradient array IP surveys were initiated at the Espejo and Nico projects, with results pending. As of March 31, 2007, the Company held 20 Cateos (mineral exploration concessions) in Santa Cruz Province. Mirasol identified, staked and holds a 100% interest in all of its prospects. The Company intends to carry out grass-roots exploration for gold and silver properties in Argentina, Chile, and elsewhere in Latin America, to advance such properties through further exploration in order to bring the properties to a stage where the Company can attract the participation of a major resource company which has the expertise and financial capability to take such properties to commercial production. As part of its exploration and new project generation strategy, Mirasol plans to continue to joint venture several properties during Generative Exploration: Generative exploration is a key strategy employed by Mirasol for identifying and acquiring new prospects. To identify a good opportunity, experienced professionals are needed to ensure the right opportunity is taken at the right time. Costs of generative exploration are those costs not attributable to a specific Mirasol project. When Mirasol defines a project as a distinct exploration target, it is then accounted for as a separate project. Generative exploration costs totaled $690,079 for the nine months ended 31 March 2007, up from $563,533 incurred for the same period last year. The majority of costs associated with generative exploration were for consulting and contractors, travel, camp and general costs, acquisition of exploration technology and equipment and administrative costs of the Company s exploration office. Generative exploration is an important element to Mirasol, as it continues to find exceptional opportunities for further exploration. The Company initiated field generative exploration activities in Chile and is active in other parts of Argentina. Sascha Property The Sascha Project hosts a gold and silver mineralized epithermal quartz vein system of lowsulphidation style which comprises four cateos and two M.D.s ( manifestaciones de descubrimiento ). Drilling is planned during the coming year. The Sascha Project is included in the Coeur joint venture. Coeur initiated drilling in March 2007 for anticipated total of 2500 metres. Costs incurred on the Sascha property totaled $3,110 for the three month period ended March 31, 2007, as compared to costs incurred in the same period last year, of $17,579. Of this period s total, $1,589 was spent on consultants and contractors, camp and general consisted of $1,517. As of the end of 31 March 2007, total cumulative costs of exploration on the Sascha property were $311,721.

16 Santa Rita Property Santa Rita is a northwest-trending structure which hosts a silver-dominated, low sulphidation quartz vein system measuring up to 18.9 meters at its widest point and more than 350 meters in length, and dipping on average 80 degrees northeast. A systematic channel sampling program was undertaken and assay results were presented in a news release dated October 7, First-phase channel and rock chip sampling returned a 1.0-metre interval of 645 g/t silver and 1.31 g/t gold within a 3-metre section grading 407 g/t silver and 0.83 g/t gold. Average assay results of 79.9 g/t silver and 0.81 g/t gold were obtained across the structure s widest exposure of 18.9 metres. Spending in the current period was $949, with consultants and salaries costs comprising $922 of this amount. The Santa Rita Property is subject to the Hochschild joint venture. Hochschild plans to drill the Santa Rita property during the next quarter. Claudia Property The Claudia Property comprises eight exploration cateos totaling 71,110 hectares located in the central part of Santa Cruz Province, beginning at the limit with, and for approximately 30 km south of Anglogold Ashanti s producing Cerro Vanguardia gold-silver mine. Initial exploration mapping of the La Claudia and Claudia II cateos identified several zones of veins and veinlets hosted within silicified rhyolite and rhyodacite tuff units. Sampling returned anomalous gold and silver assays from three discrete zones. Assay results from a systematic channel sampling program were presented in a news release dated November 25, Channel assay values reaching 3.28 g/t gold with g/t silver over 1.7 metres, and individual vein results up to 14.2 g/t Au with 229 g/t Ag over 0.7 metres were obtained. Further news of the Claudia Project was published in a news release dated August 3, The Claudia Project is part of the Hochschild Joint Venture. The current property has been expanded to 100,000 hectares. During the period Hochschild initiated detailed mapping and regional scale IP geophysical surveys over several mineralized targets. Expenses during the three months ended 31 March 2007 totaled $6,607, which included $6,135 was spent on consultants and contractors. Joaquin Property The Joaquin Property comprises three exploration cateos and one M.D. located in the central part of Santa Cruz Province. A total of four mineralized structures and breccias have been discovered to date, including the La Morocha and La Negra silver vein prospects, the Joaquin Main gold-silver vein zone, and a gold-silver anomalous vein and breccia prospect, La Morena. Assays from a systematic saw channel sample program undertaken during the second quarter 2006 were presented in a news release dated January 20, The Joaquin Property is part of the Coeur Joint Venture. Expenses during the three months ended 31 March 2007 totaled $6,384, which included $3,910 on consultants and salary, camp and general consisted of $2,466. Nico Property The Nico property, comprising 19,359 hectares, was staked in 2004 and is located 40 km north of Coeur d Alene Mines operating Martha silver mine, adjacent to a provincial highway. The central mineralized zone at Nico hosts a north-south trend of quartz veinlets and breccia and exhibits a silver-gold-polymetallic signature. During the period a ground magnetic survey was completed and gradient array IP geophysical survey initiated over key targets. Results are pending. Expenses during the three months ended 31 March 2007 totaled $47,025, which included $17,181 on consultants and salary, $14,407 on camp and general and $12,698 on assays and sampling.

17 Espejo Property The Espejo property was staked in April 2006 and is located south of Panamerican Silver s Manantial Espejo silver-gold development project. Initial reconnaissance and a geophysical survey were performed during the period. Activities completed include a ground magnetic survey, mapping and sampling. Expenses during the three months ended 31 March 2007 totaled $11,479, which included $10,548 on consultants and salaries. Other Properties In addition to the above projects, the Company has several other early stage exploration properties, including two new properties staked in Santa Cruz Province during the period. No exploration work has been carried out on the Zoe or Surfer property. Our Results of Operations For the Three Months Ended 31 March 2007 as compared to the Three Months Ended 31 March 2006 Net Loss and Operating Expenses For the period ended 31 March 2007, the Company experienced a net loss of $583,574 compared to a net loss of $307,147 for the comparative period in 2006, an increase of $276,427. The Company had a loss per share of $0.02 as compared to $0.02 in the prior year. Total operating expenses for the three months ended 31 March 2007 were $260,734 compared to $112,701 for the same period in 2006, an increase of $148,033. Travel increased due to increased travel between Australia and Argentina. Shareholder information and investor relations increased to $47,097, up from $19,699 in the prior period. This includes the hiring of an investor relations firm, which accounts for additional expenses of $20,000 in the current quarter. Consultant costs totalling $49,179 (up from $28,096 in the previous period) include costs paid to the Company s president. The company had exploration costs of $377,197 during the three months ended 31 March 2007, as compared to the same period last year, where the Company had exploration costs of $183,848. Liquidity and Capital Resources The Company s net working capital as at 31 March 2007 was $4,879,526 compared to a net working capital of $5,593,074 as at 30 June The cash balance at 31 March 2007 was $4,917,803 compared to $5,604,472 as at 30 June As at 31 March 2007, current liabilities were $141,717, compared to $121,282 as at 30 June Current liabilities include $10,074 owed to a director and officer of the Company for expenses paid on behalf of the Company. On 31 March 2007 and 22 May 2007, the Company had 25,374,769 and 28,183,275 issued common shares, respectively. On 31 March 2007 and 22 May 2007, the Company had 3,414,912 warrants and 4,606,406 warrants outstanding, respectively.

18 Subsequent to 31 March 2007, a total of 757,500 common shares were issued for cash of $563,125 by exercise of warrants. Summary of Quarterly Results The following table sets out selected unaudited quarterly financial information of Mirasol and is derived from unaudited quarterly consolidated financial statements prepared by management. The Company s interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles and expressed in Canadian dollars. Period Revenues $ Loss from Continued Operations and Net Income (loss) $ Basic and Fully Diluted Loss per Share from Continued Operations and Net Income (loss) $ 3 rd Quarter 2007 Nil (583,574) (0.02) 2 nd Quarter 2007 Nil (128,378) (0.01) 1 st Quarter 2007 Nil (620,458) (0.03) 4 th Quarter 2006 Nil (570,729) (0.05) 3 rd Quarter 2006 Nil (307,147) (0.03) 2 nd Quarter 2006 Nil (340,238) (0.03) 1 st Quarter 2006 Nil (184,788) (0.01) 4 th Quarter 2005 Nil (366,980) (0.03) 3 rd Quarter 2005 Nil (216,205) (0.03) 2 nd Quarter 2005 Nil (151,720) (0.02) Foreign Currency Exchange Rate Risk All of Mirasol s activities are located in Latin America, with the exception of a small administrative office in Canada. Mirasol s future profitability could be affected by fluctuations in foreign currencies relative to the United States dollar and Canadian dollar. Mirasol has not entered into any foreign currency contracts or other derivatives to establish a foreign currency protection program. Transactions with Related Parties As at 31 March 2007, $10,074 (30 June $10,074) was owed to a director and officer of the Company for expenses paid on behalf of the Company. Also during the period, the Company paid exploration consulting fees of $99,613 to a Company controlled by an officer of the Company. By agreement dated 1 September 2004, the Company entered into a consulting agreement with a director and officer of the Company to act as the President and C.E.O. of the Company. Compensation is currently US$10,000 per month. By agreement dated 1 September 2004, the Company entered into a consulting agreement with a director to act as the Exploration Manager of the Company. Compensation currently is US$9,000 per month.

19 Pursuant to an agreement dated 1 September 2004, the Company entered into a consulting agreement with an officer of the Company to act as the Vice-President of Exploration of the Company. Compensation is US$500 per day for the days worked. The Company paid $9,500 of accounting fees to a company where the CFO of the Company is a partner. Critical Accounting Policies and Estimates The details of the Company s accounting policies are presented in note 2 of the annual consolidated financial statements. The following policies are considered by management to be essential to understanding the processes and reasoning that go into the preparation of the Company s financial statements and the uncertainties that could have a bearing on its financial results. Change in accounting policy: Effective July 1, 2006 the Company has adopted the following accounting policy with respect to exploration expenditures and acquisition payments: Acquisition and Exploration Costs Acquisition and exploration costs are expensed as incurred since all of the Company is in the process of exploring its mineral tenements and has not yet determined whether these properties contain ore reserves that are economically recoverable. If and when the Company s management determines that economically extractable proven or probable mineral reserves have been established, the subsequent costs incurred to develop such property, including costs to further delineate the ore body will be capitalized. This change in accounting policy requires the Company to restate the comparative figures presented in these interim consolidated financial statements as in the period prior to January 1, 2006 the Company s policy was to capitalize all mineral acquisition and exploration costs. The following is a summary of the accounts, which have been affected as a result of the restatement for the change in accounting policy as at June 30, 2006: Deficit, end of period as previously reported $ 2,028,776 Restatement for change in accounting policy exploration expenditures 682,379 Deficit, end of period as restated $ 2,711,155 Resource Property Costs, end of period as previously reported $ 682,379 Restatement for change in accounting policy exploration expenditures (682,379) Resource Property Costs, end of period as restated $ -

20 Estimates Financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Approval The Audit Committee of the Company has approved the disclosure contained in this MD&A. Additional Information Additional information relating to Mirasol is available on SEDAR at