On February 23, 2007, the Company entered into a formal Property Option Agreement (the "Property Option Agreement"), dated for reference January 22, 2007, with St. Elias Mines Ltd. ("St. Elias"), pursuant to which St. Elias granted to the Company an option (the "Option") to acquire not less than an undivided 66% legal, beneficial and registrable interest in certain mining leases in Peru including, without limitation, St. Elias' option to earn a 95% interest in the Vilcoro Gold Property project comprised of approximately 600 hectares in Peru (collectively, the "Properties").

The Property Option Agreement is attached to this Current Report as an Exhibit. In addition, this Current Report is in furtherance of the Company's Current Report dated January 22, 2007 which disclosed the Company's original Letter of Intent to which the Property Option Agreement is now the formal and final agreement.

Under the terms of the Property Option Agreement, and in order to exercise its Option to acquire the Properties, the Company is required to make the following non-refundable cash payments to St. Elias totalling U.S.$350,000 in the following manner: (i) the first payment of U.S. $50,000 is due within five business days from the execution of the Property Option Agreement, which will be paid shortly; (ii) the second payment of U.S. $100,000 is due on or before the twelve-month anniversary of the signing of the Property Option Agreement; and (iii) the third payment of U.S. $200,000 is due on or before the twenty-four-month anniversary of the signing of the Property Option Agreement; and the Company is required to issue to St. Elias 50,000 shares of common stock of the Company on or before the twelve-month anniversary of the signing of the Property Option Agreement; and the Company is required to incur the following incurred costs totalling U.S. $2,500,000 in the following manner: (i) a first expenditure of U.S. $500,000 to be incurred on or before the twelve-month anniversary of the signing of the Property Option Agreement; (ii) the second expenditure of U.S. $750,000 to be incurred on or before the twenty-forth-month anniversary of the signing of the Property Option Agreement; and (iii) the third expenditure of U.S. $1,250,000 to be incurred on or before the thirty-sixth-month anniversary of the signing of the Property Option Agreement.

Also under the terms of the Property Option Agreement: (a) St. Elias will be the operator of the Properties and will receive an 8% operator fee on all exploration expenditures; (b) once the Company exercises the Option, the Company agrees to pay 100% of all on-going exploration, development and production costs until commercial production (the "Production Costs"); and (c) the Company has the right to receive 100% of any cash flow from commercial production of the Properties until it has recouped the Production Costs, after which the cash flow will be allocated 66% to the Company and 34% to St. Elias.