10KSB

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the Year Ended December 31, 2007

Commission File Number: 1-12401

WITS BASIN PRECIOUS MINERALS INC.

(Exact Name of Small Business Issuer as Specified in its Charter)

MINNESOTA	84-1236619
(State or Other Jurisdiction of	(I.R.S. Employer Identification Number)
Incorporation or Organization)

900 IDS CENTER, 80 SOUTH EIGHTH STREET, MINNEAPOLIS, MINNESOTA 55402-8773

(Address of Principal Executive Offices)

Issuer’s telephone number including area code: (612) 349-5277

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

COMMON STOCK, $0.01 PAR VALUE

Title of Class

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB o.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes o No x

The Company’s revenues for its most recent fiscal year: None.

The aggregate market value of the Company’s common stock held by non-affiliates as of March 31, 2008 was approximately $25,000,000, based on the closing sale price as reported on the OTCBB for the Company’s common stock on March 31, 2008.

On March 31, 2008, there were 120,140,866 shares of common stock issued and outstanding, which is the Company’s only class of voting stock.

Documents Incorporated by Reference: None.

Traditional Small Business Disclosure Format: Yes o No x

WITS BASIN PRECIOUS MINERALS INC.

Annual Report on Form 10-KSB

For the Year Ended December 31, 2007

Table of Contents

PART I		Page
Item 1.	Description of Business	4
Item 2.	Description of Properties	25
Item 3.	Legal Proceedings	26
Item 4.	Submission of Matters to a Vote of Security Holders	26
PART II
Item 5.	Market for Common Equity and Related Shareholder Matters	27
Item 6.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 7.	Financial Statements	36
Item 8.	Disagreements with Accountants on Accounting and Financial Disclosure	37
Item 8A(T).	Controls and Procedures	37
Item 8B.	Other Information	39
PART III
Item 9.	Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act	40
Item 10.	Executive Compensation	42
Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	46
Item 12.	Certain Relationships and Related Transactions	48
Item 13.	Exhibits	51
Item 14.	Principal Accountant Fees and Services	56
Signatures		57

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-KSB contains both historical statements and statements that are forward-looking in nature. Historical statements are based on events that have already happened. Certain of these historical events provide some basis to our management, with which assumptions are made relating to events that are reasonably expected to happen in the future. Management also relies on information and assumptions provided by certain third party operators of our projects as well as assumptions made with the information currently available to predict future events. These future event predictions, or forward-looking statements, include (but are not limited to) statements related to the uncertainty of the quantity or quality of probable ore reserves, the fluctuations in the market price of such reserves, general trends in our operations or financial results, plans, expectations, estimates and beliefs. You can identify forward-looking statements by terminology such as “may,” “could,” “should,” “anticipate,” “believe,” “estimate,” “continue,” “expect,” “intend,” “plan,” “predict,” “potential” and similar expressions and their variants. These forward-looking statements reflect our judgment as of the date of this Annual Report with respect to future events, the outcome of which is subject to risks, which may have a significant impact on our business, operating results and/or financial condition. Readers are cautioned that these forward-looking statements are inherently uncertain. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein. We undertake no obligation to update forward-looking statements. The risks identified in the section following Item 1 entitled “RISK FACTORS,” among others, may impact forward-looking statements contained in this Annual Report.

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PART I

ITEM 1. BUSINESS

OVERVIEW

Wits Basin Precious Minerals Inc. (with its subsidiaries “we,” “us,” “our,” “Wits Basin” or the “Company”) is a minerals exploration and development company based in Minneapolis, Minnesota. As of December 31, 2007, we hold interests in mineral exploration projects in South Africa, Colorado and Mexico.

· We hold a 35 percent equity interest in Kwagga Gold (Barbados) Limited (“Kwagga Barbados”), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, holds mineral exploration rights in South Africa. This project is referred to as the “FSC Project” and is located adjacent to the historic Witwatersrand Basin. The last completed drillhole on the FSC project occurred in 2005. On December 12, 2007, we entered into an agreement with AfriOre International (Barbados) Limited (“AfriOre”), the holder of the other 65 percent of Kwagga Barbados, whereby we may acquire all of AfriOre’s interest in Kwagga Barbados. See the “Our Exploration Projects” section that follows for more detail as to the FSC Project, including a discussion regarding a letter of intent we have entered into with respect to our rights to acquire the 65 percent interest in Kwagga Barbados held by AfriOre.

· On September 20, 2006, we executed a formal asset purchase agreement relating to the purchase of assets of the Hunter GoldMining Corporation, a corporation incorporated under the laws of British Columbia, Canada, which assets include the Bates-Hunter Mine, a prior producing gold mine from the 1860’s until the 1930’s located in Central City, Colorado. On January 28, 2008, we executed a fourth amendment to the formal purchase agreement, including an amendment to change the closing date from March 31, 2008 to June 30, 2008. We are continuing with a defined work program, which includes dewatering the existing mine shaft and performing a surface drilling program. See the “Our Exploration Projects” section that follows for detailed information regarding the Bates-Hunter Mine, including the fourth amendment to the formal asset purchase agreement.

· On October 31, 2007, we executed an amendment to the formal joint venture agreement with Journey Resources Corp., a corporation formed under the laws of the Province of British Columbia (“Journey”) and Minerales Jazz S.A. De C.V., a corporation duly organized pursuant to the laws of Mexico and a wholly owned subsidiary of Journey. Pursuant to the terms of the amendment, we own a 50 percent undivided beneficial interest in “located mineral claims” in the property known as the Vianey Mine Concession located in the State of Guerrero, Mexico (“Vianey”). In addition to located mineral claims, our interest includes all surface rights, personal property and permits associated with Vianey and all other claims, leases and interests in minerals acquired within two kilometers of the external perimeter of Vianey.  All work being performed at Vianey is under the supervision of Journey, which mainly consists of cleaning the site for a future work program. See the “Our Exploration Projects” section that follows for detailed information regarding the Vianey Mine, including the amendment to the formal joint venture agreement.

Additionally, we have made approximately $7,000,000 in advance payments on two equity investments to acquire interests in the following mining projects located in the People’s Republic of China (the “PRC”): (i) a nickel mining operation referred to as the Xing Wang Mine and (ii) the iron ore mining properties of Nanjing Sudan Mining Co., Ltd. (which includes Maanshan Zhaoyuan Mining Co. Ltd., and Xiaonanshan Mining Co., Ltd.) and Changjiang Mining Company Limited. Further due diligence and the satisfaction of certain conditions are required before we can proceed with completing the acquisition ofeither of these PRC projects.

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As of December 31, 2007, we do not directly own any mining permits, we possess only a few pieces of equipment and we employ insufficient numbers of personnel necessary to actually explore and/or mine for minerals. Therefore, we are substantially dependent on the third party contractors we engage to perform such operations. As of the date of this Annual Report, we do not claim to have any mineral reserves on our properties.

OUR HISTORY

We were originally incorporated under Colorado law in December 1992 under the name Meteor Industries, Inc. In conjunction with our April 2001 merger with activeIQ Technologies Inc., we reincorporated under Minnesota law and changed our name to Active IQ Technologies, Inc. In June 2003, following our transaction to acquire the rights to the FSC Project, we changed our name to Wits Basin Precious Minerals Inc., in order to further associate our corporate name with our new business model.

Until March 14, 2003, we provided industry-specific solutions for managing, sharing and collaborating on business information on the Internet through our Hosted Solutions Business and until April 30, 2003, we provided accounting software through our Accounting Software Business. We sold substantially all of the assets relating to our Hosted Solutions and Accounting Software Businesses as of such dates and as a result, we became an exploratory stage company effective May 1, 2003. As of the date of this Annual Report, we have only one operating segment, that of minerals exploration, and we will continue reporting as an exploration stage company until such time as an economic mineral deposit is discovered or we otherwise complete acquisitions or joint ventures with business models that have revenues.

OUR EXPLORATION PROJECTS

KWAGGA GOLD (BARBADOS) LIMITED and the FSC PROJECT

Overview

On June 4, 2003, Hawk Uranium Inc., (f/k/a Hawk Precious Minerals Inc.) a corporation formed under the laws of the Providence of Ontario, Canada (“Hawk”), AfriOre International (Barbados) Limited, a corporation formed under the laws of Barbados (“AfriOre”), and AfriOre’s wholly owned subsidiary, Kwagga Gold (Proprietary) Limited, a corporation formed under the laws of the Republic of South Africa (“Kwagga (Proprietary)”), entered into a Heads of Agreement whereby Hawk could earn an interest in exploration rights in certain lands located in the region adjacent to the main Witwatersrand Basin in the Republic of South Africa, referred to as the “FSC Project.” The Heads of Agreement required a total investment of $3,500,000 from Hawk to acquire a 50 percent equity ownership of Kwagga (Proprietary).

On June 26, 2003, we acquired Hawk’s interest and rights to the Heads of Agreement. On August 27, 2004, we entered into a new shareholders agreement, as amended August 30, 2004, with AfriOre and its wholly owned subsidiary, Kwagga Gold (Barbados) Limited, a corporation formed under the laws of Barbados (“Kwagga (Barbados)”). The new shareholders agreement superseded the Heads of Agreement. Kwagga (Barbados) is the parent and holding company of Kwagga (Proprietary). By September 2004, we had invested an aggregate of $2.1 million and became a 35 percent minority shareholder of Kwagga Barbados. The $2.1 million had been expended in the drilling of two holes, completed by August 2005.

On December 12, 2007, we entered into a new agreement, the Sale of Shares Agreement with AfriOre and Kwagga (Barbados), which specifies terms and conditions by which we may acquire the remaining 65 percent equity interest of Kwagga (Barbados). In order for us to acquire the remaining 65 percent interest, all of the following must occur: (1) on or before June 14, 2008 (or such extended date as agreed to by the parties), South Africa’s Minister of Minerals and Energy, who oversees the Department of Minerals and Energy (the “DME”), must consent in writing to the change in the controlling interest in Kwagga (Proprietary) as per South African law; (2) we must incur certain exploration expenditures in the aggregate amount of at least $1.4 million (this with the initial $2.1 million investment attains the $3.5 million investment necessary to acquire a 50 percent ownership level) as required in the shareholders agreement; and (3) we must pay to AfriOre an amount equal to $1.162 million on the earlier of (a) December 31, 2008 or (b) within three months following the final date of the completion of the required $1.4 million exploration expenditures. The closing of this transaction will occur three business days following the receipt of the DME consent, at which time we will acquire the remaining 65 percent interest and simultaneously grant to AfriOre a security interest in that 65 percent interest as collateral. Such security interest will not be released by AfriOre until such time as we incur the exploration expenditures and make the $1.162 million payment. The August 27, 2004 shareholders agreement remains in full force and effect until receipt of the DME consent, but upon receipt of the DME consent, such shareholders agreement will be superseded by the Sale of Shares Agreement. In the event the parties do not obtain the DME consent, the Sale of Shares Agreement will lapse and the terms and conditions set forth therein will be null and void and of no further force or effect.

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As additional consideration for entering into the Sale of Shares Agreement, AfriOre will be entitled to a two percent gross royalty on all sales of gold and any other minerals by the Company relating to the FSC project. We may buy back one percent of the two percent gross royalty for a one-time cash payment of $2 million upon delivery of a bankable feasibility study.

In connection with the Sale of Shares Agreement, we entered in an operating agreement with Kwagga (Proprietary), whereby we will serve as the manager of exploration, evaluation, development and mining of those mineral properties to which Kwagga (Proprietary) holds rights (the properties and valid prospecting permits cover approximately 230,000 acres). Under that operating agreement, we will be compensated for our management services according to the accounting procedure set forth in the operating agreement. We may terminate the operating agreement for any reason upon three months’ notice to Kwagga (Proprietary).

On March 3, 2008, we entered into a letter of intent with Communications DVR Inc. (“DVR”), a capital pool company listed on the TSX Venture Exchange (TSXV: DVR.P). Under the terms of the letter of intent, it is anticipated that DVR will acquire and assume all of our rights and obligations under the Sale of Shares Agreement in exchange for 22 million common shares of DVR (the “DVR Transaction”). DVR currently has 3,765,000 common shares issued and outstanding and at the request of DVR, trading of DVR common shares has been halted and will remain so until receipt by the TSX Venture Exchange of all requisite documentation in connection with this proposed DVR Transaction and satisfaction of related conditions.

The closing of the proposed DVR Transaction is subject to a number of other conditions including, but not limited to the following: (1) obtaining all necessary regulatory approvals, including the approval by the TSX Venture Exchange of the DVR Transaction, which is intended to qualify as DVR's qualifying transaction for purposes of the rules of the TSX Venture Exchange and as a result of which DVR would cease to be a capital pool company and would become a regularly-listed company on the TSX Venture Exchange, (2) DME and other necessary third party consents, (3) the negotiation and execution of definitive agreements, (4) board of director approval, (5) the completion of necessary financing and (6) other conditions typical of a transaction of this nature.

Upon completion of the DVR Transaction, the parties anticipate that DVR will have approximately 34,590,000 common shares issued and outstanding on a non-diluted basis, and its officers are expected to include H. Vance White, as Chief Executive Officer, and Dr. Clyde Smith, as President. We also anticipate that Mr. White, Dr. Smith and Mr. King will serve on the board of DVR.

Creating a vehicle that is focused on the 65 percent interest in the FSC project is part of an overall strategy to allow management to be single minded as well as having access to one of the largest mining capital markets in the world.

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Previous Exploration Efforts

The geological model was developed by AfriOre, affiliates of AfriOre and academic geologists from Witwatersrand University.

In October 2003, AfriOre commissioned the first drillhole, which was completed on June 8, 2004. This drillhole, BH47, was drilled in the western structural block to a depth of 2,984 meters (approximately 9,800 feet) and intersected a well developed succession of lower Proterozoic rocks before it was terminated in a zone of shearing. Although BH47 was not successful in intersecting any gold bearing mineralization reefs to the depths drilled, it did confirm the existence of the overlying cover rock stratigraphies, similar to those in the main Witwatersrand Basin, thereby confirming the initial geological model.

In October 2004, the South African Department of Minerals and Energy granted permission to prospect on newly acquired areas of the FSC Project, which had been defined as drillhole BH48. That second drillhole, BH48 (which was completed in August 2005) was drilled to a depth of 2,559 meters (approximately 8,400 feet) and intersected over 600 meters of quartzites, below cover rocks which included a relatively thin succession of Transvaal Supergroup sedimentary rocks (160 meters) and Ventersdorp Supergroup lavas (132 meters) below the Karoo Supergroup rocks. The quartzites have been positively identified as Witwatersrand rocks, both through stratigraphic correlation and age dating analysis. Although the age dating determinations indicated an age of the quartzites in accordance with that of the Witwatersrand Supergroup, expert consultants engaged by AfriOre correlated the quartzites with the West Rand Group of the Witwatersrand Supergroup. Also identified in BH48 were a number of bands of pyrite mineralization which, while returning assays results with negligible amounts of gold, nevertheless were consistent with similar features encountered throughout the rocks in the main Witwatersrand Basin.

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Our Exploration Plans

The FSC project is significant because for the first time all the historical data previously held by independent sources has been acquired and interpreted together. Part of the data that AfriOre has acquired and compiled from independent sources includes:

· Government aeromagnetic and gravimetric data.

· 66 regional drillholes of which 37 define the FSC basin and 7 intersected Witwatersrand rocks within the FSC basin.

· 736 line kilometers of seismic data.

Six potential sites for proposed future drilling have been identified for consideration. It has been recommended that additional seismic and drillhole information be purchased from a third party to enhance the interpretation in the exploration area prior to siting the drillholes.

A preliminary estimate of costs associated with the next phase of exploration has been calculated and includes the purchase of data from other drilling companies and the drilling of a single drillhole with associated costs. The actual costs will be dependent on the depth of drilling, with a 2,000 meter hole estimated at $622,000 and a 3,200 meter hole estimated at $957,790 based on estimates made in March 2007. We anticipate that costs will have generally increased since the estimate.

It is anticipated that the next round of exploration funding will be financed upon completion of the proposed DVR Transaction. In the event that the DVR Transaction is not closed, alternate sources of financing will be sought.

BATES-HUNTER MINE

Overview

On January 21, 2005, we acquired an option to purchase all of the outstanding capital stock of the Hunter Gold Mining Corporation (a corporation incorporated under the laws of British Columbia, Canada) including its wholly owned subsidiary Hunter Gold Mining, Inc., (a Colorado corporation). On July 21, 2006, we executed a stock purchase agreement with the parties to the option intended to supersede the option agreement. On September 20, 2006, we executed a formal asset purchase agreement (as amended on October 31, 2006, March 1, 2007 and May 31, 2007) to purchase the Bates-Hunter Mine on different economic terms than previously agreed upon in the stock purchase agreement or option. The formal asset purchase agreement is by and among the Company and Hunter Gold Mining Corporation, Hunter Gold Mining Inc., Central City Consolidated Mining Corp., a Colorado corporation, and George Otten, a resident of Colorado (collectively the “Sellers”) for the purchase of the following assets: the Bates-Hunter Mine (this was a prior producing gold mine when operations ceased during the 1930’s), a water treatment plant, mining properties, claims, permits and all ancillary equipment.

On January 28, 2008, the parties to the formal asset purchase agreement entered into a fourth amendment relating to the modification or amendment of certain terms, including without limitation: (i) the incorporation of an acknowledgement of the parties that we have incurred approximately $2,500,000 in due diligence costs; (ii) an amendment to change the closing date of the formal asset purchase agreement from March 31, 2008 to June 30, 2008 (and to change the date upon which either party may terminate the agreement in the event a closing has not occurred as of such date to June 30, 2008); and (iii) an amendment to the purchase price whereby all payments of principal and interest under such note can be deferred until the earlier of production on the property or January 2010.

At a formal closing, we shall deliver to the Sellers(i) a note payable to Sellers in the original principal amount of $6,750,000 Canadian Dollars, (ii) a deed of trust with George Otten as trustee for the Sellers securing the note payable, and (iii) 3,620,000 shares of our unregistered and restricted $.01 par value common stock. Furthermore, we would still be required to provide the following additional compensation: (i) a warrant to purchase up to 100,000 shares of our common stock, at an exercise price equal to the average prior 30-day sale price of our common stock; (ii) a two percent net smelter return royalty on all future production, with no limit; (iii) a one percent net smelter return royalty (up to a maximum payment of $1,500,000); and (iv) a fee of $300,000, payable in cash or common stock at our election.

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At December 31, 2007, Kenneth Swaisland, who previously assigned us certain rights relating to the Bates-Hunter property, held the right to receive a warrant to purchase up to 1 million shares of our common stock at an exercise price equal to the average prior 30-day sale price of our common stock, to be granted upon closing of our purchase of the Bates-Hunter mine. In January 2008, we entered into an agreement with Mr. Swaisland to that allowed him the right-to-purchase 125,000 shares of our unregistered common stock at $0.20 per share and provided for the issuance of a new three-year warrant to purchase up to 875,000 shares of our common stock at $0.20 per share in exchange for the termination of his right to receive the 1 million share warrant. In February 2008, Mr. Swaisland purchased the 125,000 shares for $25,000 and we finalized the agreement by issuing a three-year warrant to purchase 875,000 shares with an exercise price of $0.20 per share.

The Bates-Hunter Mine is located about 35 miles west of Denver, Colorado and is located within the city limits of Central City while the mill lies about one mile to the north in Black Hawk. The Central City mining district lies on the east slope of the Front Range where elevations range from 8,000 in the east to 9,750 feet in the west. Local topography consists of gently rolling hills with local relief of as much as 1,000 feet.

The mine site is located in the middle of a residential district within the city limits of Central City and is generally zoned for mining or industrial use. The Bates-Hunter shaft is equipped with a two-compartment, 85 foot tall steel headframe and a single drum hoist using a one inch diameter rope to hoist two ton skips from at least 1,000 feet deep. Permit M-1990-41 covers the Bates-Hunter Mine and the Golden Gilpin Mill and is in good standing. Colorado permitting regulations allow for transfer of ownership or relocating the mine within 90 to 120 days based on technical considerations only. A state-of-the-art water treatment plant has been constructed adjacent to the mine headframe. This is a significant asset given the mine site location and environmental concerns. Substantial water rights are attached to the mine permits. There is ample water to meet both present and future project needs. The Water Discharge Permit #0043168 was in good standing until July 31, 2007, and currently is under renewal. Transfer of permit ownership requires an amendment showing the new owner and takes about 30 days to process.

Geology

The regional geology of the Central City district is not “simple” but the economic geology is classically simple. The Precambrian granites and gniesses in the area were intensely fractured during a faulting event resulting in the emplacement of many closely spaced and roughly parallel veins. The veins are the result of fracture filling by fluids that impregnated a portion of the surrounding gneisses and granites with lower grade gold concentrations “milling ore” and usually leaving a high grade “pay streak” of high grade gold sulphides within a quartz vein in the fracture. There are two veins systems present, one striking east-west and the other striking sub parallel to the more predominant east-west set. These veins hosted almost all of the gold in the camp. The veins vary from 2 to 20 feet in width and dip nearly vertical. Where two veins intersect, the intersection usually widens considerably and the grade also increases, sometimes to bonanza grades. In the Timmins camp, this same feature was described as a “blow out” and resulted in similar grade and thickness increases. The Bates vein in the area of the Bates-Hunter has been reported to have both sets of veins and extremely rich “ore” where the two veins intersected. These veins persist to depth and consist of gold rich sulphides that include some significant base metal credits for copper and silver.

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Previous Exploration Efforts

The following is based on the information from a report titled “Exploration and Development Plan for the Bates-Hunter Project,” prepared by Glenn R. O’Gorman, P. Eng., dated March 1, 2004.

Lode gold was first discovered in Colorado in 1859 by John H. Gregory. The first veins discovered were the Gregory and the Bates. This discovery started a gold rush into the area with thousands of people trying to stake their claims. The Central City mining district is the most important mining district in the Front Range mineral belt. Since 1859, more than 4,000,000 ounces of gold have been mined from this district. Over 25% of this production has come from the area immediately surrounding the Bates-Hunter Project. Although the Bates vein was one of the richest and most productive in the early history of the area, it was never consolidated and mined to any great depth.

The majority of production on the claims occurred during the period prior to 1900. Technology at that time was very primitive in comparison to today's standards. Hand steel and hand tramming was the technology of the day. The above limitations coupled with limited claim sizes generally restricted mining to the top few hundred feet on any one claim.

During the early 1900’s cyanidation and flotation recovery technologies were developed along with better hoists and compressed air operated drills. Consolidation of land was a problem. Production rates were still limited due to the lack of mechanized mucking and tramming equipment. Issues that were major obstacles prior to the 1900’s and 1930’s are easily overcome with modern technology.

Colorado legislated their own peculiar mining problem by limiting claim sizes to 500 feet in length by 50 feet wide and incorporated the Apex Law into the system as well. A typical claim was 100 to 200 feet long in the early days. This resulted in making it extremely difficult for any one owner to consolidate a large group of claims and benefit from economies of scale. The W.W.II Production Limiting Order # 208 effectively shut down gold mining in the area and throughout Colorado and the United States in mid 1942.

Historical production records indicate that at least 350,000 ounces of gold were recovered from about half of the Bates Vein alone to shallow depths averaging about 500 feet below surface.

GSR Goldsearch Resources drilled two reverse circulation holes on the property in 1990. The first hole did not intersect the Bates Vein. However, the second drilled beneath the Bates-Hunter shaft bottom intersected the Bates Vein at about 900 feet below surface. The drill cuttings graded 0.48 oz. Au/ton over 10 feet. This drillhole intersected three additional veins as well with significant gold assays.

In 2006 and 2007, we completed a total of 7,739 feet of diamond drilling in seven holes despite the extreme winter conditions in the Colorado mountains and difficulties with the drilling contractor’s proficiency, both which significantly slowed the surface drilling progress. Several narrow intervals of potential ore grade gold values were intersected. Three-dimensional computer modeling of the data from the drillholes has allowed the identification of additional drill targets for 2008. Mine de-watering has recently reached a depth of approximately 410 feet below the mine shaft collar.

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Our Exploration Plans

We have conducted a detailed and comprehensive exploration program on the Bates-Hunter property consisting of the following: de-watering the shaft; underground and surface geologic mapping, sampling, and assaying; a detailed surface survey of claims and outcropping veins; computer modeling with state-of the three-dimensional art software; surface drilling of deep holes to test selected targets below the 750 foot depth of previous mining. Once de-watering has exposed a suitable level, underground diamond drilling of targets in veins adjacent to the Bates Vein will be undertaken.

We have engaged a new drilling contractor for the drilling of BH08-09, which is now being drilled toward what we perceive as a quality target and it is expected that this hole will be completed in April 2008.

VIANEY MINE CONCESSION

On June 28, 2006, we entered into an option agreement with Journey Resources Corporation, a corporation duly organized pursuant to the laws of the Providence of British Columbia, and its wholly-owned subsidiary Minerales Jazz S.A. de C.V., a corporation duly organized pursuant to the laws of Mexico (collectively, as “Journey”), to acquire an undivided 50 percent interest in certain mining claims comprising the Vianey Mine concession (“Vianey”) located in Guerrero State, Mexico. On December 18, 2006, we entered into a formal joint venture agreement with Journey and through the issuance of 500,000 shares of our common stock and a $500,000 work program expenditure payment, we acquired a 25 percent interest in Vianey.

In January 2007, we paid $100,000 of an additional $500,000 required for work program expenditures to Journey and issued an additional 500,000 shares of our common stock as partial payment to acquire an additional 25 percent interest in Vianey. On October 31, 2007, we executed an amendment to the formal joint venture agreement with Journey, whereby we issued 1,600,000 shares of our unregistered common stock to Journey in lieu of the final $400,000 work program expenditure payment due under the amendment. As a result, we now hold a 50 percent interest in Vianey.

The Vianey Mine is located in the north-central part of the state of Guerrero, which lies in the southern part of Mexico. It is about 250 kilometers by road south of Mexico City and 160 kilometers north of Acapulco. The mine is situated within the Morelos National Mining Reserve on the southwestern flank of the southern Sierra Madre Occidental province that extends north-northwest to the border between Sonora and Arizona, and east-southeast to Oaxaca State. The region is characterized by moderately steep rolling hills with alternating valleys of gentle gradient. Elevations in the area range from 450 to 850m above sea level. A major drainage system, the Balsas River, flows generally east to west through the region, about 2.5 km south of the site. The concession constitutes 44 contiguous hectares, centered on UTM coordinates 431,330m E, 1,987,020m N (WGS 84, Zone 14), or -99.6485 degrees E, 17.9704 degrees N.

Road access is good via highway 95, then 15 kilometers by gravel road. The concession exists in the municipality of Cocula, 1.6 km southeast of the small town of Atzcala, where labor suitable for exploration and limited mining can be found. Supplies and equipment are available in the towns of Mezcala and Chilpancingo, the capital of Guerrero, located on the main highway approximately 8 and 48 km south of the property respectively. A major power line passes near the property and electrical power is available at the mine.

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In Mexico, all minerals are held in trust for the people of Mexico by the national government. Surface rights can be held by the government, local communities (“ejidos”), or privately held by companies or individuals. Under the mining regulations, there are no provisions for patent to mineral lands in Mexico. The granting of permission for an individual, a cooperative, or a commercial company to acquire rights to explore for, and ultimately for extracting minerals from the ground, is governed by legislation administrated by the government of Mexico.

The Mexico mining code of 1990 was revised in June 1992, and its current enabling regulations were issued by the President of Mexico in 1999. The government, under the mining code, can grant to individuals and Mexican corporations mining concessions with the right to explore and extract mineral resources.

“Concessions” refer to mining lots, the perimeter and name of which is determined by the applicant, and which are granted on “free” land (“tierra libre”). An exploration concession is valid for a period of six years; an exploitation concession for fifty years. Exploitation concessions can be renewed once for an additional fifty years, if requested before the end of the expiration of the original concession. The concession relating to Vianey consists of 44 hectares held under the exploitation concession (Number 164151, Exp. No. 5929, issued March 5, 1979 and will expire, unless renewed, in 2029) pursuant to the laws of Mexico. Minerales Jazz SA de C.V., (the wholly-owned subsidiary of Journey) exercised a lease with option to purchase the property held between Minera LMX SA de C.V., and Minera Chilpancingo SA de C.V., and the owner of the concession. The property is owned 100 percent by Minerales Jazz SA de C.V., with no royalty, back-in rights, or other encumbrance.

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The main obligations which arise from a mining concession, and which must be kept current to avoid its cancellation, are (i) the performance of assessment work, (ii) the payment of mining taxes (technically called “duties”), and (iii) compliance with environmental laws.

The Mining Law (in Mexico) establishes that minimum amounts of funds for assessment work be spent in performing exploration work (in the case of exploration concessions) or exploration and/or exploitation work (in the case of exploitation concessions); in the latter case the sales of minerals from the mine may be substituted in lieu of the equivalent amount of minimum expenditures. A report must be filed in May of each year regarding the work done during the previous calendar year.

Mining duties must be paid in advance in January and July of each year, and they are based on the type of concession, on the surface area of the concession and the number of years that have elapsed since the date of issue. Environmental laws require the filing and approval of an environmental impact statement for all exploitation work, and for exploration work that does not fall within the threshold of a standard issued by the federal government for mining exploration.

Potential environmental impacts and social impacts to communities affected by future land disturbance and mining activities are reviewed by the environmental protection sector of the government. There are no known or observed environmental liabilities respecting the Vianey or the land adjacent to it.

Geology

The property is located in the Sierra del Sur Metallogenic Province in the Guerrero Gold and Massive Sulfide Belts. This province is characterized by Cretaceous sedimentary and volcanic rocks intruded by Lower Tertiary intermediate composition stocks. It hosts intrusive associated gold-copper-silver deposits. To the west, the massive sulfide belt hosts several silver-lead-zinc and copper deposits.

The Vianey is located in the Morelos-Guerrero Basin of Cretaceous age, mostly composed of a folded and faulted limestone sequence up to 2500 meters thick, intruded by granodiorite and monzonite plutons, which are responsible for development of silver-lead-zinc mineralization in veins, skarn and breccia bodies. Various types of deposits occur in this geological context, i.e. mesothermal lenses, veins and breccias (Vianey Mine), iron- and gold-bearing skarns, disseminated iron-gold-copper or hydrothermal veins and epithermal gold-mercury deposits.

The Vianey property is underlain by limestones, limestone breccias, calcareous and carbonaceous siltstones, and argillites intruded locally by felsic dikes and plugs with affiliated skarn. The local stratigraphy consists of limestone underlain by limy siltstone of undetermined thickness, but known to exceed 2500 meters thick. These rocks are part of regionally extensive shallow marine sedimentary sequence that form an elliptical exposure of Cretaceous carbonate lithologies known as the Morelos-Guerrero Basin.

The Vianey Mine carbonate sequence is intruded by granodiorite and monzonite plutons, dikes, sills and irregular plugs. These intrusive masses are intimately associated with mineral deposits throughout the region. The carbonate stratigraphy in the Vianey Mine region is broadly folded and domed. Major folds, with amplitudes of fifty- to hundreds of meters are common. Drag folds and distortions of the bedded rocks are common in the underground exposures at the property.

Various types of mineralization occur as a result of the interplay between stratigraphy, structure, and proximity to intrusive centers in the district. The different types of deposits known to occur are as follows:

· Lenses, veins, mantos or breccias containing silver and poly-metallic Pb-Zn-Cu (Vianey deposit)

· Skarn zones and replacement concentrations or iron and gold (Nukay deposit)

· Disseminated and hydrothermal vein type Fe-Au-Cu (La Subsida deposit)

· Epithermal and hot springs deposits of mercury (Hg) and gold (Brasil and Laguna deposits)

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Mineralization at the Vianey Mine includes veins, breccias, lens and mantos of silver - and poly-metallic (Pb-Zn) mineralization with local concentrations of gold and copper. The veins and breccia zones predominate in apparent importance. Most of the veins are localized along NW-SE trending structures and E-W structures; the lenses occur in fault zones and as sulfide concentrations with calcite, gypsum and quartz between some bedding planes.

Previous Exploration Efforts

The Vianey Mine has been operated intermittently on a small-scale basis since the 1400’s. More recently, the mine is said to have been in almost continuous production since about 1976 by Compania Minera de Chilpancingo S.A., and operated until 1996 on a small scale with short breaks, extracting 200 to 300 tonnes per month.

Underground workings put in by Compania Minera de Chilpancingo S.A., and its predecessors, amounts to seven levels, several winzes, two shafts and numerous stopes. The portal is approximately 540 meters above sea level, which penetrates into the mountain about 100 meters in an easterly direction.

Minera LMX SA de C.V., a former subsidiary of LMX Resources Ltd., took over the Vianey operations in 1996 and started various exploration and development works. The first phase of exploration was conducted in the mine by P.H. Consultants Ltd of Val d’Or, Quebec, in order to determine what resources were still contained in the old workings. A total of 252 meters of vertical fan drilling was completed from drill station one, 276 channel samples were taken, and 433 additional samples were obtained. All samples were analyzed for 38 minerals by a combination of fire assay, ICP, and aqua regia-AA methods by Bondar Clegg Laboratories.

A second phase of exploration completed in November 1996 accomplished 2,173 meters of underground core drilling from drill stations one through six. The second phase drilling further delineated the mineralized zones identified by the first program and resulted in the partial definition of a new breccia chimney called the Twilight Zone.

In May 1997, Minera LMX started a third phase to verify and expand previous findings and to mine accessible reserves for direct shipping. After stockpiling about 940 tonnes of material from underground development work, the company abruptly closed the operation and the third drilling program was interrupted shortly after it was initiated.

The property was sold to the Chief Geologist of Minera LMX, who later defaulted on a property payment and a legal battle ensued. After several years of inactivity, the legal matters were settled and Minerales Jazz SA de CV acquired 100 percent interest in the property, free of royalties and encumbrances, with a cash payment in 2004, but did not conduct any physical exploration of the property.

As reported in the Blakestad Report, there are many issues related to the resource/reserve calculations reported from these prior drilling phases which may not meet the requirements of National Instrument 43-101. The calculations, however, were performed by a qualified person (P. J. Hawley) with intimate experience with the property and its mineralization. The results of exploration to date and the evaluations serve to form a basis for recommending aggressive exploration of the Vianey Mine.

A total of 12 diamond drillholes were drilled in during 2006-2007. In some cases these holes were incorrectly located and in some cases they were terminated prior to intersecting target zones. The target zones were projected to depth from the lowest levels of the mine at -75 meters below surface.

Our Exploration Plans

An abundance of data has been generated on the Vianey Mine over the years. All available data is now being compiled and entered into a three-dimensional model prior to conducting the next phase of exploration work on the project. This model includes geologic and assay data plotted on underground survey and drillhole information.

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Journey is the operator of the Vianey project. Journey’s consulting geologist and Qualified Person is now Philip van Angeren. The previous consultant on the project, Rodney Blakestad, recommended a 2006 surface drill program to test the down-dip continuity of the principal veins; technical and drilling difficulties resulted in the fact that none of the 12 holes drilled reached sufficient depths to test the veins at deeper levels. We have recently requested that Journey proceed to (1) acquire significant additional claims surrounding the current property, (2) acquire available underground survey data, (3) acquire available additional underground geologic and assay data developed during previous programs, (4) enter all available underground data into a suitable computer software program, (5) complete underground industry-standard channel sampling to confirm data contained in Hawley’s resource and reserve calculation report. Following completion of this work, we look forward to planning the next stage of exploration or development on the Vianey project.

TRANSACTIONS IN HONG KONG AND THE PEOPLE’S REPUBLIC OF CHINA

China Global Mining Resources Limited

In November and December 2006, SSC Mandarin Group Limited, a British Virgin Islands corporation with a principal place of business in Hong Kong (“SSC Mandarin Group”), introduced us to various potential mining opportunities located in the People’s Republic of China (the “PRC”). From January through June 2007, we made loans in the aggregate amount of approximately $7.8 million to SSC Mandarin Group, which were used by SSC Mandarin Group to acquire interests in certain mining properties (which are described below) located in the PRC through SSC Mandarin Group’s wholly owned subsidiary, China Global Mining Resources Limited, a British Virgin Islands corporation (“CGMR”). The loans to CGMR were made out of the proceeds from the China Gold, LLC convertible promissory notes (see Note 9 - Convertible Notes Payable in the financial statements). In partial consideration for the loans, we received two promissory notes of CGMR in the respective amounts of $2 and $5 million. CGMR’s obligations under the notes were secured by its rights under various acquisition and other agreements, including a supply agreement relating to forty tonnes of nickel, that CGMR had entered into relating to the mining opportunities (as discussed below). Additionally, an aggregate of $500,000 of the amounts loaned to SSC Mandarin Group were used to acquire interests in two entities from SSC Mandarin Group, SSC Mandarin Africa ($400,000) and SSC-Sino Gold ($100,000), which are described below. The remaining $300,000 was expensed for due diligence activities relating to the acquisition of mining interests. Norman D. Lowenthal, a director of ours, serves as Vice Chairman of SSC-Sino Gold and as a director of SSC Mandarin Africa, and until June 2007 served as Chairman of SSC Mandarin Financial, all of which are affiliates of SSC Mandarin Group.

On March 28, 2007, we entered into separate Sale of Shares and Claims Agreements with SSC Mandarin Group whereby we acquired CGMR and a Hong Kong entity of the same name, China Global Mining Resources Limited. The Hong Kong entity does not hold any assets, but was formed for the right to use the corporate name in Hong Kong. Due to technical deficiencies in the original Sale of Shares and Claims Agreements, we and SSC Mandarin Group re-executed the agreements on July 27, 2007 to resolve the deficiencies in the original agreements, and on August 1, 2007 paid the nominal purchase price of $10,000 Hong Kong dollars (US$1,317) for each corporation as required under the Sale of Shares and Claims Agreements. Effective August 1, 2007, we reclassified the $7 million in promissory notes received from CGMR as “Advance payments on equity investments” in our financial statements to reflect the status of CGMR as our wholly owned subsidiary.

At the time of the acquisition of CGMR, it held rights to acquire interests in a nickel and various iron ore mining properties located in the PRC. As of December 31, 2007, we hold only the right or option to acquire and do not hold title to any of these properties, therefore, we have recorded these as advanced payments until such time as we complete a transaction. In the event we determine that such a transaction will not occur, we will seek to collect our advance payments or consider available alternatives.

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Nickel – Shanxi Hua Ze Nickel Smelting Co.

CGMR is a party to that certain Joint Venture Agreement with Shanxi Hua Ze Nickel Smelting Co. (“Shanxi Hua Ze”) dated April 14, 2007, as supplemented on June 6, 2007, pursuant to which the parties contemplate a joint venture relating to the Xing Wang Mine, a nickel mine located in the Qinghai province of the PRC. Pursuant to the agreement, CGMR would receive a 25% interest in the joint venture in consideration of its contribution of approximately 425 million Chinese Renminbi, or RMB, (approximately US$52 million) to the joint venture, such contribution to be used for the development and improvement of the mining property and production facility, the repayment of loans and settlement of other outstanding payables and other purposes. Shanxi Hua Ze would receive 75% of the joint venture in consideration of its contribution of the mine and related assets. Upon the acquisition by the joint venture of additional land with an additional 200,000 tonnes of nickel, CGMR would be required to contribute an additional 155 million RMB (approximately US$19 million). In consideration of this additional contribution, CGMR would receive an additional 15% of the equity interest in the joint venture, resulting in a holding of 40% of the joint venture at such time. CGMR further has the right to acquire an additional 40% interest in the joint venture from Shanxi Hua Ze if it contributes an additional 580 million RMB (approximately US$71 million) on or before June 15, 2008. To date, the parties have been unable to meet the agreed upon timetables for contributions due to the inability to obtain the necessary permits for the joint venture. We are currently exploring our options with respect to this project.

As a condition to the Joint Venture Agreement, CGMR also entered into a Supply Contract with Shanxi Hua Ze to purchase forty tonnes of electrolytic nickel (greater than 99% grade) for US$2 million, which payment also served as a prepayment of the initial contribution outlined in the Joint Venture Agreement. CGMR’s obligations under the Joint Venture Agreement are subject to the receipt of certain government approvals. The nickel to be acquired under the Supply Contract has been prepaid, and accordingly CGMR is entitled to receive the 40 tonnes of nickel pursuant to the terms of any future purchase orders relating to such nickel. CGMR’s rights under the Supply Contract serve as security for the loan to CGMR in the amount of $2 million. Based on current market prices for nickel, we believe that the 40 metric tonnes of nickel is worth approximately $1.2 million. In the event the transaction is not completed, there can be no assurance, however, that CGMR will be able to recover the $2 million advance on a timely basis, or at all.

Iron Ore – Nanjing Sudan Mining Co., Ltd.

CGMR is a party to that certain Equity and Asset Transfer Heads of Agreement, dated May 4, 2007 (the “Nanjing Heads of Agreement”) with Maanshan Zhaoyuan Mining Co., Ltd., Xiaonanshan Mining Co., Ltd., and two individual sellers (collectively, the “Sellers”), pursuant to which CGMR holds a right to acquire 100% of Nanjing Sudan Mining Co., Ltd. (which holds a processing plant), two iron ore mining properties located in the PRC (Maanshan Zhaoyuan Mining Co. and Xiaonanshan Mining Co.) and related assets for a purchase price of $66 million, to be paid in cash or shares of stock of a listed company, as agreed by the parties. Of this amount, CGMR has paid an aggregate of 40 million Hong Kong Dollars (approximately $5 million US) in the form of two deposits to be credited against the purchase price. The consummation of the transaction is subject to the completion of definitive agreements, receipt of various governmental approvals, the completion by and satisfaction of due diligence by CGMR, and satisfaction of certain indicated iron ore reserve requirements, among other conditions, which have not been fulfilled as of March 31, 2008. Additionally, in the event the transaction is consummated, CGMR will be required to enter into an eight-year management services contract with one of the sellers. The Nanjing Heads of Agreement calls for the completion of definitive documents and the receipt of necessary government approval by May 30, 2007, but the parties have verbally extended the applicable timetable due to a difficulty in obtaining the necessary permits.

Subsequent to our fiscal year end, on January 25, 2008, the Company, CGMR and the Sellers entered into a letter agreement establishing a purchase price and payment schedule relating to Nanjing Heads of Agreement. Under the Nanjing Heads of Agreement, the purchase price for the assets was dependent upon proven tonnage of the Maanshan and Xiaonanshan mines. The letter agreement sets the purchase price at 620,000,000 RMB (approximately $86 million US), and requires that CGMR pay the purchase price in accordance with the following schedule: (1) 25% within 30 days following the verification that a permit has been obtained with respect to Xiaonanshan Mining Company; (2) 50% within 30 days of verification of a permit for additional reserves contiguous to the Xiaonanshan mine; and (3) 25% within 30 days following the verification of a permit for Maanshan Zhaoyuan Mining Co. On March 24, 2008, the parties further amended the terms of Nanjing Heads of Agreement to include a production incentive whereby we would be required to issue a substantial number of our unregistered shares of common stock to the sellers upon the achievement of certain performance criteria relating to the delivery of iron ore within certain stated time frames. Based on our discussions with the Sellers, we anticipate the permits relating to the Xiaonanashan Mining Company will be obtained in the first half of 2008, at which time our obligation to pay 25% of the purchase price as set forth in the letter agreement will arise. We are in the process of obtaining third-party financing to assist us in proceeding with this transaction.

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At the time of our acquisition of CGMR, it had advanced an aggregate of $5 million to the Sellers which may be applied by CGMR against the purchase price. In the event the transaction is not completed, there can be no assurance that CGMR will be able to recover the $5 million advance on a timely basis, or at all.

Iron Ore – Yun County Changjiang Mining Company Ltd.

CGMR is also party to that certain Equity Transfer Heads of Agreement (“Changjiang Heads of Agreement”) dated May 4, 2007 with three individual sellers, whereby CGMR holds a right to acquire a 95% equity interest in Yun County Changjiang Mining Company Limited (“Changjiang”), which holds licenses to explore for iron ore in the Hubei province of the PRC, for an aggregate of $57 million. The purchase price is to be paid by up to $15 million in cash and the remainder in shares of stock of a listed company. Two of the sellers, holding an aggregate of 90% of the interest in Changjiang), are parties to the Nanjing Heads of Agreement. Under the Changjiang Heads of Agreement, CGMR is required to arrange for a loan to Changjiang in the amount of $10 million, such loan to be secured by the capital stock of Changjiang. Additionally, in the event CGMR and Changjiang enter into an exclusive supply agreement relating to the purchase by CGMR of iron ore from Changjiang, CGMR will also be required to arrange for an additional loan to Changjiang, the amount of such loan to be determined based on the reserves of iron ore located on the related mining properties, but not to exceed 1.2 billion RMB. The consummation of the transaction is subject to the completion of definitive agreements, receipt of various governmental approvals, the completion by and satisfaction of due diligence by CGMR, and satisfaction of certain indicated iron ore reserve requirements, among other conditions. Additionally, in the event the transaction is consummated, CGMR will be required to enter into an eight-year management services contract with one of the sellers. As of December 31, 2007, no funds have been advanced for this project. The resources that will be required to complete this transaction are substantial, and greater than we can currently support. Accordingly, we are seeking an industry partner to assist us in completing this transaction.

Agreement to acquire interest in SSC Mandarin Africa (Proprietary) Limited

On March 28, 2007, we entered into a Sale of Shares and Claims Agreement with SSC Mandarin Financial Services Limited (“SSC Mandarin Financial”) and SSC Mandarin Africa (Proprietary) Limited, a company incorporated under the laws of the Republic of South Africa (“Mandarin Africa”), relating to the acquisition of a 40% equity interest in Mandarin Africa for a purchase price of US$400,000. The purchase price was paid on February 14, 2007. Due to technical deficiencies in the original agreement, we and SSC Mandarin Financial re-executed the agreement on July 27, 2007 to resolve the deficiencies in the original agreement. SSC Mandarin Financial is an affiliate of SSC Mandarin Group. Norman D. Lowenthal, a director of ours, served as Chairman of SSC Mandarin Financial until June 2007, and remains a director of Mandarin Africa.

Mandarin Africa’s only asset was a two-year Collaboration Agreement with Kumba Iron Ore (an affiliate of Anglo American PLC) dated August 4, 2006, whereby Mandarin Africa could potentially earn a finders fee with respect to any PRC iron ore mining projects it introduced to Kumba that Kumba subsequently acquired. Subsequent to December 31, 2007, we were informed by Kumba Iron Ore that it had no interest in reviewing any iron ore projects for the near term, and that it would not pursue any properties potentially subject to the Collaboration Agreement. Furthermore, we are unable to consummate our acquisition of the 40% equity interest in Mandarin Africa and obtain a stock certificate representing such interest as we have learned that SSC Mandarin Financial is unable to transfer the interest as agreed. Therefore, we expensed the entire $400,000 representing the investment, effective December 31, 2007, and claim not to hold any ownership in Mandarin Africa.

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Agreement to acquire option to acquire an interest in SSC-Sino Gold Consulting Co. Limited

On March 28, 2007, we entered into an Option Agreement (the “Option Agreement”) with SSC Mandarin Financial and SSC-Sino Gold Consulting Co. Limited, a company incorporated under the laws of the PRC (“SSC-Sino Gold”), pursuant to which we acquired, for US$100,000, a three-year option to purchase a 60% equity interest in SSC-Sino Gold for an exercise price of US$5,000,000. Norman D. Lowenthal, one of our directors, was then and continues to serve as Vice Chairman of SSC-Sino Gold. We paid the purchase price on March 22, 2007. Due to technical deficiencies in the original agreement, the parties re-executed the agreement on July 27, 2007 to resolve the deficiencies in the original agreement. SSC-Sino Gold holds rights to acquire an 80% interest in Tongguan Taizhou Gold Mining Co., Ltd., which holds licenses relating to a gold mine located in the Shaanxi province of the PRC.

On October 15, 2007, we received a notice of termination of the Sale of Shares and Claims Agreements with SSC Mandarin Group relating to the acquisition of CGMR (as discussed above), whereby SSC Mandarin Group alleged that the parties agreed to certain amended terms to the Sale of Shares and Claims Agreements, and that we had breached those amended terms. In an effort to resolve the potential dispute with SSC Mandarin Group, on December 12, 2007, we entered into a Termination of Option Agreement (the “Termination Agreement”) with SSC Mandarin Group, CGMR, and China Global Mining Resources Limited (Hong Kong), whereby we relinquished our right to purchase a 60% equity interest in SSC-Sino Gold under the Option Agreement. Under the Termination Agreement, we agreed to pay SSC Mandarin Group within 60 days an aggregate of 3,850,000 Hong Kong Dollars (approximately $500,000 US) as reimbursement for expenses incurred by SSC Mandarin Group for the wholly-foreign owned enterprises (“WFOE”) established for the iron ore projects (Maanshan and Changjiang). Additionally, we and SSC Mandarin Group have agreed to offset other payment obligations to one another on the later of 90 days and the date we complete due diligence and obtain the necessary title and permits for the iron ore projects. These offsets currently result in an obligation of the Company to pay SSC Mandarin Group approximately an additional $750,000, but we believe that we are entitled to additional offsets from SSC Mandarin Group in an amount equal to or greater than $750,000.

Due to the termination of the Option Agreement, effective December 31, 2007, we have expensed the entire $100,000 representing the purchase price of the option and do not claim to hold any ownership in developments in the Tongguan Taizhou Gold Mining Co.

Proposed Merger Transaction with Easyknit Enterprises

In an effort to finance our potential transactions in the PRC through access to the capital markets in Hong Kong, on April 20, 2007, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Easyknit Enterprises Holdings Limited, a Bermuda corporation with its principal place of business in Hong Kong that is listed on the Hong Kong Stock Exchange (SEHK: 0616) (“Easyknit”), and Race Merger, Inc., a Minnesota corporation and wholly owned subsidiary of Easyknit (“Merger Sub”). Pursuant to the Merger Agreement, the parties contemplated the merger of Merger Sub with and into the Company, with the Company constituting the surviving corporation to the merger and a wholly owned subsidiary of Easyknit following completion of the merger.

In the course of due diligence on the proposed merger transaction, on August 15, 2007, we filed a declaratory judgment action in the District Court in the Fourth Judicial District of the State of Minnesota against Easyknit and Race Merger seeking a declaration by the court that we were entitled to terminate the Merger Agreement pursuant to its terms based on our conclusion, determined in our sole and absolute discretion, that the merger transaction was not in the best interests of our shareholders based on our due diligence findings. We also asserted alternative grounds that there existed a material adverse change in the financial condition of Easyknit. On October 15, 2007, Easyknit filed an Answer and Counterclaim seeking a declaration by the court that it was entitled to a $30 million termination fee in the event we terminated the Merger Agreement or it terminated the Merger Agreement based on our alleged breach of contract.

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On November 1, 2007, we terminated the Merger Agreement. On December 18, 2007, we entered into a Settlement Agreement and General Release (the “Settlement Agreement”) with Easyknit, whereby the parties agreed to dismiss with prejudice and release each other from all claims, counterclaims and defenses that touched upon or arose out of the parties’ Merger Agreement or which were asserted or could have been asserted in the litigation between the parties venued in the District Court in the Fourth Judicial District of the State of Minnesota.

INDUSTRY BACKGROUND

The exploration for and development of mineral deposits involves significant capital requirements. While the discovery of an ore body may result in substantial rewards, few properties are ultimately developed into producing mines. Some of the factors involved in determining whether a mineral exploration project will be successful include, without limitation:

· competition;

· financing costs;

· availability of capital;

· proximity to infrastructure;

· the particular attributes of the deposit, such as its size and grade;

· political risks, particularly in some emerging third world countries; and

· governmental regulations, particularly regulations relating to prices, taxes, royalties, infrastructure, land use, importing and exporting of gold, environmental protection matters, property title, rights and options of use, and license and permitting obligations.

All of which leads to a speculative endeavor of very high risk. Even with the formation of new theories and new methods of analysis, unless the minerals are simply lying exposed on the surface of the ground, exploration will continue to be a “hit or miss” process.

PRODUCTS AND SERVICES

As of December 31, 2007, we hold interests in three exploration projects: the Bates-Hunter Mine in Colorado, the Vianey Mine Concession in Mexico and the FSC Project located in South Africa. Additionally, we hold rights to acquire interests in certain mining properties in the People’s Republic of China.

EXPLORATION AND DEVELOPMENT EXPENSES

If we acquire a project that has no revenue, exploration expenses will be charged to expense as incurred.

EMPLOYEES

As of December 31, 2007, under the Wits Basin parent corporation, we employ four individuals - our chief executive officer, our president, our chief financial officer and our president of Asia operations. Gregory Gold Producers (our wholly owned subsidiary) employs 11 mine related employees at the Bates-Hunter Mine. None of our employees are represented by a labor union and we consider our employee relations to be good.

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FINANCIAL INFORMATION IN INDUSTRY SEGMENTS

During the year ended December 31, 2007, our continuing operations included one reportable segment: that of minerals exploration.

AVAILABLE INFORMATION

We make available free of charge, through our Internet web site www.witsbasin.com, our annual report on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material, or furnish it to the Securities and Exchange Commission. You can also request a free copy of the above filings by writing or calling us at:

Wits Basin Precious Minerals Inc.

Attention: Mark D. Dacko, Secretary

900 IDS Center, 80 South 8^th Street

Minneapolis, Minnesota 55402-8773

(612) 349-5277

RISK FACTORS

RISKS RELATING TO OUR COMMON STOCK

TRADING OF OUR COMMON STOCK IS LIMITED.

Trading of our common stock is conducted on the National Association of Securities Dealers’ Over-the-Counter Bulletin Board, or “OTC Bulletin Board.” This has an adverse effect on the liquidity of our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and reduction in security analysts’ and the media’s coverage of us. This may result in lower prices for our common stock than might otherwise be obtained and could also result in a larger spread between the bid and asked prices for our common stock.

BECAUSE IT IS A “PENNY STOCK” IT CAN BE DIFFICULT TO SELL SHARES OF OUR COMMON STOCK.

Our common stock is a “penny stock.” Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. The penny stock rules may make it difficult for you to sell your shares of our stock. Because of the rules, there is less trading in penny stocks. Also, many brokers choose not to participate in penny stock transactions. Accordingly, you may not always be able to sell our shares of common stock publicly at times and prices that you feel are appropriate.

A SIGNIFICANT NUMBER OF SHARES OF OUR COMMON STOCK ARE HELD IN RESERVE FOR VARIOUS AGREEMENTS AND THEIR ISSUANCE COULD DEPRESS THE PRICE OF OUR SECURITIES.

The issuance of a substantial number of shares of our common stock in the public market could adversely affect the market price for our common stock and make it more difficult for you to sell our securities at times and prices that you feel are appropriate. As of March 27, 2008, we had 120,140,866 shares of common stock, 690,000 Class A Redeemable Warrants and 7,726,200 Class C Redeemable Warrants issued and outstanding. Furthermore, we have reserved for issuance 13,643,500 shares of common stock issuable upon the exercise of stock options, 18,569,038 shares of common stock issuable upon the exercise of warrants, approximately 48,000,000 shares of common stock issuable upon the conversion of convertible debt, and may be required to issue up to an aggregate of 51,000,000 shares of common stock under various agreements that have not closed as of April 3, 2008, subject in most cases to the satisfaction of certain conditions under the respective agreements.

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RISKS RELATING TO OUR FINANCIAL CONDITION

WE CURRENTLY DO NOT HAVE ENOUGH CASH TO FUND OPERATIONS, DEBT REDUCTION OR POTENTIAL ACQUISITIONS DURING 2008.

As of March 28, 2008, we had only approximately $475,000 of cash and cash equivalents on hand. Since we do not expect to generate any revenue from operations in 2008, we will be required to raise additional capital in financing transactions in order to satisfy our expected cash expenditures. Included in the expected cash expenditures is approximately $10,500,000 in short-term debt that will become due May 31, 2008, assuming some or all of such debt is not converted into equity prior to such date. Accordingly, we will require additional funds during the second quarter of 2008.

We continue to seek additional opportunities relating to our mining operations, and our ability to seek out such opportunities, perform due diligence, and, if successful, acquire such properties or opportunities requires additional capital. We expect to raise such additional capital by selling shares of our capital stock or by borrowing money. However, we currently have only a limited number of available shares of common stock authorized for issuance, and will require shareholder approval to increase our authorized capitalization to raise such additional capital. Additionally, such additional capital may not be available to us at acceptable terms or at all. Further, if we increase our capitalization and sell additional shares of our capital stock, your ownership position in our Company will be subject to dilution. In the event that we are unable to obtain additional capital, we may be forced to cease our search for additional business opportunities, reduce our operating expenditures or to cease operations altogether.

WE HAVE NO OPERATING ASSETS.

After we completed the sales of our Hosted Solutions Business and our Accounting Software Business in 2003, we became an exploration stage company and do not anticipate having any revenues from operations until an economic mineral deposit is discovered or unless we complete other acquisitions or joint ventures with business models that produce such revenues. As of March 28, 2008 we hold certain rights in three projects: FSC Project located in South Africa., the Bates-Hunter Mine in Colorado and the Vianey Concession in Mexico. None of these projects may ever produce any significant mineral deposits.

WE ANTICIPATE INCURRING LOSSES FOR THE FORESEEABLE FUTURE.

Since becoming an exploration stage company in May 2003 through December 31, 2007, we have incurred an aggregate net loss of $39,368,792. We expect operating losses to continue for the foreseeable future and may never be able to operate profitably.

OUR INDEPENDENT AUDITORS HAVE SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

We have had net losses for each of the years ended December 31, 2007 and 2006, and we have an accumulated deficit as of December 31, 2007. Since the financial statements for each of these periods were prepared assuming that we would continue as a going concern, in the view of our independent auditors, these conditions raise substantial doubt about our ability to continue as a going concern. Furthermore, since we do not expect to generate any significant revenues for the foreseeable future, our ability to continue as a going concern depends, in large part, on our ability to raise additional capital through equity or debt financing transactions. If we are unable to raise additional capital, we may be forced to discontinue our business.

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CERTAIN OF OUR AGREEMENTS REQUIRE PAYMENTS IN FOREIGN CURRENCIES AND ARE SUBJECT TO EXCHANGE RATE FLUCTUATIONS.

Certain of our acquisition agreements (including certain of those we hold through our subsidiary, China Global Mining Resources) and other agreements we have entered require payments in foreign currencies, including Chinese Renminbi, or RMB. It is possible that we will enter into other agreements for future acquisitions or work relating to our various mining interests that will require payment in currencies other than the U.S. Dollar. Fluctuations in exchange rates, in particular between the U.S. Dollar and other currencies, any affect the actual amounts of these payments and potentially may be in excess of the amounts we have budgeted for payment of these fees and other payments.

RISKS RELATING TO OUR BUSINESS

SINCE BECOMING ENGAGED IN THE MINERAL EXPLORATION BUSINESS IN JUNE 2003, WE HAVE RELIED ON AN EXCLUSION FROM THE DEFINITION OF “INVESTMENT COMPANY” IN ORDER TO AVOID BEING SUBJECT TO THE INVESTMENT COMPANY ACT OF 1940. TO THE EXTENT THE NATURE OF OUR BUSINESS CHANGES IN THE FUTURE, WE MAY BECOME SUBJECT TO THE REQUIREMENTS OF THE INVESTMENT COMPANY ACT, WHICH WOULD LIMIT OUR BUSINESS OPERATIONS AND REQUIRE US TO SPEND SIGNIFICANT RESOURCES IN ORDER TO COMPLY WITH SUCH ACT.

The Investment Company Act defines an “investment company,” among other things, as an issuer that is engaged in the business of investing, reinvesting, owning, holding or trading in securities and owns investment securities having a value exceeding 40 percent of the issuer’s unconsolidated assets, excluding cash items and securities issued by the federal government. Because the value of our interest in the FSC Project has in the past exceeded 40 percent of our unconsolidated assets, excluding cash and government securities, we have met this threshold definition of “investment company” during such time. However, the Investment Company Act also excludes from this definition any person substantially all of whose business consists of owning or holding oil, gas or other mineral royalties or leases or fractional interests therein, or certificates of interest or participation relating to such mineral royalties or leases. Based on an opinion of counsel, we believed that we satisfied this exclusion from the definition of “investment company” for mineral companies for the period from June 26, 2003 through August 29, 2004. If our reliance on the mineral company exclusion from the definition of investment company during this period was misplaced, we may have been in violation of the Investment Company Act, the consequences of which can be significant. For example, investment companies that fail to register under the Investment Company Act are prohibited from conducting business in interstate commerce, which includes selling securities or entering into other contracts in interstate commerce. Section 47(b) of the Investment Company Act provides that a contract made, or whose performance involves, a violation of the act is unenforceable by either party unless a court finds that enforcement would produce a more equitable result than non-enforcement. Similarly, a court may not deny rescission to any party seeking to rescind a contract that violates the Investment Company Act, unless the court finds that denial of rescission would produce more equitable result than granting rescission. Accordingly, for example, certain investors who purchase our securities during any period in which we were required to register as investment company may seek to rescind their subscriptions.

We further believe that we have continued to qualify for the mineral company exclusion from August 30, 2004 through the date of this Annual Report and are not therefore subject to the requirements of the Investment Company Act of 1940. If in the future the nature of our business changes such that the mineral company exception to the threshold definition of investment company is not available to us, we will be required to register as an investment company with the SEC. The ramifications of becoming an investment company, both in terms of the restrictions it would have on our Company and the cost of compliance, would be significant. For example, in addition to expenses related to initially registering as an investment company, the Investment Company Act also imposes various restrictions with regard to our ability to enter into affiliated transactions, the diversification of our assets and our ability to borrow money. If we became subject to the Investment Company Act at some point in the future, our ability to continue pursuing our business plan would be severely limited as it would be significantly more difficult for us to raise additional capital in a manner that would comply with the requirements of the Investment Company Act. To the extent we are unable to raise additional capital, we may be forced to discontinue our operations or sell or otherwise dispose of our mineral assets.

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LAWS GOVERNING MINERAL RIGHTS OWNERSHIP HAVE CHANGED IN SOUTH AFRICA.

The South African mining industry has undergone a series of significant changes culminating in the enactment of the Mineral and Petroleum Resources Development Act No. 28 of 2002 (“the Act”) on May 1, 2004. The Act legislates the abolition of private mineral rights in South Africa and replaces them with a system of state licensing based on the patrimony over minerals, as is the case with the bulk of minerals in other established mining jurisdictions such as Canada and Australia. On May 3, 2004 the Department of Minerals and Energy (the “DME”) announced that it was seeking legal advice on the implications of the Act in light of South Africa’s international agreements.

Holders of old-order mining rights, of the type held by Kwagga (Proprietary), are required within five years of the May 1, 2004 commencement date, to apply for conversion of their old order rights into new order mining rights in terms of the Act. Old order mining rights will continue to be in force during the conversion period, subject to the terms and conditions under which they were granted. Once a new order right is granted, security of tenure is guaranteed for a period of up to 30 years, subject to ongoing compliance with the conditions under which the right has been granted. A mining right may be renewed for further periods of up to 30 years at a time, subject to fulfillment of certain conditions.

In order to be able to convert old order mining rights to new order mining rights, a holder must primarily: apply in the correct form for conversion at the relevant office of the DME before May 1, 2009; submit a prescribed social and labor plan; and undertake to “give effect to” the black economic empowerment and socio-economic objectives of the Act (the “Objectives”) and set out the manner in which it will give effect to the Objectives.

In general, the Objectives are embodied in the broad-based socio-economic empowerment charter which was signed by the DME, the South African Chamber of Mines and others on October 11, 2002 (the “Charter”), and which was followed on February 18, 2003 by the release of the appendix to the Charter known as the Scorecard. The Charter and Scorecard have since been published for information during August 2004. The Charter is based on seven key principles, two of which are focused on ownership targets for historically disadvantaged South Africans (“HDSAs”) and beneficiation, and five of which are operationally oriented and cover areas focused on improving conditions for HDSAs.

Regarding ownership targets, the Charter (as read with the Scorecard) requires each mining company to achieve the following HDSA ownership targets for the purpose of qualifying for the grant of new order rights: (i) 15% ownership by HDSAs in that company or its attributable units of production by May 1, 2009, and (ii) 26% ownership by HDSAs in that company or its attributable units of production by May 1, 2014. The Charter states that such transfers must take place in a transparent manner and for fair market value. It also states that the South African mining industry will assist HDSA companies in securing financing to fund HDSA participation, in the amount of ZAR100 billion within the first five years. The Charter does not specify the nature of the assistance to be provided.

At present, the financial implications and market-related risks brought about by the various pieces of the new legislation (including the Mineral and Petroleum Royalty Bill) cannot be assessed. It is not clear when the next draft of the Mineral and Petroleum Royalty Bill will be released. The Government has, however, indicated that no royalties will be payable until 2009. Material impacts on both the ownership structure and operational costs at the FSC Project are possible. Kwagga (Barbados) and AfriOre continue to explore their options and monitor the implementation and interpretation of the Act and the progress of other ancillary regulations and legislation.

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DUE TO LEGISLATION ENACTED IN SOUTH AFRICA, KWAGGA (PROPRIETY) WILL BE REQUIRED TO SELL A SUBSTANTIAL AMOUNT OF ITS STOCK, WHICH WOULD DILUTE OUR EQUITY POSITION IN KWAGGA.

Kwagga (Barbados) and AfriOre are actively engaged in discussions with DME officials and others to ensure that Kwagga (Barbados) fulfills the ownership requirements for conversion under the Act; however, the finalization of the means of achieving that end will require greater certainty regarding the operation and interpretation of the Act and pending related legislation.

In accordance with the Broad-Based Socio-Economic Empowerment Charter for the South African mining industry and under the terms of the new shareholders agreement, as amended August 30, 2004, Kwagga (Propriety) will offer up to 28 percent of its capital stock at fair market value to a HDSA investor group. Any investment by such a group will dilute our ownership of Kwagga (Propriety) and, accordingly, the right to receive profits generated from the FSC Project, if any.

CERTAIN OF OUR DIRECTORS MAY HAVE CONFLICTS OF INTEREST WITH REGARD TO CERTAIN TRANSACTIONS THAT WE MAY ENTER.

H. Vance White, who is the Chairman of our Board of Directors, is both an officer and director of Hawk Uranium Inc., (f/k/a Hawk Precious Minerals Inc.) a junior exploration company, and a partner in Brooks & White Associates, an unincorporated Canadian partnership that provides management, financial and investor relations services to junior mineral resource exploration companies. Additionally, Norman D. Lowenthal was the Chairman of SSC Mandarin Financial Services Ltd for the period 2001 to 2007, and continues to serve as a director of SSC-Sino Gold Consulting Co Ltd, which is an advisor to the Government operated association of China gold mines via the China Gold Bureau. As a result of their positions with other companies that may, from time to time, compete with us, Messrs. White and Lowenthal may have conflicts of interest to the extent the other companies with which they are affiliated acquire rights in exploration projects that may be suitable for us to acquire.

THE OPERATORS OF OUR EXPLORATION PROJECTS MAY NOT HAVE ALL NECESSARY TITLE TO THE MINING EXPLORATION RIGHTS.

We expect that Kwagga (Barbados), Kwagga (Propriety), Hunter Gold and Journey will have good and proper right, title and interest in and to the respective mining exploration rights they currently own, have optioned or intend to acquire and that they will explore and develop. Such rights may be subject to prior unregistered agreements or interests or undetected claims or interests, which could materially impair our ability to participate in the development of our projects. The failure to comply with all applicable laws and regulations, including failure to pay taxes and to carry out and file assessment work, may invalidate title to portions of the properties where the exploration rights are held.

WE WILL REQUIRE ADDITIONAL FINANCING TO CONTINUE TO FUND OUR CURRENT EXPLORATION PROJECT INTERESTS OR TO ACQUIRE INTERESTS IN OTHER EXPLORATION PROJECTS.

Substantial additional financing will be needed in order to fund beyond the current exploration programs underway or to potentially complete further acquisitions or complete other acquisitions or joint ventures with other business models. Our means of acquiring investment capital is limited to private equity and debt transactions. We have no significant sources of currently available funds to engage in additional exploration and development. Without significant additional capital, we will be unable to fund exploration of our current property interests or acquire interests in other mineral exploration projects that may become available. See “—Risks Relating to Our Financial Condition – We Currently Do Not Have Enough Cash to Fund Operations During 2008.”

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OUR PERFORMANCE MAY BE SUBJECT TO FLUCTUATIONS IN MINERAL PRICES.

The profitability of the exploration projects could be significantly affected by changes in the market price of minerals. Demand for minerals can be influenced by economic conditions, attractiveness as an investment vehicle and the relative strength of the US Dollar and local investment currencies. Other factors include the level of interest rates, exchange rates, inflation and political stability. The aggregate effect of these factors is impossible to predict with accuracy.

In particular, mine production and the willingness of third parties such as central banks to sell or lease gold affects the supply of gold. Worldwide production levels also affect mineral prices. In addition, the price of gold has on occasion been subject to very rapid short-term changes due to speculative activities. Fluctuations in gold prices may adversely affect the value of any discoveries made at the sites with which we are involved.

MINERAL EXPLORATION IS EXTREMELY COMPETITIVE.

There is a limited supply of desirable mineral properties available for claim staking, lease or other acquisition in the areas where we contemplate participating in exploration activities. We compete with numerous other companies and individuals, including competitors with greater financial, technical and other resources than we possess, in the search for and the acquisition of attractive mineral properties. Our ability to acquire properties in the future will depend not only on our ability to develop our present properties, but also on our ability to select and acquire suitable producing properties or prospects for future mineral exploration. We may not be able to compete successfully with our competitors in acquiring such properties or prospects.

THE NATURE OF MINERAL EXPLORATION IS INHERENTLY RISKY.

The exploration for and development of mineral deposits involves significant financial risks, which even experience and knowledge may not eliminate, regardless of the amount of careful evaluation applied to the process. Very few properties are ultimately developed into producing mines. Whether a gold or other mineral deposit will become commercially viable depends on a number of factors, including:

· financing costs;

· proximity to infrastructure;

· the particular attributes of the deposit, such as its size and grade; and

· governmental regulations, including regulations relating to prices, taxes, royalties, infrastructure, land use, importing and exporting and environmental protection.

The outcome of any of these factors may prevent us from receiving an adequate return on invested capital.

ITEM 2. PROPERTIES

Our corporate office is located at 900 IDS Center, 80 South Eighth Street, Minneapolis, Minnesota 55402-8773, in which we occupy approximately 160 square feet of office space, together with the use of related adjacent common areas, pursuant to a lease agreement that expires May 31, 2008, which requires monthly payments of $1,261. We believe that our current facilities are adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

None.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

Our common stock is quoted on the OTCBB under the symbol “WITM.” As of March 31, 2008 the last closing bid price of our common stock as reported by OTCBB was $0.25 per share. The following table sets forth for the periods indicated the range of high and low bid prices of our common stock:

Period	High		Low
Quarter Ended March 31, 2006	$	0.46	$	0.20
Quarter Ended June 30, 2006	$	0.29	$	0.14
Quarter Ended September 30, 2006	$	0.20	$	0.10
Quarter Ended December 31, 2006	$	0.27	$	0.08
Quarter Ended March 31, 2007	$	1.26	$	0.26
Quarter Ended June 30, 2007	$	1.27	$	0.76
Quarter Ended September 30, 2007	$	0.98	$	0.21
Quarter Ended December 31, 2007	$	0.30	$	0.15

The quotations from the OTCBB above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not reflect actual transactions.

RECORD HOLDERS

As of March 24, 2008, there were approximately 210 record holders of our common stock, excluding shareholders holding securities in “street name.” Based on securities position listings, we believe that there are approximately 4,400 beneficial holders of our common stock in “street name.”

DIVIDENDS

We have never paid cash dividends on our common stock and have no present intention of doing so in the foreseeable future. Rather, we intend to retain all earnings to provide for the growth of our Company. Payment of cash dividends in the future, if any, will depend, among other things, upon our future earnings, requirements for capital improvements and financial condition.

RECENT SALES OF UNREGISTERED SECURITIES

In addition to the sales of unregistered securities that we reported in Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K during fiscal year 2007, we made the following sales of unregistered securities during the quarter ended December 31, 2007.

In October 2007, we executed an amendment to the joint venture agreement with Journey Resources Corporation relating to our option to earn the final undivided 25 percent interest in the Vianey Mine, whereby we issued 1,600,000 shares of our unregistered common stock to Journey in lieu of the $400,000 payment due under the agreement.

From September to December 2007, through a private placement of units of our unregistered securities (each unit consisting of one share of our unregistered common stock and a five-year warrant to purchase one share of common stock at an exercise price of $0.25 per share) we sold 2,400,000 units at a price per unit of $0.25, resulting in gross proceeds of $600,000 less offering costs of $30,000.

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In November and December 2007, through a private placement of our securities, we sold 2,193,334 shares of our common stock at $0.15 per share, resulting in gross proceeds of $329,000 less offering costs of $15,465.

In December 2007, we entered into agreements with two consultants for services in public and investor relations and issued an aggregate of 550,000 shares of our unregistered common stock.

Except as noted above, sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof and rules promulgated thereunder. Based on representations from the above-referenced investors, we have determined that such investors were “accredited investors” (as defined by Rule 501 under the Securities Act) and were acquiring the shares for investment and not distribution, and that they could bear the risks of the investment and could hold the securities for an indefinite period of time. The investors received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.

ITEM 6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Financial Statements of the Company and notes thereto included elsewhere in this Annual Report. See “—Financial Statements.”

Readers are cautioned that the following discussion contains certain forward-looking statements and should be read in conjunction with the “Special Note Regarding Forward-Looking Statements” appearing at the beginning of this Annual Report.

As of December 31, 2007, we hold interests in mineral exploration projects in South Africa, Colorado and Mexico.

We hold a 35 percent equity interest in Kwagga Gold (Barbados) Limited (“Kwagga Barbados”), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, holds mineral exploration rights in South Africa. This project is referred to as the “FSC Project” and is located adjacent to the historic Witwatersrand Basin. The last completed drillhole on the FSC project occurred in 2005. In February 2007, Lonmin Plc announced that it acquired all of the equity interest of AfriOre International (Barbados) Limited (“AfriOre”). AfriOre is the holder of the other 65 percent of Kwagga Barbados. On December 12, 2007, we entered into an agreement whereby we may acquire all of AfriOre’s interest of Kwagga Barbados. Lonmin Plc is a primary producer of Platinum Group Metals (PGMs) with its headquarters in London. See the “Our Exploration Projects” section appearing elsewhere in this Annual Report for information about events that have occurred subsequent to December 31, 2007.

On September 20, 2006, we executed a formal asset purchase agreement relating to the purchase of assets of the Hunter GoldMining Corporation, a corporation incorporated under the laws of British Columbia, Canada, which assets includes the Bates-Hunter Mine, a prior producing gold mine from the 1860’s until the 1930’s located in Central City, Colorado. On January 28, 2008, we entered into a fourth amendment to the asset purchase agreement, whereby, among other modifications or amendments, the closing date is now June 30, 2008 and the entire purchase price is to be paid in a promissory note to be issued at closing. We are continuing with a defined work program, which includes dewatering the existing mine shaft and performing a surface drilling program.

On October 31, 2007, we executed an amendment to the formal joint venture agreement with Journey Resources Corp., a corporation formed under the laws of the Province of British Columbia (“Journey”) and Minerales Jazz S.A. De C.V., a corporation duly organized pursuant to the laws of Mexico and a wholly owned subsidiary of Journey. Pursuant to the terms of the amendment, we own a 50 percent undivided beneficial interest in “located mineral claims” in the property known as the Vianey Mine Concession located in the State of Guerrero, Mexico (“Vianey”). In addition to located mineral claims, our interest includes all surface rights, personal property and permits associated with Vianey and all other claims, leases and interests in minerals acquired within two kilometers of the external perimeter of Vianey.  All work being performed at Vianey is under the supervision of Journey, which mainly consists of cleaning the site for a future work program.

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On April 20, 2007, we entered into an Agreement and Plan of Merger and Reorganization, as amended on May 21, 2007 (as amended, the “Merger Agreement”) with Easyknit Enterprises Holdings Limited, a Bermuda corporation with its principal place of business in Hong Kong and listed on the Hong Kong Stock Exchange (SEHK: 0616), and Race Merger, Inc., a Minnesota corporation and wholly owned subsidiary of Easyknit (collectively “Easyknit”). On August 15, 2007, we filed a declaratory judgment action in the District Court in the Fourth Judicial District of the State of Minnesota against Easyknit pursuant to which we sought a declaration by the court that we were entitled to terminate the Merger Agreement. On October 15, 2007, Easyknit filed a counterclaim against us, seeking our payment of a termination fee. On November 1, 2007, we formally terminated the merger transaction. On December 18, 2007, the parties entered into a Settlement Agreement and General Release whereby all parties agreed to dismiss with prejudice and release each other from all claims, counterclaims and defenses that arose out of the Merger Agreement.

RESULTS OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2007 COMPARED TO THE YEAR ENDED DECEMBER 31, 2006.

Revenues

We had no revenues from continuing operations for the years December 31, 2007 and 2006. Furthermore, we do not anticipate having any future revenues until an economic mineral deposit is discovered or unless we make further acquisitions or complete other mergers or joint ventures with business models that produce such results.

Operating Expenses

General and administrative expenses were $6,953,591 for 2007 as compared to $4,963,481 for 2006. After we completed the sale of our Hosted Solutions and Accounting Software Businesses, we became an exploratory stage company effective May 1, 2003, and all prior operating expenses associated with these two business models are included in discontinued operations. Of the $6,953,591 recorded for general and administrative expenses in 2007, approximately $2,251,780 relates to our due diligence processes on China mining properties (travel and visa requirements, site visits and significant costs with consultants), $2,353,642 relates to public relations services, consulting fees and shareowner services and $1,299,005 relates to non-cash charges for options, warrants and common stock issuances and/or modifications. Of the $4,963,481 recorded for 2006, approximately $3,996,000 relates to public relations services, consulting fees and shareowner services. We anticipate that our operating expenses will increase over the next fiscal year due to our continued plans for exploration.

Exploration expenses relate to the issuance of stock and warrants for acquiring mining rights, and expenditures being reported on the work-in-process from the project operators. We anticipate the rate of spending for fiscal 2008 exploration expenses should increase.

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Components of exploration expenses are as follows:

	Years Ended December 31,				May 1, 2003  (inception) to
					December 31,
	2007		2006		2007
Expenditures related to Bates-Hunter	$	1,938,387	$	1,235,965	$	3,660,507
Expenditures related to Vianey		136,820		508,286		645,106
Expenditures related to other projects		89,701		—		309,524
Issuance of shares and warrant expense (1)		590,583		213,978		909,314
Issuance of shares to Hawk USA		—		—		4,841,290
	$	2,755,491	$	1,958,229	$	10,365,741

(1) During 2007, we issued 2,100,000 shares of common stock valued at $560,000 to obtain the rights to the Vianey project and 100,000 shares of common stock valued at $27,000 to a vendor for extending payment terms for drilling services and recorded $3,583 in warrant expense for Bates-Hunter consultants. During 2006, we issued 650,000 shares of common stock valued at $192,000 to obtain the rights to the Vianey project, 40,000 shares of common stock valued at $12,800 to obtain the rights to the MacNugget Claims and warrants to purchase 150,000 shares of common stock to two Bates-Hunter consultants and recorded $9,178 in warrant expense.

Depreciation for 2007 was $16,050 as compared to $21,214 for 2006, which represents straight-line depreciation of fixed assets purchased for work being performed at the Bates-Hunter. We will recognize depreciation expense in 2008 similar to those of 2007 on the fixed assets already purchased and possibly will be adding additional assets to the Company.

We have incurred costs for the uncompleted and terminated merger with Easyknit totaling $1,238,619 for the year ended December 31, 2007. These costs represent fees charged by our Hong Kong and US attorneys, various Hong Kong advisors and other litigation costs.

For the year ended December 31, 2006, we recorded a loss on impairment of Kwagga (Barbados) of $120,803. That amount represented the ending cash balance in Kwagga (Barbados) as reported at December 31, 2005. During 2006, we determined that our initial $2.1 million investment in Kwagga (Barbados) represented a passive equity position in a non-controlled foreign corporation and we lacked significant influence to control the operational and financial decisions of Kwagga (Barbados). Accordingly, we decided that the appropriate accounting for this investment was on the cost method of accounting. This investment was determined to not meet the guidance under the equity method of accounting according to Accounting Principles Board No. 18, “The Equity Method of Accounting for Investments in Common Stock.” In order for us to initiate a new drillhole at the FSC Project, we were required to provide $500,000 to engage the driller and since our resources for this project would not allow for that amount of capital, we re-evaluated that those funds may never be utilized and therefore took a permanent write down of the remaining funds.

We have recorded gains of $95,820 on the sale of two mining projects for the year ended December 31, 2007. (1) In June 2003, we acquired the Holdsworth Project from Hawk Uranium Inc. (f/k/a Hawk Precious Minerals Inc.) (“Hawk”), which we assigned its historical value of $17,235, which was expensed as exploration activities. The rights we held allowed us to explore only through a limited surface depth, with the remaining below-surface rights belonging to Hawk. We had not expended any funds on Holdsworth since its acquisition. On September 19, 2007, we sold all of our rights and claims in Holdsworth back to Hawk for $50,000 Canadian (US$47,260). (2) In June 2006, we acquired a 50 percent interest in five mining claims (the “MacNugget Claims”) held by Hawk in consideration of the issuance of 40,000 shares of our common stock (valued at $12,800) to Hawk, which was expensed as exploration activities. Then in November 2006, we both sold a portion of the MacNugget Claims to MacDonald Mines Exploration Ltd., (“MacDonald”), whereby MacDonald became a 51 percent owner in the MacNugget Claims and the operator of the project. Other than the common stock issued to Hawk in June 2006, we had not incurred any other expenses related to this project. On October 1, 2007, we transferred our 24.5% interest in the MacNugget Claims to both Hawk and MacDonald for an aggregate sale price of $50,000 Canadian (US$48,560).

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Other Income and Expenses

Our other income and expense consists of interest income, interest expense and gains from sale of marketable investment. Net other income for 2007 was $70,117, which included a $65,580 gain from sale of marketable investments and $4,537 of interest income, and $31,122 of interest income for 2006. Interest expense for 2007 was $1,061,383 and for 2006 it was $1,858,082. Interest expense relates primarily to interest on significant new debt, extensions to debt agreements and additional rights granted to the promissory note holders. Components of interest expense for 2007 were: $529,294 in principal loan interest and $532,089 representing the amortization of original issue discount relating to the issuance of common stock and warrants in connection with notes payable (as described below). Components of interest expense for 2006 were: $40,450 in principal loan interest and $1,817,632 representing the amortization of original issue discount relating to the issuance of common stock and warrants in connection with notes payable.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is a measure of an entity’s ability to secure enough cash to meet its contractual and operating needs as they arise. We have funded our operations and satisfied our capital requirements primarily through the sale of securities and debt financing. We do not anticipate generating sufficient net positive cash flows from our operations to fund the next twelve months. For the years ended December 31, 2007 and 2006, we had net cash used in operating activities of $6,666,746 and $3,567,731, respectively.

We had a working capital deficit of $11,393,352 at December 31, 2007, compared to $40,333 at December 31, 2006. Cash and equivalents were $130,481 at December 31, 2007, representing an increase of $44,571 from the cash and equivalents of $85,910 at December 31, 2006.

As of April 1, 2006, we had promissory notes in the aggregate principal amount of $1,100,000 payable to three lenders. We paid the obligations under the three promissory notes in May 2006. The notes had accumulated an aggregate of $69,239 in interest payable. We paid $3,353 in cash to one note holder and paid the remaining $65,886 by the issuance of 329,432 shares (valued at $0.20 per share) of our common stock.

On April 28, 2006, we completed a round of financing through the exercise of issued and outstanding warrants (the “Exercise Offer”) to certain warrant holders who qualified as accredited investors. For each two warrants exercised by a warrant holder, the warrant holder received two shares of common stock and a new three-year warrant (Class C Redeemable Warrant) with an exercise price of $0.50 per share. Certain of the warrant holders were offered a limited time reduction of the exercise price (in which the warrants were originally price from $5.50 to $0.75 per share) of $0.25 per share.  We accepted subscription agreements to exercise 15,577,401 common stock purchase warrants and received approximately $3.84 million in cash (which includes $307,600 for which we accepted, in lieu of cash, a secured promissory note, which accrued interest of five percent per annum, and was paid in February 2007 along with the $10,323 of interest receivable). No placement agents or broker/dealers were utilized.

On June 28, 2006, we entered into an option agreement with Journey Resources Corporation, a corporation duly organized pursuant to the laws of the Providence of British Columbia, and its wholly-owned subsidiary Minerales Jazz S.A. de C.V., a corporation duly organized pursuant to the laws of Mexico (collectively as “Journey”), to acquire an undivided 50 percent interest in certain mining claims comprising the Vianey Mine concession (“Vianey”) located in Guerrero State, Mexico. On December 18, 2006, we entered into a formal joint venture agreement with Journey and through the issuance of 500,000 shares of our common stock and a $500,000 payment, we acquired a 25 percent interest in Vianey. In January 2007, we paid $100,000 of an additional $500,000 required payment and issued an additional 500,000 shares of our common stock in partial payment to acquire an additional 25 percent interest in Vianey. On October 31, 2007, we executed an amendment to the formal joint venture agreement with Journey, whereby we issued 1,600,000 shares of our unregistered common stock to Journey in lieu of the final $400,000 payment due under the amendment.

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On September 20, 2006, we executed a formal asset purchase agreement (as amended on October 31, 2006, March 1, 2007 and May 31, 2007) to purchase the Bates-Hunter Mine on different economic terms than previously agreed upon. The formal asset purchase agreement is by and among Wits Basin and Hunter Gold Mining Corporation, Hunter Gold Mining Inc., Central City Consolidated Mining Corp., a Colorado corporation, and George Otten, a resident of Colorado (collectively the “Sellers”). On January 28, 2008, the parties to the formal asset purchase agreement entered into a fourth amendment relating to the modification or amendment of certain terms, including without limitation: (i) the incorporation of an acknowledgement of the parties that we have incurred approximately $2,500,000 in due diligence costs; (ii) an amendment to change the closing date of the formal asset purchase agreement from March 31, 2008 to June 30, 2008 (and to change the date upon which either party may terminate the agreement in the event a closing has not occurred as of such date to June 30, 2008); and (iii) an amendment to the purchase price to provide that all payments of principal and interest under such note can be deferred until the earlier of production on the property or January 2010. At the closing, we shall deliver to the Sellers(i) a note payable to Sellers in the original principal amount of $6,750,000 Canadian Dollars, (ii) a deed of trust with George Otten as trustee for the Sellers securing the note payable, and (iii) 3,620,000 shares of our unregistered and restricted $.01 par value common stock. Furthermore, we would still be required to provide the following additional compensation: (i) a warrant to purchase up to 100,000 shares of our common stock, at an exercise price equal to the average prior 30-day sale price of our common stock; (ii) a two percent net smelter return royalty on all future production, with no limit; (iii) a one percent net smelter return royalty (up to a maximum payment of $1,500,000); and (iv) a fee of $300,000, payable in cash or common stock at our election.

By December 31, 2006, we had received subscription exercise forms with a total value of $515,000 from 11 shareholders for the exercise of 2,060,000 stock purchase warrants, all with an exercise price of $0.25 per share, issued in connection with our private placement of 16,600,000 units in January 2005. All of these shareholders paid their respective subscription subsequent to December 31, 2006.

In December 2006, a consultant exercised a stock option held into shares of common stock. The 200,000 stock option was issued in October 2005 with an exercise price of $0.15 per share. The $30,000 cash exercise amount was paid in February 2007.

Under the provisions of the Loan Agreement with Pacific Dawn Capital, Pacific Dawn Capital had the right to purchase shares of our common stock (based on a $0.20 per share purchase price) in an amount equal to the principal balance of the promissory note issued pursuant to the Loan Agreement. Of the available right to purchase option of 2,000,000 shares available, Pacific Dawn purchased 1,000,000 shares of common stock in December 2006. Pacific Dawn provided $120,000 in December 2006 and $80,000 in January 2007.

During 2006, other investors exercised on an aggregate of 1,475,000 stock purchase warrants with an exercise price of $0.25 per share and received 1,475,000 shares of common stock. We received $368,750 in proceeds.

In January 2007, we issued 300,000 shares of our unregistered common stock to Relevant Marketing, LLC, a consultant, who exercised a stock purchase warrant (issued in April 2005 with an original exercise price of $0.50 per share), subsequently re-priced to $0.15 per share. Relevant Marketing paid $15,000 in March 2007 and the remaining balance in November 2007.  The president of Relevant Marketing is the step-daughter of our CEO, Stephen D. King.

In February 2007, in consideration of a $700,000 loan from Andrew Green, we issued a promissory note in the principal amount of $700,000 to Mr. Green. The promissory note had a maturity date of March 31, 2007, and bore interest at a rate of 6% per annum. The promissory note was paid in full by March 29, 2007 along with the accrued interest of $3,912. Under the terms of the promissory note, and as additional consideration for the loan, the Company reduced the exercise price of certain warrants to purchase an aggregate of 3,550,000 shares of our common stock from $0.12 to $0.09125 and extended the expiration date of an outstanding right to purchase up to 3,000,000 shares of the Company’s common stock at a price per share of $0.20 from March 31, 2007 to December 31, 2007.

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In January 2007, we issued to Andrew Green, a significant shareholder, 1,250,000 shares of common stock pursuant to his exercise of stock purchase warrants with an exercise price of $0.12 per share and we received $150,000 in proceeds. In March 2007, we issued to Mr. Green (1) 3,550,000 shares of common stock pursuant to his exercise of his remaining outstanding warrants with the reduced exercise price of $0.09125 per share and we received $323,937 in proceeds and (2) 1,450,000 shares of common stock pursuant to his exercise of his right-to-purchase option at $0.20 per share and we further received $290,000 in proceeds. In June 2007, we issued to Mr. Green 1,550,000 shares of common stock pursuant to his exercise of his right-to-purchase option at $0.20 per share and we received $310,000 in proceeds.

In April 2007, in consideration of a $625,000 loan from Andrew Green, we issued a promissory note to Mr. Green in the principal amount of $625,000. The promissory note had a maturity date of May 28, 2007, and bore simple interest at a rate of 12% per annum and was repaid in June 2007.

On April 10, 2007, we entered into a Convertible Note Purchase Agreement with China Gold, LLC, a Kansas limited liability company (“China Gold”), whereby we agreed to offer and sell, and China Gold agreed to purchase, an aggregate of $12,000,000 in convertible secured promissory notes over 12 months, with up to an additional $13,000,000 in convertible secured promissory notes to be issued at the discretion of both parties. The issuance and sale of convertible secured promissory notes under the Convertible Note Purchase Agreement was subject to certain conditions, including Wits Basin having a sufficient number of authorized and unissued shares available to permit the conversion of the outstanding promissory notes issued to China Gold. Promissory notes issued under the Convertible Note Purchase Agreement had a five-year term, bear interest at a rate of 8.25%, and are convertible at the option of the holder, after the expiration of 120 days from the date of issue, into shares of our common stock at a conversion price of $1.00 per share. The notes are also subject to automatic conversion in certain conditions. On April 10, 2007, we issued and sold the initial promissory note under the Convertible Note Purchase Agreement in the aggregate amount of $3,000,000, with a purchase discount of $60,000 (“Note 1”). Additionally, on May 7, 2007, we offered and sold to China Gold an additional convertible secured promissory note under the Convertible Note Purchase Agreement in the aggregate amount of $2,000,000, with a purchase discount of $40,000 (“Note 2”).

On June 19, 2007, we entered into an Amendment to Convertible Note Purchase Agreement with China Gold, whereby the parties amended the terms of the Convertible Note Purchase Agreement discussed above (as amended, the “Purchase Agreement”) to (a) clarify that the obligations of the parties under the Purchase Agreement to sell and purchase convertible notes under the Purchase Agreement shall terminate at the earlier of (i) April 10, 2008 and (ii) the date of effectiveness of our proposed merger with Easyknit, (b) to provide us an opportunity to prepay our obligations under notes issued under the Purchase Agreement, in which case China Gold would be entitled to a purchase right to acquire shares of our common stock at equivalent terms to its rights to otherwise convert the notes issued under the Purchase Agreement, and (c) extend certain registration rights of China Gold.

Furthermore, on June 19, 2007, we sold China Gold an additional note under the Purchase Agreement in the principal amount of $4,000,000, with a purchase discount of $80,000 (“Note 3”). Note 3 bears interest at a rate of 8.25% per annum, and is convertible at the option of China Gold into shares of our common stock at a conversion price of $1.00 per share, subject to anti-dilutive adjustments. Additionally, the outstanding balance on the Notes was subject to automatic conversion in the event we completed the proposed merger transaction with Easyknit. Note 3 is payable in full at the earlier of maturity or at such time that we and our subsidiaries receive financing in the aggregate amount of at least $50,000,000 from a third party. The maturity date of Note 3 was September 17, 2007, but was subject to extensions upon our request for additional periods of thirty (30) days, but in no event later than December 31, 2007, provided that at the time of each such extension we and Easyknit had not terminated the proposed merger. In the event the merger was terminated after September 17, 2007, our obligations under Note 3 were to become due and payable upon the expiration of fifteen (15) days following demand of China Gold. We also provided China Gold demand and piggyback registration rights relating to the resale of the shares of common stock issuable upon conversion of Note 3.

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On July 9, 2007, we sold China Gold an additional note under the Purchase Agreement in the principal amount of $800,000, with a purchase discount of $16,000 (“Note 4” and collectively with Note 1, Note 2 and Note 3, the “Notes”). Note 4 bears interest at a rate of 8.25% per annum, and is convertible at the option of China Gold into shares of our common stock at a conversion price of $1.00 per share, subject to anti-dilutive adjustments. Additionally, the outstanding balance on Note 4 was subject to automatic conversion in the event we completed the proposed merger transaction with Easyknit. Note 4 is payable in full at the earlier of maturity or at such time that we and our subsidiaries receive financing in the aggregate amount of at least $50,000,000 from a third party. The maturity date of Note 4 was October 7, 2007, but was subject to extensions upon our request for additional periods of thirty (30) days, but in no event later than December 31, 2007, provided that at the time of each such extension we and Easyknit had not terminated the proposed merger. In the event the merger was terminated after October 7, 2007, our obligations under Note 4 were to become due and payable upon the expiration of fifteen (15) days following demand of China Gold. We also provided China Gold demand and piggyback registration rights relating to the resale of the shares of common stock issuable upon conversion of Note 4.

In the event the Company and/or any of our majority-owned subsidiaries receive, at a time when any Notes remain outstanding, cumulative financing in the form of cash or immediately available funds from one or more third parties in the aggregate amount of at least $50,000,000 from and after June 19, 2007, (a “Substantial Financing”), the outstanding Notes issued under the Purchase Agreement shall be due and payable out of the proceeds from such Substantial Financing. In the event such prepayment of any or all outstanding Notes, the respective Holder of each such prepaid Note shall be entitled to receive from the Company, from the date of such prepayment until the earlier of (i) immediately prior to the proposed Easyknit merger or (ii) five (5) years from the date of such prepayment, at a purchase price of $1.00 per share, the right to purchase the number of shares of our common stock equal to the amount prepaid on such Note divided by $1.00.

On October 31, 2007, we entered into a letter agreement with China Gold whereby the parties amended the maturity date on each of the Notes to February 29, 2008. As additional consideration, we agreed to reduce the conversion price applicable to the Notes from $1.00 to $0.50 per share and to reduce the purchase price applicable to certain purchase rights of China Gold under the Notes from $1.00 to $0.50 per share. The letter agreement further gives us an option to obtain, at our sole discretion, an extension of the maturity dates of the respective Notes to May 31, 2008 in consideration for a further reduction in the conversion price applicable to the Notes and the purchase price relating to purchase rights provided under the Notes from $0.50 to $0.25 per share. We exercised our right to extend the maturity date to May 31, 2008 by giving notice to China Gold in February 2008.

As of December 31, 2007, we have issued an aggregate of $9,800,000 of Notes under the Purchase Agreement and have received net proceeds of $9,604,000, less $196,000 paid to an affiliate of China Gold in the form of a loan discount fee. We also agreed to pay $40,000 in accountable expenses of China Gold with respect to Notes issued under the Purchase Agreement.

On April 20, 2007, we entered into the Merger Agreement with Easyknit and Race Merger, Inc. On August 15, 2007, we filed a declaratory judgment action in the District Court in the Fourth Judicial District of the State of Minnesota against Easyknit pursuant to which we were seeking a declaration by the court that we were entitled to terminate the Merger Agreement. On October 15, 2007, Easyknit filed a counterclaim against us, seeking our payment of a termination fee. On November 1, 2007, the Company terminated the merger transaction. On December 18, 2007, the parties entered into a Settlement Agreement and General Release whereby all parties agreed to dismiss with prejudice and release each other from all claims, counterclaims and defenses that arose out of the Merger Agreement. We have recorded $1,238,619 of direct merger expenses for the year ended December 31, 2007.

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On August 1, 2007, we paid the purchase price of 10,000 Hong Kong dollars (US$1,317) for each of the following corporations: China Global Mining Resources Limited, a British Virgin Islands corporation (“CGMR”) and a Hong Kong shell corporation with the same name. CGMR has entered into two agreements: one to acquire Shanxi Hua Ze Nickel Smelting Co. and one to acquire Nanjing Sudan Mining Co. Ltd. Prior to our acquisition of CGMR in 2007, we loaned CGMR $2 million that was used toward the acquisition of Shanxi Hua Ze and $5 million that was used toward the acquisition of Nanjing Sudan Mining Co. As of December 31, 2007, we hold only the right or option to acquire and do not hold title to any of these properties, therefore, we have recorded these as advanced payments until such time as we complete a transaction. In the event we determine that such a transaction will not occur, we will seek to collect our advance payments or consider available alternatives. 

In September 2007, in consideration of a new $100,000 loan from Pacific Dawn, we issued a promissory note in the principal amount of $100,000 to Pacific Dawn. The promissory note had an original maturity date of October 21, 2007, and bears interest at a rate of 5% per annum. Under the terms of the promissory note and as additional consideration for the loan, we reduced the exercise price of a right-to-purchase option held by Pacific Dawn of up to 1,000,000 shares of our common stock from $0.20 to $0.15 per share and extended the expiration date from December 31, 2007 to December 31, 2008 of said rights. In December 2007, we memorialized an extension to the maturity date from October 21, 2007 to January 21, 2008 and provided a further price reduction of his right-to-purchase from $0.15 to $0.10 per share.

In September 2007, in consideration of an unsecured $50,000 loan from Mrs. Nancy White, a Canadian citizen and the mother of H. Vance White, our Chairman, we issued a promissory note in the principal amount of $50,000 to Mrs. White. The promissory note had an original maturity date of December 21 2007, and bears interest at a rate of 10% per annum. In December 2007, we negotiated an extension on the maturity date to be January 11, 2008. Under the terms of the promissory note and as additional consideration for the initial loan, we issued a warrant to purchase up to 100,000 shares of our common stock, with an original exercise price of $0.27 per share, to expire October 3, 2009. As additional consideration for the extension of the maturity date, we agreed to a reduction in the exercise price of the warrant from $0.27 per share to $0.20 per share.

From September to December 2007, through a private placement of units of our unregistered securities (each unit consisting of one share of our unregistered common stock and a five-year warrant to purchase one share of common stock at an exercise price of $0.25 per share) we sold 2,400,000 units at a price per unit of $0.25, resulting in gross proceeds of $600,000.

In November 2007, in consideration of an unsecured loan from Shirley Co. LLC, a Colorado limited liability company, we received net proceeds of $100,000 and issued a promissory note in the principal amount of $110,000 to Shirley Co. The promissory note has a maturity date of February 11, 2008, and bears interest at a rate of 10% per annum. Under the terms of the promissory note and as additional consideration for the loan, we issued a warrant to purchase up to 100,000 shares of our common stock at $0.20 per share with an expiration date of November 12, 2009.

In November and December 2007, through a private placement of our securities, we sold 2,193,334 shares of our common stock at $0.15 per share, resulting in gross proceeds of $329,001.

In December 2007, in consideration of an unsecured loan from an unaffiliated third party, we received net proceeds of $100,000 and issued a convertible promissory note in the principal amount of $110,000. The promissory note has a maturity date of March 31, 2008, and bears interest at a rate of 10% per annum. Furthermore, the note holder has the right to convert any portion of the principal or interest of the outstanding note into shares of our common stock based on a conversion rate equal to $0.20 per share.

During fiscal 2007, we issued 3,791,460 shares of our unregistered common stock pursuant to the exercise of warrants as follows:

(1) Two lenders exercised warrants into 1,800,000 shares with exercise prices of $0.12 and $0.40 per share related to promissory notes and we received gross proceeds of $440,000;

(2) An individual private placement holder exercised his Class C Redeemable Warrant into 62,500 shares at $0.50 per share and we received $31,250;

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(3) We issued 1,200,000 shares of our unregistered common stock to William Green, upon his exercise of a warrant at $0.12 per share, for proceeds of $144,000. Mr. Green is our President of Asia Operations and the brother of Andrew Green;

(4) Four consultants exercised warrants into an aggregate of 330,000 shares with a range of exercise prices from $0.12 to $0.30 per share and we received gross proceeds of $83,600; and

(5) We issued 398,960 shares to two consultants, who, pursuant to a cashless exercise clause, surrendered 251,040 of the available shares to pay for the exercise, with a range of exercise prices from $0.25 to $0.75 per share.

We have recorded gains of $95,820 on the sale of two mining properties for the year ended December 31, 2007. (1) In June 2003, we acquired the Holdsworth Project from Hawk Uranium Inc. (f/k/a Hawk Precious Minerals Inc.) (“Hawk”), which we assigned its historical value of $17,235. The rights we held allowed us to explore only through a limited surface depth, with the remaining below-surface rights belonging to Hawk. We had not expended any funds on the Holdsworth since its acquisition. On September 19, 2007, we sold all of our rights and claims in the Holdsworth back to Hawk for $50,000 Canadian (US$47,260). (2) In June 2006, we acquired a 50 percent interest in five mining claims (the “MacNugget Claims”) held by Hawk in consideration of the issuance of 40,000 shares of our common stock (valued at $12,800) to Hawk. Then in November 2006, we both sold a portion of the MacNugget Claims to MacDonald Mines Exploration Ltd., (“MacDonald”), whereby MacDonald became a 51 percent owner in the MacNugget Claims and the operator of the project. Other than the common stock issued to Hawk in June 2006, we had not incurred any other expenses related to this project. On October 1, 2007, we transferred our 24.5% interest in the MacNugget Claims to both Hawk and MacDonald for an aggregate sale price of $50,000 Canadian (US$48,560). Vance White, our Chairman, is the President of Hawk.

Summary

Our existing sources of liquidity will not provide cash to fund operations for the next twelve months. As of the date of this Annual Report, we have estimated our cash needs over the next twelve months to be approximately $14,000,000 (which includes approximately $10,700,000 due under our short-term convertible promissory notes assuming some or all of such notes are not converted into equity prior to maturity, $1,000,000 for Bates-Hunter, $400,000 for Vianey and $150,000 for FSC). Additionally, should any projects or mergers be completed during 2008, additional funds will be required. We will continue our attempt to raise additional capital. Some of the possibilities available to us are through private equity transactions, to develop a credit facility with a lender or the exercise of options and warrants. However, such additional capital may not be available to us at acceptable terms or at all. In the event that we are unable to obtain additional capital, we would be forced to reduce operating expenditures and/or cease operations altogether.

Foreign Exchange Exposure

Since our entrance into the metals and minerals arena, we have had very limited dealings with foreign currency transactions, even though most of our transactions have been with foreign entities. Most of the funds requests have required US Dollar denominations. Even though we may not record direct losses due to our dealings with market risk, we have an associated reduction in the productivity of our assets.

ITEM 7. FINANCIAL STATEMENTS

The Financial Statements of the Company, the accompanying notes and the report of independent registered public accounting firm are included as part of this Form 10-KSB beginning on page F-1, which follows the signature page.

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ITEM 8. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM8A(T). CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.

As of December 31, 2007, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Exchange Act. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2007, because of the identification of the material weaknesses in internal control over financial reporting described below. Notwithstanding the material weaknesses that existed as of December 31, 2007, our Chief Executive Officer and Chief Financial Officer have each concluded that the consolidated financial statements included in this Annual Report on Form 10-KSB present fairly, in all material respects, the financial position, results of operations and cash flows of the Company and its subsidiaries in conformity with accounting principles generally accepted in the United States of America (“GAAP”). We are currently taking steps to remediate such material weakness as described below.

Since we do not have a formal audit committee, our Board of Directors oversees the responsibilities of the audit committee. The Board is fully aware that there is lack of segregation of duties due to the small number of employees dealing with general administrative and financial matters.

(b) Management’s Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a set of processes designed by, or under the supervision of, a company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:

· Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

· Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

· Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It should be noted that any system of internal control, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of our internal control over financial reporting based on criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), as of December 31, 2007.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses at December 31, 2007:

· Management did not design and maintain effective control relating to the quarter end closing and financial reporting process due to lack of evidence of review surrounding various account reconciliations and properly evidenced journal entries. Due to the Company’s limited resources, the Company has insufficient personnel resources and technical accounting and reporting expertise to properly address all of the accounting matters inherent in the Company’s global financial transactions. Numerous GAAP audit adjustments were made to the financial statements for the year ended December 31, 2007. Additionally, the Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.

· The Company’s small size and “one-person” office prohibits the segregation of duties and the timely review of financial data and banking information. The Company has very limited review procedures in place.

· During 2007, the Company entered into several material acquisition transactions without timely obtaining the appropriate signed agreements, stock certificates and board approval prior to releasing cash funds called for by the transaction.

As a result of these material weaknesses described above, management has concluded that, as of December 31, 2007, our internal control over financial reporting was not effective based on the criteria in “Internal Control-Integrated Framework” issued by COSO.

We intend to initiate measures to remediate the identified material weaknesses through various means including, but not necessarily limited to, the following:

· Applying a more rigorous review of the quarterly close processes to ensure that the performance of the control is evidenced through appropriate documentation which is consistently maintained.

· Evaluating necessary changes to our process of advancing funds relating to purchase agreements and the establishment of a formalized process to ensure key controls are identified, control design is appropriate, and appropriate evidentiary documentation is maintained throughout the process.

· Establishing a more formal review process by the board members to reduce the risk of fraud and financial misstatements.

During the fiscal quarter ended December 31, 2007, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

ITEM8B. OTHER INFORMATION

None.

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PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE COMPANY

Set forth below are the names of all directors and executive officers of the Company, their respective ages and all positions and offices with the Company held by each person as of March 28, 2008:

Name	Age	Positions with the Company
H. Vance White	63	Chairman
Stephen D. King	51	Chief Executive Officer and Director
Dr. Clyde L. Smith	71	President
Mark D. Dacko	56	Chief Financial Officer, Secretary and Director
Norman D. Lowenthal	70	Director
Joseph Mancuso	66	Director

H. Vance White was elected Chairman of the Board effective September 15, 2006 and has served as a director since June 26, 2003. Mr. White also served as our Chief Executive Officer from June 26, 2003 to September 15, 2006. Since January 2003, Mr. White has also served as President of Hawk Precious Minerals Inc., a Toronto based mineral exploration company. Since April 2001, Mr. White has also been a partner in Brooks & White Associates, an unincorporated partnership providing management, financial and/or investor relations services to junior companies primarily in the natural resources sector. Since 1989 to present, Mr. White serves on the board of directors of Kalahari Resources Inc., a publicly-held Junior Canadian Resources company. Since September 1979 to present, Mr. White has served as President and Director of Brewis & White Limited, a private family investment company. From January 1991 to July 1998 he was the Franchisee for Alarm Force Industries in the Collingwood, Grey-Bruce Regions of Central Ontario, a provider of residential and commercial monitored alarm systems monitoring. From August 1993 to March 1995, Mr. White was the President of Amarado Resources Inc., a predecessor company of AfriOre Limited and a Director from August 1993 to June 1997. From September 1983 to September 1995, Mr. White was President of Mid-North Engineering Services, a company providing services and financing to the junior mining sector prior to which he was President and Director of the Dickenson Group of Companies, gold producers in the Red Lake gold mining camp of North Western Ontario, Canada. Mr. White has been involved with the natural resource industry for over 30 years and intends to devote approximately 40-50 percent of his time to the affairs of our Company.

Stephen D. King was appointed Chief Executive Officer effective September 15, 2006 and has served as a director since July 8, 2004. Mr. King also served as our President from May 15, 2006 to September 15, 2006. Since October 2000, Mr. King has served as President of SDK Investments, Inc., a private investment firm located in Atlanta, Georgia specializing in corporate finance and investing. He has served as President, from January 1994 until July 2000 and Chairman until October 2000, of PopMail.com, inc., a publicly traded company with businesses in the hospitality and Internet sectors. Mr. King has no prior experience in the precious mineral exploration or mining industry.

Dr. Clyde L. Smith was appointed President effective September 15, 2006. Since 1970, Dr. Smith has been sole owner and operator of CL Smith Consultants, an independent geological consulting firm. Dr. Smith holds a B.A. from Carleton College, a M.Sc. from the University of British Columbia, and a Ph.D. from the University of Idaho. He is a registered Professional Engineer with the Association of Professional Engineers and Geoscientists of British Columbia. Dr. Smith has founded or co-founded five exploration companies and is responsible for the discovery of four deposits: the Jason lead-zinc-silver deposit, Yukon Territory, Canada; the Santa Fe gold deposit, Nevada; the North Lake gold deposit, Saskatchewan, Canada; and the Solidaridad gold-silver-copper deposit, Mexico.

Mark D. Dacko was appointed to our board of directors on June 26, 2003. Since March 2003, Mr. Dacko has also served as Chief Financial Officer and Secretary and he served as our Controller from February 2001 to March 2003. Prior to joining the Company, Mr. Dacko was Controller for PopMail.com, inc., a publicly held email/marketing services and restaurant company, from January 1999 until January 2001. From November 1994 to December 1998, Mr. Dacko was Controller for Woodroast Systems, Inc., a publicly held restaurant company based in Minneapolis, Minnesota. Mr. Dacko has no prior experience in the precious mineral exploration or mining industry.

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Norman D. Lowenthal was appointed to our board of directors on September 4, 2003. Mr. Lowenthal is the past Chairman of the Johannesburg Stock Exchange, for the years 1997 to 2000. Since April 1997 to the present, he has served as a member of the Securities Regulation Panel of South Africa. Mr. Lowenthal was the Chairman of SSC Mandarin Financial Services Ltd for the period 2001 to 2007. Mr. Lowenthal continues to serve as a director of SSC-Sino Gold Consulting Co Ltd, which is an advisor to the Government operated association of China gold mines via the China Gold Bureau, and of SSC Mandarin Africa (Proprietary) Limited. We have entered into agreements with SSC Mandarin Financial, SSC-Siro Gold Consulting and SSC Mandarin Africa, as well as SSC Mandarin Group Limited, an affiliate of all three entities, during 2007. Mr. Lowenthal is as Vice-Chairman of the Taylor Companies, a private bank located in Washington, D.C., serving since 2002. Mr. Lowenthal has been involved in the mining industry since 1960. He has served as chairman of several listed companies in this field, including in particular, gold and diamond producing companies.

Joseph Mancuso was appointed to our board of directors on September 22, 2007. In 1977, Mr. Mancuso founded The Chief Executive Officers Club, Inc., a non-profit organization with chapters in the United States and abroad that is dedicated to the continuing education of entrepreneurial managers, and has served as its Chief Executive Officer since that time. In 1977, Mr. Mancuso also founded the Center for Entrepreneurial Management, Inc., a non-profit organization. Mr. Mancuso received a Ph. D. in Educational Administration from Boston University, an MBA from the Harvard Business School, and a degree in Electrical Engineering degree from Worcester Polytechnic Institute in Massachusetts.

There is no family relationship between any director and executive officer of the Company.

CODE OF ETHICS

The Company has adopted a Code of Ethics that applies to its principal executive officer, principal financial officer, controller and persons performing similar functions. The Code of Ethics is available on its website at www.witsbasin.com. If we make any substantive amendments to the Code of Ethics or grant any waiver from a provision of the Code of Ethics to an executive officer or director, we will promptly disclose the nature of the amendment or waiver by filing with the SEC a current report on Form 8-K.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers, directors and persons who own more than 10% of our outstanding common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission and to furnish copies of these reports to us. Based solely on a review of the copies of the Forms 3, 4 and 5 and amendments that we have received, we believe that all such forms required during 2006 and 2007 were filed on a timely basis, except for the following:

Joseph Mancuso filed a Form 4 on October 2, 2007 relating to a transaction on September 24, 2007.

AUDIT COMMITTEE AND FINANCIAL EXPERT

The Company does not have a formal audit committee. Our Board of Directors as a group acts in the capacity as the audit committee. There were no audit committee meetings held during 2007. Financial information relating to quarterly reports was disseminated to all board members for review. The audited financial statements for the years ended December 31, 2007 and 2006 were provided to each member of the board in which any concerns by the members were directed to management and the auditors.

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ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table summarizes the compensation earned for services rendered in all capacities by our chief executive officer and the other highest-paid executive officers whose total compensation for the fiscal years ended December 31, 2007 and 2006 that exceeded $100,000. No other executive officer of ours received compensation in excess of $100,000 during fiscal year 2007.

	Annual Compensation
								Option		All Other
Name and Principal Position	Year		Salary		Bonus			Awards (1)		Compensation			Total ($)
Chief Executive Officer
Stephen D. King (2)		2007	$	60,000	$	—		$	420,345	$	171,745	(3)	$	652,090
		2006	$	37,500	$	75,000	(4)	$	—	$	192,183	(5)	$	304,683
President
Dr. Clyde Smith (6)		2007	$	120,000	$	—		$	122,874	$	—		$	242,874
		2006	$	35,000	$	—		$	122,873	$	—		$	157,873
Chief Financial Officer
Mark D. Dacko (7)		2007	$	120,000	$	—		$	—	$	—		$	120,000
		2006	$	120,000	$	10,000		$	—	$	—		$	130,000
President of Asia Operations
William Green (8)		2007	$	103,288	$	—		$	601,922	$	—		$	705,210
		2006	$	—	$	—		$	—	$	—		$	—

(1) Amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal years ended December 31, 2007 and 2006 in accordance with SFAS 123(R) of stock option awards, and may include amounts from awards granted in and prior to fiscal years 2007 and 2006. Assumptions used in the calculation of this amount for employees are identified in Note 13 to our annual financial statements for the years ended December 31, 2007 and 2006 included elsewhere in this Annual Report.

(2) Mr. King was appointed Chief Executive Officer effective September 15, 2006 and served as our President from May 15, 2006 to September 15, 2006.

(3) Includes the following compensation: (i) $51,745 in reimbursements to Mr. King for administrative assistance obtained by Mr. King for his Atlanta office; and (iii) $120,000 paid to Corporate Resource Management, Inc., an entity wholly owned by Deb King, the spouse of Mr. King, pursuant to a consulting agreement with Corporate Resource Management relating to its services to the Company to provide investment banking services relating to the purchase and sale of mining related assets.

(4) Relating to a one-time bonus paid to Mr. King for his efforts relating to our April 2006 warrant call.

(5) Includes the following compensation: (i) $80,000 received pursuant to a consulting agreement dated January 27, 2005 with Mr. King for consulting services relating to strategic merger, acquisition and corporate advice with regard to the Company’s Colorado mining opportunities, (ii) $37,183 in reimbursements to Mr. King for administrative assistance obtained by Mr. King for his Atlanta office; and (iii) $75,000 paid to Corporate Resource Management, Inc., an entity wholly owned by Deb King, the spouse of Stephen D. King, pursuant to a consulting agreement with Corporate Resource Management relating to its services to the Company to provide investment banking services relating to the purchase and sale of mining related assets.

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(6) Mr. Smith was appointed President effective September 15, 2006

(7) Mr. Dacko was appointed Chief Financial Officer and Secretary effective June 26, 2003.

(8) Mr. Green was hired as our President of Asia Operations effective February 19, 2007.

EXECUTIVE EMPLOYMENT AGREEMENTS

Pursuant to a letter agreement with Dr. Smith dated September 14, 2006 and amended September 21, 2006, Dr. Smith is entitled to receive an annual salary of $120,000. Additionally, Dr. Smith was granted an option to purchase up to 1,500,000 shares of common stock (the “Standard Options”) and an option to purchase up to 500,000 shares of common stock (the “Incentive Based Stock Options”), each an exercise price of $0.31 per share (the closing sale price of our common stock as reported on the OTCBB on the day of grant). The Standard Options vest as follows: 300,000 vested immediately and 300,000 vest each anniversary thereafter (September 15, 2007, 2008, 2009 and 2010). The Incentive Based Stock Options vest in equal parts annually over five years, with the first 100,000 vesting on September 15, 2007), subject to the Company’s satisfaction of certain criteria set by our Chief Executive Officer relating to our exploration projects. The agreement with Dr. Smith is at-will, and does not have any term of employment.

Mr. King, our Chief Executive Officer is entitled to a monthly salary of $5,000. On March 9, 2007, we issued a ten-year option to Stephen D. King to purchase 3,000,000 shares of the Company’s common stock at an exercise price of $1.02 per share, the fair market value of the Company’s common stock on the date of grant, in consideration for his services as Chief Executive Officer. The option vests in six equal annual installments commencing on the first anniversary of the grant date. The option shall be accelerated upon the completion of each material acquisition of mining related assets by the Company, with the then last remaining annual installment to immediately vest, at such time the board of directors of the Company, in its sole discretion, to determine whether an acquisition is “material.” In the event the Company attempts to obtain listing of its common stock on a stock exchange and such stock exchange, as a condition to listing, requires that the Company reduce the number of shares issued to Mr. King pursuant to the option, the Company shall be entitled to reduce the number of unvested shares available to Mr. King as necessary to obtain listing on that exchange.

Mr. Dacko, our Chief Financial Officer, is entitled to a monthly salary of $10,000. Neither Mr. King nor Mr. Dacko have a formal employment agreement with the Company.

On February 19, 2007, we entered into an employment agreement with William Green as President of Asia Operations. The term of the agreement is for a period of three years, and is terminable by either party with one year written notice. Under the agreement, Mr. Green is entitled to a base salary of $10,000 per month and standard benefits provided by the Company to its management team. Additionally, the Company has agreed to pay Mr. Green an advance of $10,000 and reimburse him for certain expenses in excess of such amount relating to his relocation to Hong Kong. The Company further issued Mr. Green a ten-year option to purchase up to 2,500,000 shares of the Company’s common stock at an exercise price of $0.43 per share, the fair market value of the Company’s common stock on the date of grant. The option shall vest in three installments as follows: (i) with respect to 1,000,000 shares vested in February 2007; (ii) with respect to an additional 500,000 shares on (A) the earliest of the first anniversary of the effective date or (B) the achievement of a milestone, as determined by the board of directors or (C) the termination of Mr. Green’s employment; and (iii) with respect to the remaining 1,000,000 shares on the earlier of (a) the time the Company achieves certain performance criteria to be established by the Company’s board of directors or (b) the third anniversary of the option grant. The employment agreement further provides standard confidentiality and one-year non-competition and non-solicitation provisions. Mr. Green is a sibling of Andrew Green, a significant shareholder of the Company.

Except as reported above, we have not entered into any severance or change of control provisions with any of our executive officers.

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OUTSTANDING EQUITY AWARDS TABLE

No options were exercised by our named executive officers during the year ended December 31, 2007. The following table sets forth information of outstanding option awards held by named executive officers as of December 31, 2007.

Name	Number of Securities Underlying Unexercised Options Exercisable			Number of Securities Underlying Unexercised Options Unexercisable			Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options			Option Exercise Price		Option Exercise Date
Stephen King		250,000	(1)		—			—		$	0.40		07/08/14
		250,000	(2)		—			—		$	0.26		05/02/15
		200,000	(3)		—			—		$	0.15		10/20/15
		—			3,000,000	(4)		—		$	1.02		03/09/17
Clyde Smith		600,000	(5)		900,000	(5)		—		$	0.31		09/15/16
		100,000	(6)		—			400,000	(6)	$	0.31		09/15/16
Mark Dacko		40,000	(7)		—			—		$	2.75		02/05/11
		350,000	(8)		—			—		$	0.56		07/09/13
		125,000	(9)		—			—		$	0.23		12/29/14
		250,000	(2)		—			—		$	0.26		05/02/15
		200,000	(3)		—			—		$	0.15		10/20/15
William Green		1,500,000	(10)		—			1,000,000	(10)	$	0.43		02/19/17

(1) Options vested in portions of 125,000, 62,500 and 62,500 on July 8, 2004, January 8, 2005 and July 8, 2005, respectively.

(2) Options vested in their entirety on May 2, 2005.

(3) Options vested in their entirety on October 20, 2005.

(4) Options vest in equal portions of 500,000 annually commencing on March 9, 2008. The last outstanding tranche to vest shall accelerate immediately upon completion of each material acquisition of mining related assets by the Company, as determined in the discretion of the Board of Directors.

(5) Options vest in equal portions of 300,000 annually commencing on September 15, 2007.

(6) Options vest in equal portions of 100,000 annually commencing on September 15, 2007 subject to the achievement of objective criteria determined by the Board of Directors from time to time with respect to each year prior to the commencement of such year.

(7) Options vested in portions of 10,000, 15,000 and 15,000 on May 5, 2001, February 5, 2002 and February 5, 2003, respectively.

(8) Options vested in portions of 175,000, 87,500 and 87,500 on July 9, 2003, January 9, 2004 and July 9, 2004.

(9) Options were granted by our Board of Directors for Mr. Dacko’s voluntary deferment of salary for a six-month period during 2004. Options vested December 29, 2004.

(10) Options vest in three installments as follows: (i) with respect to 1,000,000 shares at such time Mr. Green relocates to Hong Kong and establishes a home office for the Company in Hong Kong; (ii) with respect to an additional 500,000 shares on (A) the earlier of the first anniversary of the effective date or (B) the achievement of a milestone, as determined by the Board of Directors or (C) the termination of Executive's employment with the Company; and (iii) with respect to the remaining 1,000,000 shares on the earlier of (A) the time the Company achieves certain performance criteria to be established by the Board of Directors or (B) the third anniversary of the option grant. Options relating to (i) and (ii) have vested as of December 31, 2007.

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DIRECTOR COMPENSATION

Non-employee directors of our Company are reimbursed for all reasonable and necessary costs and expenses incurred in connection with their duties as directors. In addition, we issue options to our directors as determined from time to time by the Board. In 2007, no option awards were issued to our non-employee directors, except as set forth below.

On January 27, 2005, the Board authorized a consulting agreement with Mr. King. The agreement was for consulting services to provide strategic merger, acquisition and corporate advice with regard to the Company’s Colorado mining opportunities, as well as other consulting services. Under this agreement, we paid Mr. King $80,000 in fiscal 2006. This agreement was terminated by the parties upon Mr. King’s appointment as our President in May 2006.

In consideration of Mr. Mancuso’s agreement to serve on the board, and his future service on the board, on September 24, 2007, we awarded Mr. Mancuso a ten-year option to purchase up to 2,000,000 shares of our common stock at an exercise price of $0.30 per share, the closing price of our common stock on the prior business day. The option vests in equal biannual installments of 250,000 shares each over four years, the first installment vested March 24, 2008.

Members of our board who are also employees of ours receive no compensation for their services as directors.

The following table sets forth the compensation earned by each of our non-employee directors for the year ended December 31, 2007:

Name	Option Awards				Total
H. Vance White	$	--			$	--
Norman D. Lowenthal	$	--			$	--
Joseph Mancuso	$	14,809	(1	)	$	14,809

⁽¹⁾Amount reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007 in accordance with SFAS 123(R) of stock option awards, relating to stock option grants to purchase shares of our common stock, at an exercise price equal to the fair market value of our common stock on the dates of grant, to Mr. Mancuso, a non-employee director. Assumptions used in the calculation of this amount for non-employees are identified in Note 13 to our financial statements for the year ended December 31, 2007 included elsewhere in this Annual Report.

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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The following information sets forth the number and percentage of shares of the Company’s common stock owned beneficially, as of March 31, 2008, by any person, who is known to the Company to be the beneficial owner of five percent or more of the Company’s common stock, and, in addition, by each director and each executive officer of the Company, and by all directors and executive officers as a group. Information as to beneficial ownership is based upon statements furnished to the Company by such persons.

Name and Address	Amount of Beneficial Ownership (1)			Percentage of Class
H. Vance White		4,932,500	(2)		4.1
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Stephen D. King		3,200,000	(3)		2.6
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Mark D. Dacko		965,000	(4)		*
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Clyde L. Smith		700,000	(4)		*
80 South 8th Street, Suite 900
Minneapolis, MN 55402
Norman D. Lowenthal		1,000,000	(5)		*
Private Bag X60
Saxonwold, 2132 South Africa
Joseph Mancuso		277,200	(6)		*
80 South 8th Street, Suite 900
Minneapolis, MN 55402
William Green		2,200,000	(7)		1.8
80 South 8th Street, Suite 900
Minneapolis, MN 55402
All directors and officers as a group (7 persons)		13,274,700			10.3
Andrew Green		6,550,000			5.5
5101 Creek Road
Cincinnati, OH 45242
Thomas Brazil		8,185,367	(8)		6.7
17 Bayns Hill Road
Boxford, MA 01921
Pacific Dawn Capital		7,169,976	(9)		5.8
2566 W. Woodland Drive
Anaheim, CA 92801

* represents less than 1 percent.

(1) Except as otherwise indicated, each person possesses sole voting and investment power with respect to the shares shown as beneficially owned.

(2) Includes 1,450,000 shares issuable upon the exercise of options that are currently exercisable. Also includes 3,242,500 shares held by Hawk Uranium USA, Inc. (f/k/a Hawk Precious Minerals USA, Inc.), a wholly owned subsidiary of Hawk Uranium Inc. (f/k/a Hawk Precious Minerals Inc.), and 240,000 shares held by Hawk Uranium Inc., of which Mr. White is a director and executive officer.

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(3) Includes 1,200,000 shares issuable upon the exercise of options that are currently exercisable and 2,000,000 shares issuable upon exercise of certain warrants. All options and warrants have been transferred into the name of Mr. King’s spouse.

(4) Represents shares issuable upon the exercise of options that are currently exercisable.

(5) Includes 700,000 shares issuable upon the exercise of options that are currently exercisable and 100,000 shares issuable upon exercise of certain warrants.

(6) Includes 250,000 shares issuable upon the exercise of options that are currently exercisable. All options have been transferred into the name of Mr. Mancuso’s daughter.

(7) Includes 1,000,000 shares issuable upon the exercise of an option that is currently exercisable.

(8) Includes 2,918,000 shares issuable upon the exercise of certain warrants (held in the name of Boston Financial Partners, Inc., which is owned and controlled by Mr. Brazil). Also includes 91,500 shares owned by Mr. Brazil’s spouse. Mr. Brazil disclaims beneficial ownership of the shares held by his wife.

(9) Includes (i) 2,666,667 shares issuable upon the exercise of certain warrants and (ii) 1,000,000 shares of common stock Pacific has the right to acquire at $0.10 per share on or prior to December 31, 2008, pursuant to the terms of previous financing agreements.

EQUITY COMPENSATION

The following table sets forth certain information regarding equity compensation plan information as of December 31, 2007:

					Number of securities
					remaining available for
					future issuance under
					equity compensation
	Number of securities to		Weighted-average		plans (excluding
	be issued upon exercise		exercise price of		securities reflected in
Plan category	of outstanding options		outstanding options		column (a))
	(a)				(b)
Equity compensation
plans approved by
security holders (1)		4,759,500	$	0.42		1,814,000
Equity compensation
plans not approved by
security holders		8,900,000	$	0.58		2,850,000	(1)
Total		13,659,500	$	0.53		4,664,000

(1) Includes 450,000 securities approved by written board action on July 8, 2003 from the 2000 Director Stock Option Plan (a Plan previously approved by shareholders) but not yet presented for shareholder approval.

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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following describes certain relationships and related transactions that we have with persons deemed to be affiliates of ours. We believe that each of the transactions described below were on terms at least as favorable to our Company as we would have expected to negotiate with unaffiliated third parties.

Hawk Uranium Inc. (f/k/a Hawk Precious Minerals Inc.)

On May 15, 2006, we entered into a management services agreement with Hawk, whereby Hawk provided certain management and administrative services to the Company. The term of the agreement was until December 31, 2006 and required a $50,000 payment. H. Vance White, our Chairman, is the President of Hawk.

On June 29, 2006, we executed a Memorandum of Agreement between the Company and Hawk (the “Hawk Memorandum”). Under the terms of the Hawk Memorandum, we acquired a 50 percent interest in MacNugget Claims located in northern Ontario, held entirely by Hawk by issuing Hawk 40,000 shares of our common stock, valued at $12,800. Then on November 30, 2006, both parties executed a second agreement in which we both sold a portion of the MacNugget Claims to MacDonald Mines Exploration Ltd., whereby MacDonald became a 51 percent owner in the MacNugget Claims and the operator of the project and Hawk and the Company retained a 24.5% interest in the MacNugget Claims.

In August 2007, we entered into a new management services agreement with Hawk, which requires a US$100,000 payment, which has been accrued but not paid as of December 31, 2007. The Hawk agreement expired on December 31, 2007.

On September 19, 2007, we sold all of our rights and claims in the Holdsworth Project to Hawk for $50,000 Canadian (US$47,260). We acquired the Holdsworth Project from Hawk in June 2003. The rights we held allowed us to explore only through a limited surface depth, with the remaining below-surface rights belonging to Hawk. We had not expended any funds on the Holdsworth since its acquisition. We’ve retained a one percent gross gold royalty for any gold extracted from the limited surface depth and Hawk retains the right to purchase one half of the royalty from us for $500,000 Canadian. We have estimated that the value of the one percent royalty is immaterial and therefore have not recorded the possibility of a future gain.

On October 1, 2007, we sold our 24.5% interest in the MacNugget Claims to both Hawk and MacDonald for an aggregate sale price of $50,000 Canadian (US$48,560). Other than the common stock issued to Hawk in June 2006, we have not incurred any other expenses related to this project.

Andrew Green

In April 2006, we entered into an amendment to a note with Andrew Green (pertaining to a November 1, 2005 loan and security agreement, which allow us to draw up to an aggregate of $600,000 and required no payments until the maturity date of April 30, 2006) extending the maturity date for an additional 30 days. In consideration of this extension, we issued 60,000 shares of our common stock and we entitled Mr. Green the option, at any time on or prior to August 31, 2006, to purchase shares of our common stock at a price of $0.20 per share, in an amount equal to, but not greater than, the final principal and interest balance of the note.

In May 2006, we made a $600,000 principal payment and paid the accrued interest of $44,091 by the issuance of 220,456 shares (valued at $0.20 per share) of our common stock.

In August 2006, we executed a standby joint venture financing agreement with Mr. Green. The agreement contemplated Mr. Green’s future participation in joint venture or financing arrangements for the purposes of financing mineral exploration projects. As consideration for Mr. Green’s agreement to review and consider projects presented by us, Mr. Green’s right-to-purchase up to 3,000,000 shares of our common stock at a purchase price per share of $0.20, as provided pursuant to April 2006 amendment, was extended from August 31, 2006 to March 31, 2007. This modification was valued and recorded at $273,000.

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In February 2007, in consideration of a new $700,000 loan to the Company from Mr. Green, we issued a promissory note in the principal amount of $700,000 to Mr. Green. The promissory note had a maturity date of March 31, 2007, and bore interest at a rate of 6% per annum. The promissory note was paid in full on March 29, 2007 along with accrued interest of $3,912. Under the terms of the new promissory note and as additional consideration for the loan, we reduced the exercise price of certain of his pre-existing warrants to purchase up to an aggregate of 3,550,000 shares of our common stock from $0.12 to $0.09125 and extended the expiration date of his right-to-purchase of up to 3,000,000 shares of common stock at a price per share of $0.20 from March 31, 2007 to December 31, 2007. The fair value of these equity modifications totaling $202,844 was recorded as a discount to the note and was amortized over the term of the note.

In April 2007, in consideration of a new $625,000 loan from Mr. Green, we issued a promissory note to Mr. Green in the principal amount of $625,000. The promissory note bore simple interest at a rate of 12% per annum and was paid in full in June 2007 along with $11,096 of interest.

Andrew Green is the brother of William Green, our President of Asia Operations.

Corporate Resource Management, Inc.

The Company entered into a consulting agreement with Corporate Resource Management, Inc., a Minnesota corporation (“CRM”), effective May 15, 2006. CRM is an entity wholly owned by Deb King, the spouse of Stephen D. King (at which time he was our president and board member). CRM provides the Company with investment banking services relating to the purchase and sale of mining related assets. The terms of the agreement include the following: (i) a two-year initial term with the right to terminate with a 30-day written notice, subject to a $75,000 termination fee payable to CRM if terminated by the Company without cause, (ii) a fee of $10,000 per month, plus reimbursement of normal out-of-pocket expenses, and (iii) commissions of up to two percent of the value of the transaction upon successful closings of any asset transactions during the term of the agreement and for a period of one year following termination. During fiscal 2007 and 2006, we paid $120,000 and $75,000, respectively, pursuant to the terms of the consulting agreement.

Stephen D. King

On January 27, 2005, the Board authorized a consulting agreement with Stephen D. King, at the time a director, and who currently serves as our Chief Executive Officer and as a director. The agreement was for consulting services to provide strategic merger, acquisition and corporate advice with regard to the Company’s Colorado mining opportunities, as well as other consulting services. Under this agreement, we paid Mr. King $80,000 in fiscal 2006. Upon acceptance of Mr. King’s employment as the Company’s President in March 2006, the agreement was terminated.

In fiscal year 2005, pursuant to certain secured convertible promissory notes with Pacific Dawn Capital, LLC and Andrew Green, Mr. King, who only served as a board member at that time, provided a personal guaranty for the repayment of these notes. In exchange for agreeing to personally guaranty our obligations under the Pacific Note, we issued Mr. King a two-year warrant to purchase 1,000,000 shares of our common stock at a price of $0.15 per share and in exchange for agreeing to personally guaranty our obligations under the Green Note, we issued Mr. King a two-year warrant to purchase 1,000,000 shares of our common stock at a price of $0.15 per share. The fair value of these warrants was valued at $70,913. Mr. King subsequently assigned both of the warrants to his spouse. The warrants had expiration dates of October 13 and November 4, 2007. In October 2007, the Company’s board of directors authorized an extension of the expiration dates, granting a one-year extension and the Company recorded a non-cash expense of $139,054 relating to the extension.

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Relevant Marketing LLC, dba Lighthouse Communications

The Company utilizes the services of Lighthouse Communications as its primary investor and public relations management consultant. The president of Relavent Marketing is the step-daughter of our CEO, Stephen D. King. For the years ended December 31, 2007 and 2006, we paid $120,650 and $0, respectively for services provided.

Boston Financial Partners, Inc.

Effective June 1, 2006, we engaged Boston Financial Partners, Inc., as a non-exclusive consultant, to provide assistance to the Company in various matters pertaining to corporate growth, strategic planning, public relations and marketing services. As consideration for the services, we paid a one-time fee of $100,000 and issued (i) 625,000 shares of our common stock valued at $212,500 and (ii) a two-year warrant to purchase up to 1,000,000 shares of our common stock, at an exercise price of $0.62 per share, valued at $304,802. Boston Financial Partners is controlled by Thomas Brazil, a greater than five percent beneficial shareholder of the Company’s securities.

On April 13, 2007, entered into a new six-month consulting agreement with Boston Financial Partners, Inc., as a non-exclusive consultant, to provide assistance to the Company in various matters pertaining to corporate growth, strategic planning, public relations and marketing services. As consideration for the services, we agreed to pay a fee of $100,000. As of December 31, 2007, we have paid $36,400 towards this fee.

In May 2007, the Company’s board of directors authorized an extension of the expiration dates on two warrants held by Boston Financial Partners, granting a 30-day extension. The warrants are: (1) to purchase 500,000 shares at $1.00 per share expiring on May 25, 2007 and (2) to purchase 880,000 shares at $1.00 per share expiring on May 25, 2007, both obtained in 2001. Then in June 2007, the board further authorized a six month extension, until December 31, 2007. Furthermore, on December 28, 2007, the board further authorized a one-year extension, until December 31, 2008. The Company recorded a non-cash expense of $815,758 relating to the extensions.

In October 2007, the Company’s board of directors authorized an extension of the expiration dates on two other warrants held by Boston Financial Partners, granting a one-year extension. The warrants are: (1) to purchase 442,000 shares at $0.50 per share expiring on October 14, 2007 and (2) to purchase 96,000 shares at $0.50 per share expiring on October 24, 2007, both obtained as part of the Company’s 2003 private placement. No non-cash compensation charge was recorded due to the Company providing this modification as an incentive to raise capital and not for any services in return.

Norman D. Lowenthal

Mr. Lowenthal was the Chairman of SSC Mandarin Financial Services Ltd for the period 2001 to 2007 and continues to serve as a director of SSC-Sino Gold Consulting Co Ltd, which is an advisor to the Government operated association of China gold mines via the China Gold Bureau, and SSC Mandarin Africa. We have entered into transactions with SSC Mandarin Financial Services, SSC-Sino Gold Consulting, SSC Mandarin Africa and SSC Madarin Group Limited, an affiliate of all three entities, during 2007.

DIRECTOR INDEPENDENCE

In determining whether the members of our Board are independent, we have elected to use the definition of “independence” set forth by Section 121 of the Listing Standards for the American Stock Exchange (“AMEX”), although we are not currently listed on AMEX, whereby a majority of the members of a listed company’s board of directors must qualify as “independent” as determined by the board. Consistent with these considerations, and after review of all relevant transactions or relationships between each director, or any of his family members, and Wits Basin Precious Minerals Inc., its senior management and its independent registered public accounting firm, the Board has determined that only Joseph Mancuso is currently independent within the meaning of the applicable listing standard of AMEX.

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ITEM 13. EXHIBITS

The following exhibits are filed as part of this Annual Report on Form 10-KSB, or are incorporated herein by reference.

3.1	Amended and Restated Articles of Incorporation (effective as of September 24, 2007) (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on September 27, 2007).
3.2	By-Laws (incorporated by reference to Exhibit 3.2 to Form 10-KSB for the year ended December 31, 2004 (File No. 1-12401)).
4.1	Form of Common Stock certificate (incorporated by reference to Exhibit 4.1 to the Company’s Form S-2 filed on November 26, 2003 (File No. 333-110831)).
4.2	Form of Warrant issued to Boston Financial Partners, Inc., (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K filed July 13, 2006).
4.3	Form of Class C Redeemable Warrant (incorporated by reference to Exhibit 4.7 to the Company’s Form SB-2 filed on Form SB-2 filed on July 14, 2006 (File No. 333-135765)).
4.4**	Form of Warrant to purchase 3,000,000 shares of common stock issued to Platinum Long Term Growth V, LLC.
4.5**	Form of Warrant to purchase 2,100,000 shares of common stock issued to Platinum Long Term Growth V, LLC.
10.1	Stock Option Agreement (incorporated by reference to Exhibit 6.1 to Company’s Form 1-A (File No. 24D-3802 SML)).
10.2	1997 Incentive Plan (incorporated by reference to Exhibit 10.23 to Company’s Form 10-K for the year ended December 31, 1996 (File No. 0-27968)).
10.3	1999 Employee Stock Option Plan, as amended (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed September 18, 2006).
10.4	2000 Director Stock Option Plan, as amended (incorporated by reference to Exhibit 4.1 to Company’s Form S-8 filed November 19, 2003 (File No. 333-110590)).
10.5	2001 Employee Stock Option Plan, as amended (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed January 18, 2006).
10.6	2003 Director Stock Option Plan (incorporated by reference to Exhibit 4.2 to Company’s Form S-8 filed November 19, 2003 (File No. 333-110590)).
10.7	2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 15, 2007).
10.8	Join Venture and Joint Contribution Agreement dated June 26, 2003 by and among the Company, Hawk Precious Minerals Inc. and Hawks Precious Minerals USA, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed July 1, 2003).
10.9	Shareholders Agreement by and among AfriOre International (Barbados) Limited, the Company, and Kwagga Gold (Barbados) Limited, dated August 27, 2004 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed September 1, 2004).
10.10	Amendment to Shareholders Agreement by and among AfriOre International (Barbados) Limited, the Company, and Kwagga Gold (Barbados) Limited, dated August 30, 2004 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed September 1, 2004)

51

10.11	Proposal by and among the Company, Hunter Gold Mining Corporation, Hunter Gold Mining, Inc., and Ken Swaisland, dated September 16, 2004 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed September 16, 2004).
10.12	Assignment of Purchase Option Agreement by and between the Company and Kenneth Swaisland, dated August 12, 2004 (incorporated by reference to Exhibit 10.24 to Form 10-KSB for the year ended December 31, 2004 (File No. 1-12401)).
10.13	Letter Agreement dated December 2, 2003 by and between Ken Swaisland and Hunter Gold Mining Corporation regarding purchase and sale of shares of Hunter Gold Mining Corporation (incorporated by reference to Exhibit 10.24 to the Company’s Form SB-2 filed on February 14, 2005 (File No. 333-122338)).
10.14	Letter Agreement dated December 31, 2005 by and between the Company and Hunter Gold Mining Corporation regarding amending the option agreement for the purchase of the shares of Hunter Gold Mining Corporation (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed January 18, 2006).
10.15	Consulting Agreement by and among the Company and Corporate Resource Management, Inc., dated May 15, 2006 (incorporated by reference to Exhibit 10.1 to Form 10-QSB for the quarter ended March 31, 2006 (File No. 1-12401)).
10.16	Option Agreement by and between the Company, Journey Resources Corporation and Minerales Jazz S.A. de C.V., dated June 28, 2006 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed June 30, 2006).
10.17	NI 43-101 Technical Report Pertaining To: The Vianey Mine - Guerrero State, Mexico (dated of October 18, 2004 and revised March 10, 2005) prepared by Rodney A. Blakestad J.D., C.P.G. (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed June 30, 2006).
10.18	Consulting Agreement by and among the Company and Boston Financial Partners, Inc., dated June 1, 2006 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed July 13, 2006).
10.19	Warrant Agreement between the Company and American Stock Transfer & Trust Company, dated June 28, 2006 (incorporated by reference to Exhibit 10.32 to the Company’s Form SB-2 filed on Form SB-2 filed on July 14, 2006 (File No. 333-135765)).
10.20	Standby Joint Venture Financing Agreement by and among the Company and Andrew Green dated August 18, 2006 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed August 23, 2006).
10.21	Employment Offer Letter by and among the Company and Dr. Clyde L. Smith dated September 14, 2006 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed September 18, 2006).
10.22	Employee Stock Option Vesting Correction Letter by and among the Company and Dr. Smith dated September 21, 2006 (incorporated by reference to Exhibit 10.1 of the Company’s Amendment to Form 8-K filed September 21, 2006).
10.23	Asset Purchase Agreement by and among the Company and Hunter Gold Mining Corporation, a British Columbia corporation, Hunter Gold Mining Inc., a Colorado corporation, Central City Consolidated Mining Corp., a Colorado corporation and George Otten, a resident of Colorado, dated September 20, 2006, (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed September 25, 2006).

52

10.24	Joint Venture Agreement dated December 18, 2006, by and among the Company, Journey Resources Corp., and Minerales Jazz S.A. De C.V. (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed December 19, 2006).
10.25	Employment Agreement between the Company and William Green dated February 19, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 23, 2007).
10.26	Stock Option Agreement between the Company and William Green dated February 19, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 23, 2007).
10.27	Promissory Note dated February 23, 2007 issued in favor of Andrew Green (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 23, 2007).
10.28	Stock Option Agreement between the Company and Stephen D. King dated March 9, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 15, 2007).
10.29	Convertible Notes Purchase Agreement dated April 10, 2007 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 16, 2007).
10.30	Agreement and Plan of Merger and Reorganization dated April 20, 2007 by and among the Company, Easyknit Enterprises Holdings Limited and Race Merger, Inc (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 26, 2007).
10.31	Amendment #1 to Agreement and Plan of Merger and Reorganization dated May 21, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 25, 2007).
10.32	Amendment to Convertible Notes Purchase Agreement, dated June 19, 2007, by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 25, 2007).
10.33	Form of Secured Convertible Note of the Company to be issued pursuant to Convertible Notes Purchase Agreement dated April 10, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 16, 2007).
10.34	Form of Secured Convertible Note #3 dated June 19, 2007 issued to China Gold, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 25, 2007).
10.35	Pledge Agreement dated April 10, 2007 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 16, 2007).
10.36	Guaranty of Wits-China Acquisition Corp. dated April 10, 2007 in favor of China Gold, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 16, 2007).
10.37	Security Agreement dated June 19, 2007 by and between the Company and China Gold, LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on June 25, 2007).

53

10.38**	Sale of Shares and Claim Agreement dated July 27, 2007 by and between the Company, SSC Mandarin Group Limited and China Global Mining Resources Limited, British Virgin Islands.
10.39**	Sale of Shares and Claim Agreement dated July 27, 2007 by and between the Company, SSC Mandarin Group Limited and China Global Mining Resources Limited, Hong Kong.
10.40**	Sale of Shares and Claim Agreement dated July 27, 2007 by and between the Company, SSC Mandarin Financial Services Limited and SSC Mandarin Africa (Proprietary) Limited.
10.41**	Option Agreement dated July 27, 2007 by and between the Company, SSC Mandarin Financial Services Limited and SSC-Sino Gold Consulting Co. Limited.
10.42**	Joint Venture Agreement dated April 14, 2007 by and between Shanxi Hua Ze Nickel Smelting Co. and China Global Mining Resources Limited.
10.43**	Supplemental Agreement to Joint Venture Agreement, dated June 6, 2007 by and between Shanxi Hua Ze Nickel Smelting Co. and China Global Mining Resources Limited.
10.44**	Supply Contract dated June 15, 2007 by and among China Global Mining Resources Limited, Shaanxi Hua Ze Nickel and Cobalt Metals Co., Ltd. and Shaanxi Xingwang Import & Export Limited.
10.45**	Equity Transfer Heads of Agreement dated May 4, 2007 by and among China Global Mining Resources Limited, Lu Benzhao, Lu Nan and Jin Yao Hui.
10.46**	Equity Transfer Heads of Agreement dated May 4, 2007 by and among China Global Mining Resources Limited, Lu Benzhao, Lu Nan, Nanjing Sudan Mining Co., Ltd., Maanshan Zhaoyuan Mining Co., Ltd. and Xiaonanshan Mining Co. Ltd.
10.47	Bill of Sale dated September 19, 2007 by and among Active Hawk Minerals, LLC (a wholly owned subsidiary of the Company) and Hawk Uranium Inc., for the sale of the Holdsworth Project (incorporated by reference to Exhibit 10.1 to Form 10-QSB for the quarter ended September 30, 2007 (File No. 1-12401)).
10.48	Transfer Agreement dated October 1, 2007 by and among the Company, Hawk Uranium Inc. and MacDonald Mines Exploration Ltd., for the sale of the MacNugget Claims (incorporated by reference to Exhibit 10.2 to Form 10-QSB for the quarter ended September 30, 2007 (File No. 1-12401)).
10.49	Amendment to Joint Venture Agreement dated October 31, 2007 by and among the Company, Journey Resources Corp., and Minerales Jazz S.A. De C.V., whereby we issued 1,600,000 shares of common stock in lieu of the $400,000 exploration work payment (incorporated by reference to Exhibit 10.3 to Form 10-QSB for the quarter ended September 30, 2007 (File No. 1-12401)).
10.50	Letter Agreement dated October 31, 2007 by and among the Company and China Gold, LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 5, 2007).
10.51	Sale of Shares Agreement between and among the Company, AfriOre International (Barbados) Limited and Kwagga Gold (Barbados) Limited, dated December 12, 2007 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 18, 2007).
10.52	Operating Agreement between the Company and Kwagga Gold (Proprietary) Limited, dated December 12, 2007 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 18, 2007).

54

10.53	Termination Agreement by and among the Company, SSC Mandarin Group Limited, China Global Mining Resources, BVI, China Global Mining Resources, HK, SSC Mandarin Financial Services Limited and SSC - Sino Gold Consulting Co., Ltd. dated December 12, 2007 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on December 18, 2007).
21**	Subsidiaries of the Registrant.
23.1**	Consent of Carver Moquist & O’Connor, LLC
24**	Power of Attorney (included on the signature page hereto).
31.1**	Certification by Chief Executive Officer.
31.2**	Certification by Chief Financial Officer.
32.1**	Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

** Filed herewith electronically

55

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

On January 10, 2008, our Board of Directors ratified the engagement of Carver Moquist & O’Connor, LLC (“CMO”) to audit our financial statements for the year ended December 31, 2007 and on February 8, 2007, our Board ratified the engagement of CMO to audit our financial statements for the year ended December 31, 2007.

AUDIT FEES:

The aggregate fees billed for professional services rendered by CMO for the audit of the Company's annual financial statements and review of financial statements included in the Company's Form 10-KSB and 10-QSB for 2007 and 2006, and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements was $86,947 for the year ended December 31, 2007 and $77,912 for the year ended December 31, 2006.

AUDIT RELATED FEES:

There were no fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the Company's financial statements.

TAX FEES:

There were no fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.

ALL OTHER FEES:

There were no other fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT AUDITORS

At present, we do not have an audit committee, but rather our entire Board of Directors performs the functions of the audit committee. Our Board approves each engagement for audit or non-audit services before we engage our independent auditor to provide those services. The Board has not established any pre-approval policies or procedures that would allow our management to engage our independent auditor to provide any specified services with only an obligation to notify the audit committee of the engagement for those services. None of the services provided by our independent auditors for fiscal 2007 was obtained in reliance on the waiver of the pre-approval requirement afforded in SEC regulations.

56

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WITS BASIN PRECIOUS MINERALS INC.
	(“COMPANY”)
Dated: April 2, 2008	By:	/s/ Stephen D. King
		Stephen D. King
		Chief Executive Officer

Each person whose signature to this Annual Report appears below hereby constitutes and appoints Stephen D. King and Mark D. Dacko as his true and lawful attorney-in-fact and agent, with full power of substitution, to sign on his or her behalf individually and in the capacity stated below and to perform any acts necessary to be done in order to file all amendments to this Annual Report and any and all instruments or documents filed as part of or in connection with this Annual Report or the amendments thereto and each of the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or his substitutes, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Company, in the capacities and dates indicated.

Name	Title	Date
/s/ H. Vance White	Chairman	April 2, 2008
H. Vance White
/s/ Stephen D. King	Chief Executive Officer and Director	April 2, 2008
Stephen D. King	(principal executive officer)
/s/ Clyde L. Smith	President	April 2, 2008
Clyde Smith
/s/ Mark D. Dacko	Chief Financial Officer, Secretary and	April 2, 2008
Mark D. Dacko	Director (principal financial and
	accounting officer)
/s/ Norman D. Lowenthal	Director	April 2, 2008
Norman D. Lowenthal
/s/ Joseph Mancuso	Director	April 1, 2008
Joseph Mancuso

57

ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Table of Contents

	Page
Report of Independent Registered Public Accounting Firm of Carver Moquist & O’Connor, LLC	F-2
Consolidated Balance Sheets as of December 31, 2007 and 2006	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2007 and 2006	F-4
Consolidated Statements of Shareholders’ Equity (Deficit) and Comprehensive Loss for the Years Ended December 31, 2007 and 2006	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007 and 2006	F-7
Notes to Consolidated Financial Statements	F-8

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Wits Basin Precious Minerals Inc. and subsidiaries (an exploration stage company)

We have audited the accompanying consolidated balance sheets of Wits Basin Precious Minerals Inc., and subsidiaries (an exploration stage company) as of December 31, 2007 and 2006, and the related consolidated statements of operations, shareholders’ equity (deficit) and comprehensive loss, and cash flows for the years ended December 31, 2007 and 2006, and the period from May 1, 2003 (inception of exploration stage) to December 31, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wits Basin Precious Minerals Inc. as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the years ended December 31, 2007 and 2006, and the period from May 1, 2003 (inception of exploration stage) to December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company had net losses for the years ended December 31, 2007 and 2006 and had an accumulated deficit at December 31, 2007. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Carver Moquist & O’Connor, LLC

Minneapolis, Minnesota

March 31, 2008

F-2

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2007			2006
Assets
Current assets:
Cash	$	130,481		$	85,910
Receivables		—			10,323
Investment		—			21,241
Prepaid expenses		91,030			53,815
Total current assets		221,511			171,289
Property and equipment, net		73,206			80,087
Advance payments on equity investments		7,000,000			—
Debt issuance costs, net		16,415			—
Total Assets	$	7,311,132		$	251,376
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Convertible notes payable, net of original issue discount	$	9,843,283		$	—
Short-term notes payable, net of original issue discount		234,220			—
Accounts payable		229,292			68,622
Accrued interest		514,286			—
Other accrued expenses		793,782			143,000
Total current liabilities		11,614,863			211,622
Commitments and contingencies
Shareholders’ equity (deficit):
Common stock, $.01 par value, 300,000,000 shares authorized in 2007 and 150,000,000 authorized in 2006: 113,982,533 and 94,747,739 shares issued and outstanding at December 31, 2007 and 2006, respectively		1,139,825			947,477
Additional paid-in capital		51,147,313			42,954,263
Stock subscriptions receivable		—			(932,600	)
Warrants outstanding		5,710,383			7,515,487
Accumulated deficit		(22,932,460	)		(22,932,460	)
Deficit accumulated during the exploration stage, subsequent to April 30, 2003		(39,368,792	)		(27,509,595	)
Accumulated other comprehensive loss		—			(2,818	)
Total shareholders’ equity (deficit)		(4,303,731	)		39,754
Total Liabilities and Shareholders’ Equity (Deficit)	$	7,311,132		$	251,376

The accompanying notes are an integral part of these consolidated financial statements.

F-3

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

							May 1, 2003 (inception)
	December 31,						To Dec. 31,
	2007			2006			2007
Revenues	$	—		$	—		$	—
Operating expenses:
General and administrative		6,953,591			4,963,481			18,834,004
Exploration expenses		2,755,491			1,958,229			10,365,741
Depreciation and amortization		16,050			21,214			476,314
Merger transaction costs		1,238,619			—			1,238,619
Stock issued as penalty		—			—			2,152,128
Loss on impairment of Kwagga Gold		—			120,803			2,100,000
Loss (gain) on sale of mining properties		(95,820	)		—			571,758
Loss on disposal of assets		—			—			1,633
Total operating expenses		10,867,931			7,063,727			35,740,197
Loss from operations		(10,867,931	)		(7,063,727	)		(35,740,197	)
Other income (expense):
Other income (expense), net		70,117			31,122			103,464
Interest expense		(1,061,383	)		(1,858,082	)		(3,997,133	)
Total other expense		(991,266	)		(1,826,960	)		(3,893,669	)
Loss from operations before income tax benefit and discontinued operations		(11,859,197	)		(8,890,687	)		(39,633,866	)
Benefit from income taxes		—			—			243,920
Loss from continuing operations		(11,859,197	)		(8,890,687	)		(39,389,946	)
Discontinued operations:
Gain from discontinued operations		—			—			21,154
Net loss	$	(11,859,197	)	$	(8,890,687	)	$	(39,368,792	)
Basic and diluted net loss per common share:
Continuing operations	$	(0.11	)	$	(0.11	)	$	(0.63	)
Discontinued operations		—			—			—
Net loss	$	(0.11	)	$	(0.11	)	$	(0.63	)
Basic and diluted weighted average common shares outstanding		105,146,864			82,503,278			62,125,190

The accompanying notes are an integral part of these consolidated financial statements.

F-4

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) AND

COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

					Additional		Stock
	Common stock				paid-in		subscription
	Shares		Amount		capital		receivable			Warrants
BALANCE, December 31, 2005		65,674,329	$	656,743	$	34,487,774	$	—		$	6,418,685
Exercise of warrants with cash		21,141,184		211,412		4,644,069		(822,600	)		149,841
Issuance of 5,452,794 shares of common stock and 4,000,000 warrants to consultants during 2006 for services		5,452,794		54,528		1,677,160		—			1,015,712
Issuance of shares of common stock for maturity date extensions and conversion of interest due; issuance of 3,500,000 warrants and recording a beneficial conversion charge all related to 2006 notes payable		439,432		4,394		1,178,222		—			252,014
Conversion of accounts payable into common stock at $0.26 per share in March 2006		150,000		1,500		37,500		—			—
Issuance of common stock to obtain exploration rights for Mexico and Canada		690,000		6,900		197,900		—			—
Exercise of Right-to-Purchase option provided under the terms of 2006 notes payable		1,000,000		10,000		190,000		(80,000	)		—
Exercise of stock options in December 2006		200,000		2,000		28,000		(30,000	)		—
Stock option compensation expense		—		—		122,873		—			—
Warrants that expired during 2006 without exercise		—		—		320,765		—			(320,765	)
Contributed services by an executive		—		—		70,000		—			—
Comprehensive loss:
Net loss		—		—		—		—			—
Unrealized gain (loss) on investment		—		—		—		—			—
Total comprehensive loss		—		—		—		—			—
BALANCE, December 31, 2006		94,747,739		947,477		42,954,263		(932,600	)		7,515,487
Issuance of 2,400,000 shares of common stock and warrants in private placement September through December 2007 at $0.25 per unit (net of offering costs of $30,000)		2,400,000		24,000		258,127		—			287,873
Issuance of 2,193,334 shares of common stock in private placement Dec 2007 at $0.15 per share (net of offering costs of $15,465)		2,193,334		21,933		291,602		—			—
Exercise of warrants with cash		8,492,500		84,925		2,031,222		—			(898,360	)
Cash-less exercise of warrants		398,960		3,990		156,975		—			(160,965	)
Exercise of Right-to-Purchase option provided under the terms of 2006 notes payable		3,000,000		30,000		570,000		—			—
Issuance of common stock to obtain exploration rights for Mexico		2,100,000		21,000		539,000		—			—
Issuance of 300,000 warrants and recording a beneficial conversion charge, re-pricing charges and maturity date extensions all related to 2007 notes payable		—		—		331,801		—			40,305
Issuance of 650,000 shares of common stock, 5,350,000 warrants, 100,000 options and the associated charges for re-pricing and the extension of exercise dates all to consultants for services in 2007		650,000		6,500		166,188		—			1,614,227
Stock subscription receivable payments received		—		—		—		932,600			—
Stock option compensation expense		—		—		1,159,951		—			—
Warrants that expired during 2007 without exercise		—		—		2,688,184		—			(2,688,184	)
Comprehensive loss:
Net loss		—		—		—		—			—
Realized gain on investment		—		—		—		—			—
Total comprehensive loss		—		—		—		—			—
BALANCE, December 31, 2007		113,982,533	$	1,139,825	$	51,147,313	$	—		$	5,710,383

The accompanying notes are an integral part of these consolidated financial statements.

F-5

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) AND

COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

	Accumulated deficit			Deficit accumulated (1)			Accumulated other comprehensive loss/gain			Total
BALANCE, December 31, 2005	$	(22,932,460	)	$	(18,618,908	)	$	(7,644	)	$	4,190
Exercise of warrants with cash		—			—			—			4,182,722
Issuance of 5,452,794 shares of common stock and 4,000,000 warrants to consultants during 2006 for services		—			—			—			2,747,400
Issuance of shares of common stock for maturity date extensions and conversion of interest due; issuance of 3,500,000 warrants and recording a beneficial conversion charge all related to 2006 notes payable		—			—			—			1,434,630
Conversion of accounts payable into common stock at $0.26 per share in March 2006		—			—			—			39,000
Issuance of common stock to obtain exploration rights for Mexico and Canada		—			—			—			204,800
Exercise of Right-to-Purchase option provided under the terms of 2006 notes payable		—			—			—			120,000
Exercise of stock options in December 2006		—			—			—			—
Stock option compensation expense		—			—			—			122,873
Warrants that expired during 2006 without exercise		—			—			—			—
Contributed services by an executive		—			—			—			70,000
Comprehensive loss:
Net loss		—			(8,890,687	)		—			—
Unrealized gain (loss) on investment		—			—			4,826			—
Total comprehensive loss		—			—			—			(8,885,861	)
BALANCE, December 31, 2006		(22,932,460	)		(27,509,595	)		(2,818	)		39,754
Issuance of 2,400,000 shares of common stock and warrants in private placement September through December 2007 at $0.25 per unit (net of offering costs of $30,000)		—			—			—			570,000
Issuance of 2,193,334 shares of common stock in private placement Dec 2007 at $0.15 per share (net of offering costs of $15,465)		—			—			—			313,535
Exercise of warrants with cash		—			—			—			1,217,787
Cash-less exercise of warrants		—			—			—			—
Exercise of Right-to-Purchase option provided under the terms of 2006 notes payable		—			—			—			600,000
Issuance of common stock to obtain exploration rights for Mexico		—			—			—			560,000
Issuance of 300,000 warrants and recording a beneficial conversion charge, re-pricing charges and maturity date extensions all related to 2007 notes payable		—			—			—			372,106
Issuance of 650,000 shares of common stock, 5,350,000 warrants, 100,000 options and the associated charges for re-pricing and the extension of exercise dates all to consultants for services in 2007		—			—			—			1,786,915
Stock subscription receivable payments received		—			—			—			932,600
Stock option compensation expense		—			—			—			1,159,951
Warrants that expired during 2007 without exercise		—			—			—			—
Comprehensive loss:
Net loss		—			(11,859,197	)		—			—
Realized gain on investment		—			—			2,818			—
Total comprehensive loss		—			—			—			(11,856,379	)
BALANCE, December 31, 2007	$	(22,932,460	)	$	(39,368,792	)	$	—		$	(4,303,731	)

(1) Deficit accumulated during the exploration stage, subsequent to April 30, 2003.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

							May 1, 2003
							(inception) to
	December 31,						Dec. 31,
	2007			2006			2007
OPERATING ACTIVITIES:
Net loss	$	(11,859,197	)	$	(8,890,687	)	$	(39,368,792	)
Adjustments to reconcile net loss to cash flows from operating activities:
Depreciation and amortization		16,050			21,214			476,314
Loss (gain) on disposal of miscellaneous assets		(65,580	)		—			(63,947	)
Loss (gain) on sale of mining projects		(95,820	)		—			571,758
Issuance of common stock for exploration rights		560,000			204,800			5,700,090
Loss on impairment of Kwagga Gold		—			120,803			2,100,000
Amortization of debt issuance costs		36,480			4,662			175,338
Amortization of original issue discount		495,609			798,889			2,196,890
Amortization of prepaid consulting fees related to issuance and modifications of warrants and issuance of common stock		944,581			2,744,326			5,508,669
Compensation expense related to stock options		1,159,951			122,873			1,282,824
Issuance of common stock and warrants for services		932,418			419,524			2,101,940
Contributed services by an executive		—			70,000			274,500
Interest expense related to issuance of common stock and warrants		—			1,084,630			1,173,420
Issuance of common stock as penalty related to private placement		—			—			2,152,128
Gain from discontinued operations		—			—			(21,154	)
Changes in operating assets and liabilities:
Accounts receivable, net		10,323			(10,323	)		18,017
Prepaid expenses		(127,299	)		(306,869	)		(254,062	)
Accounts payable		160,670			(28,601	)		159,011
Accrued expenses		1,165,068			77,028			1,087,481
Net cash used in operating activities		(6,666,746	)		(3,567,731	)		(14,729,575	)
INVESTING ACTIVITIES:
Purchases of property and equipment		(9,169	)		(11,742	)		(115,523	)
Proceeds from sale of mining projects		95,820			—			220,820
Proceeds from sale of miscellaneous assets		89,639			—			89,639
Purchases of investments		—			(5,155	)		(2,244,276	)
Advance payments on equity investments		(7,000,000	)		—			(7,000,000	)
Net cash used in investing activities		(6,823,710	)		(16,897	)		(9,049,340	)
FINANCING ACTIVITIES:
Payments on short-term and long-term debt		(1,325,000	)		(1,100,000	)		(2,759,645	)
Cash proceeds from issuance of common stock, net of offering costs		1,563,535			120,000			6,408,807
Cash proceeds from exercise of stock options		30,000			—			199,900
Cash proceeds from exercise of warrants		2,040,387			4,182,722			6,526,047
Cash proceeds from short-term debt		11,279,000			350,000			12,379,000
Cash proceeds from long-term debt		—			—			650,000
Debt issuance costs		(52,895	)		—			(191,753	)
Net cash provided by financing activities		13,535,027			3,552,722			23,212,356
INCREASE (DECREASE) IN CASH EQUIVALENTS		44,571			(31,906	)		(566,559	)
CASH AND EQUIVALENTS, beginning of period		85,910			117,816			697,040
CASH AND EQUIVALENTS, end of period	$	130,481		$	85,910		$	130,481

The accompanying notes are an integral part of these consolidated financial statements.

F-7

WITS BASIN PRECIOUS MINERALS INC. AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2007 and 2006

NOTE 1 - NATURE OF BUSINESS

Wits Basin Precious Minerals Inc., and subsidiaries (“we,” “us,” “our,” “Wits Basin” or the “Company”) is a minerals exploration and development company based in Minneapolis, Minnesota. As of December 31, 2007, we hold interests in mineral exploration projects in South Africa (FSC), Colorado (Bates-Hunter) and Mexico (Vianey). The following is a summary of our projects:

· We hold a 35 percent equity interest in Kwagga Gold (Barbados) Limited (“Kwagga Barbados”), which, through its wholly owned subsidiary Kwagga Gold (Proprietary) Limited, holds mineral exploration rights in South Africa. This project is referred to as the “FSC Project” and is located adjacent to the historic Witwatersrand Basin. The last completed drillhole on the FSC project occurred in 2005. On December 12, 2007, we entered into an agreement with AfriOre International (Barbados) Limited (“AfriOre”), the holder of the other 65 percent of Kwagga Barbados, whereby we may acquire all of AfriOre’s interest of Kwagga Barbados. See Note 19 – Subsequent Events for an update regarding a letter of intent we have entered into with respect to our rights to acquire the 65 percent interest in Kwagga Barbados held by AfriOre.

· On September 20, 2006, we executed a formal asset purchase agreement relating to the purchase of assets of the Hunter GoldMining Corporation, a corporation incorporated under the laws of British Columbia, Canada, which assets includes the Bates-Hunter Mine, a prior producing gold mine from the 1860’s until the 1930’s located in Central City, Colorado. On January 28, 2008, we executed a fourth amendment to the formal purchase agreement, including an amendment to change the closing date from March 31, 2008 to June 30, 2008. See Note 19 - Subsequent Events for detailed information regarding the fourth amendment to the formal asset purchase agreement. We are continuing with a defined work program, which includes dewatering the existing mine shaft and performing a surface drilling program.

· On October 31, 2007, we executed an amendment to the formal joint venture agreement with Journey Resources Corp., a corporation formed under the laws of the Province of British Columbia (“Journey”) and Minerales Jazz S.A. De C.V., a corporation duly organized pursuant to the laws of Mexico and a wholly owned subsidiary of Journey. Pursuant to the terms of the amendment, we own a 50 percent undivided beneficial interest in “located mineral claims” in the property known as the Vianey Mine Concession located in the State of Guerrero, Mexico (“Vianey”). In addition to located mineral claims, our interest includes all surface rights, personal property and permits associated with Vianey and all other claims, leases and interests in minerals acquired within two kilometers of the external perimeter of Vianey.  All work being performed at Vianey is under the supervision of Journey, which mainly consists of cleaning the site for a future work program.

Additionally, we have made $7,000,000 in advance payments on two equity investments to acquire interests in the following mining projects located in the People’s Republic of China (the “PRC”): (i) a nickel mining operation, the Xing Wang Mine and (ii) the iron ore mining properties of Nanjing Sudan Mining Co., Ltd. (which includes Maanshan Zhaoyuan Mining Co. Ltd., Xiaonanshan Mining Co., Ltd.) and Changjiang Mining Company Limited. Further due diligence is required before we can proceed with further negotiations on either of these PRC projects. In January 2008, we entered into a revised letter agreement establishing a purchase price and payment schedule relating to the Nanjing Sudan Mining Co, whereby the purchase price was set at 620,000,000 Chinese Remnimbi (approximately $86 million US). Depending on the final agreements ultimately agreed to and closed by both parties, the Company may also have to issue a significant amount of shares of common stock as contingent consideration based on the number of tonnes of iron ore processed over a period of time from the actual closing date.

F-8

Until March 14, 2003, we provided industry-specific solutions for managing, sharing and collaborating on business information on the Internet through our Hosted Solutions Business and until April 30, 2003, we provided accounting software through our Accounting Software Business. We sold substantially all of the assets relating to our Hosted Solutions and Accounting Software Businesses as of such dates and as a result, we became an exploratory stage company effective May 1, 2003.

As of December 31, 2007, we do not directly own any mining permits, we possess only a few pieces of equipment and we employ insufficient numbers of personnel necessary to actually explore and/or mine for minerals. Therefore, we are substantially dependent on the third party contractors we engage to perform such operations.

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2007, we incurred losses from continuing operations of $11,859,197. At December 31, 2007, we had an accumulated deficit of $62,301,252 and a working capital deficit of $11,393,352. Our ability to continue as a going concern is dependent on our ability to raise the required additional capital or debt to meet short and long-term operating requirements. We believe that private placements of equity capital and debt financing may be adequate to fund our long-term operating requirements. We may also encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict our operations. We are continuing to pursue external financing alternatives to improve our working capital position. If we are unable to obtain the necessary capital, we may have to cease operations.

As of the date of this Annual Report, we do not claim to have any mineral reserves on our properties.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Wits Basin Precious Minerals Inc., and our wholly owned subsidiaries: (i) Gregory Gold Producers, Inc; (ii) Wits-China Acquisition Corp; (iii) China Global Mining Resources Ltd, a British Virgin Islands corporation; (iv) China Global Mining Resources Ltd a Hong Kong corporation; (v) Red Wing Business Systems, Inc; and (vi) Champion Business Systems, Inc. After the sale of our Accounting Software Business in 2003, Red Wing and Champion Business Systems became inactive subsidiaries, which are represented as discontinued operations in the statement of operations. All significant intercompany transactions and balances have been eliminated in consolidation.

Cash and Cash Equivalents

We include as cash equivalents: (a) certificates of deposit, and (b) all other investments with maturities of three months or less, which are readily convertible into known amounts of cash. We maintain our cash in high-quality financial institutions. The balances, at times, may exceed federally insured limits.

F-9

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over estimated useful lives ranging from five to seven years.

Long-Lived Assets

We will periodically evaluate the carrying value of long-lived assets to be held and used, including but not limited to, capital assets and intangible assets, when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose.

Segment Reporting

Due to the reclassification of our Hosted Solutions Business into discontinued operations, we have a single operating segment. The single operating segment is that of minerals exploration.

Revenue Recognition and Deferred Revenue

We currently do not have the ability to generate revenues from our investments in any of our projects. Furthermore, we do not expect to generate revenues for the foreseeable future.

Exploration Expenses

Any exploration expenses incurred relating to our projects will be charged as incurred.

Use of Estimates

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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.

Stock Based Compensation

On January 1, 2006, the Company adopted Financial Accounting Standards Board (“FASB”) Statement No. 123(R), “Share-Based Payment,” which requires the fair value of share-based payments, including grants of employee stock options and employee stock purchase plan shares, to be recognized in the income statement based on their estimated fair values unless a fair value is not reasonably estimable. The Company's consolidated financial statements as of and for the years ended December 31, 2007 and 2006, reflect the impact of SFAS 123(R). SFAS 123(R) requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's consolidated statements of operations.

Off Balance Sheet Arrangements

As of December 31, 2007, we did not have any off-balance sheet activities (including the use of structured finance or special purpose entities) or any trading activities in non-exchange traded commodity contracts that have a current or future effect on our financial condition, changes in the financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources that are material to our investors.

F-10

Financial Instruments

The carrying amounts for all financial instruments approximates fair value. The carrying amounts for cash and cash equivalents, accounts payable and accrued liabilities approximated fair value because of the short maturity of these instruments. The fair value of short-term debt approximated the carrying amounts based upon our expected borrowing rate for debt with similar remaining maturities and comparable risk.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss) and items defined as other comprehensive income (loss). Items defined as other comprehensive income (loss) include such items as foreign currency translation adjustments and unrealized gains (losses) on certain marketable securities.

Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss applicable to common shareholders by the weighted average number of common shares outstanding during the periods presented. Diluted net loss per common share is determined using the weighted average number of common shares outstanding during the periods presented, adjusted for the dilutive effect of common stock equivalents, consisting of shares that might be issued upon exercise of options, warrants and conversion of convertible debt. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents, because their inclusion would be anti-dilutive.

As of December 31, 2007, we have (i) 13,659,500 shares of common stock issuable upon the exercise of stock options, (ii) 24,930,238 shares of common stock issuable upon the exercise of warrants and (iii) reserved an aggregate of 21,150,000 shares of common stock issuable under convertible debt agreements. These 59,739,738 shares, which would be reduced by applying the treasury stock method, were excluded from the basic and diluted weighted average outstanding shares amount for computing the net loss per common share, because the net effect would be antidilutive for each of the periods presented.

Income Taxes

The Company accounts for income taxes using the liability method to recognize deferred income tax assets and liabilities. Deferred income taxes are provided for temporary differences between the financial reporting and tax bases of our assets and liabilities at currently enacted tax rates. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related benefits.

Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The statement is effective in the first fiscal quarter of 2008 and we will adopt the statement at that time. We believe that the adoption of SFAS No. 157 will not have a material effect on the Company’s results of operations, cash flows or financial position.

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets andFinancial Liabilities,” which provides companies with an option to report selected financial assets andliabilities at fair value. This standard is effective beginning after December 31, 2007. We presently do notanticipate that the provisions of SFAS No. 159 will apply to the Company.

F-11

In December 2007, the FASB issued Statement No. 141R, “Business Combinations,” which establishesprinciples for how an acquirer recognizes and measures in its financial statements the identifiable assetsacquired and liabilities assumed in a business combination, the goodwill acquiredin a business combination, and determines what information to disclose to enable users of the financialstatements to evaluate the nature and financial effects of a business combination. We are required to applythis standard prospectively to business combinations for which the acquisition date is on or after January 1,2009. Earlier application is not permitted.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements - anamendment of Accounting Research Bulletin No. 51” (“SFAS No. 160”). SFAS No. 160 will change the accounting and reporting forminority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. This newconsolidation method will significantly change the accounting for transactions with minority interest holders. SFAS No. 160 iseffective for fiscal years beginning after December 15, 2008, and will be adopted by us in the first quarter 2009. SFAS No. 160 iscurrently not expected to have a material effect on the Company’s results of operations, cash flows or financial position.

NOTE 3 – RECEIVABLE

Pursuant to a stock subscription agreement for which we accepted in lieu of cash, we held a secured promissory note dated April 28, 2006, which accrued interest at a rate of five percent per annum. The note balance was $10,323 at December 31, 2006, which we collected in February 2007.

NOTE 4 – INVESTMENT

We held 225,000 shares of MacDonald Mines Exploration Ltd., a Toronto Stock Exchange listed company (TSX-V:BMK), that we received under joint venture agreements with MacDonald. We had received 175,000 of the shares in 2004 and the additional 50,000 shares in 2006 with respect to certain joint venture agreements in Canadian projects. Our original basis in the aggregate 225,000 shares was approximately $24,059 and at December 31, 2006, was valued at $21,241. During September 2007, we sold all of these shares by utilizing the efforts of a U.S. registered broker/dealer in open market sales. The sale of these marketable securities generated a gain of $65,580, which has been recorded as other income/expense for the year ended December 31, 2007.

NOTE 5 – PREPAID EXPENSES

Prepaid expenses consist of two components: prepaid consulting fees and other prepaid expenses. The prepaid consulting fees include cash and calculated amounts from the issuance of common stock, warrants or options to consultants for various services that we do not have the internal infrastructure to perform. The amortization periods coincide with terms of the agreements. The other prepaid expenses contain amounts we have prepaid for general and administrative purposes and are being expensed as utilized.

During 2006, we entered into various consulting agreements and issued the following to nine unaffiliated third party consultants: (i) an aggregate of 3,700,000 shares of un-registered common stock (with an aggregate value of $1,196,000 based on closing sale prices of our common stock), (ii) warrants to purchase an aggregate of 2,550,000 shares of common stock at exercise prices from $0.25 to $1.00 per share (with an aggregate value of $614,575 using the Black-Scholes pricing model) with certain of the warrants issued below market price on date of grant and (iii) $150,000 in cash to one of the consultants. All of these were amortized over monthly periods to coincide with the consulting agreements and have been fully amortized as of December 31, 2007.

In June 2006, we entered into two agreements with related parties. The first was a management services agreement with Hawk Uranium Inc. (f/k/a Hawk Precious Minerals Inc.), whereby Hawk provided certain management and administrative services to the Company in consideration of US$50,000. This agreement expired on December 31, 2006. H. Vance White, our Chairman of the Board, is also an officer and director of Hawk. The second agreement was a consulting agreement with Boston Financial Partners Inc. (a greater than five percent beneficial shareholder) as a non-exclusive consultant, pursuant to which Boston Financial provided assistance in various matters pertaining to corporate growth, strategic planning, public relations and marketing services in consideration of $100,000 in cash, 625,000 shares of our common stock (valued at $212,500 based on the closing sale price of our common stock) and a two-year warrant to purchase up to an aggregate of 1,000,000 shares of our common stock (valued at $304,802 using the Black-Scholes pricing model), at an exercise price of $0.62 per share.

F-12

During the fourth quarter of 2007, we entered into two consulting agreements with unaffiliated third party consultants and issued the following: (i) an aggregate of 300,000 shares of un-registered common stock (with an aggregate value of $63,000 based on the closing sale price of our common stock), (ii) a two-year warrant to purchase up to 100,000 shares of common stock at exercise price of $0.30 per share (value at $16,051 using the Black-Scholes pricing model) and (iii) a ten-year option from our 2001 Employee Stock Option Plan to purchase up to 100,000 shares of common stock at exercise price of $0.30 per share (value at $22,688 using the Black-Scholes pricing model).

During 2007, we additionally entered into two agreements with related parties. (1) In August 2007, we entered into a new management services agreement with Hawk, which requires a US$100,000 payment, which has been accrued but not paid as of December 31, 2007. The Hawk agreement expired on December 31, 2007. (2) In May 2007 and again in June 2007, we extended the expiration date on two warrants held by Thomas Brazil (the principal shareholder of Boston Financial Partners Inc.) for services to be rendered during the remainder of 2007. The previously issued and outstanding warrants allow for the purchase of up to an aggregate of 1,380,000 shares of common stock at $1.00 per share for a term to May 22, 2007. The modifications extended the term to December 31, 2007 and resulted in an additional $815,758 of non-cash expense being recorded from the modification of the expiration dates (calculated using the Black-Scholes pricing model).

Included in the other prepaid expenses are two bonds (held in the form of a certificate of deposit, CD, $10,000 each) required by the State of Colorado for exploration activities, which earn nominal interest. The two bonds should not have to be expensed unless an event requires us to release them to the State.

Components of prepaid expenses are as follows:

	December 31,
	2007		2006
Prepaid consulting fees	$	35,743	$	25,827
Other prepaid expenses		55,287		27,988
	$	91,030	$	53,815

NOTE 6 – PROPERTY AND EQUIPMENT

Related to our on-going exploration efforts at the Bates-Hunter Mine in Colorado, we have made certain purchases of equipment necessary to operate and de-water the property. Depreciation of these purchases is calculated on a straight-line method over the estimated useful life, presently ranging from five to seven years. Components of our depreciable assets are as follows:

	December 31,
	2007			2006
Equipment purchases	$	115,522		$	106,353
Less accumulated depreciation		(42,316	)		(26,266	)
	$	73,206		$	80,087

F-13

NOTE 7 – ADVANCE PAYMENTS ON EQUITY INVESTMENTS

China Global Mining Resources Limited

In November and December 2006, SSC Mandarin Group Limited, a British Virgin Islands corporation with a principal place of business in Hong Kong (“SSC Mandarin Group”), introduced us to various potential mining opportunities located in the People’s Republic of China(the "PRC"). From January through June 2007, we made loans in the aggregate amount of approximately $7.8 million to SSC Mandarin Group, which were used by SSC Mandarin Group to acquire interests in certain mining properties (which are described below) located in the PRC through SSC Mandarin Group’s wholly owned subsidiary, China Global Mining Resources Limited, a British Virgin Islands corporation (“CGMR”). The loans to CGMR were made out of the proceeds from the China Gold, LLC convertible promissory notes (see Note 9). In partial consideration for the loans, we received two promissory notes of CGMR in the respective amounts of $2 and $5 million. CGMR’s obligations under the notes were secured by its rights under various acquisition and other agreements, including a supply agreement relating to forty tonnes of nickel, that CGMR had entered into relating to the mining opportunities (as discussed below). Additionally, an aggregate of $500,000 of the amounts loaned to SSC Mandarin Group were used to acquire interests in two entities from SSC Mandarin Group, SSC Mandarin Africa ($400,000) and SSC-Sino Gold ($100,000), which are described below. The remaining $300,000 was expensed for due diligence activities relating to the acquisition of the mining interests. Norman D. Lowenthal, a director of ours, serves as Vice Chairman of SSC-Sino Gold and as a director of SSC Mandarin Africa, and until June 2007 served as Chairman of SSC Mandarin Financial, all of which are affiliates of SSC Mandarin Group.

On March 28, 2007, we entered into separate Sale of Shares and Claims Agreements with SSC Mandarin Group whereby we acquired CGMR and a Hong Kong entity of the same name, China Global Mining Resources Limited. The Hong Kong entity does not hold any assets, but was formed for the right to use the corporate name in Hong Kong. Due to technical deficiencies in the original Sale of Shares and Claims Agreements, we and SSC Mandarin Group re-executed the agreements on July 27, 2007 to resolve the deficiencies in the original agreements, and on August 1, 2007 paid the nominal purchase price of $10,000 Hong Kong dollars (US$1,317) for each corporation as required under the Sale of Shares and Claims Agreements. Effective August 1, 2007, we reclassified the $7 million in promissory notes received from CGMR as “Advance payments on equity investments” in our financial statements to reflect the status of CGMR as our wholly owned subsidiary.

At the time of the acquisition of CGMR, it held rights to acquire interests in a nickel and various iron ore mining properties located in the PRC. As of December 31, 2007, we hold only the right or option to acquire and do not hold title to any of these properties, therefore, we have recorded these as advanced payments until such time as we complete a transaction. In the event we determine that such a transaction will not occur, we will seek to collect our advance payments or consider available alternatives.

Nickel – Shanxi Hua Ze Nickel Smelting Co.

CGMR is a party to that certain Joint Venture Agreement with Shanxi Hua Ze Nickel Smelting Co. (“Shanxi Hua Ze”) dated April 14, 2007, as supplemented on June 6, 2007, pursuant to which the parties contemplate a joint venture relating to the Xing Wang Mine, a nickel mine located in the Qinghai province of the PRC. Pursuant to the agreement, CGMR would receive a 25% interest in the joint venture in consideration of its contribution of approximately 425 million Chinese Renminbi, or RMB, (approximately US$52 million) to the joint venture, such contribution to be used for the development and improvement of the mining property and production facility, the repayment of loans and settlement of other outstanding payables and other purposes. Shanxi Hua Ze would receive 75% of the joint venture in consideration of its contribution of the mine and related assets. Upon the acquisition by the joint venture of additional land with an additional 200,000 tonnes of nickel, CGMR would be required to contribute an additional 155 million RMB (approximately US$19 million). In consideration of this additional contribution, CGMR would receive an additional 15% of the equity interest in the joint venture, resulting in a holding of 40% of the joint venture at such time. CGMR further has the right to acquire an additional 40% interest in the joint venture from Shanxi Hua Ze if it contributes an additional 580 million RMB (approximately US$71 million) on or before June 15, 2008. To date, the parties have been unable to meet the agreed upon timetables for contributions due to the inability to obtain the necessary permits for the joint venture. We are currently exploring our options with respect to this project.

F-14

As a condition to the Joint Venture Agreement, CGMR also entered into a Supply Contract with Shanxi Hua Ze to purchase forty tonnes of electrolytic nickel (greater than 99% grade) for US$2 million, which payment also served as a prepayment of the initial contribution outlined in the Joint Venture Agreement. CGMR’s obligations under the Joint Venture Agreement are subject to the receipt of certain government approvals. The nickel to be acquired under the Supply Contract has been prepaid, and accordingly CGMR is entitled to receive the 40 tonnes of nickel pursuant to the terms of any future purchase orders relating to such nickel. CGMR’s rights under the Supply Contract serve as security for the loan to CGMR in the amount of $2 million. Based on current market prices for nickel, we believe that the 40 metric tonnes of nickel is worth approximately $1.2 million. In the event the transaction is not completed, there can be no assurance, however, that CGMR will be able to recover the $2 million advance on a timely basis, or at all.

Iron Ore – Nanjing Sudan Mining Co., Ltd.

CGMR is a party to that certain Equity and Asset Transfer Heads of Agreement, dated May 4, 2007 (the “Nanjing Heads of Agreement”) with Maanshan Zhaoyuan Mining Co., Ltd., Xiaonanshan Mining Co., Ltd., and two individual sellers (collectively, the “Sellers”), pursuant to which CGMR holds a right to acquire 100% of Nanjing Sudan Mining Co., Ltd. (which holds a processing plant), two iron ore mining properties located in the PRC (Maanshan Zhaoyuan Mining Co. and Xiaonanshan Mining Co.) and related assets for a purchase price of $66 million, to be paid in cash or shares of stock of a listed company, as agreed by the parties. Of this amount, CGMR has paid an aggregate of 40 million Hong Kong Dollars (approximately $5 million US) in the form of two deposits to be credited against the purchase price. The consummation of the transaction is subject to the completion of definitive agreements, receipt of various governmental approvals, the completion by and satisfaction of due diligence by CGMR, and satisfaction of certain indicated iron ore reserve requirements, among other conditions, which have not been fulfilled as of March 31, 2008. Additionally, in the event the transaction is consummated, CGMR will be required to enter into an eight-year management services contract with one of the sellers. The Nanjing Heads of Agreement calls for the completion of definitive documents and the receipt of necessary government approval by May 30, 2007, but the parties have verbally extended the applicable timetable due to a difficulty in obtaining the necessary permits.

Subsequent to our fiscal year end, on January 25, 2008, the Company, CGMR and the Sellers entered into a letter agreement establishing a purchase price and payment schedule relating to Nanjing Heads of Agreement. Under the Nanjing Heads of Agreement, the purchase price for the assets was dependent upon proven tonnage of the Maanshan and Xiaonanshan mines. The letter agreement sets the purchase price at 620,000,000 RMB (approximately $86 million US), and requires that CGMR pay the purchase price in accordance with the following schedule: (1) 25% within 30 days following the verification that a permit has been obtained with respect to Xiaonanshan Mining Company; (2) 50% within 30 days of verification of a permit for additional reserves contiguous to the Xiaonanshan mine; and (3) 25% within 30 days following the verification of a permit for Maanshan Zhaoyuan Mining Co. On March 24, 2008, the parties further amended the terms of Nanjing Heads of Agreement to include a production incentive whereby we would be required to issue a substantial number of our unregistered shares of common stock to the sellers upon the achievement of certain performance criteria relating to the delivery of iron ore within certain stated time frames. Based on our discussions with the Sellers, we anticipate the permits relating to the Xiaonanashan Mining Company will be obtained in the first half of 2008, at which time our obligation to pay 25% of the purchase price as set forth in the letter agreement will arise. We are in the process of obtaining third-party financing to assist us in proceeding with this transaction.

At the time of our acquisition of CGMR, it had advanced an aggregate of $5 million to the Sellers which may be applied by CGMR against the purchase price. In the event the transaction is not completed, there can be no assurance that CGMR will be able to recover the $5 million of advances on a timely basis, or at all.

F-15

Iron Ore – Yun County Changjiang Mining Company Ltd.

CGMR is also party to that certain Equity Transfer Heads of Agreement (“Changjiang Heads of Agreement”) dated May 4, 2007 with three individual sellers, whereby CGMR holds a right to acquire a 95% equity interest in Yun County Changjiang Mining Company Limited (“Changjiang”), which holds licenses to explore for iron ore in the Hubei province of the PRC, for an aggregate of $57 million. The purchase price is to be paid by up to $15 million in cash and the remainder in shares of stock of a listed company. Two of the sellers, holding an aggregate of 90% of the interest in Changjiang), are parties to the Nanjing Heads of Agreement. Under the Changjiang Heads of Agreement, CGMR is required to arrange for a loan to Changjiang in the amount of $10 million, such loan to be secured by the capital stock of Changjiang. Additionally, in the event CGMR and Changjiang enter into an exclusive supply agreement relating to the purchase by CGMR of iron ore from Changjiang, CGMR will also be required to arrange for an additional loan to Changjiang, the amount of such loan to be determined based on the reserves of iron ore located on the related mining properties, but not to exceed 1.2 billion RMB. The consummation of the transaction is subject to the completion of definitive agreements, receipt of various governmental approvals, the completion by and satisfaction of due diligence by CGMR, and satisfaction of certain indicated iron ore reserve requirements, among other conditions. Additionally, in the event the transaction is consummated, CGMR will be required to enter into an eight-year management services contract with one of the sellers. As of December 31, 2007, no funds have been advanced for this project. The resources that will be required to complete this transaction are substantial, and greater than we can currently support. Accordingly, we are seeking an industry partner to assist us in completing this transaction.

Agreement to acquire interest in SSC Mandarin Africa (Proprietary) Limited

On March 28, 2007, we entered into a Sale of Shares and Claims Agreement with SSC Mandarin Financial Services Limited (“SSC Mandarin Financial”) and SSC Mandarin Africa (Proprietary) Limited, a company incorporated under the laws of the Republic of South Africa (“Mandarin Africa”), relating to the acquisition of a 40% equity interest in Mandarin Africa for a purchase price of US$400,000. The purchase price was paid on February 14, 2007. Due to technical deficiencies in the original agreement, we and SSC Mandarin Financial re-executed the agreement on July 27, 2007 to resolve the deficiencies in the original agreement. SSC Mandarin Financial is an affiliate of SSC Mandarin Group. Norman D. Lowenthal, a director of ours, served as Chairman of SSC Mandarin Financial until June 2007, and remains a director of Mandarin Africa.

Mandarin Africa’s only asset was a two-year Collaboration Agreement with Kumba Iron Ore (an affiliate of Anglo American PLC) dated August 4, 2006, whereby Mandarin Africa could potentially earn a finders fee with respect to any PRC iron ore mining projects it introduced to Kumba that Kumba subsequently acquired. Subsequent to December 31, 2007, we were informed by Kumba Iron Ore that it had no interest in reviewing any iron ore projects for the near term, and that it would not pursue any properties potentially subject to the Collaboration Agreement. Furthermore, we are unable to consummate our acquisition of the 40% equity interest in Mandarin Africa and obtain a stock certificate representing such interest as we have learned that SSC Mandarin Financial is unable to transfer the interest as agreed. Therefore, we expensed the entire $400,000 representing the investment, effective December 31, 2007, and claim not to hold any ownership in Mandarin Africa.

Agreement to acquire option to acquire an interest in SSC-Sino Gold Consulting Co. Limited

On March 28, 2007, we entered into an Option Agreement (the “Option Agreement”) with SSC Mandarin Financial and SSC-Sino Gold Consulting Co. Limited, a company incorporated under the laws of the PRC (“SSC-Sino Gold”), pursuant to which we acquired, for US$100,000, a three-year option to purchase a 60% equity interest in SSC-Sino Gold for an exercise price of US$5,000,000. Norman D. Lowenthal, one of our directors, was then and continues to serve as Vice Chairman of SSC-Sino Gold. We paid the purchase price on March 22, 2007. Due to technical deficiencies in the original agreement, the parties re-executed the agreement on July 27, 2007 to resolve the deficiencies in the original agreement. SSC-Sino Gold holds rights to acquire an 80% interest in Tongguan Taizhou Gold Mining Co., Ltd., which holds licenses relating to a gold mine located in the Shaanxi province of the PRC.

F-16

On October 15, 2007, we received a notice of termination of the Sale of Shares and Claims Agreements with SSC Mandarin Group relating to the acquisition of CGMR (as discussed above), whereby SSC Mandarin Group alleged that the parties agreed to certain amended terms to the Sale of Shares and Claims Agreements, and that we had breached those amended terms. In an effort to resolve the potential dispute with SSC Mandarin Group, on December 12, 2007, we entered into a Termination of Option Agreement (the “Termination Agreement”) by and among SSC Mandarin Group, CGMR, and China Global Mining Resources Limited (Hong Kong) whereby we relinquished our right to purchase a 60% equity interest in SSC-Sino Gold under the Option Agreement. Under the Termination Agreement, we agreed to pay SSC Mandarin Group within 60 days an aggregate of 3,850,000 Hong Kong Dollars (approximately $500,000 US) as reimbursement for expenses incurred by SSC Mandarin Group for the wholly-foreign owned enterprises (“WFOE”) established for the iron ore projects (Maanshan and Changjiang). Additionally, we and SSC Mandarin Group have agreed to offset other payment obligations to one another on the later of 90 days and the date we complete due diligence and obtain the necessary title and permits for the iron ore projects. These offsets currently result in an obligation of the Company to pay SSC Mandarin Group approximately an additional $750,000, but we believe that we are entitled to additional offsets from SSC Mandarin Group in an amount equal to or greater than $750,000.

Due to the termination of the Option Agreement, effective December 31, 2007, we have expensed the entire $100,000 representing the purchase price of the option and do not claim to hold any ownership in developments in the Tongguan Taizhou Gold Mining Co.

Summary

As of December 31, 2007, we hold only the right or option to acquire and do not hold title to any of these properties, therefore, we have recorded these as advanced payments until such time as we complete a transaction. In the event we determine that such a transaction will not occur, we will seek to collect our advance payment or consider available alternatives.

NOTE 8 – DEBT ISSUANCE COSTS

With respect to legal services relating to promissory notes issued during 2007, we paid $52,895 of debt issuance costs. The following table summarizes the amortization of debt issuance costs:

	December 31,
	2007			2006
Gross debt issuance costs	$	52,895		$	7,361
Less: amortization of debt issuance costs		(36,480	)		(7,361	)
Debt issuance costs, net	$	16,415		$	—

NOTE 9 – CONVERTIBLE NOTES PAYABLE

China Gold, LLC

On April 10, 2007, we entered into a Convertible Securities Purchase Agreement with China Gold, LLC, a Kansas limited liability company (“China Gold”), whereby we agreed to offer and sell, and China Gold agreed to purchase, an aggregate of $12,000,000 in convertible secured promissory notes over 12 months, with up to an additional $13,000,000 in convertible secured promissory notes to be issued at the discretion of both parties. The issuance and sale of convertible secured promissory notes under the Convertible Securities Purchase Agreement was subject to certain conditions, including Wits Basin having a sufficient number of authorized and unissued shares available to permit the conversion of the outstanding promissory notes issued to China Gold. Promissory notes issued under the Convertible Securities Purchase Agreement had a five-year term, bear interest at a rate of 8.25%, and are convertible at the option of the holder, after the expiration of 120 days from the date of issue, into shares of our common stock at a conversion price of $1.00 per share. The notes are also subject to automatic conversion in certain conditions. On April 10, 2007, we issued and sold the initial promissory note under the Convertible Securities Purchase Agreement in the aggregate amount of $3,000,000, with a purchase discount of $60,000 (“Note 1”). Additionally, on May 7, 2007, we offered and sold to China Gold an additional convertible secured promissory note under the Convertible Securities Purchase Agreement in the aggregate amount of $2,000,000, with a purchase discount of $40,000 (“Note 2”).

F-17

On June 19, 2007, we entered into an Amendment to Convertible Notes Purchase Agreement with China Gold, whereby the parties amended the terms of the Convertible Notes Purchase Agreement discussed above (as amended, the “Purchase Agreement”) to (a) clarify that the obligations of the parties under the Purchase Agreement to sell and purchase convertible notes under the Purchase Agreement shall terminate at the earlier of (i) April 10, 2008 and (ii) the date of effectiveness of our proposed merger with Easyknit Enterprises Holdings Limited (“Easyknit”), (b) to provide us an opportunity to prepay our obligations under notes issued under the Purchase Agreement, in which case China Gold is entitled to a purchase right to acquire shares of our common stock at equivalent terms to its rights to otherwise convert the notes issued under the Purchase Agreement, and (c) extend certain registration rights of China Gold.

Furthermore, on June 19, 2007, we sold China Gold an additional note under the Purchase Agreement in the principal amount of $4,000,000, with a purchase discount of $80,000 (“Note 3”). Note 3 bears interest at a rate of 8.25% per annum, and is convertible at the option of China Gold into shares of our common stock at a conversion price of $1.00 per share, subject to anti-dilutive adjustments. Additionally, the outstanding balance on the Notes was subject to automatic conversion in the event we completed the proposed merger transaction with Easyknit. Note 3 is payable in full at the earlier of maturity or at such time that we and our subsidiaries receive financing in the aggregate amount of at least $50,000,000 from a third party. The maturity date of Note 3 was September 17, 2007, but was subject to extensions upon our request for additional periods of thirty (30) days, but in no event later than December 31, 2007, provided that at the time of each such extension we and Easyknit had not terminated the proposed merger. In the event the merger was terminated after September 17, 2007, our obligations under Note 3 were to become due and payable upon the expiration of fifteen (15) days following demand of China Gold. We also provided China Gold demand and piggyback registration rights relating to the resale of the shares of common stock issuable upon conversion of Note 3.

On July 9, 2007, we sold China Gold an additional note under the Purchase Agreement in the principal amount of $800,000, with a purchase discount of $16,000 (“Note 4” and collectively with Note 1, Note 2 and Note 3, the “Notes”). Note 4 bears interest at a rate of 8.25% per annum, and is convertible at the option of China Gold into shares of our common stock at a conversion price of $1.00 per share, subject to anti-dilutive adjustments. Additionally, the outstanding balance on Note 4 was subject to automatic conversion in the event we completed the proposed merger transaction with Easyknit. Note 4 is payable in full at the earlier of maturity or at such time that we and our subsidiaries receive financing in the aggregate amount of at least $50,000,000 from a third party. The maturity date of Note 4 was October 7, 2007, but was subject to extensions upon our request for additional periods of thirty (30) days, but in no event later than December 31, 2007, provided that at the time of each such extension we and Easyknit had not terminated the proposed merger. In the event the merger was terminated after October 7, 2007, our obligations under Note 4 were to become due and payable upon the expiration of fifteen (15) days following demand of China Gold. We also provided China Gold demand and piggyback registration rights relating to the resale of the shares of common stock issuable upon conversion of Note 4.

In the event the Company and/or any of our majority-owned subsidiaries receive, at a time when any Notes remain outstanding, cumulative financing in the form of cash or immediately available funds from one or more third parties in the aggregate amount of at least $50,000,000 from and after June 19, 2007, (a “Substantial Financing”), the outstanding Notes issued under the Purchase Agreement shall be due and payable out of the proceeds from such Substantial Financing. In the event such prepayment of any or all outstanding Notes, the respective Holder of each such prepaid Note shall be entitled to receive from the Company, from the date of such prepayment until the earlier of (i) immediately prior to the proposed Easyknit merger or (ii) five (5) years from the date of such prepayment, at a purchase price of $1.00 per share, the right to purchase the number of shares of our common stock equal to the amount prepaid on such Note divided by $1.00.

F-18

On October 31, 2007, we entered into a letter agreement with China Gold whereby the parties amended the maturity date on each of the Notes to February 29, 2008. As consideration for the Note extensions, we agreed to reduce the conversion price applicable to the Notes from $1.00 to $0.50 per share and to reduce the purchase price applicable to certain purchase rights of China Gold under the Notes from $1.00 to $0.50 per share. The letter agreement further gives us an option to obtain, at our sole discretion, an extension of the maturity dates of the respective Notes to May 31, 2008 in consideration for a further reduction in the conversion price applicable to the Notes and the purchase price relating to purchase rights provided under the Notes from $0.50 to $0.25 per share. We exercised our right to extend the maturity date to May 31, 2008 by giving notice to China Gold in February 2008.

As of December 31, 2007, we have issued an aggregate of $9,800,000 of Notes under the Purchase Agreement and have received net proceeds of $9,604,000, less $196,000 paid to an affiliate of China Gold in the form of a loan discount fee. The resulting original issue discount is being amortized over the life of the Notes using the straight-line method, which approximates the interest method. We also agreed to pay $40,000 in accountable expenses of China Gold with respect to the Notes issued under the Purchase Agreement.

Other Third Party

In December 2007, in consideration of an unsecured loan from an unaffiliated third party, we received net proceeds of $100,000 and issued a convertible promissory note in the principal amount of $110,000. The promissory note has a maturity date of March 31, 2008, and bears interest at a rate of 10% per annum. Furthermore, the note holder has the right to convert any portion of the principal or interest of the outstanding note into shares of our common stock based on a conversion rate equal to $0.20 per share and is considered to be conventional convertible debt under the accounting guidance of Emerging Issues Task Force (“EITF”) 05-2 “The Meaning of ‘Conventional Convertible Debt’ in Issue No. 00-19”. Under the terms of the convertible promissory note and as additional consideration for the loan, we issued a warrant to purchase up to 100,000 shares of our common stock at $0.20 per share with an expiration date of February 12, 2009. The application of the provisions of EITF 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios,” and EITF 00-27, “Application of Issue 98-5 to Certain Convertible Instruments” resulted in the proceeds of the loan being allocated based on the relative fair value of the loan and warrants. Lastly, due to the reduced relative fair value assigned to the convertible debt, the debt had a beneficial conversion feature that was “in-the-money” on the commitment date which totaled $27,500. Since the debt was convertible on the issuance date, the entire beneficial conversion amount was charged to interest expense immediately.

The following table summarizes the convertible note balances:

Original gross proceeds	$	9,910,000
Less: original issue discount at time of issuance of notes		(206,000	)
Less: principal payments		—
Less: value assigned to beneficial conversion feature and warrants		(40,224	)
Add: amortization of original issue discount and beneficial conversion feature		179,507
Balance at December 31, 2007	$	9,843,283

F-19

NOTE 10 – SHORT-TERM NOTES PAYABLE

In fiscal 2005, we had borrowed an aggregate of $750,000 from three lenders with each one receiving warrants to purchase shares of our common stock and two of them, Andrew Green and Pacific Dawn Capital, LLC. (as of December 31, 2007, Mr. Green and Pacific Dawn Capital each beneficially owned more than five percent of our securities) received the right to convert any portion of the principal or interest of their outstanding notes into shares of our common stock based on a conversion rate equal to $0.20 per share and was considered to be conventional convertible debt under the accounting guidance of Emerging Issues Task Force (“EITF”) 05-2. During the first quarter of fiscal 2006, we borrowed an additional $350,000 from Mr. Green.

In April 2006, we entered into amendments to the arrangements with each of the three lenders, extending the maturity of each of the notes for an additional 30 days. In consideration of these extensions, we issued an aggregate of 110,000 shares of our common stock to the lenders (with an aggregate fair value of $27,100, based on the closing sale price of our common stock on the date of issuance as listed on the OTCBB) and we gave each lender an option, at any time on or prior to August 31, 2006, the right-to- purchase a number of shares of our common stock, at a price per share of $0.20, equal to, but not greater than, the final principal and interest balance of their respective note divided by the $0.20 per share price. One of the note holders right to purchase expired on August 31, 2006. During the three months ended June 30, 2006, we recorded an expense relating to the right-to-purchase of the three lenders of $628,643 (the fair value of the aggregate shares calculated using the Black-Scholes pricing model) resulting in a non-cash interest expense.

We paid off the obligations under the three notes in May 2006, which required an aggregate of $1,100,000 in cash principal payments. The notes had accumulated an aggregate of $69,239 in interest payable. We paid $3,353 in cash to one note holder and paid the remaining $65,886 by the issuance of 329,432 shares (valued at $0.20 per share) of our common stock.

In August 2006, we entered into standby joint venture financing agreements with two of the lenders, Mr. Green and Pacific Dawn, whereby they individually could participate in joint venture or financing arrangements for the purpose of financing future mineral exploration projects. As partial consideration for their entering into their respective standby joint venture financing agreements, we extended the term of each of their right-to-purchase shares at $0.20 per share from August 31, 2006 to March 31, 2007. Since the right-to-purchase price of $0.20 was below the fair value of our underlying common stock on the modification date, we calculated an additional fair value of $363,000 using the Black-Scholes pricing model and recorded the entire amount as interest expense for the three months ended September 30, 2006 as neither was required to participate in any joint venture or financing during the period of the agreements, which agreements expired in 2007.

In February 2007, in consideration of a new $700,000 loan to the Company from Mr. Green, we issued a promissory note in the principal amount of $700,000 to Mr. Green. The promissory note had a maturity date of March 31, 2007, and bore interest at a rate of 6% per annum. The promissory note was paid in full on March 29, 2007 along with accrued interest of $3,912. Under the terms of the new promissory note and as additional consideration for the loan, we reduced the exercise price of certain of his pre-existing warrants to purchase up to an aggregate of 3,550,000 shares of our common stock from $0.12 to $0.09125 and extended the expiration date of his right-to-purchase of up to 3,000,000 shares of common stock at a price per share of $0.20 from March 31, 2007 to December 31, 2007. The fair value of these equity modifications totaling $202,844 was recorded as a discount to the note and was amortized over the term of the note.

In April 2007, in consideration of a new $625,000 loan from Mr. Green, we issued a promissory note to Mr. Green in the principal amount of $625,000. The promissory note bore simple interest at a rate of 12% per annum and was paid in full in June 2007 along with $11,096 of interest.

F-20

In September 2007, in consideration of a new $100,000 loan from Pacific Dawn, we issued a promissory note in the principal amount of $100,000 to Pacific Dawn. The promissory note had an original maturity date of October 21, 2007, and bears interest at a rate of 5% per annum. Under the terms of the promissory note and as additional consideration for the loan, we reduced the exercise price of his right-to-purchase of up to 1,000,000 shares of our common stock from $0.20 to $0.15 per share and extended the expiration date from December 31, 2007 to December 31, 2008 of said rights. In December 2007, we memorialized an extension to the maturity date from October 21, 2007 to January 21, 2008 and provided a further price reduction of his right-to-purchase from $0.15 to $0.10 per share. The fair value of these equity modifications totaled $101,457 and was recorded as a discount to the note and is being amortized through January 21, 2008.

In September 2007, in consideration of an unsecured $50,000 loan from Mrs. Nancy White, a Canadian citizen and the mother of H. Vance White, our Chairman, we issued a promissory note in the principal amount of $50,000 to Mrs. White. The promissory note had an original maturity date of December 21 2007, and bears interest at a rate of 10% per annum. In December 2007, we negotiated an extension on the maturity date to be January 11, 2008. Under the terms of the promissory note and as additional consideration for the initial loan, we issued a warrant to purchase up to 100,000 shares of our common stock, with an original exercise price of $0.27 per share, to expire October 3, 2009. As additional consideration for the extension of the maturity date, we agreed to a reduction in the exercise price of the warrant from $0.27 per share to $0.20 per share. The proceeds of the unsecured loan were allocated based on the relative fair value of the loan and the warrant granted in accordance with APB 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.” The fair value of the warrant (including the reduction to the exercise price) was $15,443 based on the Black Scholes pricing model and is being amortized over the term of the debt.

In November 2007, in consideration of an unsecured loan from Shirley Co. LLC, a Colorado limited liability company, we received net proceeds of $100,000 and issued a promissory note in the principal amount of $110,000 to Shirley Co. The promissory note has a maturity date of February 11, 2008, and bears interest at a rate of 10% per annum. Under the terms of the promissory note and as additional consideration for the loan, we issued a warrant to purchase up to 100,000 shares of our common stock at $0.20 per share with an expiration date of November 12, 2009. The proceeds of the unsecured loan were allocated based on the relative fair value of the principal amount and the warrant granted in accordance with APB 14, “Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.” The fair value of the warrant was $12,138 based on the Black Scholes pricing model and is being amortized over the term of the debt.

The following table summarizes the notes payable balances:

Original gross proceeds received in 2005	$	750,000
Less: original issue discount at time of issuance of note for common stock and warrants		(521,304	)
Less: beneficial conversion feature		(179,977	)
Add: amortization of original issue discount and beneficial conversion feature		252,392
Balance at December 31, 2005		301,111
Add: additional draws received in the 1st Quarter 2006		350,000
Less: original issue discount at time of issuance of note with warrants		(252,014	)
Less: beneficial conversion feature		(97,986	)
Add: amortization of original issue discount and beneficial conversion feature		798,889
Less: principal payments		(1,100,000	)
Balance at December 31, 2006	$	—
Add: additional loans received in 2007		1,585,000
Less: original issue discount at time of issuance of note related to cash and warrants		(341,882	)
Add: amortization of original issue discount		316,102
Less: principal payments		(1,325,000	)
Balance at December 31, 2007	$	234,220

F-21

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Operating Leases

We currently occupy approximately 160 square feet of office space, together with the use of related adjacent common areas, in Minneapolis, Minnesota pursuant to a lease agreement that expires May 31, 2009. Under the lease, we are required to make monthly payments of $1,261 through May 2009. Total rent expense under operating leases for the years ended December 31, 2007 and 2006, was $14,837 and $16,485, respectively.

Future minimum operating lease commitments are as follows for the years ending December 31:

2008	$	15,144
2009		6,310
	$	21,454

NOTE 12 – LEGAL MATTERS

The Company is subject to legal proceedings in the normal course of business. The Company is currently addressing a matter relating to a termination of a consulting arrangement relating to SSC Mandarin Africa and SSC-Sino Gold of which the agent is disputing the amount of reimbursable expenses owed to them. Management believes that this proceeding will not have a material adverse effect on the financial statements.

Terminated Merger Transaction with Easyknit Enterprises

In an effort to finance our potential transactions in the PRC through access to the capital markets in Hong Kong, on April 20, 2007, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Easyknit Enterprises Holdings Limited, a Bermuda corporation with its principal place of business in Hong Kong that is listed on the Hong Kong Stock Exchange (SEHK: 0616) (“Easyknit”), and Race Merger, Inc., a Minnesota corporation and wholly owned subsidiary of Easyknit (“Merger Sub”). Pursuant to the Merger Agreement, the parties contemplated the merger of Merger Sub with and into the Company, with the Company constituting the surviving corporation to the merger and a wholly owned subsidiary of Easyknit following completion of the merger.

In the course of due diligence on the proposed merger transaction, on August 15, 2007, we filed a declaratory judgment action in the District Court in the Fourth Judicial District of the State of Minnesota against Easyknit and Race Merger seeking a declaration by the court that we were entitled to terminate the Merger Agreement pursuant to its terms based on our conclusion, determined in our sole and absolute discretion, that the merger transaction was not in the best interests of our shareholders based on our due diligence findings. We also asserted alternative grounds that there existed a material adverse change in the financial condition of Easyknit. On October 15, 2007, Easyknit filed an Answer and Counterclaim seeking a declaration by the court that it was entitled to a $30 million termination fee in the event we terminated the Merger Agreement or it terminated the Merger Agreement based on our alleged breach of contract.

On November 1, 2007, we terminated the Merger Agreement. On December 18, 2007, we entered into a Settlement Agreement and General Release (the “Settlement Agreement”) with Easyknit, whereby the parties agreed to dismiss with prejudice and release each other from all claims, counterclaims and defenses that touched upon or arose out of the parties’ Merger Agreement or which were asserted or could have been asserted in the litigation between the parties venued in the District Court in the Fourth Judicial District of the State of Minnesota.

We have recorded $1,238,619 of direct merger expenses for the year ended December 31, 2007.

F-22

NOTE 13 - SHAREHOLDERS’ EQUITY

Common Stock Issuances

In January 2006, as a continuation of certain May 2005 warrant exercise agreements with two consultants, we provided the consultants a reduced exercise price (at $0.20 per share) on previously issued and outstanding warrants (originally priced from $0.40 to $5.50 per share), whereby an additional 695,450 warrants were exercised into common stock.

In March 2006, we issued 150,000 shares of our common stock to the principal owner of a public relations firm, in exchange for amounts due them for services rendered totaling $39,000, which we had previously recorded as accounts payable.

In April 2006, we entered into amendments to the arrangements with each of three promissory note holders, extending the maturity of each of the notes for an additional 30 days. In consideration of these extensions, we issued an aggregate of 110,000 shares of our common stock to the note holders.

In May 2006, we issued 20,794 shares of our common stock to a consultant, who, pursuant to a cashless exercise clause, surrendered 29,206 of the available shares to pay for the exercise. We issued the 50,000 two-year warrant to purchase shares of our common stock in May 2005, with an exercise price of $0.25 per share.

We paid off the obligations under the three promissory notes in May 2006, which had accumulated an aggregate of $69,239 in interest payable. We paid $3,353 in cash to one note holder and paid the remaining $65,886 by the issuance of 329,432 shares (valued at $0.20 per share) of our common stock.

Under the provisions of the Pacific Dawn Capital loan agreement, Pacific had the right-to-purchase shares of our common stock (based on a $0.20 per share purchase price) of the principal balance. Of the available right-to-purchase option of 2,000,000 shares available, Pacific purchased 1,000,000 shares of common stock in December 2006.

In December 2006, a consultant exercised a stock option held into 200,000 shares of common stock. The stock option was issued in October 2005.

During fiscal 2006, we issued an aggregate of 690,000 shares of our common stock to acquire exploration rights on two projects: we issued 40,000 shares to Hawk for rights to the MacNugget Claims and a total of 600,000 shares to Journey and 50,000 shares to an unrelated third party for rights to Vianey.

During fiscal 2006, we entered into various agreements with consultants for services in public and investor relations. A total of 5,432,000 shares of our un-registered common stock were issued as follows: in January we issued 1,257,000 shares; in February we issued 500,000 shares; in March we issued 950,000 shares; and in June we issued 2,725,000 shares.

During fiscal 2006, shareholders exercised an aggregate of 20,445,734 stock purchase warrants into common stock.

In January 2007, we issued 300,000 shares of our unregistered common stock to Relevant Marketing, LLC, a consultant, who exercised a stock purchase warrant (issued in April 2005 with an original exercise price of $0.50 per share), subsequently re-priced to $0.15 per share. Relevant Marketing paid $15,000 in March 2007 and the remaining balance in November 2007. The president of Relevant Marketing is the step-daughter of our CEO, Stephen D. King. 

F-23

In January 2007, we issued to Andrew Green, a significant shareholder of the Company, 1,250,000 shares of common stock pursuant to his exercise of stock purchase warrants with an exercise price of $0.12 per share and we received $150,000 in proceeds. In March 2007, we issued to Mr. Green (1) 3,550,000 shares of common stock pursuant to his exercise of his remaining outstanding warrants with the reduced exercise price of $0.09125 per share and we received $323,937 in proceeds and (2) 1,450,000 shares of common stock pursuant to his exercise of his right-to-purchase option at $0.20 per share and we further received $290,000 in proceeds. In June 2007, we issued to Mr. Green 1,550,000 shares of common stock pursuant to his exercise of his right-to-purchase option at $0.20 per share and we received $310,000 in proceeds.

In January 2007, we issued 500,000 shares of our unregistered common stock to Journey Resources Corporation relating to our option to earn our first undivided 25 percent interest in the Vianey Mine.

In May 2007, we issued 1,200,000 shares of our unregistered common stock to William Green, upon his exercise of a warrant at $0.12 per share. Mr. Green is our President of Asia Operations and the brother of Andrew Green.

In September 2007, we issued 100,000 shares of our unregistered common stock to a non-US vendor, who provided extended terms on payables due to him.

In October 2007, we executed an amendment to the joint venture agreement with Journey Resources Corporation relating to our option to earn the final undivided 25 percent interest in the Vianey Mine, whereby we issued 1,600,000 shares of our unregistered common stock to Journey in lieu of the $400,000 payment due under the agreement.

From September to December 2007, through a private placement of units of our unregistered securities (each unit consisting of one share of our unregistered common stock and a five-year warrant to purchase one share of common stock at an exercise price of $0.25 per share) we sold 2,400,000 units at a price per unit of $0.25, resulting in gross proceeds of $600,000 less offering costs of $30,000.

In November and December 2007, through a private placement of our securities, we sold 2,193,334 shares of our common stock at $0.15 per share, resulting in gross proceeds of $329,000 less offering costs of $15,465.

In December 2007, we entered into agreements with two consultants for services in public and investor relations and issued an aggregate of 550,000 shares of our unregistered common stock with a fair value totaling $123,000.

During fiscal 2007, we issued 2,591,460 shares of our unregistered common stock pursuant to the exercise of warrants as follows:

(1) Two lenders exercised warrants into 1,800,000 shares with exercise prices of $0.12 and $0.40 per share related to promissory notes;

(2) An individual private placement holder exercised his Class C Redeemable Warrant into 62,500 shares at $0.50 per share;

(3) We issued 398,960 shares to two consultants, who, pursuant to a cashless exercise clause, surrendered 251,040 of the available shares to pay for the exercise, with a range of exercise prices from $0.25 to $0.75 per share; and

(4) Four consultants exercised warrants into an aggregate of 330,000 shares with a range of exercise prices from $0.12 to $0.30 per share.

Warrant Grants

During January and February 2006, relating to the issuance of two promissory notes, we issued five-year warrants to purchase an aggregate of 3,500,000 shares of common stock at $0.12 per share as additional consideration.

In January 2006, we issued two 100,000 two-year warrants to purchase common stock at $0.20 per share for consultant services, valued at $53,104.

F-24

In February 2006, we issued two-year warrants to purchase an aggregate of 1,150,000 shares of common stock as follows: 150,000 at $0.25 per share; 500,000 at $0.50 per share; and 500,000 at $1.00 per share all for consultant services, valued at $253,335.

Effective March 31, 2006, we terminated an exclusive placement agent agreement (entered into on January 30, 2006) with the issuance of a five-year stock purchase warrant to purchase up to 250,000 shares of our common stock, with an exercise price of $0.25 per share, valued at $55,020.

In April 2006, we issued two-year warrants to purchase an aggregate of 500,000 shares of common stock as follows: 200,000 at $0.30 per share and 300,000 at $0.50 per share all for consultant services, valued at $103,531.

In April 2006, we completed a round of financing through the exercise of issued and outstanding warrants. One incentive of the exercise offer was the receipt of one Class C Redeemable Warrant for each two shares purchased upon exercise of previously held warrants. We issued Class C Redeemable Warrants to purchase an aggregate of up to 7,788,700 shares of our common stock, at an exercise price of $0.50 per share, which expire on April 28, 2009.

In May 2006, we issued a two-year warrant to purchase 150,000 shares of common stock at $0.50 per share for consultant services, valued at $49,889.

In June 2006, we issued two-year warrants to purchase an aggregate of 1,500,000 shares of common stock as follows: 250,000 at $0.50 per share; 250,000 at $0.60 per share and 1,000,000 at $0.62 per share all for consultant services, valued at $459,671.

In August 2006, we issued a two-year warrant to purchase 150,000 shares of common stock at $0.50 per share for consultant services, valued at $30,548.

In October 2006, we issued a two-year warrant to purchase 100,000 shares of common stock at $0.29 per share for consultant services, valued at $22,403.

In July 2007, we entered into a one-year consulting agreement with MHG Consultant LLC, to provide consulting services relating to the acquisition of mines, minerals rights and financing. Subject to third-party consent (as described below) we delivered into escrow to MHG two warrants, both with an exercise price of $0.01 per share, to purchase up to an aggregate of 5,100,000 shares of our common stock as follows: (i) one warrant to purchase up to 2,100,000 shares that was immediately exercisable and (ii) one warrant to purchase up to 3,000,000 shares to vest in amounts of 250,000 per month for 12 months as earned under the consulting agreement. The issuance of the warrants was subject to our receipt of consent from Easyknit Enterprises Holdings Limited, a Bermuda corporation with its principal place of business in Hong Kong and listed on the Hong Kong Stock Exchange (SEHK: 0616) (“Easyknit”) pursuant to the terms of an Agreement and Plan of Merger and Reorganization, dated April 20, 2007 with Easyknit. On November 1, 2007, we terminated the merger transaction, thereby removing the obligation under the warrants to MHG to obtain Easyknit consent. Accordingly, on November 1, 2007, we issued the 2,100,000 warrant and began recording the related expense of these and the monthly warrant issuances. For the period ended December 31, 2007, we recorded $588,400 relating to the release of 2,600,000 warrants under this agreement (calculated utilizing the Black-Scholes pricing model). At December 31, 2007, 2,500,000 of this warrant grant remains unvested. See Note 19 - Subsequent Events regarding a financing transaction which involved the MHG warrants yet to be issued.

During the fourth quarter of 2007, in consideration of three loans, we issued three two-year warrants (100,000 each) to purchase up to an aggregate of 300,000 shares of our common stock (100,000 at $0.27 per share and 200,000 at $0.20 per share). The value of the warrants totaled $40,305 using the Black-Scholes pricing model.

During the fourth quarter of 2007, we issued warrants to purchase up to 2,400,000 shares of our common stock through a private placement of units of our securities (each unit consisting of one share of our common stock and a five-year warrant to purchase one share of common stock at an exercise price of $0.25 per share). The value of the warrants totaled $287,873 using the Black-Scholes pricing model.

F-25

During the fourth quarter of 2007, we issued warrants to two consultants to purchase an aggregate of 350,000 shares of common stock as follows: a two year warrant to purchase up to 100,000 shares at $0.30 per shares and a five-year warrant to purchase up to 250,000 at $0.25 per share all for consultant services, valued at $71,015.

For warrants issued to non-employees in exchange for services, we account for such warrants in accordance with EITF Issue No. 96-18 “Accounting For Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling Goods or Services”. We value the fair value of the equity instrument using the Black-Scholes pricing model unless the value of the services is more reliably measurable.

Using the Black-Scholes pricing model, the following assumptions were used to value the fair value of warrants granted, for which the fair value of the services were not more reliably measurable, (i) during 2007: dividend yield of 0%, risk-free interest rate of 2.625% to 4.875%, expected life equal to the contractual life between two and ten years, and volatility of 154% to 156% and (ii) during 2006: dividend yield of 0%, risk-free interest rate of 4.25% to 4.875%, expected life equal to the contractual life between two and ten years, and volatility of 163% to 186%.

The following table summarizes information about the Company’s warrants:

	Number			Weighted Average Exercise Price		Range of Exercise Price
Outstanding at December 31, 2005		40,126,998		$	1.10	$	0.10 - $7.15
Granted		15,288,700			0.42		0.12 – 1.00
Cancelled or expired		(4,674,887	)		4.12		0.10 – 5.50
Exercised		(21,161,978	)		0.24		0.12 – 0.25
Outstanding at December 31, 2006		29,578,833		$	0.56	$	0.12 - $7.15
Granted		8,150,000			0.10		0.01 – 0.27
Cancelled or expired		(1,156,095	)		1.14		0.25 – 1.25
Exercised		(9,142,500	)		0.16		0.09125 – 0.75
Outstanding at December 31, 2007		27,430,238		$	0.53	$	0.01 - $7.15
Warrants exercisable at December 31, 2007		24,930,238		$	0.58	$	0.01 - $7.15

Option Grants

The Company has six stock option plans: the 1993 and 1999 Stock Option Plans, the 2000 and 2003 Director Stock Option Plans, the 2001 Employee Stock Option Plan and the 2007 Stock Incentive Plan. Stock options, stock appreciation rights, restricted stock and other stock and cash awards may be granted under the plans. In general, options vest over a period ranging from immediate vesting to five years and expire 10 years from the date of grant. Additionally, the Company has two non-plans, titled “Non-Plan Stock Options” which are outside of the six plans listed above. As of December 31, 2007, an aggregate of 17,250,000 shares of our common stock may be granted under these eight plans as determined by the board of directors.

Effective January 13, 2006, the 2001 Employee Stock Option Plan was amended to increase the total shares of stock which may be issued under the Plan from 1,450,000 to 2,500,000. Effective September 13, 2006, the 1999 Stock Option Plan was amended to increase the total shares of stock which may be issued under the Plan from 4,250,000 to 6,250,000.

F-26

In January 2006, we granted options to purchase 1,000,000 shares of common stock to a consultant as compensation for services, with the exercise price greater than the fair market value of our common stock on the date of grant. The aggregate consulting option was valued at $200,000 and such value was recorded as a component of Prepaid Expenses in 2006. The entire amount was expensed during 2006, coinciding with the consulting agreement timeline for services to be rendered.

During the year ended December 31, 2006, we granted our President, Dr. Clyde Smith an option to purchase up to 1,500,000 shares of common stock (the “Standard Options”) and an option to purchase up to 500,000 shares of common stock (the “Incentive Based Stock Options”), each an exercise price of $0.31 per share (the closing sale price of our common stock as reported on the OTCBB on the day of grant). The Standard Options vest as follows: 300,000 vested immediately and 300,000 vest each anniversary thereafter (September 15, 2007, 2008, 2009 and 2010). The Incentive Based Stock Options vest at 100,000 shares on each anniversary (September 15, 2007, 2008, 2009, 2010 and 2011).

On February 19, 2007, we entered into an employment agreement with William Green as President of Asia Operations and issued Mr. Green a ten-year option to purchase up to 2,500,000 shares of the Company's common stock at an exercise price of $0.43 per share, the fair market value of the Company's common stock on the date of grant. The option vests in three installments as follows: (i) 1,000,000 shares vested in February 2007; (ii) with respect to an additional 500,000 shares on (A) the earliest of the first anniversary of the effective date or (B) the achievement of a milestone, as determined by the board of directors or (C) the termination of Mr. Green’s employment; and (iii) with respect to the remaining 1,000,000 shares on the earlier of (a) the time the Company achieves certain performance criteria to be established by its board of directors or (b) the third anniversary of the option grant. Mr. Green is a sibling of Andrew Green, a significant shareholder of the Company.

On March 9, 2007, we issued a ten-year option to Stephen D. King to purchase up to 3,000,000 shares of the Company’s common stock at an exercise price of $1.02 per share, the fair market value of the Company’s common stock on the date of grant, in consideration for his services as Chief Executive Officer. The option vests in six equal annual installments commencing on the first anniversary of the grant date. The option shall be accelerated upon the completion of a material acquisition of mining related assets by the Company, at the sole discretion of the board of directors of the Company. In the event the Company attempts to obtain listing of its common stock on a stock exchange and such stock exchange, as a condition to listing, requires that the Company reduce the number of shares issued to Mr. King pursuant to the option, the Company shall be entitled to reduce the number of unvested shares available to Mr. King as necessary to obtain listing on that exchange.

On September 21, 2007, we granted a stock option Joe Mancuso in consideration of his agreement to serve on our board of directors. Mr. Mancuso received a ten-year option to purchase up to 2,000,000 shares of our common stock at an exercise price of $0.30 per share (the closing price of our common stock on September 21, 2007). The option vests in equal bi-annual installments of 250,000 shares each over four years, with the first installment vesting March 24, 2008.

On December 1, 2007, we entered into an agreement with a consultant for services in public and investor relations and granted a ten-year option to purchase up to 100,000 shares of our common stock at an exercise price of $0.30 per share (the closing price of our common stock on the grant date) all which vested immediately.

The Company uses the Black-Scholes pricing model as a method for determining the estimated fair value for employee stock awards under SFAS 123(R). Compensation expense for employee stock awards is recognized on a straight-line basis over the vesting period of service awards and for performance based awards, the Company recognizes the expense when the performance condition is probable of being met. The adoption of SFAS 123(R) also requires certain changes to the accounting for income taxes and the method used in determining diluted shares, as well as additional disclosure related to the cash flow effects resulting from share-based compensation.

F-27

In determining the compensation cost of the options granted during fiscal 2007 and 2006, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes pricing model and the weighted average assumptions used in these calculations are summarized below:

	2007		2006
Weighted average fair value of options granted		$0.63		$0.27
Risk-free interest rate		4.6% - 4.9%		4.5% - 5.0%
Expected volatility factor		154% - 160%		164% - 172%
Expected dividend		—		—
Expected option term		10 years		10 years

We recorded $1,159,951 related to employee stock compensation expense for the year ended December 31, 2007, relating to share options granted in 2007 and 2006. This expense is included in general and administrative expense. There was no tax benefit from recording this non-cash expense due to our income tax valuation allowance and a portion of the options were incentive stock options. The compensation expense had a $0.01 per share impact on the loss per share for the year ended December 31, 2007. As of December 31, 2007, $4,012,625 of total unrecognized compensation expense is expected to be recognized over a period of approximately six years.

For the year ended December 31, 2006, we recorded $122,873 related to employee stock compensation expense, which is included in general and administrative expense. There was no tax benefit from recording this non-cash expense and had no impact on the loss per share for the year ended December 31, 2006.

The following table summarizes information about the Company’s stock options:

	Number of Options			Weighted Average Exercise Price
Options outstanding - December 31, 2005		6,132,000		$	0.88
Granted		3,000,000			0.27
Canceled or expired		(1,420,000	)		0.61
Exercised		(1,200,000	)		0.18
Options outstanding - December 31, 2006		6,512,000			0.56
Granted		7,600,000			0.63
Canceled or expired		(452,500	)		0.37
Exercised		—			—
Options outstanding - December 31, 2007		13,659,500		$	0.53
Options exercisable - December 31, 2007		5,859,500		$	0.43
Weighted average fair value of options granted during the year ended December 31, 2007				$	0.63
Weighted average fair value of options granted during the year ended December 31, 2006				$	0.27

F-28

The following tables summarize information about stock options outstanding at December 31, 2007:

	Options Outstanding
Range of Exercise Prices	Number Outstanding		Weighted Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
$0.15 to $0.30		4,025,000		8.6 years	$	0.26	$	56,000
$0.31 to $0.43		4,850,000		7.7 years	$	0.38	$	—
$0.56 to $1.02		4,706,000		6.8 years	$	0.87	$	—
$2.75 to $4.25		78,500		0.7 years	$	3.13	$	—
$0.15 to $4.25		13,659,500		7.4 years	$	0.53	$	56,000

	Options Exercisable
Range of Exercise Prices	Number Exercisable		Weighted Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value(1)
$0.15 to $0.30		2,025,000		7.8 years	$	0.22	$	56,000
$0.31 to $0.43		2,050,000		7.4 years	$	0.38	$	—
$0.56 to $1.02		1,706,000		4.3 years	$	0.60	$	—
$2.75 to $4.25		78,500		0.7 years	$	3.13	$	—
$0.15 to $4.25		5,859,500		6.0 years	$	0.43	$	56,000

(1) The aggregate intrinsic value in the table represents the difference between the closing stock price on December 31, 2007 and the exercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised their options on December 31, 2007. The total intrinsic value of options exercised during the year ended December 31, 2006 was approximately $212,000. No options were exercised during 2007.

Common Stock Shares held in Reserve Pursuant to Right-to-Purchase Options

In September 2005, we issued Pacific Dawn Capital, LLC a six-month secured convertible promissory note. In April 2006, we entered into an amendment extending the maturity of the note for an additional 30 days and gave Pacific Dawn an option, at any time on or prior to August 31, 2006, to purchase a number of shares of our common stock, at a price per share of $0.20, equal to, but not greater than, the final principal and interest balance of its note divided by the $0.20 per share price. We reserved 2 million shares in order to satisfy Pacific Dawn’s right-to-purchase. In August 2006, we entered into a standby joint venture financing agreement with Pacific Dawn and as partial consideration, we extended the term of its right-to-purchase from August 31, 2006 to March 31, 2007. Pacific Dawn partially exercised its option in December 2006 and purchased 1 million shares at $0.20 per share and in consideration of that exercise, we agreed to extend its remaining right-to-purchase from March 31, 2007 to December 31, 2007, and subsequently to December 31, 2008.

On June 19, 2007, we entered into an amendment in connection with the Convertible Notes Purchase Agreement with China Gold, LLC, dated April 10, 2007, whereby China Gold provided us an opportunity to prepay our obligations under the four notes issued and we provided China Gold the right-to-purchase our common stock at equivalent terms to its rights to convert the notes issued under the Purchase Agreement, stated at $1.00 per share conversion rate. On October 31, 2007, we entered into a letter agreement with China Gold whereby the maturity date on each of the notes was extended to February 29, 2008 and as additional consideration, we agreed to reduce the conversion price applicable to the notes from $1.00 to $0.50 per share and to reduce the right-to-purchase price from $1.00 to $0.50 per share. The letter agreement further gives the Company an option to obtain an extension of the notes to May 31, 2008 in consideration for a further reduction in the conversion price from $0.50 to $0.25 per share. As of July 9, 2007, we had issued an aggregate of $9.8 million of notes under the Purchase Agreement and thereby have reserved 9.8 million shares available for purchase at $0.50 per share.

F-29

Therefore, as of December 31, 2007, we have reserved 10,980,000 shares of our common stock under these right-to-purchase options.

NOTE 14 – STOCK SUBSCRIPTIONS RECEIVABLE

On April 28, 2006, we completed a round of financing through the exercise of issued and outstanding warrants to certain warrant holders who qualified as accredited investors. Certain of the warrant holders were offered a limited time reduction of the exercise price of $0.25 per share. We accepted subscription agreements to exercise 15,577,401 common stock purchase warrants and received approximately $3.84 million in cash (which includes $307,600 for which we accepted, in lieu of cash, a secured promissory note, bearing interest at five percent per annum, was due December 29, 2006 and is secured by the stock issued). Of those warrants exercised, warrants representing 1,230,401 shares, which were held by a former director of ours, Wayne W. Mills, during: (i) April 2001 (340,734 issued with an original exercise price of $3.00 per share), (ii) October 2003 (208,000 issued with an original exercise price of $0.50 per share); (iii) May 2004 (475,000 issued with an original exercise price of $0.40 per share) and (iv) 206,667 warrants he purchased in a private transaction from another shareholder. The secured promissory note was paid in February 2007 along with the $10,323 of interest receivable.

By December 31, 2006, we had received subscription exercise forms from 11 shareholders who held 2,060,000 stock purchase warrants, all with an exercise price of $0.25 per share, totaling $515,000, issued in connection with our private placement of 16,600,000 units of January 2005, all with an expiration date of December 31, 2006. All of these shareholders paid their respective subscription subsequent to December 31, 2006.

In December 2006, we issued a consultant 200,000 shares upon the exercise of a stock option originally granted in October 2005 at an exercise price of $0.15 per share. The $30,000 cash exercise amount was paid in February 2007.

Under provisions of a Loan Agreement entered into with Pacific Dawn Capital, and related promissory note issued to Pacific Dawn, Pacific Dawn had the right to purchase, at a price per share of $0.20, a number of shares of our common stock equal to the maximum principal amount drawn against the promissory note divided by $0.20. Of the available right to purchase option of 2,000,000 shares, Pacific Dawn purchased 1,000,000 shares of common stock in December 2006. Pacific Dawn paid $120,000 of the exercise price in December 2006 and the remaining $80,000 in January 2007.

By February 2007, all $932,600 of the stock subscriptions funds receivable as of December 31, 2006 have been received.

NOTE 15 – COMPREHENSIVE LOSS

Comprehensive loss was the unrealized loss on the investment in marketable securities (the 225,000 shares of MacDonald common stock previously held). We reported an unrealized loss, at December 31, 2006, of $2,818 in our Condensed Consolidated Balance Sheets.

During September 2007, we sold all of the shares of MacDonald we held, by utilizing the efforts of a U.S. registered broker/dealer in open market sales. Our original basis in the aggregate 225,000 shares was approximately $24,059. The sale of these marketable securities generated a realized gain of $65,580, which has been recorded within the other income/expense line items for the year ended December 31, 2007. Therefore, we no longer have any comprehensive losses related to these marketable securities.

F-30

NOTE 16 - RELATED PARTY TRANSACTIONS

Hawk Uranium Inc. (f/k/a Hawk Precious Minerals Inc.)

On May 15, 2006, we entered into a management services agreement with Hawk, a company in which our Chairman, H. Vance White, is also an officer and director of, whereby Hawk provided certain management and administrative services to the Company. The term of the agreement was until December 31, 2006 and required a US $50,000 payment.

On June 29, 2006, we executed a Memorandum of Agreement between the Company and Hawk (the “Hawk Memorandum”). Under the terms of the Hawk Memorandum, we acquired a 50 percent interest in MacNugget Claims located in northern Ontario, held entirely by Hawk by issuing Hawk 40,000 shares of our common stock, valued at US$12,800. Then on November 30, 2006, both parties executed a second agreement in which we both sold a portion of the MacNugget Claims to MacDonald Mines Exploration Ltd., whereby MacDonald became a 51 percent owner in the MacNugget Claims and the operator of the project and Hawk and the Company retained a 24.5% interest in the MacNugget Claims. On October 1, 2007, we sold our 24.5% interest in the MacNugget Claims to both Hawk and MacDonald for an aggregate sale price of $50,000 Canadian (US$48,560). Other than the common stock issued to Hawk in June 2006, we have not incurred any other expenses related to this project.

In August 2007, we entered into a new management services agreement with Hawk, which requires a US$100,000 payment, which has been accrued but not paid as of December 31, 2007. The Hawk agreement expired on December 31, 2007.

On September 19, 2007, we sold all of our rights and claims in the Holdsworth Project to Hawk for $50,000 Canadian (US$47,260). We acquired the Holdsworth Project from Hawk in June 2003. The rights we held allowed us to explore only through a limited surface depth, with the remaining below-surface rights belonging to Hawk. We had not expended any funds on the Holdsworth since its acquisition. We’ve retained a one percent gross gold royalty for any gold extracted from the limited surface depth and Hawk retains the right to purchase one half of the royalty from us for $500,000 Canadian. We have estimated that the value of the one percent royalty is immaterial and therefore have not recorded the possibility of a future gain.

Stephen D. King

On January 27, 2005, the Board authorized a consulting agreement with Stephen D. King, at the time a director, and who currently serves as our Chief Executive Officer and as a director. The agreement was for consulting services to provide strategic merger, acquisition and corporate advice with regard to the Company’s Colorado mining opportunities, as well as other consulting services. Under this agreement, we paid Mr. King $80,000 in fiscal 2006. Upon acceptance of Mr. King’s employment as the Company’s President in March 2006, the agreement was terminated.

In fiscal year 2005, pursuant to certain secured convertible promissory notes with Pacific Dawn Capital, LLC and Andrew Green, Mr. King, who only served as a board member at that time, provided a personal guaranty for the repayment of these notes. In exchange for agreeing to personally guaranty our obligations under the Pacific Note, we issued Mr. King a two-year warrant to purchase 1,000,000 shares of our common stock at a price of $0.15 per share and in exchange for agreeing to personally guaranty our obligations under the Green Note, we issued Mr. King a two-year warrant to purchase 1,000,000 shares of our common stock at a price of $0.15 per share. The fair value of these warrants was valued at $70,913. Mr. King subsequently assigned both of the warrants to his spouse. The warrants had expiration dates of October 13 and November 4, 2007. In October 2007, the Company’s board of directors authorized an extension of the expiration dates, granting a one-year extension and the Company recorded a non-cash expense of $139,054 relating to the extension.

F-31

Corporate Resource Management, Inc.

The Company entered into a consulting agreement with Corporate Resource Management, Inc., a Minnesota corporation (“CRM”), effective May 15, 2006. CRM is an entity wholly owned by Deb King, the spouse of Stephen D. King (at which time he was our president and board member). CRM provides the Company with investment banking services relating to the purchase and sale of mining related assets. The terms of the agreement include the following: (i) a two-year initial term with the right to terminate with a 30-day written notice, subject to a $75,000 termination fee payable to CRM if terminated by the Company without cause, (ii) a fee of $10,000 per month, plus reimbursement of normal out-of-pocket expenses, and (iii) commissions of up to two percent of the value of the transaction upon successful closings of any asset transactions during the term of the agreement and for a period of one year following termination. For the years ended December 31, 2007 and 2006, we paid $120,000 and $75,000, respectively, pursuant to the terms of the consulting agreement.

Relevant Marketing LLC, dba Lighthouse Communications

The Company utilizes the services of Lighthouse Communications as its primary investor and public relations management consultant. The President of Relative Marketing is the step-daughter of our CEO, Stephen D. King. For the years ended December 31, 2007 and 2006, we paid $120,650 and $0, respectively for services provided.

Boston Financial Partners, Inc.

Effective June 1, 2006, we engaged Boston Financial Partners, Inc., as a non-exclusive consultant, to provide assistance to the Company in various matters pertaining to corporate growth, strategic planning, public relations and marketing services. As consideration for the services, we paid a one-time fee of $100,000 and issued (i) 625,000 shares of our common stock valued at $212,500 and (ii) a two-year warrant to purchase up to 1,000,000 shares of our common stock, at an exercise price of $0.62 per share, valued at $304,802. Boston Financial Partners is controlled by Thomas Brazil, a greater than five percent beneficial shareholder of the Company’s securities.

On April 13, 2007, we entered into a new six-month consulting agreement with Boston Financial Partners, Inc., as a non-exclusive consultant, to provide assistance to the Company in various matters pertaining to corporate growth, strategic planning, public relations and marketing services. As consideration for the services, we agreed to pay a fee of $100,000. As of December 31, 2007, we have paid $36,400 towards this fee and the remaining $63,600 is in other accrued expenses.

In May 2007, the Company’s board of directors authorized an extension of the expiration dates on two warrants held by Boston Financial Partners, granting a 30-day extension. The warrants are: (1) to purchase 500,000 shares at $1.00 per share expiring on May 25, 2007 and (2) to purchase 880,000 shares at $1.00 per share expiring on May 25, 2007, both obtained in 2001. Then in June 2007, the board further authorized a six month extension, until December 31, 2007. Furthermore, on December 28, 2007, the board further authorized a one-year extension, until December 31, 2008. The Company recorded a non-cash expense of $815,758 relating to these extensions.

In October 2007, the Company’s board of directors authorized an extension of the expiration dates on two other warrants held by Boston Financial Partners, granting a one-year extension. The warrants are: (1) to purchase 442,000 shares at $0.50 per share expiring on October 14, 2007 and (2) to purchase 96,000 shares at $0.50 per share expiring on October 24, 2007, both obtained as part of the Company’s 2003 private placement. No non-cash compensation charge was recorded due to the Company providing this modification as an incentive to raise capital and not for any services in return.

Norman D. Lowenthal

Mr. Lowenthal was the Chairman of SSC Mandarin Financial Services Ltd for the period 2001 to 2007 and continues to serve as a director of SSC-Sino Gold Consulting Co Ltd, which is an advisor to the Government operated association of China gold mines via the China Gold Bureau, and SSC Mandarin Africa (Proprietary) Limited. We have entered into transactions with SSC Mandarin Financial Services, SSC-Sino Gold Consulting, SSC Mandarin  Africa and SSC Mandarin Group Limited, which is affiliated with all three entities, during 2007.

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NOTE 17 - INCOME TAXES

The Company estimates that at December 31, 2007 it had cumulative net operating loss (“NOL”) carryforwards for tax purposes of approximately $14,670,000 for both federal and state purposes. These carryforwards, if not used, will begin to expire in 2023. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. During 2006, the Company had a change of ownership as defined under IRC Section 382. Although the Company has not performed a formal Section 382 study, it appears that the NOL-carryforward from 2006 would be limited to approximately $740,000 per year. Due to the number of additional shares issued in 2007, it appears that the Company may have another Section 382 limitation in 2008. Future ownership changes could significantly further limit the use of the NOL. In addition, a number of the Company's deferred tax assets will likely be considered capital assets and therefore, if the transactions result in a loss, they would create a capital loss. Capital losses have a five year carryforward and can only be offset by capital gains. There can be no assurance of future capital gain income to offset any potential capital losses.

Significant components of the Company’s estimated deferred tax assets and liabilities at December 31, 2007 and 2006 are as follows:

	2007			2006
Deferred tax assets:
Net operating loss carryforwards	$	6,014,000		$	3,719,000
Exploration rights		3,198,000			2,959,000
Expenses related to warrants and options		1,736,000			1,900,000
Accrued liabilities and other		413,000			—
Total deferred tax asset		11,361,000			8,578,000
Valuation allowance		(11,361,000	)		(8,578,000	)
	$	—		$	—

The income tax provision consists of the following for the years ended December 31:

	2007			2006
Current tax provision	$	—		$	—
Deferred tax provision		(2,783,000	)		(3,205,000	)
Valuation allowance		2,783,000			3,205,000
Total income tax provision	$	—		$	—

Reconciliation between the statutory rate and the effective tax rate for the years ended December 31:

	2007			2006
Federal statutory tax rate		(35.0	)%		(35.0	)%
State taxes, net of federal benefit		(6.0	)%		(6.0	)%
Permanent differences		17.0	%		5.0	%
Valuation allowance		24.0	%		36.0	%
Effective tax rate		—			—

At December 31, 2007, the Company fully reserved its net deferred tax assets totaling $11,361,000, recognizing that the Company has incurred losses during the last several years and there is no assurance that future years will be profitable.

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NOTE 18 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

					May 1, 2003
					(inception)
	December 31,				to Dec. 31,
	2007		2006		2007
Supplemental cash flow information:
Cash paid for interest	$	15,008	$	3,353	$	76,056
Issuance of common stock for accounts payable	$	—	$	39,000	$	39,000
Issuance of common stock, warrants and options for prepaid consulting fees	$	854,497	$	2,327,876	$	4,701,578

NOTE 19 - SUBSEQUENT EVENTS

During the first three months of 2008, we sold 5,733,133 shares of our unregistered common stock in a private placement at $0.15 per share, resulting in gross proceeds of $860,000 less offering costs of $612.

Amendment to Bates-Hunter Purchase Agreement, January 28, 2008

On September 20, 2006, we entered into an asset purchase agreement by and between the Company, Central City Mining Corp., George Otten, Hunter Gold Mining Corp., and Hunter Gold Mining Inc. (as amended on October 31, 2006, March 1, 2007 and May 31, 2007). On January 28, 2008, the parties to the asset purchase agreement entered into a fourth amendment relating to the modification or amendment of certain terms, including without limitation: (i) the incorporation of an acknowledgement of the parties that the Company has incurred to date approximately $2,500,000 in due diligence costs; (ii) an amendment to change the closing date of the asset purchase agreement from March 31, 2008 to June 30, 2008 (and to change the date upon which either party may terminate the agreement in the event a closing has not occurred as of such date to June 30, 2008); and (iii) an amendment to the purchase price so that a required cash payment of the Company of $250,000 Canadian Dollars could be deferred and included in a promissory note to be issued at closing. Pursuant to the fourth amendment, all payments of principal and interest under such note can be deferred until the earlier of production on the property or January 2010.

At December 31, 2007, Kenneth Swaisland, an individual who previously assigned us certain rights relating to the Bates-Hunter property, held the right to receive a warrant to purchase up to 1 million shares of our common stock, at an exercise price equal to the average prior 30-day sale price of our common stock, should we close on the purchase of the Bates-Hunter. In January 2008, we entered into an agreement with Mr. Swaisland that allowed Mr. Swaisland the right-to-purchase 125,000 shares of our unregistered common stock at $0.20 per share and (ii) the issuance of a new three-year warrant to purchase up to 875,000 shares of our common stock at $0.20 per share upon the return of the 1 million share warrant. In February 2008, Mr. Swaisland purchased the shares for $25,000 and we finalized the agreement by issuing the new warrant with a fixed price of $0.20 per share.

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Execution of Senior Secured Convertible Promissory Note

On February 13, 2008, we entered into a Note and Warrant Purchase Agreement (the “Platinum Agreement”) dated February 11, 2008 with Platinum Long Term Growth V, LLC, a Delaware limited liability company (“Platinum”), pursuant to which we issued to Platinum a 10% Senior Secured Convertible Promissory Note in the principal amount of $1,020,000 (the “Note”). We received net proceeds of $1,000,000. The Note has a maturity date of February 11, 2009. The Note is convertible at the option of the holder at any time into shares of our common stock at an initial conversion price of $0.18 per share. The conversion price is further subject to weighted-average anti-dilution adjustments in the event we issue equity or equity-linked securities at a price below the then-applicable conversion price. The Note accrues interest at a rate of 10% per annum, and such interest is payable on a quarterly basis commencing March 31, 2008, with the principal balance of the Note, together with any accrued and unpaid interest thereon, due and payable on the maturity date. At any time after August 11, 2008, if the seven trailing trading day volume-weighted average price (“VWAP”) of our common stock is less than $0.30 per share (as appropriately adjusted for any splits, combinations or like events relating to the common stock), Platinum shall have the option to (i) require us to prepay in cash all or any portion of the Note at a price equal to 115% of the aggregate principal amount to be repaid together with accrued and unpaid interest or (ii) demand that all or a portion of the Note be converted into common stock at a conversion price equal to the lesser of the then-applicable conversion price or 85% of the lowest VWAP for the 10 trading days preceding such demand. Subject to certain conditions, if, between August 11, 2008 and February 11, 2009, our common stock exceeds $0.50 per share for a period of 20 consecutive trading days, we will be entitled to require the holder of the Note to convert the outstanding balance of the Note at the applicable conversion price.

Our obligations under the Note are secured by a first priority security interest in all of our assets with the exception of our equity interests and assets held in CGMR and Wits-China Acquisition Corp., a Minnesota corporation and a wholly owned corporation of ours, to the extent such entities or assets are located in or relate to China and are subject to a lien in favor of China Gold LLC. Platinum’s security interest includes our equity interest in Gregory Gold Producers, Inc., a Colorado corporation and a wholly owned corporation of ours and Kwagga Gold (Barbados) Limited (the FSC Project). We also delivered to Platinum a guaranty of Gregory Gold Producers.

Pursuant to the Platinum Agreement, we also issued Platinum a five-year warrant to purchase up to 2.5 million shares of our common stock at an exercise price of $0.35 per share (the “Warrant”). The Warrant provides for cashless exercise at any time after August 11, 2008, and further provides for a weighted-average anti-dilution adjustment to the exercise price in the event we issue equity or equity-linked securities at a price below the then-applicable exercise price.

As additional consideration pursuant to the terms of the Platinum Agreement, we agreed to accelerate the vesting of a previously issued warrant (from MHG Consultant LLC) to purchase up to 3,000,000 shares of our common stock that was transferred to Platinum at closing, such that all shares underlying such warrant are immediately exercisable. We provided Platinum piggy-back registration rights relating to the shares of common stock issuable upon conversion of the Note and exercise of the Warrant. The Platinum Agreement and other transaction documents contain standard representations, warranties, and covenants of the parties.

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EX-4.4

Exhibit 4.4

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

To Purchase 3,000,000 Shares of Common Stock of

WITS BASIN PRECIOUS MINERALS INC.

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Platinum Long Term Growth V, LLC, a Delaware limited liability company (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after July 27, 2007 (the “Initial Exercise Date”) and on or prior to the close of business on the fifth anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”), subject to the limitations in Section 2(f), up to 3,000,000 shares (the “Warrant Shares”) of Common Stock, par value $.01 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth on Exhibit A hereto.

Section 2.Exercise.

a)Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, if this Warrant is exercised in full, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within 1 Business Day of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b)Exercise Price. The exercise price of the Common Stock under this Warrant shall be $0.01, subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise. This Warrant may also be exercised at any time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

d)Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, such Holder (together with such Holder’s Affiliates, and any other person or entity acting as a group together with such Holder or any of such Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by a Holder that the Company is not representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise shall be deemed to be each Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 2(d) may be waived by such Holder, at the election of such Holder, upon not less than 61 days’ prior notice to the Company, and the provisions of this Section 2(d) shall continue to apply until such 61^st day (or such later date, as determined by such Holder, as may be specified in such notice of waiver). The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended 4.99% beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such 4.99% limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. The holders of Common Stock of the Company shall be third party beneficiaries of this Section 2(d) and the Company may not waive this Section 2(d) without the consent of holders of a majority of its Common Stock.

e)Mechanics of Exercise.

i.Authorization of Warrant Shares. Subject to Section 5(e) hereof, the Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

ii.Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”), free and clear of all legends (other than as required by law). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid.

iii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iv.Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2 by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

v.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

vi.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

vii.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

viii.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

f)Vesting Schedule. Notwithstanding anything to the contrary contained herein, it is understood and agreed that this Warrant shall vest and only be exercisable for Warrant Shares on a monthly basis as is set forth in Section 4(b) of the Consulting Agreement (as defined below). Upon termination of the Consulting Agreement, vesting of the shares hereunder shall cease in accordance with the terms of the Consulting Agreement; provided that the portion of this Warrant that shall have previously vested shall remain vested and exercisable for the Term, and shall not be forfeited by the Holder.

Section 3.Certain Adjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

b)Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. Notwithstanding the foregoing, this Section 3(b) shall not apply in respect of an Exempt Issuance.

c)Pro Rata Distributions. If the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

d)Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of common stock or other securities of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. A condition to the consummation of a Fundamental Transaction shall require any such successor or surviving entity to comply with the provisions of this Section 3(d) and ensure that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction and upon any other circumstances as set forth in Section 3 herein. For the avoidance of doubt, it is understood and agreed that this Warrant shall be adjusted pursuant to this 3(d) (or otherwise entitled to the provisions of this Section 3(d)), irrespective of whether a sufficient number of authorized shares of Common Stock shall be available to permit exercise of this Warrant immediately prior to any Fundamental Transaction.

e)Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. To the extent that any Common Stock or any Common Stock Equivalents (or any warrants or other rights therefor) shall be issued for cash consideration, the consideration received by the Company therefor shall be the amount of the cash received by the Company therefor, or, if such Common Stock or Common Stock Equivalents are offered by the Company for subscription, the subscription price, or, if such Common Stock or Common Stock Equivalents are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends and without taking into account any compensation, discounts or expenses paid or incurred by the Company for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as mutually determined in good faith by the Board of Directors of the Company and the Holder. The consideration for any Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Company for issuing such warrants or other rights divided by the number of shares of Common Stock issuable upon the exercise of such warrant or right plus the additional consideration payable to the Company upon exercise of such warrant or other right for one share of Common Stock. The consideration for any Common Stock issuable pursuant to the terms of any Common Stock Equivalents shall be the consideration received by the Company for issuing such Common Stock Equivalent, divided by the number of shares of Common Stock issuable upon the conversion or other exercise of such Common Stock Equivalent, plus the additional consideration, if any, payable to the Company upon the exercise of the right of conversion or exchange in such Common Stock Equivalent for one share of Common Stock. In case of the issuance at any time of any Common Stock or Common Stock Equivalents in payment or satisfaction of any dividends upon any class of stock other than Common Stock, the Company shall be deemed to have received for such Additional Shares of Common Stock or Common Stock Equivalents a consideration equal to the amount of such dividend so paid or satisfied.

f)Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

g)Notice to Holders.

i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 10-day period commencing on the date of such notice to the effective date of the event triggering such notice.

Section 4.Transfer of Warrant; Registration Rights.

a)Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b)New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

c)Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company, at the Holder’s expense, a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act. The Company will provide, at the Company’s expense, such legal opinions in the future as are reasonably necessary for the issuance and resale of the Common Stock issuable upon exercise of this Warrant pursuant to an effective Registration Statement, Rule 144 under the Securities Act or an exemption from registration. In the event that the Common Stock is sold in a manner that complies with an exemption from registration, the Company will promptly instruct its counsel (at the Company’s expense) to issue to the transfer agent an opinion permitting removal of the legend (indefinitely, if pursuant to Rule 144(k) under the Securities Act, or to permit sale of the shares pursuant to other provisions under Rule 144 under the Securities Act).

e)Registration Rights. If the Company shall determine to prepare and file with the Commission a registration statement (a “Registration Statement”) relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act), or their then equivalents, relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to the Holder a written notice of such determination and, if within ten days after the date of such notice, the Holder shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Shares as the Holder requests to be registered so long as such Warrant Shares are proposed to be disposed in the same manner as those set forth in the Registration Statement; provided, however, that if the number of Warrant Shares offered for participation in the proposed offering is greater than, in the reasonable opinion of the managing underwriter of the proposed offering, can be accommodated without adversely affecting the proposed offering, then the number of shares of Common Stock included in such registration shall be subject to reduction to a number deemed satisfactory by the managing underwriter, which reduction shall be allocated pro rata among all parties offering securities pursuant to such registration statement. The Company shall use its best efforts to cause any Registration Statement to be declared effective by the Commission as promptly as is possible following it being filed with the Commission and to remain effective until all Warrant Shares subject thereto have been sold. All fees and expenses incident to the performance of or compliance with this Section 4(e) by the Company shall be borne by the Company whether or not any Warrant Shares are sold pursuant to the Registration Statement. The Company shall, notwithstanding any full or partial exercise of this Warrant, indemnify and hold harmless the Holder, the officers, directors, members, partners, agents, brokers, investment advisors and employees of each of them, each person who controls the Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, members, shareholders, partners, agents and employees of each such controlling person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included therein or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Section 4(e), except to the extent, but only to the extent, that such untrue statements or omissions referred to in (1) above are based solely upon information regarding the Holder furnished in writing to the Company by the Holder expressly for use therein. The rights of the Holder under this Section 4(e) shall survive any full or partial exercise of this Warrant until all Warrant Shares have been either registered under a Registration Statement or been sold pursuant to an exemption to the registration requirements of the Securities Act or are saleable pursuant to Rule 144(k) under the Act..

Section 5.Miscellaneous.

a)Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

b)No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

c)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

d)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

e)Authorized Shares.

The Company covenants that during the period the Warrant is outstanding, it will use its best efforts to reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. To the extent there exist insufficient shares of Common Stock available for reservation on the Initial Exercise Date, the Company shall use its best efforts to promptly amend its charter documents to permit for such reservation. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. If the Company shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, maintain and increase when necessary such listing, of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder, and, to the extent permissible under the applicable securities exchange’s rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Company will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Company. The Holder hereby acknowledges that the Company has informed the Holder that the Company’s Articles of Incorporation as currently in effect do not provide for sufficient authorized and unissued shares of the Company’s Common Stock to permit the issuance of all Warrant Shares upon exercise of this Warrant through the Term.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

f)Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. The Company and the Holder hereby irrevocably waive personal service of process and consent to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address set forth in the Consulting Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If the Company or the Holder shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

g)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

h)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

i)Notices. Any notice, request or other document required or permitted to be given or delivered hereunder shall be delivered by certified mail or courier to the addresses set forth in the Consulting Agreement, dated as of the date hereof, between the Holder and the Company (the “Consulting Agreement”), or such other address as specified by the relevant party in writing.

j)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

k)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

l)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

m)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

o)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

Signature Page Follows

********************

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: February 11, 2008

WITS BASIN PRECIOUS MINERALS INC.

By:__________________________________________

Name: Mark D. Dacko

Title: Chief Financial Officer

Signature Page

to Common Stock Purchase Warrant

to Purchase 3,000,000 Shares of Common Stock

NOTICE OF EXERCISE

TO:WITS BASIN PRECIOUS MINERALS INC.

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

o in lawful money of the United States; or

o the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

Holder’s Signature:_____________________________

Holder’s Address:_____________________________

_____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

Exhibit A

(Certain Definitions)

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New Jersey are authorized or required by law or other governmental action to close.

“Common Stock Equivalents” means any securities of the Company or its subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any securities issued hereunder and/or securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Initial Exercise Date, provided that such securities have not been amended since the Initial Exercise Date to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions, provided any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) shares of Common Stock (other than as set forth in (a) through (c) above) in an aggregate amount not to exceed 3% of the number of shares of Common Stock outstanding on the Initial Exercise Date.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Trading Day” means a day on which the Trading Markets are open for business, or if the Common Stock is not then listed on a Trading Market, any business day in New York City.

“Trading Market” means the following markets or exchanges: the Nasdaq Capital Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Over-the-Counter Bulletin Board.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by BigCharts (based on a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company.

EX-4.5

Exhibit 4.5

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

To Purchase 2,100,000 Shares of Common Stock of

WITS BASIN PRECIOUS MINERALS INC.

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Platinum Long Term Growth V, LLC (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after July 27, 2007 (the “Initial Exercise Date”) and on or prior to the close of business on the fifth anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”), up to 2,100,000 shares (the “Warrant Shares”) of Common Stock, par value $.01 per share, of the Company (the “Common Stock”). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1.Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth on Exhibit A hereto.

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Section 2.Exercise.

a)Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, if this Warrant is exercised in full, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within 1 Business Day of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

b)Exercise Price. The exercise price of the Common Stock under this Warrant shall be $0.01, subject to adjustment hereunder (the “Exercise Price”).

c)Cashless Exercise. This Warrant may also be exercised at any time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date of such election;

(B) = the Exercise Price of this Warrant, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

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d)Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise, such Holder (together with such Holder’s Affiliates, and any other person or entity acting as a group together with such Holder or any of such Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to such issuance.  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by a Holder that the Company is not representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which a portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise shall be deemed to be each Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-QSB or Form 10-KSB, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The provisions of this Section 2(d) may be waived by such Holder, at the election of such Holder, upon not less than 61 days’ prior notice to the Company, and the provisions of this Section 2(d) shall continue to apply until such 61^st day (or such later date, as determined by such Holder, as may be specified in such notice of waiver). The provisions of this paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended 4.99% beneficial ownership limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such 4.99% limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. The holders of Common Stock of the Company shall be third party beneficiaries of this Section 2(d) and the Company may not waive this Section 2(d) without the consent of holders of a majority of its Common Stock.

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e)Mechanics of Exercise.

i.Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

ii.Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”), free and clear of all legends (other than as required by law). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid.

iii.Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iv.Rescission Rights. If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2 by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

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v.Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

vi.No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

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vii.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

viii.Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Section 3.Certain Adjustments.

a)Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

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b)Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall offer, sell, grant any option to purchase or offer, sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”), as adjusted hereunder (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or of applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. Notwithstanding the foregoing, this Section 3(b) shall not apply in respect of an Exempt Issuance.

c)Pro Rata Distributions. If the Company, at any time prior to the Termination Date, shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith. In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

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d)Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of common stock or other securities of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula. For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. A condition to the consummation of a Fundamental Transaction shall require any such successor or surviving entity to comply with the provisions of this Section 3(d) and ensure that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction and upon any other circumstances as set forth in Section 3 herein.

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e)Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. To the extent that any Common Stock or any Common Stock Equivalents (or any warrants or other rights therefor) shall be issued for cash consideration, the consideration received by the Company therefor shall be the amount of the cash received by the Company therefor, or, if such Common Stock or Common Stock Equivalents are offered by the Company for subscription, the subscription price, or, if such Common Stock or Common Stock Equivalents are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends and without taking into account any compensation, discounts or expenses paid or incurred by the Company for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as mutually determined in good faith by the Board of Directors of the Company and the Holder. The consideration for any Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Company for issuing such warrants or other rights divided by the number of shares of Common Stock issuable upon the exercise of such warrant or right plus the additional consideration payable to the Company upon exercise of such warrant or other right for one share of Common Stock. The consideration for any Common Stock issuable pursuant to the terms of any Common Stock Equivalents shall be the consideration received by the Company for issuing such Common Stock Equivalent, divided by the number of shares of Common Stock issuable upon the conversion or other exercise of such Common Stock Equivalent, plus the additional consideration, if any, payable to the Company upon the exercise of the right of conversion or exchange in such Common Stock Equivalent for one share of Common Stock. In case of the issuance at any time of any Common Stock or Common Stock Equivalents in payment or satisfaction of any dividends upon any class of stock other than Common Stock, the Company shall be deemed to have received for such Additional Shares of Common Stock or Common Stock Equivalents a consideration equal to the amount of such dividend so paid or satisfied.

f)Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

g)Notice to Holders.

i.Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised.

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ii.Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided, that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder is entitled to exercise this Warrant during the 10-day period commencing on the date of such notice to the effective date of the event triggering such notice.

Section 4.Transfer of Warrant; Registration Rights.

a)Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Sections 5(a) and 4(d) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

b)New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

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c)Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

d)Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions), at the Holder’s expense, to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8) promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act. The Company will provide, at the Company’s expense, such legal opinions in the future as are reasonably necessary for the issuance and resale of the Common Stock issuable upon exercise of this Warrant pursuant to an effective Registration Statement, Rule 144 under the Securities Act or an exemption from registration. In the event that the Common Stock is sold in a manner that complies with an exemption from registration, the Company will promptly instruct its counsel (at the Company’s expense) to issue to the transfer agent an opinion permitting removal of the legend (indefinitely, if pursuant to Rule 144(k) under the Securities Act, or to permit sale of the shares pursuant to other provisions under Rule 144 under the Securities Act).

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e)Registration Rights. If the Company shall determine to prepare and file with the Commission a registration statement (a “Registration Statement”) relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act), or their then equivalents, relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to the Holder a written notice of such determination and, if within ten days after the date of such notice, the Holder shall so request in writing, the Company shall include in such registration statement all or any part of the Warrant Shares as the Holder requests to be registered so long as such Warrant Shares are proposed to be disposed in the same manner as those set forth in the Registration Statement; provided, however, that if the number of Warrant Shares offered for participation in the proposed offering is greater than, in the reasonable opinion of the managing underwriter of the proposed offering, can be accommodated without adversely affecting the proposed offering, then the number of shares of Common Stock included in such registration shall be subject to reduction to a number deemed satisfactory by the managing underwriter, which reduction shall be allocated pro rata among all parties offering securities pursuant to such registration statement. The Company shall use its best efforts to cause any Registration Statement to be declared effective by the Commission as promptly as is possible following it being filed with the Commission and to remain effective until all Warrant Shares subject thereto have been sold. All fees and expenses incident to the performance of or compliance with this Section 4(e) by the Company shall be borne by the Company whether or not any Warrant Shares are sold pursuant to the Registration Statement. The Company shall, notwithstanding any full or partial exercise of this Warrant, indemnify and hold harmless the Holder, the officers, directors, members, partners, agents, brokers, investment advisors and employees of each of them, each person who controls the Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the officers, directors, members, shareholders, partners, agents and employees of each such controlling person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included therein or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Section 4(e), except to the extent, but only to the extent, that such untrue statements or omissions referred to in (1) above are based solely upon information regarding the Holder furnished in writing to the Company by the Holder expressly for use therein. The rights of the Holder under this Section 4(e) shall survive any full or partial exercise of this Warrant until all Warrant Shares have been either registered under a Registration Statement or been sold pursuant to an exemption to the registration requirements of the Securities Act or are saleable pursuant to Rule 144(k) under the Act.

Section 5.Miscellaneous.

a)Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 4 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

b)No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

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c)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

d)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

e)Authorized Shares.

The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. To the extent there exist insufficient shares of Common Stock available for reservation on the Initial Exercise Date, the Company shall use its best efforts to promptly amend its charter documents to permit for such reservation. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. If the Company shall list any shares of Common Stock on any securities exchange or market it will, at its expense, list thereon, maintain and increase when necessary such listing, of, all shares of Warrant Stock from time to time issued upon exercise of this Warrant or as otherwise provided hereunder, and, to the extent permissible under the applicable securities exchange’s rules, all unissued shares of Warrant Stock which are at any time issuable hereunder, so long as any shares of Common Stock shall be so listed. The Company will also so list on each securities exchange or market, and will maintain such listing of, any other securities which the Holder of this Warrant shall be entitled to receive upon the exercise of this Warrant if at the time any securities of the same class shall be listed on such securities exchange or market by the Company.

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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

f)Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflict of laws thereof. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or inconvenient venue for such proceeding. The Company and the Holder hereby irrevocably waive personal service of process and consent to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address set forth in the Consulting Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The parties hereby waive all rights to a trial by jury. If the Company or the Holder shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

g)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

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h)Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

i)Notices. Any notice, request or other document required or permitted to be given or delivered hereunder shall be delivered by certified mail or courier to the addresses set forth in the Consulting Agreement, dated as of the date hereof, between the Holder and the Company (the “Consulting Agreement”), or such other address as specified by the relevant party in writing.

j)Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

k)Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

l)Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

m)Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

n)Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

o)Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

Signature Page Follows

********************

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: February 11, 2008

WITS BASIN PRECIOUS MINERALS INC.

By:__________________________________________

Name: Mark D. Dacko

Title: Chief Financial Officer

Signature Page

Common Stock Purchase Warrant

To Purchase 2,100,000 Shares of Common Stock

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NOTICE OF EXERCISE

TO:WITS BASIN PRECIOUS MINERALS INC.

(1)The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)Payment shall take the form of (check applicable box):

o in lawful money of the United States; or

o the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following:

_______________________________

_______________________________

_______________________________

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated: ______________, _______

Holder’s Signature:_____________________________

Holder’s Address:_____________________________

_____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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Exhibit A

(Certain Definitions)

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act.

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New Jersey are authorized or required by law or other governmental action to close.

“Common Stock Equivalents” means any securities of the Company or its subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any securities issued hereunder and/or securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the Initial Exercise Date, provided that such securities have not been amended since the Initial Exercise Date to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions, provided any such issuance shall only be to a person which is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) shares of Common Stock (other than as set forth in (a) through (c) above) in an aggregate amount not to exceed 3% of the number of shares of Common Stock outstanding on the Initial Exercise Date.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Trading Day” means a day on which the Trading Markets are open for business, or if the Common Stock is not then listed on a Trading Market, any business day in New York City.

“Trading Market” means the following markets or exchanges: the Nasdaq Capital Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Over-the-Counter Bulletin Board.

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“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by BigCharts (based on a Trading Day from 9:30 a.m. New York City time to 4:02 p.m. New York City time); (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company.

EX-10.38

Exhibit 10.38

SALE OF SHARES AND CLAIMS AGREEMENT

1 PARTIES

1.1 The parties to this agreement are –

1.1.1 Wits Basin Precious Minerals Inc;

1.1.2 SSC Mandarin Group Limited; and

1.1.3 China Global Mining Resources Limited.

1.2 The parties agree as set out below.

2 INTERPRETATION

2.1 In this agreement, unless inconsistent with or otherwise indicated by the context -

2.1.1 "the/this agreement" means the agreement as set out herein together with all appendices hereto;

2.1.2 "business day" means a day which is not a Saturday, Sunday or a United States public holiday;

2.1.3 "the company" means China Global Mining Resources Limited, with registration number 1386052, a company duly incorporated in accordance with the laws of the British Virgin Islands, herein represented by Lee Sing Leung, Robin, he being duly authorised;

2.1.4 "the subsidiary" means Maanshan Global Resources Limited, a company duly incorporated in accordance with the laws of the People's Republic of China and a wholly owned foreign enterprise of the company with its registered address at Hongqinanlu, Development District, Ma'anshan, Anhui Province;

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2.1.5 "the documents of title" means collectively

2.1.5.1 the share certificates in respect of the subject shares, together with share transfer forms in respect thereof duly completed in accordance with the articles of association of the company, indicating the purchaser or his nominee as the transferee of the subject shares and dated the effective date;

2.1.5.2 a certified copy of a resolution of the directors of the company passed in accordance with the articles of association of the company approving the transfer of the subject shares in the name of the purchaser or its nominee;

2.1.5.3 the written and signed cession of the claims in favour of the purchaser or its nominee;

2.1.6 "the effective date" means the signature date;

2.1.7 "the parties" means all the parties to this agreement;

2.1.8 "the purchaser" means Wits Basin Precious Minerals Inc. (OTCBB: WITM), a public company duly incorporated in accordance with the laws Minnesota, United States of America, or its appointed nominee, herein represented by Stephen David King, he having been duly authorised hereto;

2.1.9 "the Seller" means SSC Mandarin Group Limited, with registration number 137917, a company duly incorporated in terms of the laws of the British Virgin Islands, herein represented by Lee Sing Leung, Robin, he being duly authorised thereto;

2.1.10 "the signature date" means the date of signature of this agreement as identified on the signature page;

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2.1.11 "the subject claims" means any and all claims of whatsoever nature and howsoever arising held by the seller against the company as at the effective date;

2.1.12 "the subject shares" means 1 (one) ordinary par value share amounting to 100% (one hundred percentum) of the company's issued share capital at the effective date;

2.1.13 any reference to the singular includes the plural and vice versa;

2.1.14 any reference to natural persons includes legal persons and vice versa;

2.1.15 any reference to a gender includes the other genders.

2.2 If any provision in a definition is a substantive provision conferring rights or imposing obligations on any party, effect shall be given to it as if it were a substantive clause in the body of the agreement notwithstanding that it is only contained in the interpretation clause.

2.3 The clause headings in this agreement have been inserted for convenience only and shall not be taken into account in its interpretation.

2.4 If any period is referred to in this agreement by way of reference to a number of days, the days shall be reckoned exclusively of the first and inclusively of the last day unless the last day falls on a day other than a business day, in which case the last day shall be the next succeeding business day.

2.5 Words and expressions defined in any sub-clause shall, for the purposes of the clause of which that sub-clause forms part, bear the meaning assigned to such words and expressions in that sub-clause.

2.6 This agreement shall be governed by and construed and interpreted in accordance with the laws of the United Sates of America.

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3 INTRODUCTION

3.1 It is recorded that –

3.1.1 the seller is the owner of the subject shares and the subject claims;

3.1.2 the purchaser wishes to acquire the subject shares and the subject claims from the seller and the seller is willing to dispose of the subject shares and the subject claims to the purchaser on the effective date, subject to the terms and conditions set out in this agreement.

3.2 The parties accordingly agree as set out herein.

4PURCHASE AND SALE

With effect from the effective date the seller hereby sells the subject shares and the subject claims to the purchaser, who hereby purchases same from the seller, subject to the terms and conditions set out in this agreement.

5SHARE CAPITAL OF THE COMPANY

5.1 It is recorded that the company is duly registered with a share capital as follows

5.1.1 an authorised share capital of USD50,000 (fifty thousand United States Dollars) divided into 50,000 (fifty thousand) ordinary par value shares of USD1,00 (one United States Dollar) each; and

5.1.2 an issued share capital of USD1,00 (one United States Dollar) divided into 1 (one) ordinary par value share of USD1,00 (one United States Dollar).

6 PURCHASE PRICE

The purchase price payable by the purchaser to the seller in respect of the subject shares and the subject claims shall be an amount of HKD10,000 (ten thousand Hong Kong Dollars), the receipt of which is hereby acknowledged by seller.

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7 PAYMENT OF PURCHASE PRICE

It is recorded that the purchase price for the subject shares and the subject claims has been paid by the purchaser to the seller in cash.

8 WARRANTIES

The seller warrants that on the effective date –

8.1 the company will not be under any obligations to issue any shares or debentures to any person, and no resolution will have been passed to increase its capital or to issue further shares or any debentures;

8.2 no person will have any lien or other preferential right in respect of the share capital of the company, nor will any person other than the seller have any claim to any of the subject shares in the company;

8.3 the company will not have declared any dividends which will not have been paid in full.

8.4 Except as set out above, the shares and claims are sold without any warranties of any nature, either express or implied.

9 DELIVERY AND CLOSING

At 10h00 on the effective date, the parties shall meet at the address of the seller referred to in 13.2.1 below or at such other premises as agreed to between them. At that meeting the seller shall:

9.1 deliver to the purchaser or its nominee –

9.1.1 the share certificates in respect of the sale shares together with duly signed and currently dated share transfer forms in respect thereof duly completed in negotiable form;

9.1.2 a copy of a resolution of the seller approving the transaction contemplated in terms of this agreement.

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10 CONFIDENTIALITY

The parties agree not to disclose details of this agreement or any other matter in relation to the transactions set out in this agreement to any third party at any time and further undertake not to make any public announcement relating to the matters contemplated herein without the prior written approval of the seller and the purchaser first being had and obtained and which approval shall not be unreasonably withheld.

11 RISK AND BENEFIT

11.1 All risk in and benefit to the subject shares and subject claims shall pass to the purchaser on the effective date.

11.2 Ownership of the subject shares and subject claims shall pass to the purchaser with effect from the effective date.

12 BREACH

Should any party ("the party in default") breach any material term, condition, undertaking, warranty or representation contained in this agreement and fail to remedy such breach within seven days (or such reasonable longer period as the parties may agree on) after receipt of a written notice from any of the other parties ("the innocent party/ies"), requiring such breach to be remedied, then, without prejudice to any other rights that it may have in terms hereof or in law, the innocent party/ies shall be entitled to forthwith cancel this agreement on written notice thereof to the party in default.

13 NOTICES AND DOMICILIA

13.1 The parties choose as their domicilia citandi et executandi their respective addresses set out in this clause for all purposes arising out of or in connection with this agreement at which addresses all processes and notices arising out of or in connection with this agreement, its breach or termination may validly be served upon or delivered to the parties.

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13.2 For purposes of this agreement the parties' respective addresses shall be –

13.2.1 the seller at Suite 3015, 30/F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong;

facsimile number ~ +852 2504 3232;

13.2.2 the purchaser at 900 IDS Center 80 South 8. Street Minneapolis, MN 55402, United States for attention Mr. Mark D. Dacko,

facsimile number ~ +1612 395 5276;

13.2.3 the company at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands;

facsimile number ~ +852 2504 3232,

or at such other address of which the party concerned may notify the other/s in writing provided that no street address mentioned in this sub-clause shall be changed to a post office box or poste restante.

13.3 Any notice given in terms of this agreement shall be in writing and shall –

13.3.1 if delivered by hand be deemed to have been duly received by the addressee on the date of delivery;

13.3.2 if transmitted by facsimile be deemed to have been received by the addressee on the day following the date of despatch, unless the contrary is proved.

13.4 Notwithstanding anything to the contrary contained or implied in this agreement, a written notice or communication actually received by one of the parties from another including by way of facsimile transmission shall be adequate written notice or communication to such party.

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14 WHOLE AGREEMENT

This agreement constitutes the whole agreement between the parties as to the subject matter hereof and no agreements, representations or warranties between the parties regarding the subject matter hereof other than those set out herein are binding on the parties.

15 VARIATION

No addition to or variation, consensual cancellation or novation of this agreement and no waiver of any right arising from this agreement or its breach or termination shall be of any force or effect unless reduced to writing and signed by all the parties or their duly authorised representatives.

16 RELAXATION

No latitude, extension of time or other indulgence which may be given or allowed by any party to the other parties in respect of the performance of any obligation hereunder, and no delay or forbearance in the enforcement of any right of any party arising from this agreement, and no single or partial exercise of any right by any party under this agreement, shall in any circumstances be construed to be an implied consent or election by such party or operate as a waiver or a novation of or otherwise affect any of the party's rights in terms of or arising from this agreement or preclude any such party from enforcing at any time and without notice, strict and punctual compliance with each and every provision or term hereof.

17 COSTS

Each party shall bear its own costs in respect of the negotiation, drafting and implementation of this agreement. All stamp duty, if any, shall be borne and paid by the purchaser.

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SIGNED at _______________________________________	as of ________________________________________
AS WITNESS:
		WITS BASIN PRECIOUS
	For:	MINERALS INC.
(Name of witness in print)	Duly Authorised
SIGNED at _______________________________________	as of ________________________________________
AS WITNESS:
		SSC MANDARIN GROUP
	For:	LIMITED
(Name of witness in print)	Duly Authorised
SIGNED at _______________________________________	as of _________________________________________
AS WITNESS:
		CHINA GLOBAL MINING
	For:	RESOURCES LIMITED
(Name of witness in print)	Duly Authorised

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EX-10.39

Exhibit 10.39

SALE OF SHARES AND CLAIMS AGREEMENT

1 PARTIES

1.1 The parties to this agreement are –

1.1.1 Wits Basin Precious Minerals Inc;

1.1.2 SSC Mandarin Group Limited; and

1.1.3 China Global Mining Resources Limited.

1.2 The parties agree as set out below.

2 INTERPRETATION

2.1 In this agreement, unless inconsistent with or otherwise indicated by the context –

2.1.1 "the/this agreement" means the agreement as set out herein together with all appendices hereto;

2.1.2 "business day" means a day which is not a Saturday, Sunday or a United States public holiday;

2.1.3 "the company" means China Global Mining Resources Limited, with registration number C.I. 1110747, a company duly incorporated in accordance with the laws of Hong Kong, herein represented by Lee Sing Leung, Robin, he being duly authorised;

2.1.4 "the documents of title" means collectively –

2.1.4.1 the share certificates in respect of the subject shares, together with share transfer forms in respect thereof duly completed in accordance with the articles of association of the company, indicating the purchaser or his nominee as the transferee of the subject shares and dated the effective date;

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2.1.4.2 a certified copy of a resolution of the directors of the company passed in accordance with the articles of association of the company approving the transfer of the subject shares in the name of the purchaser or its nominee;

2.1.4.3 the written and signed cession of the claims in favour of the purchaser or its nominee;

2.1.5 "the effective date" means the signature date;

2.1.6 "the parties" means all the parties to this agreement;

2.1.7 "the purchaser" means Wits Basin Precious Minerals Inc. (OTCBB: WITM), a public company duly incorporated in accordance with the laws Minnesota, United States of America, or its appointed nominee, herein represented by Stephen David King, he having been duly authorised hereto;

2.1.8 "the Seller" means SSC Mandarin Group Limited, with registration number 137917, a company duly incorporated in terms of the laws of the British Virgin Islands, herein represented by Lee Sing Leung, Robin, he being duly authorised thereto;

2.1.9 "the signature date" means the date of signature of this agreement as identified on the signature page;

2.1.10 "the subject claims" means any and all claims of whatsoever nature and howsoever arising held by the seller against the company as at the effective date;

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2.1.11 "the subject shares" means 1 (one) ordinary par value share amounting to 100% (one hundred percentum) of the company's issued share capital at the effective date;

2.1.12 any reference to the singular includes the plural and vice versa;

2.1.13 any reference to natural persons includes legal persons and vice versa;

2.1.14 any reference to a gender includes the other genders.

2.2 If any provision in a definition is a substantive provision conferring rights or imposing obligations on any party, effect shall be given to it as if it were a substantive clause in the body of the agreement notwithstanding that it is only contained in the interpretation clause.

2.3 The clause headings in this agreement have been inserted for convenience only and shall not be taken into account in its interpretation.

2.4 If any period is referred to in this agreement by way of reference to a number of days, the days shall be reckoned exclusively of the first and inclusively of the last day unless the last day falls on a day other than a business day, in which case the last day shall be the next succeeding business day.

2.5 Words and expressions defined in any sub-clause shall, for the purposes of the clause of which that sub-clause forms part, bear the meaning assigned to such words and expressions in that sub-clause.

2.6 This agreement shall be governed by and construed and interpreted in accordance with the laws of the United Sates of America.

3 INTRODUCTION

3.1 It is recorded that –

3.1.1 the seller is the owner of the subject shares and the subject claims;

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3.1.2 the purchaser wishes to acquire the subject shares and the subject claims from the seller and the seller is willing to dispose of the subject shares and the subject claims to the purchaser on the effective date, subject to the terms and conditions set out in this agreement.

3.2 The parties accordingly agree as set out herein.

4 PURCHASE AND SALE

With effect from the effective date the seller hereby sells the subject shares and the subject claims to the purchaser, who hereby purchases same from the seller, subject to the terms and conditions set out in this agreement.

6SHARE CAPITAL OF THE COMPANY

5.1 It is recorded that the company is duly registered with a share capital as follows:

5.1.1 an authorised share capital of HKD10,000 (ten thousand Hong Kong Dollars) divided into 10,000 (ten thousand) ordinary par value shares of HKD1,00 (one Hong Kong Dollar) each; and

5.1.2 an issued share capital of HKD1,00 (one Hong Kong Dollar) divided into 1 (one) ordinary par value share of HKD1,00 (one United States Dollar).

6 PURCHASE PRICE

The purchase price payable by the purchaser to the seller in respect of the subject shares and the subject claims shall be an amount of HKD10,000 (ten thousand Hong Kong Dollars), the receipt of which is hereby acknowledged.

7 PAYMENT OF PURCHASE PRICE

It is recorded that the purchase price for the subject shares and the subject claims has been paid by the purchaser to the seller in cash.

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8 WARRANTIES

The seller warrants that on the effective date–

8.1 the company will not be under any obligations to issue any shares or debentures to any person, and no resolution will have been passed to increase its capital or to issue further shares or any debentures;

8.2 no person will have any lien or other preferential right in respect of the share capital of the company, nor will any person other than the seller have any claim to any of the subject shares in the company;

8.3 the company will not have declared any dividends which will not have been paid in full.

8.4 Except as set out above, the shares and claims are sold without any warranties of any nature, either express or implied.

9 DELIVERY AND CLOSING

At 10h00 on the effective date, the parties shall meet at the address of the seller referred to in 13.2.1 below or at such other premises as agreed to between them. At that meeting the seller shall:

9.1 deliver to the purchaser or its nominee –

9.1.1 the share certificates in respect of the sale shares together with duly signed and currently dated share transfer forms in respect thereof duly completed in negotiable form;

9.1.2 a copy, of a resolution of the seller approving the transaction contemplated in terms of this agreement.

10 CONFIDENTIALITY

The parties agree not to disclose details of this agreement or any other matter in relation to the transactions set out in this agreement to any third party at any time and further undertake not to make any public announcement relating to the matters contemplated herein without the prior written approval of the seller and the purchaser first being had and obtained and which approval shall not be unreasonably withheld.

5

11 RISK AND BENEFIT

11.1 All risk in and benefit to the subject shares and subject claims shall pass to the purchaser on the effective date.

11.2 Ownership of the subject shares and subject claims shall pass to the purchaser with effect from the effective date.

12 BREACH

Should any party ("the party in default") breach any material term, condition, undertaking, warranty or representation contained in this agreement and fail to remedy such breach within seven days (or such reasonable longer period as the parties may agree on) after receipt of a written notice from any of the other parties ("the innocent party/ies"), requiring such breach to be remedied, then, without prejudice to any other rights that it may have in terms hereof or in law, the innocent party/ies shall be entitled to forthwith cancel this agreement on written notice thereof to the party in default.

13 NOTICES AND DOMICILIA

13.1 The parties choose as their domicilia citandi et executandi their respective addresses set out in this clause for all purposes arising out of or in connection with this agreement at which addresses all processes and notices arising out of or in connection with this agreement, its breach or termination may validly be served upon or delivered to the parties.

13.2 For purposes of this agreement the parties' respective addresses shall be –

6

13.2.1 the seller at Suite 3015, 301F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong;

facsimile number ~ +852 2504 3232;

13.2.2 the purchaser at 900 IDS Center 80 South 8. Street Minneapolis, MN 55402, United States for attention Mr. Mark D. Dacko,

facsimile number ~ +1 612 395 5276;

13.2.3 the company at Suite 3015, 301F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong;

facsimile number ~ +852 2504 3232,

or at such other address of which the party concerned may notify the other/s in writing provided that no street address mentioned in this sub-clause shall be changed to a post office box or poste restante.

13.3 Any notice given in terms of this agreement shall be in writing and shall –

13.3.1 if delivered by hand be deemed to have been duly received by the addressee on the date of delivery;

13.3.2 if transmitted by facsimile be deemed to have been received by the addressee on the day following the date of despatch, unless the contrary is proved.

13.4 Notwithstanding anything to the contrary contained or implied in this agreement, a written notice or communication actually received by one of the parties from another including by way of facsimile transmission shall be adequate written notice or communication to such party.

7

14 WHOLE AGREEMENT

This agreement constitutes the whole agreement between the parties as to the subject matter hereof and no agreements, representations or warranties between the parties regarding the subject matter hereof other than those set out herein are binding on the parties.

15 VARIATION

No addition to or variation, consensual cancellation or novation of this agreement and no waiver of any right arising from this agreement or its breach or termination shall be of any force or effect unless reduced to writing and signed by all the parties or their duly authorised representatives.

16 RELAXATION

No latitude, extension of time or other indulgence which may be given or allowed by any party to the other parties in respect of the performance of any obligation hereunder, and no delay or forbearance in the enforcement of any right of any party arising from this agreement, and no single or partial exercise of any right by any party under this agreement, shall in any circumstances be construed to be an implied consent or election by such party or operate as a waiver or a novation of or otherwise affect any of the party's rights in terms of or arising from this agreement or preclude any such party from enforcing at any time and without notice, strict and punctual compliance with each and every provision or term hereof.

17 COSTS

Each party shall bear its own costs in respect of the negotiation, drafting and implementation of this agreement. All stamp duty, if any, shall be borne and paid by the purchaser.

8

SIGNED at ________________________________________	as of _________________________________________
AS WITNESS:
		WITS BASIN PRECIOUS
	For:	MINERALS INC
(Name of witness in print)	Duly Authorised
SIGNED at ________________________________________	as of _________________________________________
AS WITNESS:
		SSC MANDARIN GROUP
	For:	LIMITED
(Name of witness in print)	Duly Authorised
SIGNED at ________________________________________	as of _________________________________________
AS WITNESS:
		CHINA GLOBAL MINING
	For:	RESOURCES LIMITED
(Name of witness in print)	Duly Authorised

9

EX-10.40

Exhibit 10.40

SALE OF SHARES AND CLAIMS AGREEMENT

1 PARTIES

1.1 The parties to this agreement are -

1.1.1 Wits Basin Precious Minerals Inc;

1.1.2 SSC Mandarin Financial Services Limited; and

1.1.3 SSC Mandarin Africa (Proprietary) Limited.

1.2 The parties agree as set out below.

2 INTERPRETATION

2.1 In this agreement, unless inconsistent with or otherwise indicated by the context -

2.1.1 "the/this agreement" means the agreement as set out herein together with all appendices hereto;

2.1.2 “business day” means a day which is not a Saturday, Sunday or a United States public holiday;

2.1.3 “the collaboration agreement” means the collaboration agreement entered into on 4 August 2006 between the company and the and Kumba Iron Ore Limited, a indirect subsidiary of Anglo American plc;

2.1.4 “the company” means SSC Mandarin Africa (Proprietary) Limited, with registration number 1998/010265/07, a private company duly incorporated in accordance with the laws of the Republic of South Africa, herein represented by Nick Venter, he being duly authorised;

2.1.5 "the documents of title" means collectively –

1

2.1.5.1 the share certificates in respect of the subject shares, together with share transfer forms in respect thereof duly completed in accordance with the articles of association of the company, indicating the purchaser or his nominee as the transferee of the subject shares and dated the effective date;

2.1.5.2 a certified copy of a resolution of the directors of the company passed in accordance with the articles of association of the company approving the transfer of the subject shares in the name of the purchaser;

2.1.5.3 the written and signed cession of the claims in favour of the purchaser;

2.1.6 “the effective date” means the signature date;

2.1.7 "the parties" means all the parties to this agreement;

2.1.8 "the purchaser" means Wits Basin Precious Minerals Inc. (OTCBB: WITM), a public company duly incorporated in accordance with the laws Minnesota, United States of America, or its appointed nominee, herein represented by Stephen David King, he having been duly authorised hereto;

2.1.9 "the Seller" means SSC Mandarin Financial Services Limited, with registration number C.I. 641254, a company duly incorporated in terms of the laws of Hong Kong, herein represented by Lee Sing Leung, Robin, he being duly authorised thereto;

2.1.10 “the signature date” means the date of signature of this agreement as identified on the signature page;

2.1.11 “the subject claims” means any and all claims of whatsoever nature and howsoever arising held by the seller against the company as at the effective date;

2

2.1.12 "the subject shares" means 40 (forty) ordinary par value shares amounting to 40% (forty percentum) of the company’s issued share capital at the effective date;

2.1.13 any reference to the singular includes the plural and vice versa;

2.1.14 any reference to natural persons includes legal persons and vice versa;

2.1.15 any reference to a gender includes the other genders.

2.2 If any provision in a definition is a substantive provision conferring rights or imposing obligations on any party, effect shall be given to it as if it were a substantive clause in the body of the agreement notwithstanding that it is only contained in the interpretation clause.

2.3 The clause headings in this agreement have been inserted for convenience only and shall not be taken into account in its interpretation.

2.4 If any period is referred to in this agreement by way of reference to a number of days, the days shall be reckoned exclusively of the first and inclusively of the last day unless the last day falls on a day other than a business day, in which case the last day shall be the next succeeding business day.

2.5 Words and expressions defined in any sub-clause shall, for the purposes of the clause of which that sub-clause forms part, bear the meaning assigned to such words and expressions in that sub-clause.

2.6 This agreement shall be governed by and construed and interpreted in accordance with the laws of the United Sates of America.

3 INTRODUCTION

3.1 It is recorded that –

3.1.1 the seller is the owner of the subject shares and the subject claims;

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3.1.2 the purchaser wishes to acquire the subject shares and the subject claims from the seller and the seller is willing to dispose of the subject shares and the subject claims to the purchaser on the effective date, subject to the terms and conditions set out in this agreement.

3.2 The parties accordingly agree as set out herein.

4 PURCHASE AND SALE

With effect from the effective date the seller hereby sells the subject shares and the subject claims to the purchaser, who hereby purchases same from the seller, subject to the terms and conditions set out in this agreement.

5 SHARE CAPITAL OF THE COMPANY

5.1 It is recorded that the company is duly registered with a share capital as follows :

5.1.1 an authorised share capital of R1000,00 (one thousand Rand) divided into 1000 (one thousand) ordinary par value shares of R1,00 (one Rand) each; and

5.1.2 an issued share capital of R100,00 (one hundred Rand) divided into 100 (one hundred) ordinary par value shares of R1,00 (one Rand) each.

6 PURCHASE PRICE

The purchase price payable by the purchaser to the seller in respect of the subject shares and the subject claims shall be an amount of $400,000 (four hundred thousand United States Dollars).

7 PAYMENT OF PURCHASE PRICE

It is recorded that the purchase price for the subject shares and the subject claims has been paid by the purchaser to the seller in cash.

4

8 WARRANTIES

The seller warrants that on the effective date -

8.1 the company will not be under any obligations to issue any shares or debentures to any person, and no resolution will have been passed to increase its capital or to issue further shares or any debentures;

8.2 no person will have any lien or other preferential right in respect of the share capital of the company, nor will any person other than the seller have any claim to any of the subject shares in the company;

8.3 the company will not have declared any dividends which will not have been paid in full.

8.4 Except as set out above, the shares and claims are sold without any warranties of any nature, either express or implied.

9 DELIVERY AND CLOSING

At 10h00 on the effective date, the parties shall meet at such premises as agreed to between them. At that meeting the seller shall:

9.1 deliver to the purchaser –

9.1.1 the share certificates in respect of the sale shares together with duly signed and currently dated share transfer forms in respect thereof duly completed in negotiable form;

9.1.2 a copy of a resolution of the seller approving the transaction contemplated in terms of this agreement.

10 CONFIDENTIALITY

The parties agree not to disclose details of this agreement or any other matter in relation to the transactions set out in this agreement to any third party at any time and further undertake not to make any public announcement relating to the matters contemplated herein without the prior written approval of the seller and the purchaser first being had and obtained and which approval shall not be unreasonably withheld.

5

11 RISK AND BENEFIT

11.1 All risk in and benefit to the subject shares and subject claims shall pass to the purchaser on the effective date.

11.2 Ownership of the subject shares and subject claims shall pass to the purchaser with effect from the effective date.

12 BREACH

Should any party (“the party in default”) breach any material term, condition, undertaking, warranty or representation contained in this agreement and fail to remedy such breach within seven days (or such reasonable longer period as the parties may agree on) after receipt of a written notice from any of the other parties (“the innocent party/ies”), requiring such breach to be remedied, then, without prejudice to any other rights that it may have in terms hereof or in law, the innocent party/ies shall be entitled to forthwith cancel this agreement on written notice thereof to the party in default.

13 NOTICES AND DOMICILIA

13.1 The parties choose as their domicilia citandi et executandi their respective addresses set out in this clause for all purposes arising out of or in connection with this agreement at which addresses all processes and notices arising out of or in connection with this agreement, its breach or termination may validly be served upon or delivered to the parties.

13.2 For purposes of this agreement the parties’ respective addresses shall be –

13.2.1 the seller at Suite 3015, 30/F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong;

facsimile number ~ +852 2504 3232;

6

13.2.2 the purchaser at 900 IDS Center 80 South 8^th Street Minneapolis, MN 55402, United States for attention Mr.Mark D. Dacko,

facsimile number ~ +1 612-395-5276;

13.2.3 the company at 170 Oxford Road, Melrose, Johannesburg;

facsimile number ~ +27 11 380 3111,

or at such other address of which the party concerned may notify the other/s in writing provided that no street address mentioned in this sub-clause shall be changed to a post office box or poste restante.

13.3 Any notice given in terms of this agreement shall be in writing and shall –

13.3.1 if delivered by hand be deemed to have been duly received by the addressee on the date of delivery;

13.3.2 if transmitted by facsimile be deemed to have been received by the addressee on the day following the date of despatch,

unless the contrary is proved.

13.4 Notwithstanding anything to the contrary contained or implied in this agreement, a written notice or communication actually received by one of the parties from another including by way of facsimile transmission shall be adequate written notice or communication to such party.

14 WHOLE AGREEMENT

This agreement constitutes the whole agreement between the parties as to the subject matter hereof and no agreements, representations or warranties between the parties regarding the subject matter hereof other than those set out herein are binding on the parties.

15VARIATION

No addition to or variation, consensual cancellation or novation of this agreement and no waiver of any right arising from this agreement or its breach or termination shall be of any force or effect unless reduced to writing and signed by all the parties or their duly authorised representatives.

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16 RELAXATION

No latitude, extension of time or other indulgence which may be given or allowed by any party to the other parties in respect of the performance of any obligation hereunder, and no delay or forbearance in the enforcement of any right of any party arising from this agreement, and no single or partial exercise of any right by any party under this agreement, shall in any circumstances be construed to be an implied consent or election by such party or operate as a waiver or a novation of or otherwise affect any of the party’s rights in terms of or arising from this agreement or preclude any such party from enforcing at any time and without notice, strict and punctual compliance with each and every provision or term hereof.

17 COSTS

Each party shall bear its own costs in respect of the negotiation, drafting and implementation of this agreement. All stamp duty, if any, shall be borne and paid by the purchaser.

8

SIGNED at _______________________________________	as of ________________________________________
AS WITNESS:
		WITS BASIN PRECIOUS
	For:	MINERALS INC
(Name of witness in print)	Duly Authorised
SIGNED at _______________________________________	as of ________________________________________
AS WITNESS:
		SSC MANDARIN FINANCIAL
	For:	SERVICES LIMITED
(Names of witness in block letters)	Duly authorised
SIGNED at _______________________________________	as of _________________________________________
AS WITNESS:
		SSC MANDARIN AFRICA
	For:	(PROPRIETARY) LIMITED
(Names of witness in block letters)	Duly authorised

9

EX-10.41

Exhibit 10.41

OPTION AGREEMENT

1 PARTIES

1.1 The parties to this agreement are –

1.1.1 Wits Basin Precious Minerals Inc.;

1.1.2 SSC Mandarin Financial Services Limited; and

1.1.3 SSC-Sino Gold Consulting Co. Limited.

1.2 The parties agree as set out below.

2 INTERPRETATION

2.1 In this agreement, unless inconsistent with or otherwise indicated by the context –

2.1.1 "the/this agreement" means the agreement as set out herein together with all appendices hereto;

2.1.2 "business day" means a day which is not a Saturday, Sunday or a United States public holiday;

2.1.3 "the company" means SSC-Sino Gold Consulting Co. Limited, with registration number 019332, a company duly incorporated in accordance with the laws of the People's Republic of China, herein represented by Lu Wenyuan, he having been duly authorised hereto;

2.1.4 "the company board" means the board members of the company as at the signature date, being Norman Lowenthal, Lee Sing Leung, Robin, Lixun, Ma Xiaona, Lu Wenyuan, Zhang Yongtao and Wan Guoli;

2.1.5 "the documents of title" means collectively –

1

2.1.5.1 the transfer documents in respect of the subject interest, duly completed in accordance with the articles of association of the company, indicating the purchaser or its nominee as the transferee of the subject interest and dated the exercise date;

2.1.5.2 a certified copy of a resolution of the directors of the company passed in accordance with the articles of association of the company approving the transfer of the subject interest in the name of the purchaser or its nominee;

2.1.5.3 the written and signed cession of the claims in favour of the purchaser or its nominee;

2.1.6 "the effective date" means the signature date;

2.1.7 "the exercise date" means the date on which the purchaser exercises the option, which date shall be within the option period;

2.1.8 "the exercise price" means an amount of USD5,000,000 (five million United States Dollars) to be paid by the purchaser to the seller on the exercise date;

2.1.9 "the option" means the option which the seller grants to the purchaser to purchase the subject interest and the subject claims during the option period;

2.1.10 "the option period" means 36 months from the effective date;

2.1.11 "the option price" means an amount of USD100,000 (one hundred thousand United States Dollars) payable by the purchaser to the seller in respect of the option;

2.1.12 "the parties" means all the parties to this agreement;

2

2.1.13 "the purchaser" means Wits Basin Precious Minerals Inc. (OTCBB: WITM), a public company duly incorporated in accordance with the laws Minnesota, United States of America, or its appointed nominee, herein represented by Stephen David King, he having been duly authorised hereto;

2.1.14 "the seller" means SSC Mandarin Financial Services Limited, with registration number C.I. 641254, a company duly incorporated in terms of the laws of Hong Kong, herein represented by Lee Sing Leung, Robin, he being duly authorised thereto;

2.1.15 "the signature date" means the date of signature of this agreement as identified on the signature page;

2.1.16 "the subject claims" means any and all claims of whatsoever nature and howsoever arising held by the seller against the company as at the exercise date;

2.1.17 "the subject interest" means the interest or issued shares amounting to 60% (sixty percentum) of the company or the company's issued share capital at the exercise date;

2.1.18 any reference to the singular includes the plural and vice versa;

2.1.19 any reference to natural persons includes legal persons and vice versa;

2.1.20 any reference to a gender includes the other genders.

2.2 If any provision in a definition is a substantive provision conferring rights or imposing obligations on any party, effect shall be given to it as if it were a substantive clause in the body of the agreement notwithstanding that it is only contained in the interpretation clause.

3

2.3 The clause headings in this agreement have been inserted for convenience only and shall not be taken into account in its interpretation.

2.4 If any period is referred to in this agreement by way of reference to a number of days, the days shall be reckoned exclusively of the first and inclusively of the last day unless the last day falls on a day other than a business day, in which case the last day shall be the next succeeding business day.

2.5 Words and expressions defined in any sub-clause shall, for the purposes of the clause of which that sub-clause forms part, bear the meaning assigned to such words and expressions in that sub-clause.

2.6 This agreement shall be governed by and construed and interpreted in accordance with the laws of the United Sates of America.

3 INTRODUCTION

3.1 It is recorded that –

3.1.1 the seller is the owner of the subject interest and the subject claims;

3.1.2 the purchaser wishes to acquire an option to purchase the subject interest and the subject claims from the seller and the seller is willing grant such an option to the purchaser on the effective date, subject to the terms and conditions set out in this agreement.

3.2 The parties accordingly agree as set out herein.

4OPTION

With effect from the effective date the seller hereby grants the option for the option period to the purchaser, who hereby purchases and accepts same from the seller, subject to the terms and conditions set out in this agreement.

4

5 PAYMENT OF THE OPTION PRICE

It is recorded that the option price for option has been paid by the purchaser to the seller.

6 PAYMENT OF EXERCISE PRICE

The exercise price for the subject interest and the subject claims shall be paid by the purchaser to the seller in cash on the exercise date and against delivery of the documents of title to the purchaser, at the address of the seller referred to in 12.2.1 below or at such other premises as agreed to between them.

7 WARRANTIES

7.1 The seller warrants that on the exercise date –

7.1.1 the company will not be under any obligations to issue any shares, further interest or debentures to any person, and no resolution will have been passed to increase its capital or to issue further shares, interest or any debentures;

7.1.2 no person will have any lien or other preferential right in respect of the share capital or interest of the company, nor will any person other than the seller have any claim to any of the subject interest in the company;

7.1.3 the company will not have declared any dividends which will not have been paid in full.

7.2 Except as set out above, the shares or interest and claims are sold without any warranties of any nature, either express or implied.

8DELIVERY AND CLOSING

At 12h00 on the exercise date, the parties shall meet at the address of the seller referred to in 12.2.1 below or at such other premises as agreed to between them. At that meeting, against payment of the exercise price the seller shall deliver to the purchaser or its nominee the documents of title.

5

9 CONFIDENTIALITY

The parties agree not to disclose details of this agreement or any other matter in relation to the transactions set out in this agreement to any third party at any time and further undertake not to make any public announcement relating to the matters contemplated herein without the prior written approval of the seller and the purchaser first being had and obtained and which approval shall not be unreasonably withheld.

10 RISK AND BENEFIT

10.1 All risk in and benefit to the subject interest and subject claims shall pass to the purchaser or its nominee on the exercise date.

10.2 Ownership of the subject interest and subject claims shall pass to the purchaser or its nominee with effect from the exercise date.

11 BREACH

Should any party ("the party in default") breach any material term, condition, undertaking, warranty or representation contained in this agreement and fail to remedy such breach within seven days (or such reasonable longer period as the parties may agree on) after receipt of a written notice from any of the other parties ("the innocent party/ies"), requiring such breach to be remedied, then, without prejudice to any other rights that it may have in terms hereof or in law, the innocent party/ies shall be entitled to forthwith cancel this agreement on written notice thereof to the party in default.

12 NOTICES AND DOMICILIA

12.1 The parties choose as their domicilia citandi et executandi their respective addresses set out in this clause for all purposes arising out of or in connection with this agreement at which addresses all processes and notices arising out of or in connection with this agreement, its breach or termination may validly be served upon or delivered to the parties.

6

12.2 For purposes of this agreement the parties' respective addresses shall be –

12.2.1 the seller at Suite 3015, 301F, One International Finance Centre, 1 Harbour View Street, Central, Hong Kong;

facsimile number ~ +852 2504 3232;

12.2.2 the purchaser at 900 IDS Center 80 South 8. Street Minneapolis, MN 55402, United States for attention Mr. Mark D. Dacko,

facsimile number ~ +1 612 395 5276;

12.2.3 the company at No. 1-505, Qingnianhubeijie, Dongcheng District, Beijing;

facsimile number +86106 588 5786,

or at such other address of which the party concerned may notify the other/s in writing provided that no street address mentioned in this sub-clause shall be changed to a post office box or poste restante.

12.3 Any notice given in terms of this agreement shall be in writing and shall –

12.3.1 if delivered by hand be deemed to have been duly received by the addressee on the date of delivery;

12.3.2 if transmitted by facsimile be deemed to have been received by the addressee on the day following the date of despatch, unless the contrary is proved.

12.4 Notwithstanding anything to the contrary contained or implied in this agreement, a written notice or communication actually received by one of the parties from another including by way of facsimile transmission shall be adequate written notice or communication to such party.

7

13 WHOLE AGREEMENT

This agreement constitutes the whole agreement between the parties as to the subject matter hereof and no agreements, representations or warranties between the parties regarding the subject matter hereof other than those set out herein are binding on the parties.

14 VARIATION

No addition to or variation, consensual cancellation or novation of this agreement and no waiver of any right arising from this agreement or its breach or termination shall be of any force or effect unless reduced to writing and signed by all the parties or their duly authorised representatives.

15 RELAXATION

No latitude, extension of time or other indulgence which may be given or allowed by any party to the other parties in respect of the performance of any obligation hereunder, and no delay or forbearance in the enforcement of any right of any party arising from this agreement, and no single or partial exercise of any right by any party under this agreement, shall in any circumstances be construed to be an implied consent or election by such party or operate as a waiver or a novation of or otherwise affect any of the party's rights in terms of or arising from this agreement or preclude any such party from enforcing at any time and without notice, strict and punctual compliance with each and every provision or term hereof.

16 COSTS

Each party shall bear its own costs in respect of the negotiation, drafting and implementation of this agreement. All stamp duty, if any, shall be borne and paid by the purchaser.

8

SIGNED at ________________________________________	as of _________________________________________
AS WITNESS:
		WITS BASIN PRECIOUS
	For:	MINERALS INC.
(Name of witness in print)	Duly Authorised
SIGNED at ________________________________________	as of _________________________________________
AS WITNESS:
		SSC MANDARIN FINANCIAL
	For:	SERVICES LIMITED
(Name of witness in print)	Duly Authorised
SIGNED at ________________________________________	as of _________________________________________
AS WITNESS:
		SSC-SINO GOLD
	For:	CONSULTING CO. LIMITED
(Name of witness in print)	Duly Authorised

9

EX-10.42

Exhibit 10.42

Joint Venture Agreement

Between

[Shanxi Hua Ze Nickle Smelting Co.,]

and

[China Global Mining Resources Limited]

for the establishment of

[Sino-American Hua Ze Nickel & Cobalt Metal Co., Ltd.]

Dated 14 April 2007

THIS Joint Venture Agreement (the “Agreement”) is entered into by and between the following parties in Xian, China. on [April 14, 2007],

[ Shanxi Hua Ze Nickle Smelting Co., ], a company duly incorporated and existing under the laws of PRC. (“Party A”)

Address: [High-Tech Zone in Xi’an, Shanxi Province, PRC]

[China Global Mining Resources Limited], a company duly incorporated and existing under the laws of British Virgin Islands (“ Party B”), a wholly-owned subsidiary of Wits Basin Precious Metal Inc, a company duly incorporated and existing under the laws of USA;

(Party A and Party B are hereafter collectively referred to as “Parties”, and individually as a “Party”)

Whereas

(1) The Parties agree to establish Sino-foreign equity joint venture called [Sino-American Hua Ze Nickel & Cobalt Metal Co., Ltd.] (the “Company” or the “Joint Venture”) in the city of Xi’an, PRC with Party A to contribute [assets and equity interests] it held representing seventy five percent (75%) of the equity interest in the Company, Party B to contribute cash representing twenty five percent (25%) of the equity interest in the Company, based on this Agreement as well as the joint venture contract (“JV Contract”) and articles of association (“Articles of Association”) which shall be signed on the basis of this Agreement for the establishment of the Company;

(2) As of the date of this Agreement, the equity interests which Party A proposes to inject into the Company are held directly by Party A’ shareholders. Both Parties agree that Party A may contribute the equity interests to the Company after Party A has made agreements with its shareholders for the acquiring of the equity interests;

(3) Party B acknowledge that the total value of the assets to be contributed and the assets relating to the equity interest to be contributed by Party A is above RMB 1 billion. Party B wishes to negotiate with Party on the establishment of the Company.

NOW THEREFORE, it is agreed as follows:

PART A.JOINT VENTURE ARRANGEMENT

Article 1 – Parties to the Joint Venture

The Parties to the joint venture are:

(1) PARTY A,[ Shanxi Hua Ze Nickle Smelting Co., ]

Legal Representative:	[ Wang Yinghu]
Position:	[Chairman of Board]
Nationality:	[ Chinese ]

(2) PARTY B, China Global Mining Resources Limited.,

Legal Representative: [William Green]

2

Position:	[President]
Nationality:	[U.S.A.]

Article 2 – Establishment of the Company

2.1 Name and Address

(a) The name of the Company shall include “Hua Ze” and be registered with the company registration authority.

(b) The name of the Company in Chinese is: [          ]

The name of the Company in English is: “[Sino-American Hua Ze Nickel & Cobalt Metal Co., Ltd.]”

(c) The registered address of the Company shall be at: [High-Tech Zone in Xi’an Shanxi Province, PRC]

2.2 Local Government Approval

The establishment of the Company shall be subject to the approval by appropriate government authorities. Party A shall apply, on behalf of the Parties and JV Company, to such government authorities for the approval of any and all relevant documents legally required for the establishment of the Company, including the issuance of the Approval Letter, Approval Certificate and Business License of the Company.

2.3 Hong Kong & U.S. Approvals

Party B should apply for both government authorities for the approvals when it is required by the relevant laws and regulations.

Article 3 – Purpose and Scope of Business

3.1 Purpose

The purpose of the Company shall be to adopt advanced technology and such other management methods in order to achieve favourable economic results and an acceptable rate of return for the Parties on their respective capital contributions as well as to make a contribution to PRC.

3.2 Scope of Business

The scope of the business of the Company shall be Nickel and Cobalt smelting, mines development and other metal’s development and producing. And it subjects to any legally required government approvals and/or registrations.

3.3 Production and Operation Scale

After the further financing and development of the Company’s business, the annual production capacity of electric nickels products of the Company expected for the year of 2010 is 10,000 tons and with the annual profit no less than RMB780 million.

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Article 4 – Total Investment and Registered Capital

4.1 Total Investment

The Company’s total investment shall be RMB two and one half billion (RMB2,500,000,000].

4.2 Registered Capital

The Company’s registered capital shall be RMB one billion four hundred and forty nine million three hundred and seventy five thousand (RMB1,449,375,000).

4.3 Capital Contribution and Equity Ratio

(a) Party A’s contribution to the registered capital of the Company shall be in the form of assets and equity interest of its controlling subsidiary, in the amount of RMB1,087,031,250, representing seventy five percent (75%) of the equity interest of the Company. (The value of related assets and interest contributed should include the unsecured liabilities of RMB a hundred and sixty million (RMB 160,000,000) recorded as accounts payable or shareholders’ loans specified in the Appendix 1 of this Agreement.)

The equity interest that Party A will contribute to the Company is detailed in Appendix 1 attached hereto.

(b) Party B’s contribution to the registered capital of the Company shall be in the form of cash in the amount of RMB362,343,750, representing twenty five percent (25%) of the equity interest of the Company. Purpose of use of such contribution and use of the loans specified in Article 4.4 and Article 4.6 is detailed in Appendix 2 attached hereto.

4.4 Contribution and Loan Arrangement Schedule

4.4.1 Subject to the satisfaction of the conditions set forth in Article 4.5 below, Party A shall:

(a) contribute 40% of its contribution in the amount of RMB434,812,500 within 30 days after the date of issuance of the Company’s Business License (the “Establishment Date”); and

(b) contribute the balance of its contribution of the registered capital of the Company before 31^st December, 2007.

4.4.2 Subject to the satisfaction of the conditions set forth in Article 4.5 below, Party B shall make the following contribution and loan arrangement:

(a) RMB 154,648,313 is equity contribution by cash within 90 days of signing of the Agreement;

(b) The remaining RMB 347,850,000 will be equity contribution and shareholder’s loan before December 31 2007. The equity contribution shall be 59.71 % of this part of payment and the shareholder’s loan shall be 40.29%.

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4.5 Conditions Precedents

Each Party shall not be obligated to make its respective capital contributions to the registered capital of the Company until and unless each of the following conditions has been satisfied without delay, unless waived by the Party in writing:

(a) The following documents or certificates required for the legal establishment of the Company have been issued:

(i) an approval document issued by appropriate government authorities approving the Feasibility Study Report and all its appendices jointly prepared by the Parties relating to the establishment and operations of the Company;

(ii) the Approval Letter and Approval Certificate issued by appropriate government authorities approving the establishment of the Company, the JV Contract and the Articles of Association of the Company (including their respective Exhibits) without varying their terms unless any such variation has first been agreed by the Parties in writing;

(iii) the Business License of the Company issued by appropriate government authority.

(b) Party B has, according to Article 4.6 of the Agreement, arranged the loan in the amount of RMB seventy seven million three hundred thousand (RMB77,300,000) to Party A or a third party designated by Party A and Party A or the said third party has received such loan before May 7, 2007.

4.6 Pre Financing Arrangement

Party B shall arrange the loan in the amount of RMB seventy seven million three hundred thousand (RMB77,300,000) to Party A or the third party designated by Party A before May 7, 2007 for the purpose of mining development and construction for the subsidiary listed in the Appendix 1 hereof. The detailed payment schedule and repayment of such loan may be further negotiated and determined by the parties.

4.7 Further Financing Arrangement

Both Parties may arrange further financing arrangement for Company to the extent permitted by PRC laws and according to the Company’s Articles of Association for the Company’s business development.

4.8 Priority Call Option

After the completion of loans provided in Article 4.4 and Article 4.6, Party B may remain the right, in any time, to convert of the outstanding balance of such loans into equity interest in the Company to hold additional equity interest of the Company to the extent permitted by the PRC laws and regulations.

After the establishment of the Company, Party B has the first right for call option for acquiring another 40% of the equity interest of the Company when Party A has the intention to transfer such equity interest it holds. Detailed terms and conditions shall be negotiated and determined by the Parties.

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4.9 Priority Future Acquisition Option

Party B has the priority right to acquire other mines which are and to be owned by the connected party of Party A, including zinc mines, moly mines and any other mines. Detailed terms and conditions shall be negotiated and determined by the Parties.

Article 5 – Board of Directors and General Manager

5.1 Formation

The date of the issuance of the business license of the Company shall be the date of the establishment of the Company and the Board of Directors. The Board of Directors is the highest authority of the Company and shall decide all major issues of the Company.

5.2 Board Composition and Term of Office

The Board of Directors of the Company shall consist of [five (5)] persons. Party A shall appoint [three (3)] persons, Party B shall appoint [two (2)] persons. The Chairman shall be nominated by Party A. The Chairman is the legal representative of the Company. The term of office of the Directors and the Chairman shall be three (3) years, provided that any Party may replace any of their appointed Directors during the term of their office. Directors are eligible to serve consecutive terms if they are re-appointed by the Parties. The names of the members of the initial Board of Directors appointed by the Parties are set forth in Appendix 3 attached hereto.

5.3 Authority of Board of Directors

The following matters shall require the unanimous vote of all Directors present at a duly convened meeting of the Board of Directors or unanimous written consent if adopted by a written resolution without a meeting:

(a) amendment of the Articles of Association or the JV Contract;

(b) increase or decrease in the registered capital of the Company;

(c) termination or dissolution of the Company;

(d) merger with another organization, division or change of the form of the Company.

Such other matters as agreed to by the Parties in the JV Contract and the Articles of Association of the Company shall also require unanimous approval by the Board of Directors; provided that any matters that are not legally required to be resolved by unanimous decision by the Board of the Directors shall be decided upon by simple majority.

5.4 General Manager

The Company shall have one General Manager and Two Deputy General Managers, who shall be nominated by Party A and officially appointed by the Board of Directors. The name of the General Manager and Deputy General Managers are set forth in Appendix 4 attached hereto.

5.5 The Company shall have one Financial Officer. The first Financial of the Company shall be nominated by Party B and officially appointed by the Board of Directors. The position of the Financial Officer shall be concurrently held by one Director nominated by Party B. The powers and duty of the

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Financial Officer of the Company shall be further negotiated and determined by the Parties in the Articles of Associations.

Article 6 – Profit Distribution

6.1 Dividends

The Parties agree that the dividends to be distributed shall be paid to each Party in accordance with the proportion of paid-up contribution by the Party in the registered capital of the Company.

Article 7 – JV Documents

The Parties hereby specifically agree to the following:

(1) The Agreement shall become effective after being signed by the authorized representatives of the Parties and affixed with the official seals of the Parties;

(2) Once the Agreement becomes effective, it shall supersede the Termsheet for Convertible Bond Facility signed on March 27, 2007 by Party B and Shanxi Xingwang Group. The Termsheet for Convertible Bond Facility shall become void and null upon the Agreement’s becoming effective;

(3) Once the Articles of Association and the JV Contract becomes effective, such documents shall supersede this Agreement and this Agreement shall become void and null; and

(4) Party A may terminate the Agreement in its absolute discretion if Party B fails to arrange the loan as specified in Article 4.6 to Party A or the third party designated by Party A within 15 business days after signing of this Agreement.

(5) The use of the Party B’s contribution and loans in the Company shall be in strict compliance with the purpose of use specified in Appendix 2 of the Agreement.

Article 8 – JV Contract and Articles of Association

The formal JV documents(including JV Contract and Articles of Association) shall be signed by both Parties within one month after signing of the Agreement

Article 9 – Confidentiality and Non-Disclosure

Each Party agrees to keep confidential and not disclose to any third party the terms of this Agreement and/or any related matter without the prior written consent of the other Party.

Article 10 – Governing Law

The formation of this Agreement, the JV Contract and the Articles of Association, their validity, interpretation, execution and settlement of any disputes arising thereunder shall be governed by, and construed in accordance with, the laws of the PRC excluding Hong Kong, Macao and Taiwan.

Article 11 – Dispute Resolution

The Parties shall strive to settle any dispute, controversy or claim arising from the interpretation or performance of, or in connection with the Agreement through friendly consultations. In case no settlement can be reached through consultations within sixty (60) days of the delivery of notice requesting such consultation by one Party to the other Party, then such dispute shall be submitted to China International Economic and Trade Arbitration Commission for arbitration in Beijing. The arbitration proceedings shall be conducted in Chinese. The arbitration shall be legally final and binding on the Parties.

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Article 12 – Language and Counterparts

This Agreement is written in English and Chinese. Both language versions shall have equal validity and any inconsistencies or conflicts between the two language versions shall be resolved according to the intention of the Parties and the purpose of this Agreement. This Agreement is executed in two (2) originals of each language version, with each Party having one (1) of each language version.

IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute the Agreement and affix their respective office seals to this Agreement as of the date first written above.

(Below is left blank intentionally)

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(signing page)

[Shanxi Huaze Nickle Smelting Co.,] (seal)

Authorized Representative: ___________________________

Signature: /s/                                               

[China Global Mining Resources Limited](seal)

Authorized Representative:

Signature: /s/                                                

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Appendix 1

[Equity interest to be Contributed by Party A to the Company]

[Ping’an Xinhai Resource Development Company Limited, 93.33% equity interest]

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Appendix 2

Purpose of use of the Party B’s contribution and loans

Item	Capital (RMB10,000)
Constructing and equipment of Yuanshishan	10000
Repayment	16000
Develop new mine	17000
Cash flow for Mine	7000
Cash flow for smelting plant	5000
Cash flow for smelting technical system	2000
Total	57000

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Appendix 3

[Initial Members of the Company’s Board of Directors]

Director nominated by Party A:

Director nominated by Party B:

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Appendix 4

[ Managers of the Company]

General Manager nominated by Party A:

Deputy General Manager nominated by Party A:

____________________________.

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EX-10.43

Exhibit 10.43

Supplemental Agreement

This is a Supplemental Agreement to the terms of the joint venture agreement between Shanxi Hua Ze Nickel Smelting Co., Ltd and China Global Mining Resources Limited for the establishment of Sino-American Hua Ze Nickel & Cobalt Metal Co., Ltd (“Joint Venture”) dated 14 April 2007 (“JV Agreement”).

This Supplemental Agreement sets out an indicative timetable for the payment of capital to the Joint Venture. Except for the making of the payment on 20 June 2007, the making of each of these capital payments is subject to the establishment of the Joint Venture and the opening of its registered capital account and the satisfactory completion of legal, accounting and technical due diligence and shall be made to the registered capital account of the JV.

Revised Payment Schedule to the JV Agreement

Date	Note		Amount (RMB million)
20 June 2007		1, 4		15,460,000
5 July 2007				23,190,000
5 August 2007				38,650,000
30 September 2007				77,300,000
31 October 2007				77,300,000
31 December 2007				193,250,000
Sub-total		2		425,150,000
31 December 2007		3		154,600,000
Total		5		579,750,000

Notes:

l. The payment of RMB15,460,000 on 20 June 2007 is subject to the execution of a supply agreement between Shanxi Hua Ze Nickel Smelting Co., Ltd and China Global Mining Resources Limited for the purchase by China Global Mining Resources Limited of fourty (40) metric tonnes of electrolytic nickel (>99%). Shanxi Hua Ze Nickel Smelting Co., Ltd shall engage an import export agent to export the processed nickel cobalt to China Global Mining Resources Limited. The payment will be made to an account at a bank in China designated by Shanxi Hua Ze Nickel Smelting Co., Ltd.

2. Of the total payment of RMB425.15 million above, RMB270.55 million has to be used for development and construction of mine in Qinghai, and smelting plant and facilities in Shaanxi, both of which are owned by Shaanxi Hua Ze Nickel Smelting Company, and the remaining RMB 154.6 million will be used for repayment of loans and settlement of other outstanding payables.

3. RMB 154.6 million will be used for acquisition of additional land area which contains approximately 200,000 tonnes of nickel resources.

4. After the first payment of RMB15.46 million is made on 20 June 2007, SRK will be commissioned to prepare an updated geological report on the nickel mine.

5. It is a condition that on the completion of the above mentioned payment of RMB579,750,000 by 31 December 2007 the shareholders of the proposed Joint Venture will comprise only:

China Global Mining Resources Limited	40	%
Shanxi Hua Ze Nickel Smelting Co., Ltd	60	%

6. The parties shall use their best endeavours to complete the due diligence and to execute the final joint venture contract and articles of association within 45 days of making the payment under the supply contract referred to in paragraph 1.

Additional Equity Purchase

Ø   Referring to Clause 4.8 of the JV Agreement, China Global Mining Resources Limited has the right to purchase an additional 40% equity interest in the Joint Venture from Shanxi Hua Ze Nickel Smelting Co., Ltd for an amount of RMB579.75 million on or before 15 June 2008 and Mr Wang Ymg Hu and Shanxi Hua Ze Nickel Smelting Co., Ltd shall use their best endeavours to ensure that the transfer of that 40% equity interest is approved by the relevant government authorities.

Shanxi Huaze Nickel Smelting Co [  ]

Authorised Representative

Signature /s/

China Global Mining Resources Limited
Authorised Representative	For and on behalf of
	CHINA GLOBAL MINING RESOURCES LIMITED
	[  ]
Signature	/s/
	Authorised Signature(s)

EX-10.44

Exhibit 10.44

SUPPLY CONTRACT

CHINA GLOBAL MINING RESOURCES LIMITED

(PURCHASER)

SHAANXI HUA ZE NICKEL AND COBALT METALS CO., LTD.

(SUPPLIER)

SHAANXI XINGWANG IMPORT & EXPORT LIMITED.

(EXPORT AGENT)

DATED 15 JUNE 2007

Supplier	Shaanxi Hua Ze Nickel and Cobalt Metals Co., Ltd., a company organized and existing under the laws of the People’s Republic of China Address:    11/F, High-Tech Building, Eastern Zone, High-Tech Zone, Xi’an Municipality, Shaanxi Province, People’s Republic of China Telephone: (86) 29-8831 4062 Fax: (86) 29-8831 2501
Goods	The forty (40) metric tonnes of electrolytic nickel (>99%) as further specified in schedule 2
Price	As set out in schedule 4
Contract Effective Date	20 June 2007
Contract Expiry Date	20 December 2007, or such later date as agreed in writing by the parties
Contract Period	The period commencing on the Contract Effective Date and ending on the Contract Expiry Date
Invoice(s) to be sent to (see clause 8.1)	China Global Mining Resources Limited Attention: Robin Lee Address:    Suite 3015, 30/F., One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Fax: (852) 3101 9140

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Delivery instructions for Goods (see clause 9.1)	Delivery Point(s): as specified in each Order. Delivery Date(s) – date(s) for delivery of Goods to Delivery Point as specified in each Order.
Liquidated damages (see clause 13.1)	Rate of liquidated damages per day: Zero point two percent (0.2%) of the Price of the delayed batch of Goods.
Warranty Period (see clause 15.3, 15.4)	The Warranty Period for each batch of Goods delivered shall be a period of one year commencing on the Delivery Date for that batch of Goods
Insurance Cover (See clause 16)	Comprehensive public and product liability insurance: See further clause 17
Specifications	Specifications are set out in schedule 3
Standards	Standards include those set out in schedule 5
Aggregate limit of liability	The Supplier’s liability is unlimited
Place of arbitration (see clause 21)	The Hong Kong Special Administrative Region
Person nominated by the Purchaser for receipt of notices and address /fax details (see clause 24)	Name, Title: Brandon Ho Address:    Suite 3015, 30F., One International Finance Centre, 1 Harbour View Street, Central, Hong Kong Fax number: (852) 2504 3232
Person nominated by the Supplier for receipt of notices and address/fax details (see clause 25)	Name, title: Xi Wei, Vice President Address:    3/F, High Tech Building, Eastern Zone, High-Tech Zone, Xi’an Municipality, Shaanxi Province, People’s Republic of China Fax number: (86) 29-8831 2501
Export Agent	SHAANXI XINGWANG IMPORT & EXPROT LIMITED. Address:    Mijiaqiao, No.52, Gaoxin road, High-Tech Zone, Xi’an Municipality, Shaanxi Province, People’s Republic of China Telephone: (86) 29-88317707 Bank Account No. 61001920900050050011750 Name of the Bank in Chinese: o Name of the Bank in English: China Construction Bank Corporation Xi’an Hi-tech Development Zone Sub-branch Swift Code: PCBCCNBJSXX

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Governing law (see clause 29)	This Contract shall be governed by and construed in accordance with the laws of the Hong Kong Special Administrative Region. See further clause 29.
Date of signing this Contract	15 June 2007

The parties agree to the supply and purchase of the Goods on the terms and conditions set out in this Contract.

Name:	Robin Lee	WITNESSED BY
Position:	For and on behalf of
	CHINA GLOBAL MINING RESOURCES LIMITED	Name:
	o
Signature:	/s/	Signature:	/s/
	For and on behalf of China Global Mining
	Resources Limited by its authorised
	representative
Name:	Wang Yinghu
Position:
Signature:	/s/
	For and on behalf of Shaanxi Hua Ze Nickel
	and Cobalt Metals Co., Ltd. by its authorised
	representative
Name:	Du Tianhe
Position:
Signature:	/s/
	For and on behalf of Shaanxi Xingwang
	Import & Export Limited

Affix company chop:

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SUPPLY CONTRACT

PREAMBLE

WHEREAS

The Supplier is a properly licensed and approved manufacturer of electrolytic nickel products located in Xi’an Municipality, Shaanxi Province, the People’s Republic of China;

The Supplier wishes to sell forty (40) metric tonnes of electrolytic nickel (>99%) to the Purchaser and the Purchaser wishes to buy forty (40) metric tonnes of electrolytic nickel (>99%) from the Supplier on the terms and conditions of this Contract;

NOW, THEREFORE

The parties have entered into this Contract to set forth the terms and conditions of the supply and purchase of the Goods.

GENERAL CONDITIONS

1.PRE-PAYMENT

1.1 The Supplier agrees to sell the Goods to the Purchaser and the Purchaser wishes to buy the Goods from the Supplier on the terms and conditions of this Contract.

1.2 Without prejudice to the Price to be paid by the Purchaser for the Goods hereunder the Purchaser, Since the Purchaser has deep faith in the credibility of the Supplier, the Purchaser shall pay to the Supplier the Prepayment of a the total amount of RMB 15,460,000 as payment in advance for the Goods to be supplied pursuant to the terms and conditions of this Contract.

2.SUPPLY OF GOODS

2.1 The Supplier must supply and deliver the Goods, and the Purchaser will accept delivery of the Goods in accordance with, and as specified in, this Contract.

2.2 The Supplier is entitled but is not required to place at any time an Order for the Goods during the Contract Period.

2.3 The Supplier is required to perform the Order in accordance with the details specified in the Order.

2.4 In order to implement this Contract, the Supplier may be required to engage an Import-Export Agent to export the Goods to the Purchaser. The Supplier shall ensure that the Import-Export Agent delivers the Goods in accordance with the provisions of this Contract and the Supplier shall be liable for the failure of the Import-Export Agent to deliver the Goods as required under this Contract.

3. QUALITY AND DESCRIPTION

3.1 The Goods must comply with the Specifications, the Standards and the description of the Goods set out in this Contract and each Order.

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3.2 The Goods supplied to fulfil the terms of this Contract may be manufactured by any third party Manufacturer provided that the Suppler notifies the Purchaser of it beforehand and further provided that the Goods manufactured by the third Party Manufacturer comply the with the Specifications, the Standards and the description of the Goods set out in this Contract and each Order.

3.3 Goods procured by the Supplier from a Manufacturer shall be subject to the same requirements with respect to the Goods specified in the Contract and the Supplier shall be liable for the compliance of the Goods with such requirements as if these Goods had been manufactured by itself.

3.4 If the Supplier gave the Purchaser a sample of the Goods before the Purchaser entered into this Contract, the quality of the Goods must, as a minimum, correspond with the sample unless otherwise specified by the Purchaser.

4. INSPECTION AND INFORMATION

4.1 The Supplier must carry out all inspection and testing:

(a) as required under this Contract, including the quality assurance to be carried out in accordance with the Specifications;

(b) as required by law;

(c) as reasonably requested by the Purchaser, and

4.2 The Supplier must provide to the Purchaser at its request and cost:

(a) copies of all Technical Materials relating to the Goods;

(b) a detailed program for the testing and delivery of the Goods; and

(c) progress reports setting out in such detail as the Purchaser requires the status of testing and delivery of the Goods.

4.3 At reasonable times agreed by the Supplier beforehand, the Purchaser has the right to test, review, inspect, measure and examine the Goods and workmanship and:

(a) check the progress of production and manufacture of the Goods;

(b) check compliance of the Goods with this Contract; and

(c) witness:

(i) the manufacturing of the Goods; and

(ii) any tests carried out in respect of the Goods,

at the Supplier’s premises and the premises of any Manufacturers.

4.4 The Supplier must ensure that the Purchaser is provided with access to the Supplier’s premises or the premises of a Manufacturer and that all facilities required for the Purchaser to test, review, inspect, measure, examine and witness the testing of the Goods and workmanship are made available to the Purchaser at reasonable times agreed by the Supplier beforehand.

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4.5 The Supplier must give the Purchaser and the Representative of the Purchaser at least 10 days notice of the date upon which each of the following events will occur:

(a) the carrying out of any performance tests prior to delivery of the Goods;

(b) final inspection of the Goods prior to delivery of the Goods; and

(c) delivery of the Goods.

4.6 If, as a result of any testing, review, inspection, measuring, examination or witnessing of testing, the Purchaser is not satisfied that the Goods will comply in all respects with this Contract, and the Purchaser informs the Supplier in writing of this dissatisfaction, the Supplier agrees to take such steps as are necessary to ensure the Supplier’s compliance with this Contract.

4.7 If the manufacture of the Goods is delayed as a direct result of the testing, review, inspection, examination or witnessing of testing by the Purchaser under clause 4.3, an extension of time to the Delivery Date(s) equal to the delay caused by the Purchaser will be granted by the Purchaser. This extension of time to the Delivery Date(s) will not apply where the delay is caused by any failure by the Supplier to comply with the terms and conditions of this Contract due to its own reason.

4.8 Any testing, review, inspection, examination or witnessing of testing that the Purchaser undertakes does not relieve the Supplier of the Supplier’s responsibilities under this Contract unless otherwise provided in this Contract.

4.9 The Supplier must ensure that the rights of the Purchaser set out in this clause 4 are included in any subcontract entered into by the Supplier in respect of the Goods (including subcontracts with the Manufacturer) to the extent as reasonable and permitted by applicable laws..

5. PLANT AND EQUIPMENT

5.1 Unless otherwise provided in this Contract, the Supplier must supply, at the Supplier’s own expense, all labour, plant, equipment, tools, appliances or any other property and items the Supplier requires to comply with the Supplier’s obligations under this Contract.

6. INVOICE

6.1 The Supplier must invoice the Purchaser upon receipt of the notice of acceptance of the Goods issued by the Purchaser under clause 10.4. Invoices must be in triplicate and signed by the Supplier. When submitting the invoice under this clause to the person identified in the Contract Details, the Supplier must provide the Purchaser with all relevant records to enable the Purchaser to verify the amount of the invoice and the invoice must be based on the rates and prices set out in schedule 4.

6.2 The Purchaser is responsible for the following costs:

(a) any of the following applicable costs, except to the extent they are incurred as a result of the Supplier’s, or the Supplier’s designated shipper’s, action or inaction:

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(i) customs fees; and

(ii) transportation charges,

within the Delivery Point directly related to the offloading of the Goods; and

(b) All costs for transportation of the Goods from the Delivery Point to any other destination.

6.3 All costs incurred by the Supplier in complying with the Supplier’s obligations under this Contract shall be the responsibility of the Supplier including:

(a) all charges, fees and other costs incurred in relation to the appointment of, and the services provided by, the Import-Export Agent;

(b) all charges for packaging, packing, insurance, transportation (by ocean freight from the departure port to the destination port) ) and delivery of the Goods in accordance with this Contract;

(c) all Taxes payable in the People’s Republic of China as required by applicable tax laws or regulations; and

(d) the costs of all inspection and testing, including quality assurance (to be carried out in accordance with the Specifications) required by clause 4.

6.4 Subject to the Supplier’s compliance with clause 6.1 and subject to clause 6.5, the amount set out in the Supplier’s invoice submitted under clause 6.1 shall be deemed to have been offset against the Prepayment.

6.5 The amount set out in the Supplier’s invoice submitted under clause 6.1 may not be offset against the Prepayment in accordance with clause 8.2 where the Purchaser disputes the invoice in which case:

(a) the undisputed part of the invoice (if any) may be offset against the Prepayment and the balance shall be pending resolution of the Dispute in accordance with clause 23;

(b) if the resolution of the Dispute determines that the Purchaser is to pay the disputed amount, that amount may be offset against the Prepayment upon resolution of the dispute; or

(c) if the resolution of the Dispute determines that the Supplier is to pay the disputed amount, that amount may not be offset against the Prepayment upon resolution of the dispute.

6.6 The applicable rate of interest of 130% of the six-month benchmark lending rate for commercial customers offered by the People’s Bank of China will be payable by the Purchaser in respect of any invoice rendered to the Purchaser by the Supplier under clause 6.1 or any other charges and expenses payable to Supplier by the Purchaser under this Contract which remain due and unpaid or have not been offset against the Prepayment.

7. CONFIRMATION NOTICE

7.1 The Supplier should send the Purchaser a Confirmation Notice within two days of receipt of an Order issued by the Purchaser under clause 2.2.

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7.2 The Confirmation Notice shall contain the following information:

(a) date on which the Goods will be shipped;

(b) expected Delivery Date;

(c) batch number and detailed breakdown of the Goods being shipped; and

(d) the total Price of the Goods to be delivered under the Price Confirmation Notice.

8. TITLE AND RISK

8.1 Title to and risk in the Goods do not pass to the Purchaser until:

(a) it takes delivery of the Goods; and

(b) it inspects and accepts the Goods in accordance with clause [10].

8.2 the Supplier warrants that at the time of delivery of the Goods:

(a) the Supplier has complete ownership of the Goods free of any liens, charges and encumbrances and will provide the Goods to the Purchaser on that basis;

(b) the Purchaser will be entitled to clear, complete and quiet possession of the Goods and

(c) the Purchaser may discharge any liens, charges and encumbrances over the Goods by direct payment to the third party holding such interest in the Goods. the Supplier is responsible for compensating the Purchaser for all these payments up to the full amount within one week of the receipt of a notice from the Purchaser detailing the date, amount and recipient of the payments.

9. DELIVERY

9.1 The Supplier must ensure that the Goods are delivered to the Delivery Point(s) by the Delivery Date(s).

9.2 The Supplier must ensure that the Goods are properly and suitably packed for land and sea transportation and having regard to handling and to the weather conditions while travelling.

9.3 The Supplier must include a packing list in each package of Goods delivered to the Purchaser and provide all other shipping documents requested by the Purchaser from time to time.

9.4 The Goods must be clearly marked with the identification marks specified in this Contract. These identification marks must also be shown on drawings and dispatch and shop lists.

9.5 The Supplier must clearly mark each package of Goods to be delivered to the Purchaser with its gross dead weight and with such marks and shipping numbers as are specified in this Contract or as otherwise requested by the Purchaser by notice in writing.

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10. INSPECTION AND ACCEPTANCE

10.1 The Purchaser will not be deemed to have accepted any Goods (regardless of signing of delivery receipts) until the Purchaser has had a reasonable time to inspect the Goods after delivery and has issued a notice of acceptance under clause 10.4.

10.2 If upon inspection the Purchaser finds any Goods to be Defective Goods, the Purchaser may:

(a) reject the Defective Goods by returning them to the Supplier; or

(b) make good the Defective Goods,

10.3 At the Purchaser’s option and request, the Supplier agrees to:

(a) refund to the Purchaser any payments made by the Purchaser (including any freight charges) in respect of any Defective Goods that the Purchaser rejects;

(b) promptly make good at the Supplier’s sole expense any Defective Goods that the Purchaser rejects under clause 10.2(a); or

(c) reimburse the Purchaser for any reasonable and direct expenses the Purchaser incurs in making good any Defective Goods under clause 10.2(b).

10.4 If the Goods comply with this Contract, the Purchaser will issue the Supplier a notice of acceptance.

10.5 The inspection, testing or acceptance of some or all of the Goods by the Purchaser does not in any way:

(a) change or affect the Supplier’s obligations under this Contract; or

(b) affect the Purchaser’s rights to claim for any damage or loss it may suffer because of the Supplier’s breach of warranty or failure to fulfil any of the Supplier’s other obligations under this Contract.

10.6 If the Purchaser decides to accept any Goods from the Supplier which do not comply with this Contract, this decision does not bind the Purchaser to accept future shipments of Goods which do not comply with this Contract.

10.7 If the Purchaser rejects and returns Defective Goods, the Supplier shall be required to supply replacement Goods of the same Specifications and quantity as the returned Defective Goods within one month of receipt of the notice of rejection of the Defective Goods issued by the Purchaser.

10.8 Aforesaid inspection and acceptance procedure should be completed 30 days after the Delivery Date (s), failing which the Goods delivered shall be deemed as inspected and accepted by the Purchaser unless its failure to inspect such Goods is solely attributable to the Supplier.

11. VARIATIONS

11.1 The Supplier must not vary the Goods except as directed by the Representative of the Purchaser.

11.2 The Representative of the Purchaser may by notice direct the Supplier to alter, amend, omit, add to or otherwise vary the Goods and the Supplier must carry out and be bound by any such variations provided that such variation will not lead to an increase in the production cost for the Goods.

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11.3 The Supplier may use its best reasonable efforts prove any claim it makes that a variation required by the Purchaser increases the production cost for the Goods.

12. EXTENSION OF TIME

12.1 Within seven days of it becoming reasonably evident that delivery of the Goods is likely to be delayed beyond the Delivery Date(s), the Supplier must give notice to the Purchaser setting out full details of the cause of the delay with supporting documents and stating a reasonable period by which the Supplier believes the Delivery Date(s) should be extended.

12.2 Subject to the other provisions of this clause 12, the Supplier are only entitled to an extension of time to the Delivery Date(s) where a delay to the Delivery Date(s) is caused by any of the following events, whether occurring before, on or after the Delivery Date(s):

(a) any act, omission, breach or default by the Purchaser or the Purchaser’s employees, agents or contractors;

(b) the execution of a variation under clause 11, except where that variation is caused by the Supplier’s act, omission, breach or default; or

(c) an Event of Force Majeure.

(d) any other reason reasonably raised by the Supplier and agreed by the Purchaser.

12.3 As soon as practicable after receipt of the notice in clause 12.1, the Purchaser will notify the Supplier as to the period, if any, by which the Delivery Date(s) will be extended.

12.4 Despite any other provisions of this clause 12, the Purchaser may within 5 days of its receipt of Supplier’s notice as set out in Article 12. 1 make an extension to the Delivery Date(s).

12.5 the Supplier is entitled to recover (whether pursuant to this clause 12 or otherwise) any amount representing any kind of indirect or consequential loss or damage including loss of profit, loss of use, loss of contracts, or contribution to head office overheads arising out of or in connection with any extension of time provided such extension of time is caused by the events as set out in Article 12.2 (a).

13. LIQUIDATED DAMAGES

13.1 Unless otherwise provided in this Contract, if the Supplier fails to deliver the Goods to the Purchaser by the Delivery Date(s), the Supplier must pay the Purchaser liquidated damages at the rate stated in the Contract Details, for each day after the Delivery Date(s) up to and including the date of delivery of the Goods or the date this Contract is terminated, whichever occurs first, subject to the limit of liquidated damages set out in the Contract Details.

13.2 Without limiting any other rights the Purchaser may have, the Purchaser may deduct any liquidated damages payable to the Purchaser under clause 13.1 from any amounts payable by the Purchaser to the Supplier under this Contract or any other agreement between the Purchaser and the Supplier.

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13.3 If the Purchaser is entitled to be paid liquidated damages under clause 13.1, this does not limit the right of the Purchaser to enforce any other remedy it may have against the Supplier as permitted by the applicable laws.

14. INDEPENDENT CONTRACTOR

The parties acknowledge that the Supplier is a contractor and not an employee or agent of the Purchaser and that nothing in this Contract creates any agency, partnership, joint venture or other joint relationship between the parties.

15. WARRANTIES

15.1 The Supplier warrants that the Goods:

(a) comply in all respects with this Contract;

(b) are free from defects in design, materials and workmanship;

(c) are manufactured, produced and delivered:

(i) in a proper workmanlike and careful manner, in accordance with recognised good practice; and

(ii) with properly equipped facilities and non-hazardous materials, except as otherwise specified in this Contract; and

(d) meet the Standards and Specifications.

15.2 The Supplier warrants that as at the date of this Contract, to its best knowledge, the Supplier is not aware of any claim for infringement of Intellectual Property Rights or for the breach of any obligations of confidence, arising out of the manufacture, sale, supply or use of the Goods.

15.3 If, during the Warranty Period, the Purchaser finds any of the Goods to be Defective Goods, the Purchaser may, at its option:

(a) return the Defective Goods to the Supplier, or

(b) make good the Defective Goods.

15.4 At request of the Purchaser, during the Warranty Period the Supplier agrees to:

(a) promptly repair or, at the option of the Purchaser, replace, free of charge, any Defective Goods that the Purchaser returns to the Supplier; or

(b) reimburse the Purchaser for any expenses it incurs in making good any Defective Goods or in returning Defective Goods to the Supplier.

15.5 Any repairs or replacement goods provided by the Supplier under this clause 15 will be subject to the remaining Warranty Period or ninety (90) days after the repair or replacement date, whichever arrives earlier.

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15.6 The remedies provided in this clause 15 do not prejudice any other rights which the Purchaser may have against the Supplier in connection with the Supplier’s breach of obligations under this Contract or exclude any other remedies provided by law.

15.7 The warranties contained in this clause 15 survive the expiration or earlier termination or expiry of this Contract.

16. INSURANCE

16.1 The Supplier must take out and maintain during the period of this Contract:

(a) insurance for the Goods up to the time they are accepted by the Purchaser under clause 10.4 for an amount not less than their replacement value or any other reasonable amount agreed upon by both Parties;

(b) a comprehensive public and products liability policy to cover all sums which the Supplier may become legally liable to pay as compensation consequent upon:

(i) death of, or bodily injury (including disease or illness) to, any person; and

(ii) loss of, or damage to, property,

happening anywhere in the country in which the Goods are delivered. The limit of liability provided by the public and product liability policy must be not less than the amount specified in the Contract Details, and such policy must include a cross liability clause;

16.2 The Supplier must notify the Purchaser immediately of any cancellation of a relevant insurance policy and of any change to the policy which affects the interests of the Purchaser.

16.3 If any event occurs which may give rise to a claim involving the Purchaser under any policy of insurance to be taken out by the Supplier under this clause 16 then the Supplier must:

(a) notify the Purchaser within 14 days of that event; and

(b) ensure that the Purchaser is kept fully informed of any subsequent actions and developments concerning the relevant claim.

16.4 At the request of the Purchaser, the Supplier must produce evidence that the Supplier is maintaining the insurances required by this clause 16.

16.5 The Purchaser has the right to take out and maintain any policy of insurance required by this clause 16 if the Supplier fails to do so for no reason.

16.6 The Supplier agrees to reimburse the Purchaser for any expenses the Purchaser incurs in taking out and maintaining any policy of insurance taken out by the Purchaser under clause 16.6.

17. LIABILITY AND INDEMNITIES

17.1 One Party will not be liable to the other Party whether in tort or in contract) for or in respect of any loss or damage of any kind whatsoever arising directly or indirectly from any act or omission (whether negligent or otherwise) on its part or on the part of any of its employees, agents, contractors and/or sub-contractors in connection with or relating to this Contract.

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17.2 The Supplier acknowledges that if the Supplier enters the premises of the Purchaser, the Supplier does so at the Supplier’s own risk. The Supplier must ensure that the Supplier’s employees, agents, contractors and subcontractors (including the Manufacturer and Import-Export Agent) are also aware that they enter premises at their own risk.

The Purchaser acknowledges that if the Purchaser enters the premises of the Supplier, the Purchaser does so at the Purchaser’s own risk. The Purchaser must ensure that the Purchaser’s employees, agents, contractors and sub-contractors are also aware that they enter premises at their own risk.

17.3 Without limitation to the each Party’s rights at law, one Party (the “Indemnifying Party”) will be liable for and indemnify the other Party (the “Indemnified Party”), and the officers, employees and agents of the Indemnified Party against any and all liability and any and all loss or damage of any kind whatsoever arising directly or indirectly from the following, except to the extent that any liability, loss or damage is solely and directly caused by the wilful misconduct or gross negligence of the Indemnified Party or that of the employees, agents, contractors and sub-contractors of the Indemnified Party (other than the Indemnifying Party):

(a) any breach of any warranty or any of the other terms and conditions of this Contract by the Indemnifying Party ;

(b) the illness, injury or death of any of the Indemnifying Party’s employees, agents, contractors and/or subcontractors arising out of or in connection with this Contract;

(c) any loss or damage arising out of, or in connection with, any personal injury, illness or death to any person or damage to any property or any other loss or damage of any kind whatsoever caused or contributed to by:

(i) the Goods; or

(ii) any entry onto, and any activities undertaken on and in, the Indemnified Party’s premises by the Indemnifying Party and/or the Indemnifying Party’s employees, agents, contractors and/or subcontractors;

(d) any negligence, wilful act or omission or misuse of the Goods by the Indemnifying Party and/or any of the Indemnifying Party’s employees, agents, contractors and/or sub-contractors (including the Manufacturer and Import-Export Agent) in connection with this Contract;

(e) any claim made against the Indemnified Party by any of the Indemnifying Party’s employees, agents, contractors and/or sub-contractors in respect of any relevant legislation concerning income tax, workers compensation, annual leave, long service leave, superannuation or any applicable award, determination or agreement of a competent industrial tribunal;

(f) any penalty imposed for breach of an applicable laws in connection with the supply of the Goods;

(g) loss or damage to any plant, equipment, tools, appliances or other property owned, rented or hired by the Indemnifying Party and used in relation to this Contract;

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(h) any claim that the Goods, anything the Indemnifying Party does in supplying the Indemnified Party with the Goods, or the use of the Goods by the Indemnified Party infringes or allegedly infringes the Intellectual Property Rights of any person; and

(i) any other claim which arises out of or in relation to the manufacture, use, sale, supply or import of the Goods or any design for which the Indemnifying Party or any of the Indemnifying Party’s sub-contractors (including the Manufacturer and Import-Export Agent) is responsible.

17.4 Every exemption, limitation, defence, immunity or other benefit contained in this Contract to which the Indemnified Party is entitled will also be held by the Indemnified Party to the benefit of, and will extend to protect, each of the employees, agents, contractors and sub-contractors of the Indemnified Party (excluding the Indemnifying Party, the Indemnifying Party’s officers, the Indemnifying Party’s employees, agents, contractors and sub-contractors including the Manufacturer and Import-Export Agent).

17.5 Each indemnity in this Contract is a continuing obligation separate and independent from the Indemnifying Party’s other obligations and survives expiration or earlier termination or expiry of this Contract.

17.6 It is not necessary for each Party to incur expense or make payment before enforcing a right of indemnity conferred by this Contract.

17.7 Neither party will be liable to the other party in any circumstances for any indirect, economic, special or consequential loss or damage or loss of revenue, loss of production or loss of profit.

17.8 Clause 17.7 does not limit the each Party’s’s liability:

(a) Supplier’s under Article 13.1, and each Party’s liability 17.3(f) and 173(h);

(b) under any other provisions of this Contract which expressly impose a greater liability;

(c) where one party causes bodily injury;

(d) where the one Party’s intentionally, wilfully or by such Party’s grossly negligent acts or omissions causes damage to property;

(e) in cases of fraud, wilful misconduct or illegal or unlawful acts; or

(f) in cases of one Party’s acts or omissions which are contrary to the most elementary rules of diligence which a conscientious party would have followed in similar circumstances.

18. INTELLECTUAL PROPERTY

18.1 The Purchaser retains the Intellectual Property Rights in the Purchaser Technical Materials.

18.2 The Purchaser gives the Supplier a licence to reproduce and use the Purchaser Technical Materials as necessary for the sole purpose of the Supplier complying with the Supplier’s obligations under this Contract. The Supplier must not reproduce, use or otherwise deal with the Purchaser Technical Materials, or allow any other person to do the same, for any other purpose. The Purchaser has the right to revoke this licence at any time by notice in writing to the Supplier.

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18.3 One Party agrees to notify the other Party (the “Infringed Party”) as soon as it becomes aware of any suspected, threatened or actual infringement of any Intellectual Property Rights in the Infringed Party’s Technical Material

18.4 The Supplier agrees to provide all reasonable assistance the Infringed Party may request to protect the Intellectual Property Rights in the Infringed Party’s Technical Materials.

18.5 The obligations in this clause 18 continue after the expiration or earlier termination or expiry of this Contract.

19. CONFIDENTIAL INFORMATION

19.1 One Party (the “Receiving Party”) must not, either during the term of this Contract or at any time thereafter (except to the extent necessary to comply with the Receiving Party’s’s obligations under this Contract) disclose to any person any information of or relating to the other Party (the “Disclosing Party”) or this Contract which has come in the possession of the Receiving Party as a result of this Contract or the negotiations preceding this Contract, including the existence, terms or performance of this Contract.

19.2 Nothing in this Contract prohibits disclosure of information which:

(a) is in the public domain otherwise than as a result of a breach of this clause 20;

(b) is received from a third party provided that it was not acquired directly or indirectly by that third party as a result of a breach of this clause 20; or

(c) is required to be disclosed by law or any government or governmental body, authority or agency having authority over a party.

19.3 The obligations under this clause 19 survive the expiration or earlier termination or expiry of this Contract.

20. TAXES

20.1 Subject to clause 6.2(a) (regarding Taxes incurred as a result of the Supplier’s, or the Supplier’s designated shipper’s or Import-Export Agent’s, action or inaction), the Purchaser will be responsible for payment of any Taxes payable outside the People’s Republic of China in connection with the Contract and its performance.

20.2 The Supplier will be responsible for payment of any Taxes payable in the People’s Republic of China in connection with the Contract and its performance to the extent as required by applicable laws or regulations. The Supplier will immediately provide the Purchaser with documentary evidence of the payment of those Taxes if payment of those Taxes is made by the Supplier on behalf of the Purchaser.

20.3 Each party will provide lawful and reasonable support required by the other in relation to Taxes, including in relation to a party obtaining reimbursement of, or exemption from, Taxes.

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21. FORCE MAJEURE

21.1 If a party is or will be prevented from performing any of its obligations under this Contract; by an Event of Force Majeure, then the party who is or will be so prevented must give notice to the other party of the event or circumstances constituting the Event of Force Majeure and must specify the obligations, the performance of which is or will be prevented. The notice must be given within seven days after the party became aware, (or should have become aware), of the relevant event or circumstances constituting an Event of Force Majeure.

21.2 The affected party is, having given notice under clause 21.1, excused performance of such obligations for so long as such Event of Force Majeure prevents it from performing them.

21.3 An affected party must at all times use all reasonable endeavours to overcome or remove the effects of the Event of Force Majeure as quickly as possible and to minimise any delay in the performance of this Contract as a result of an Event of Force Majeure.

21.4 A party must give notice to the other party when it ceases to be affected by the Event of Force Majeure and when it ceases to be affected it must as soon as reasonably practicable recommence the performance of the affected obligations.

21.5 One Party has no entitlement and the other Party has no liability for:

(a) any costs, losses, expenses, damages during an Event of Force Majeure; and

(b) any costs, losses, expenses, damages in relation to any delay incurred r due to an Event of Force Majeure.

21.6 If any of the Supplier’s sub-contractors (including the Manufacturer and Import-Export Agent) are entitled under any contract or agreement relating to the Goods to relief from force majeure on terms additional to or broader than those specified in this clause 22, such additional or broader force majeure events or circumstances will not excuse the Supplier’s non-performance or entitles the Supplier to relief under this clause 21.

22. TERMINATION

22.1 One Party (the “Non-breaching Party”) may, by notice to the other Party , immediately terminate this Contract if the other Party is in breach of its obligations under this Contract, and such breach is not remedied within seven days of the receipt of a notice from the Non-breaching Party, or if such breach is remedied but repeated at any time after the receipt of such a notice.

22.2 The Non-breaching Party may terminate this Contract at any time by notice to the other Party, without prejudice to the Non-breaching Party’s rights at law or otherwise, if the other Party takes any action or any steps are taken or legal proceedings started for:

(a) the other Party’s winding up, dissolution, liquidation or re-organization, other than to reconstruct or amalgamate while solvent on terms approved by the Purchaser (which approval will not be unreasonably withheld); and/or

(b) the appointment of a controller, administrator, official manager, trustee or similar officer to the other Party or any of the other Party’s revenues and assets. The rights given by this clause 22.2 are in addition to any other rights and may be exercised notwithstanding that there has been no breach of this Contract.

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22.3 When the other Party receives a notice of termination from the Non-breaching Party, the other Party must immediately:

(a) stop work (except to the extent specified in the notice);

(b) take such action as necessary or as the Non-breaching Party directs, for the transfer, protection and preservation of the property of the Non-breaching Party; and

(c) do the other Party’s best to minimise the costs of termination to the Non-breaching Party.

22.4 Upon termination of this Contract pursuant to clauses 22.1 and 22.2, the balance of the Prepayment that has not been used up by the Purchaser shall be returned by the Supplier to the Purchaser within 14 days after the date of termination.

22.5 Any expiration or termination of this Contract does not affect the rights and obligations of the parties under clauses 18 (‘intellectual property’), 1-9 (‘confidential Information’), 23 (‘dispute resolution’) and 29 (‘governing law’).

(a) any expiration or termination of this Contract does not affect:

(i) the rights and obligations of the parties under clauses 15 (‘warranties’), or 17 (‘liability and indemnities’); or

(ii) any rights of the parties which may have accrued before the date of termination.

22.6 Notwithstanding any other contrary provisions hereof, in consideration of the constraints of the manufacturing capacity of the Supplier, Supplier is entitled from time to time during this Contract, extend the Delivery Date to any time it is deemed as reasonable. The Supplier’s such events of extensions shall not be deemed by the Parties as breaches of this Contract in any sense and thus the Supplier bears no liability in whatever nature for the Purchaser. Furthermore, both the Supplier and the Purchaser have the right to early terminate this Contract during any time of this Contract without any liability of breaching this Contract provided the Supplier has returned the Prepayment to the Purchaser within 14 days after the date of early termination in the case that Prepayment has already been paid to the Supplier by the Purchaser according to Article 1.2.

23. DISPUTE RESOLUTION

23.1 If a Dispute arises, the parties must, prior to the initiation of any legal action or arbitration proceedings permitted by this Contract, use their best efforts in good faith to reach a reasonable and equitable resolution of the Dispute.

23.2 If a Dispute arises, the Dispute must be referred to the Representatives appointed by the Supplier and the Purchaser for resolution by written notice specifying that it is a notice given under this clause 23 giving full particulars of the nature and extent of the Dispute.

23.3 If the Dispute is not resolved within 14 days of a referral in accordance with clause 23.2, the Dispute must be referred to a Panel for resolution. Each party must nominate a senior representative for the Panel within five days of the referral to the Panel in accordance with this clause 23.

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23.4 If the Dispute is not resolved by the Panel within 28 days of the referral, the Dispute will be submitted to arbitration proceedings in accordance with this clause 23.

23.5 The Panel will determine its own procedures for the resolution of a Dispute. Unless otherwise agreed by the parties, all discussions involving the Panel will be conducted on a without prejudice basis.

23.6 Decisions of the Panel may only be made by unanimous agreement of the members of the Panel.

23.7 Any decision of the Panel which is recorded in writing and signed by each member of the Panel is binding on the parties.

23.8 Subject to this clause 23, neither party may commence arbitral proceedings unless the parties have undertaken the processes set out in clauses 23.1 to 23.4 and those processes have failed to resolve the Dispute or one of the parties has attempted to follow these processes and the other party has failed to participate.

23.9 Where the Dispute is referred to arbitration at the request of either party upon notice to the other party, it will be conducted at the Hong Kong International Arbitration Centre (“Arbitration Centre”) in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law in force at the date of this Contract (“Rules”). Where the Rules do not deal with any issue arising in connection with the conduct and/or procedure of the arbitration that issue must be resolved in accordance with the law of the place in which the arbitration is held.

23.10 The place of arbitration will be in Hong Kong and the language of the arbitration will be both English and Chinese.

23.11 The arbitration will be by an arbitration tribunal composed of three arbitrators. Each party may appoint one arbitrator. The third arbitrator shall be appointed by the Arbitration Centre. If, within 10 days after the Arbitration Centre has notified each party of its acceptance of the case, the arbitrator to be appointed by either party has not been appointed, then such arbitrator shall be appointed by the Arbitration Centre (whose decision will be final).

23.12 The parties agree that any arbitration award will be final and binding upon the parties and (to the fullest extent permitted by applicable law) the parties agree to abandon their right to any form of appeal or other similar recourse to a court of law or make any application to any court in respect of the arbitration award or any legal issues that arise during the arbitration, with the exception of applications or appeals relating to the enforcement of the arbitration award.

23.13 Despite the existence of a Dispute, the parties must continue to perform their respective obligations under this Contract.

23.14 This clause 23 survives the expiration or earlier termination or expiry of this Contract.

24. ASSIGNMENT AND SUB-CONTRACTING

24.1 The Purchaser is permitted to assign or otherwise deal with its rights under this Contract or allow any interest in them to arise or be varied in each case, without the consent of the Supplier.

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24.2 The Supplier is permitted to assign or otherwise deal with its rights under this Contract or allow any interest in them to arise or be varied in each case, without the consent of the Supplier.

24.3 The Supplier acknowledges that any Manufacturer and Import-Export Agent is a sub-contractor of the Supplier and not (and will not be deemed to be) a sub-contractor of the Purchaser.

24.4 The Supplier acknowledges that no permitted assignment or subcontract of the Supplier’s rights and obligations in any way relieves the Supplier from the performance of any of the Supplier’s obligations under this Contract.

25. NOTICES

25.1 Any notice, approval, consent or other communication in relation to this Contract must be:

(a) in writing and in English;

(b) marked to the attention of the person nominated by the respective parties in the Contract Details for the receipt of notices; and

(c) either:

(i) left at the address set out in the Contract Details;

(ii) sent by prepaid ordinary post (airmail if appropriate) to the address set out in the Contract Details; or

(iii) sent by facsimile to the facsimile number of the addressee set out in the Contract Details.

However, if the addressee has notified a change of person nominated for receipt of notices, address, or fax number, then the communication must be to that person, address or fax number.

25.2 A notice, approval, consent or other communication takes effect from the time it is received unless a later time is specified in it.

25.3 A letter or facsimile is deemed to be received:

(a) in the case of a posted letter, on the fifth day after posting (seventh in the case of a letter sent by airmail); and

(b) in the case of a facsimile, on production of a transmission report by the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the recipient.

26. EXCLUSIVE TERMS

26.1 By executing this Contract either Party agrees to be bound by its terms and conditions.

26.2 Except as may be specifically provided in this Contract, any terms and conditions contained in or relating to any other documents in respect of the Goods are of no effect.

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27. ENTIRE AGREEMENT

27.1 This Contract constitutes the entire agreement of the parties about its subject matter and supersedes all previous agreements, understandings and negotiations on that subject matter.

28. OTHER MATTERS

28.1 Without obtaining prior written approval of the one Party (the “Approving Party”), the other Party must not give, offer to give or receive (directly or indirectly) to or from any person (including any of the officers, employees or agents of the Approving Party ) any bribe, gift, gratuity, commission or other thing of value; as inducement or reward for doing or forbearing to do any action in relation to this Contract or for showing or forbearing to show favour or disfavour to any person in relation to this Contract. the other Party must ensure that its staff, employees, other personnel and sub-contractors (including the Manufacturer and Import-Export Agent) also comply with this obligation.

28.2 Any of the rights of the either Party under this Contract may only be waived by itself in writing signed by its duly authorised Representative.

28.3 This Contract may not be varied except in writing signed by a duly authorised Representative of each of the parties.

28.4 Each Party may exercise a right, remedy or power in any way it considers appropriate.

28.5 If Either Party does not exercise a right, remedy or power at any time, this does not mean that it cannot exercise it later.

28.6 To the extent of any inconsistency between the Contract Details and the General Conditions, then the General Conditions will prevail.

28.7 To the extent of any inconsistency between the General Conditions and any schedules (including any documents referred to in the schedules), then the General Conditions will prevail.

28.8 To the extent of any inconsistency between any translation of this Contract and this Contract, the Contract in English will prevail.

28.9 The Supplier must obtain at the Supplier’s own expense any necessary Licences or permits and comply with applicable laws in supplying the Goods.

28.10 The rights, remedies and powers of the Purchaser under this Contract are in addition to any rights, remedies and powers provided by law,

28.11 If any provision in this Contract is voidable or unenforceable, that provision will be severed and the rest of this Contract will remain in full force and effect.

28.12 This Contract may be signed in any number of counterparts. All of such counterparts taken together constitute the one instrument.

29. GOVERNING LAW

29.1 This Contract is governed by the laws of the place nominated in the Contract Details.

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29.2 The parties agree that the United Nations Convention on Contracts for the International Sale of Goods (adopted at Vienna on 10 April 1980) does not in any way apply to this Contract.

29.3 Subject to clause 23, the parties agree to submit to the non-exclusive jurisdiction of the courts of the place nominated in the Contract Details and the courts of appeal from them.

30. DEFINITIONS AND INTERPRETATION

30.1 In this Contract unless the contrary intention appears:

ArbitrationCentre means the Hong Kong International Arbitration Centre.

CIF shall be interpreted in accordance with Incoterms.

ConfirmationNotice means the notice to be sent by the Supplier to the Purchaser under clause 7 hereof.

Contract means this contract comprising the Contract Details, the General Conditions, the schedules (as applicable pursuant to clause 2.1) and any other documents referred to in the applicable schedules.

ContractDetails means the section of this Contract headed “Contract Details”.

Contract Effective Date means the date set out in the Contract Details.

Contract Expiry Date means the date set out in the Contract Details.

Contract Period means the period set out in the Contract Details.

Day means a period of 24 consecutive hours, beginning and ending at 9:00 a.m Beijing time.

DefectiveGoods means goods which are not in conformity with this Contract or the Head Contract or which are defective in design, performance, workmanship or makeup.

DeliveryDate(s) means the date(s) on which the Supplier is to deliver the Goods as specified in each Order.

DeliveryPoint(s) means the place(s) where the Goods are to be delivered as specified in each Order.

Dispute means any dispute, difference of opinion or disagreement whatsoever between the parties arising out of or in connection with the Goods and/or this Contract (including the termination or validity of this Contract).

EventofForceMajeure means an exceptional event or circumstance:

(a) which is beyond a party’s control;

(b) which such party could not reasonably have provided against before entering into this Contract;

(c) which, having arisen, such party could not reasonably have avoided or overcome;

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(d) which is not substantially attributable to the other party; and

(e) which is limited to the following

(i) war, hostilities (whether war be declared or not), invasion, act of foreign enemies;

(ii) rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war;

(iii) munitions of war, explosive materials, ionising radiation or contamination by radio-activity, except as may be attributable to the Supplier’s or any of the Supplier’s sub-contractors’ (including the Manufacturers and Import-Export Agent) use of such munitions, explosives, radiation or radio-activity; and

(iv) natural catastrophes such as earthquake, hurricane, typhoon or volcanic activity.

GeneralConditions means the clauses set out in the section of this Contract headed “General Conditions”.

Goods means the goods or any part of the goods specified in the Contract Details.

Import-ExportAgent means an agent appointed by the Supplier upon the written consent of the Purchaser who shall assist with the formalities for the export of the Goods from China to the Delivery Point.

Incoterms means the International Rules for the Interpretation of Trade Terms published by the International Chamber of Commerce (2000) Edition.

IntellectualPropertyRights includes the protected rights attaching to inventions, patents, registered designs, trade marks, copyright, circuit layouts and confidential information.

Licences means all licences, qualifications, registrations and other statutory requirements necessary for the supply of Goods under this Contract.

Manufacturer means a manufacturer of the Goods other than the Supplier, from which the Supplier is permitted to source the Goods for delivery under the Contract only if and to the extent permitted in a notice in writing issued by the Purchaser to the Supplier.

Order means an order placed by the Purchaser for the delivery of Goods by the Supplier in accordance with the terms of this Contract.

Panel means the panel established in accordance with clause 23.3.

Price means the price for the Goods specified in the Contract Details and schedule 4.

Prepayment means the amount referred to in clause 1.2

Purchaser means China Global Mining Resources Limited, a company incorporated in British Virgin Islands and having its registered address at Suite 3015, 301F., One International Finance Centre, 1 Harbour View Street, Central, Hong Kong.

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Purchaser Technical Materials means any Technical Materials the Purchaser provides to the Supplier.

Representative means an authorised representative appointed by each party and as notified by each party to the other party in writing from time to time.

Rules means the Arbitration Rules of the United Nations Commission on International Trade Law in force at the date of this Contract.

Specifications means the specifications in relation to the Goods as set out in schedule 3.

Standards means all industry standards and government regulations applicable to the Goods and including the standards specified in schedule 5.

Supplier means Shaanxi Hua Ze Nickel and Cobalt Metals Co., Ltd., a company organized and existing under the laws of the People’s Republic of China and having its legal address at 11/F, High-Tech Building, Eastern Zone, High-Tech Zone, Xi’an Municipality, Shaanxi Province, People’s Republic of China.

Taxes means any and all (present and future) taxes including income taxes, sales taxes, excise duties, stamp duties, customs duties, payroll taxes, withholding taxes, government duties, charges, fees, withholdings, imposts and levies.

Technical Materials includes plans, designs, drawings, engineering information, data, specifications, reports, accounts and any other material specified in this Contract.

Warranty Period means the period set out in the Contract Details.

Written Claim means a written claim given by the Purchaser in accordance with clause 23.4.

30.2 In this Contract unless the contrary appears:

(a) a reference to this Contract or another instrument includes any variation or replacement of either of them;

(b) the singular includes the plural and vice versa;

(c) the word person includes a firm, a body corporate, an unincorporated association or an authority;

(d) a reference to a person includes a reference to the person’s executors, administrators, successors, substitutes (including persons taking by novation) and assigns;

(e) if a period of time is specified and dates from a given day or the day of an actual event, it is to be calculated exclusive of that day;

(f) a reference to a clause is a reference to a clause in this Contract;

(g) a reference to a schedule is a reference to a schedule to this Contract;

(h) a reference to a third person or a third party is a reference to a person who is not a party to this Contract;

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(i) a reference to “dollar” or “$” is a reference to the currency specified in the Contract Details; and

(j) the words “including” and “include” are a reference to “including, but not limited to”.

30.3 Unless inconsistent with any provision of this Contract, the meaning of any terms and the rights and obligations of the parties is as ascribed by Incoterms.

30.4 Headings are inserted for convenience only and do not affect the interpretation of this Contract.

31. EXPORT AGENT

31.1 The export agent is responsible for the application of export custom, and cancellation after verification. (for details in the Import Agent Agreement ).

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SCHEDULE 1-ORDER

TO: Shaanxi Hua Ze Nickel and Cobalt Metals Co., Ltd.

Attention: [insert name of the person nominated by the Supplier for the receipt of notices delivered to the Supplier]

Address/Facsimile number. [insert details nominated by the Supplier for the receipt of notices delivered to the Supplier]

China Global Mining Resources Limited (“CGMR”) hereby places the following order under the Supply Contract between CGMR and Shaanxi Hua Ze Nickel and Cobalt Metals Co., Ltd. (“Hua Ze”) dated (insert date] (the “Contract”) to require Hua Ze to supply and deliver the following goods to CGMR on the terms set out in the Contract:

Description: [please fill out details]

Quantity: [please fill out details]

Delivery Date: [please fill out details]

Delivery Point: [please fill out details]

Dated:
Name:
Position:
Signature:
	For and on behalf of CGMR by its
	authorised representative

SCHEDULE 2 - GOODS

The Goods are electrolytic nickel of the following description and in the following quantities.

Item	Description	Quantity
1	#1 Electrolytic nickel Ni 99.90 (GT/T6516-1997)	40 metric tonnes
2
	Total	40 metric tonnes

SCHEDULE 3 - SPECIFICATIONS

For the purposes of this schedule 3, unless the contrary intention appears, defined terms have the meanings given to them in the Head Contract.

GENERAL

#1 Electrolytic nickel Ni99.90 (State Standard: GB/T 6516-1997)

DIMENSIONS

Normal standard nickel plate in size of 780mm x 850mm x 3-5mm

CONDITIONS OF ACCEPTANCE

Goods shall be accepted when they fulfill the requirements described in these Specifications.

Once the Goods are accepted, a copy of the acceptance certificate shall be forwarded to the Supplier, together with the results of all tests carried out by the inspecting agency.

The certificates of acceptance will also bear all the identifying data of the Goods accepted, the actual weight per batch, and the Inspector’s seal.

HANDLING

The loading and unloading of the Goods is to be carried out using the appropriate lifting equipment to lift the Goods. The number of lifting attachments must be sufficient to prevent deformation of the Goods.

The Goods is to be delivered and held with steel stripes in accordance with the generally accepted industrial requirements in China

STORAGE

The Goods is to be kept in accordance with the generally accepted industrial storage requirements in China.

SCHEDULE 4 – PRICE

Item	Description		Quantity		Unit Price (USD) CIF		Total (USD)
1		#1 Electrolytic nickel Ni 99.90 (GT/T6516-1997)		40 metric tonnes		50,000		2,000,000
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		TOTAL PRICE						2,000,000

SCHEDULE 5-STANDARDS

1. APPLICABLE STATE STANDARDS

The Goods shall implement State Standard. GB/T 6516-1997 as is further described below:

#1 Electrolytic nickel Ni99.90 (standard: GB/T 6516-1997)

2. TESTING AND ACCEPTANCE

The Supplier shall be responsible for performing inspection and testing of the Goods supplied. The Supplier shall perform the specified inspections, sampling, and testing of the Goods supplied in accordance with applicable standards and compare the results of these inspections, samples, and tests with the requirements of the specifications. The Supplier shall promptly submit separate copies of each inspection, sampling, and testing report to the Purchaser.

Reports shall include, but not necessarily be limited to:

•results of the tests and the process used for obtaining the results;

•identification of the product and relevant specifications;

•name and signature of the inspector;

•date of the inspection, sampling, test and report issue.

EX-10.45

Exhibit 10.45

Equity Transfer Heads of Agreement

This Equity Transfer Heads of Agreement sets out the proposed terms for a purchase by China Global Mining Resources Limited or its nominee (the “Purchaser”) of 95% of the equity in Yun County Changjiang Mining Company Limited [   ] (the “Company”) (the “Transaction”).

1The Company

(a) The Company is a limited liability company registered at Taogouhe Village, Baisangguan Town, Yun County, Hubei, People’s Republic of China (“PRC”).

(b) The registered capital of the Company is RMB 0.5 million. The registered capital is fully paid up and not pledged or subject to a court freezing order or claims or disputes.

(c) The Company holds a licence to explore for iron ore in Yun County, Hubei Province (“MiningSite” or the “Mine”), which licence is described in Schedule 1 (“Licence”).

2Purchaser

The Purchaser is China Global Mining Resources Limited with its registered address at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands or its nominee.

3Selling Equityholders

The selling equityholders of the Company (“Selling Equityholders”) the percentage of equity in the registered capital of the Company held by each Selling Equityholder; the equity that each Selling Equityholder is selling to the Purchaser; and the equity to be held by the Selling Equityholder at completion of the Transaction is set out below:

Selling Equityholder	Percentage of  Equity Held			Percentage  of Equity to  be Sold to  the  Purchaser			Percentage of  Equity to be  held following  Completion of  the Transaction
Lu Benzhao [    ] of Room 204, No. 17 Liyuan Village, Huashan District, Maanshan, Anhui with PRC identity card number 340505195112240018		48	%		43	%		5	%
Lu Nan [    ] of Room 204, No. 17 Liyuan Village, Huashan District, Maanshan, Anhui with PRC identity card number 340503198603090238		42	%		42	%		0	%
Jin Yao Hui [    ] of Room 401, Unit 1, Tower 4, Phase 11, Qingshan Street, Xinwu District, Wuhu, Anhui with PRC identity card number 340204198403130717		10	%		10	%		0	%

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4 Transaction

The Purchaser shall purchase 95% of the equity in the Company by purchasing 43% from Lu Benzhao [   ] (“Mr Lu”), 42% from Lu Nan [   ] and 10% from J in Yao Hui [   ]. The price to be paid by the Purchaser to the Selling Equityholders for 95% of the equity in the Company shall be USD 57,000,000 or its RMB equivalent (“Purchase Price”), of which not more than USD 15,000,000 shall be paid in cash and the balance in shares in a listed company as shall be determined by the parties. The Purchase Price shall be reduced by the amount to be paid to Mr Lu Benzhao pursuant to the MSC (as defined below in clause 13). Each Selling Equityholder shall be paid that proportion of the Purchase Price which represents their proportion of equityholding in the Company. Upon completion of the Transaction, the Company shall be converted into a sino-foreign cooperative joint venture with registered capital of 95% being held by the Purchaser and 5% being held by Mr Lu Benzhao.

5Due Diligence and Legal Documentation

(a) The Selling Equityholders shall at all times provide the Purchaser, its representatives and professional advisers with access to the Company’s premises, the Company’s documents and the Mining Site at all reasonable times in order to conduct due diligence and the Selling Equityholders shall keep the Purchaser promptly informed of all matters regarding the Company, the Mining Site and the application for a mining licence that covers the area covered by the Licence.

(b) The Purchaser and the Selling Equityholders shall use their best endeavours to negotiate and execute the following documents in form and substance satisfactory to the Purchaser:

(i) equity transfer agreement (“Equity Transfer Agreement”);

(ii) joint venture contract;

(iii) articles of association;

(iv) management services contract; and

(v) such other transaction documents as the Purchaser may in its sole discretion require,

(collectively, the “Definitive Documents”).

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6Loan for Acquisition of a Licence to Mine at the Mine Site

(a) In consideration for the Selling Equityholders entering into this Equity Transfer Heads of Agreement and if the Selling Equityholders and the Purchaser execute an agreement for the exclusive supply of iron ore from the Mine to the Purchaser (“Exclusive Supply Agreement”) on terms satisfactory to the Purchaser, the Purchaser shall arrange for the Company to receive a loan. The value of the loan shall be calculated on the basis of RMB2 per tonne of iron ore that constitutes the reserve at the Mine Site as certified by an internationally recognised mining consultant, subject to such loan never being more than RMB 1.2 billion (“Licence Loan”) and on terms and conditions to be agreed. Both the Selling Equityholders and the Purchaser acknowledge that the Licence Loan must be used for the sole purpose of paying fees for the acquisition of a licence to mine at the Mine Site.

(b) The Company shall open a new bank account to receive the Licence Loan funds (“Licence Loan Bank Account”). Mr Lu Benzhao and a representative of the Purchaser will be appointed joint signatories of the Bank Account, such that the Licence Loan Bank Account may not be operated without obtaining the signature of Lu Benzhao and the Purchaser’s representative.

(c) If the Purchaser is not registered as a 95% holder of registered capital in the Company prior to receipt of the Licence Loan amount in the Licence Loan Bank Account, then the Selling Equityholders shall procure that the Company restructure its board of directors with five (5) members and that four (4) members be nominated by the Purchaser and one (1) member be appointed by the Selling Equityholders. One (1) of the four (4) members to be nominated by the Purchaser shall also be appointed as the Chairman and Legal Representative of the Company and shall hold the Company chop. The Selling Equityholders and the Company undertake to prepare, sign, file or otherwise all documents necessary to effect the formal appointment and registration of such directors in accordance with PRC laws and regulations.

7 Loan

(a) In consideration for the Selling Equityholders entering into this Equity Transfer Heads of Agreement, the Purchaser shall arrange for the Company to receive a loan on or before 30 June 2007. The value of the loan shall be USD 10 million (“Loan”) and the Selling Equityholders shall pledge their registered capital in the Company to the Purchaser (“Security”).

(b) The Company shall open a new bank account to receive the Loan funds (“BankAccount”). Mr Lu Benzhao and a representative of the Purchaser will be appointed joint signatories of the Bank Account, such that the Bank Account may not be operated without obtaining the signature of Lu Benzhao and the Purchaser’s representative.

(c) The Selling Equityholders and the Company shall be responsible for and cooperate with the Purchaser to obtain registration of the Loan and the Security with all necessary PRC government authorities.

(d) Upon completion of the Transaction, the Purchaser may, in its sole discretion, elect to set-off the Loan against the Purchase Price such that the Purchase Price is reduced by the amount of the Loan.

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8 Exclusivity

(a) In consideration of the Purchaser entering into this Equity Transfer Heads of Agreement, the Selling Equityholders shall not, and shall procure that their affiliates shall not, from the date of signing this Equity Transfer Heads of Agreement and 3 May 2012:

(i) solicit offers from;

(ii) negotiate or hold discussions with; or

(iii) enter into any agreement or arrangement with,

any person other than the Purchaser:

(i) to sell or transfer or encumber any part of their equity interest in the registered capital of the Company; or

(ii) to sell or transfer or lease any assets owned or operated by the Selling Equityholders in connection with the Mining Sites, including the Licences; or

(iii) to borrow, exchange for value, receive as a gift, or otherwise, any amount that is applied to, received or used in connection with the Mines or the Licences.

(b) In consideration of the Purchaser entering into this Equity Transfer Heads of Agreement, the Selling Equityholder shall not, and shall procure that their affiliates shall not, from the date of signing this Equity Transfer Heads of Agreement and 3 May 2012, develop, finance, or mine at the Mine Site or sell, gift, or exchange for value any product derived from the Mine Site, without the consent of the Purchaser.

9Undertakings

9.1Undertakings by the Selling Equityholders

The Selling Equityholders jointly and severally undertake to the Purchaser that each shall:

(a) use their best endeavours to negotiate and execute the Definitive Documents;

(b) provide the Purchaser, its representatives and professional advisers with access to the Company’s premises, the Company’s documents and the Mining Site at all reasonable times in order to conduct due diligence and keep the Purchaser promptly informed of all matters regarding the Company, the Mining Site and the application for a licence to mine at the Mine Site;

(c) rectify any irregularities in the corporate existence of the Company and obtain any approvals, licences, consents, registrations or otherwise that the Purchaser may, in its sole discretion, require the Selling Equityholder or the Company to obtain in connection with the Transaction;

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(d) pay any amounts owing in respect of the Licences and perfect any irregularities in the Company’s title to the Exploration Licence held and obtain any licence, including without limitation a licence to mine at the Mine Site (which hereinafter shall also be referred to as a “Licence”) and any environmental licences, necessary or required by the Company, in the Purchaser’s sole discretion, to exploit the Mine Site for a period of no less than 3 years; and

(e) execute an agreement for the exclusive supply of iron ore from the Mines to the Purchaser (“Exclusive Supply Agreement”) on terms satisfactory to the Purchaser

9.2Undertakings by the Purchaser

The Purchaser undertakes to the Selling Equityholders that it shall:

(a) use its best endeavours to negotiate and execute the Definitive Documents; and

(b) execute the Exclusive Supply Agreement on terms satisfactory to the Purchaser.

10 Damages

(a) Following receipt by the Company of the Loan or contribution by the Purchaser of USD 15,000,000 to the registered capital of Maanshan Global Mining Resources Limited [   ] if the Selling Equityholders breach any of their obligations under this Equity Transfer Heads of Agreement, the Selling Equityholders shall jointly and severally be liable to:

(i) repay the Loan in accordance with its terms;

(ii) repay the Licence Loan in accordance with its terms; and

(iii) pay all direct and indirect costs incurred by the Purchaser in connection with the Transaction including, without limitation, all legal, accounting, finance, tax and technical mining advisor fees.

(b) Following receipt by the Company of the Loan or contribution by the Purchaser of USD 15,000,000 to the registered capital of Maanshan Global Mining Resources Limited [   ] and in the event that the Selling Equityholders:

(i) breach clause 8 (“Exclusivity”) of this Equity Transfer Heads of Agreement; or

(ii) breach clause 9.1(e) (“Exclusive Supply Agreement”) of this Equity Transfer Heads of Agreement; or

(iii) breach the Exclusive Supply Agreement; or

(iv) do not own or cease to own the equity in the Company; or

(v) do not own or cease to own the Mine Site or the Licences; or

(vi) cease business at the Mine Site or cease business or wind-up or deregister the Company; or

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(vii) take any action or fail to take any action that prevents the Selling Equityholders and/or the Purchaser from entering into the Definitive Documents or completing the Transaction contemplated by this Equity Transfer Heads of Agreement,

then the Selling Equityholders shall jointly and severally be liable to:

(A) repay the Loan in accordance with its terms;

(B) repay the Licence Loan in accordance with its terms; and

(C) pay to the Purchaser an amount of USD 27,500,000 (or its RMB equivalent) as liquidated damages (“Liquidated Damages”).

The Liquidated Damages are a genuine pre-estimate of the Purchaser’s loss. Any amount payable by the Selling Equityholders pursuant to this clause 10(b)(B) constitutes liquidated damages only. It shall not affect the validity of other provisions in this Equity Transfer Heads of Agreement or any other remedies that the Purchaser may have against the Selling Equityholders for enforcement of this Equity Transfer Heads of Agreement.

11Conditions Precedent

Conditions precedent to completion of the Transaction and payment of the Purchase Price in the Equity Transfer Agreement shall include (but not be limited to) the following:

(a) The Company has been duly incorporated with fully paid up registered capital;

(b) The Company and the Selling Equityholders have fully cooperated with the Purchaser, its representatives and professional advisers to assist the Purchaser to conduct its (i) technical mining due diligence, (ii) financial due diligence, (iii) legal due diligence and (iv) commercial due diligence in respect of the Company and its rights to explore and exploit the Mining Site and, in each case, there is a successful completion of such due diligence and the results of which shall be satisfactory to the Purchaser;

(c) The execution of the Definitive Documents in form and substance satisfactory to the Purchaser.

(d) Execution of a business plan between the Purchaser and Mr Lu regarding the Company’s future operations, including, without limitation, a plan for future capitalisation of the Company;

(e) Approval by the board of directors of the Purchaser;

(f) All necessary corporate approvals and consents having been obtained, including those of the Company’s board of directors and each of the Selling Equityholders waiving their pre-emptive rights to purchase each other’s equity interest in the Company;

(g) All Chinese government approvals, registrations, filings, consents and permits required for entry into the Definitive Documents, completion of the Transactions contemplated by the Definitive Documents, transfer of the Licences, exploration and mining at the Mine Site, and the entry into, enforceability and performance of the Definitive Documents shall have been obtained and shall be in full force and effect, including without limitation, any environmental or mining approvals or licences;

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(h) The Company holds a valid, effective and fully paid licence to explore and mine iron ore at the Mine Site, subject to such Licence being renewed and/or expanded, for a period of no less than 3 years;

(i) An approval letter having been issued indicating that the Purchaser has received approval to own 95% of the registered capital of the Company;

(j) A business licence having been issued indicating that the Purchaser is the registered owner of 95% of the registered capital of the Company and that the Company’s business licence has a business scope satisfactory to the Purchaser, in its sole discretion;

(k) Receipt of a technical mining report issued by an internationally recognised mining consultant indicating that the iron ore reserves at the Mine Site are no less than 600 million metric tonnes and that the iron ore reserves held at the processing facility are no less than 200 million metric tonnes;

(l) Issue of a valuation report by the Company prepared by a PRC registered valuation firm indicating that the Company’s valuation is no more than the Purchase Price;

(m) Evidence that all taxes and fees incurred in connection with the Licence and operation of the Mine Site have been duly paid as at the date of completion of the Transaction;

(n) Evidence that the Company has good title to all buildings used in connection with the operation of the Mine Site and the processing of the iron ore and has obtained the consent of any landlord to the assignment of any leased premises;

(o) Evidence that the Company has good title to all land used in connection with the operation of the Mine Site and the processing of iron ore or has obtained the consent of any landlord to the assignment of any leased premises;

(p) Evidence that all loans between the Company and any other third party have been unwound;

(q) Receipt of a copy of each of the Selling Equityholders PRC identity cards;

(r) There being no material adverse change in the financial condition or business prospects of the Company or the Mine Site or the Licences or the estimated iron ore reserves of the Mining Site since the conclusion of the technical, financial, legal and commercial due diligence; and

(s) Other conditions precedent to be determined following the Purchaser’s due diligence.

12 Warranties

The Selling Equityholders will provide Warranties in the Equity Transfer Agreement to the Purchaser that shall include, among others:

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(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the People’s Republic of China (“PRC”), with fully paid up registered capital and full corporate power and authority to own, lease and dispose of its assets and properties;

(b) The identity of the Selling Equityholders and their existing equityholding;

(c) The equity to be sold in connection with the Transaction being free from any security interest or third party claims;

(d) The Company conducting business within its authorised business scope;

(e) The Company having all consents, licences and approvals required to conduct its business, including but not limited to a current and valid Exploration Licence [   ] and Mining Licence [   ], which consents, licences and approvals are not subject to cancellation or third party claims as a result of this Transaction or otherwise;

(f) The Company having passed its annual inspection for 2006 and any other inspections conducted by any governmental or administrative authority, including without limitation any regarding mine safety and environmental compliance;

(g) There being no disputes, investigations, litigation, administrative proceedings, arbitration or mediation whether existing, threatened or potential with regard to the Company;

(h) All documents provided by the Company and by the Selling Equityholders to the Purchaser is true, correct and not misleading in any respect;

(i) The Company’s audited balance sheet as at 31 December 2006, represents a true and fair view of the Company’s accounts as at 31 December 2006;

(j) The Company has no undisclosed or contingent liabilities and no outstanding loans;

(k) All tax liabilities incurred by the Company as at the date of completion of the Transaction have been paid in full or accrued sufficiently in the Company’s accounts;

(l) Any resource tax and resource compensation incurred in connection with the Licence and operation of the Mine Site has been fully paid or accrued sufficiently in the Company’s accounts as at the date of completion of the Transaction;

(m) The Company has good title to all buildings used in connection with the operation of the Mine Site or has obtained the consent of any landlord to the assignment of any leased premises;

(n) The Company has good title to all land used in connection with the operation of the Mine Site or has obtained the consent of any landlord to the assignment of any leased premises;

(o) All loans between the Company and any other third party have been unwound;

(p) All environmental liabilities incurred by the Company have been paid in full or accrued sufficiently in the Company’s accounts;

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(q) All salaries, social security payments and any other employee benefits of the Company’s employees have been paid in full or accrued sufficiently in the Company’s accounts;

(r) The Company has complied with all relevant laws and regulations, including without limitation, any laws regarding the environment, mine safety and worker safety;

(s) Selling Equityholders are not aware of any matter which may result in the loss of the Licences or inability to renew the Licences;

(t) Selling Equityholders have not given any guarantees to any Selling Equityholder or any third party; and

(u) Other warranties that would be standard for a transaction of this type, as well as any others that may arise as a result of continuing due diligence by the Purchaser, its representatives and professional advisers.

13 Indemnities

The Selling Equityholders will jointly and severally provide specific indemnities to the Purchaser and the Company in the Equity Transfer Agreement in respect of the following liabilities or obligations incurred by the Company prior to the effective date of transfer of their equity interest to the Purchaser:

(a) taxation;

(b) environmental and land degradation;

(c) mine and worker safety;

(d) all liabilities that are not disclosed to the Purchaser by the Selling Equityholders in writing;

(e) payment of amounts owing in connection with the operation of the Mine Sites, the Licences, leases, licences or land use rights

(f) payment of employee salary and benefits;

(g) breach of any laws or regulations, including without limitation, any with respect to environment, mine safety, worker safety and the built environment; and

(h) other appropriate matters that may become evident in the course of continuing due diligence by the Purchaser, its representatives and professional advisers.

14Management Services Contract

Upon completion of the Transaction, the Purchaser will enter into a management services contract (“MSC”) with Mr Lu Benzhao or his nominee (“Consultant”). The key terms of the MSC are as follows:

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(a) Consultant shall provide operational management services to the Purchaser;

(b) The term of the MSC shall be eight (8) years on a full time basis from completion of the Transaction; and

(c) Consultant shall be responsible for any approvals required for its entry into the MSC and all taxes, whether inside or outside the PRC, associated with payment of the Consultant’s salary.

15 Non-competition

15.1 Non-competition

(a) Following execution of this Equity Transfer Heads of Agreement for a period of five (5) years following completion of the Transaction, the Selling Equityholders and their affiliates shall not directly or indirectly or in any manner whatsoever own or participate or be involved in any way in any business that explores, exploits, processes, purifies, transports, trades or deals in any other way in any mined product in the PRC.

(b) Notwithstanding clause 15.1(a), the Selling Equityholdersmay hold a passive investment of less than 10% equity in listed companies that hold investments in any mined product and hold their investments in respect of Nanjing Sudan Mining Co., Ltd [   ] and assets from Maanshan Zhaoyuan Mining Co., Ltd [   ] and assets from Xiaonanshan Mining Co., Ltd [   ].

15.2Right of First Refusal

Following execution of this Equity Transfer Heads of Agreement, the Selling Equityholders and their affiliates undertake to the Purchaser that if the Selling Equityholders or any other companies in which the Selling Equityholders directly or indirectly control 25% or more of the issued capital take(s) on or invest(s) in any businesses and/or activities, either on their own or in the form of a joint venture, that is engaged in the mining or processing of any mined product, then the Selling Equityholders undertake to grant and will use their best efforts to procure such companies grant to the Purchaser a right of first refusal to acquire such businesses from the Selling Equityholders or such companies, as the case may be.

16Time Schedule

It is the intention of the parties that, unless otherwise agreed among the Purchaser and the Selling Equityholders and the Company, due diligence shall take place from 1 July 2007 to 31 August 2007, that execution of the Definitive Documents and submission of the Definitive Documents to the PRC government authorities for approval and registration purposes shall take place before 30 September 2007.

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17Language, Governing Law and Dispute Resolution

17.1Language

This Equity Transfer Heads of Agreement and the Definitive Documents shall be prepared in English and Chinese, and both languages shall be of equal validity.

17.2Governing Law

This Equity Transfer Heads of Agreement and the Definitive Documents shall be governed by PRC law.

17.3Dispute Resolution

All disputes arising from this Equity Transfer Heads of Agreement and the Definitive Documents shall first be resolved by friendly consultation between the parties, failing which the disputes shall be submitted to arbitration at the Hong Kong International Arbitration Centre for arbitration.

18 General

18.1General Warranties

The Purchaser warrants to the Selling Equityholders that:

(a) it has full legal right, power and authority to enter into this Equity Transfer Heads of Agreement and to perform and comply with its obligations thereunder; and

(b) it has in full force and effect the authorisations necessary for it to enter into this Equity and Assets Transfer Heads of Agreement; and

(c) its obligations under this Equity Transfer Heads of Agreement are legal, valid and binding and are enforceable against it in accordance with its terms; and

(d) it is duly incorporated or established and validly existing at its place of registration and its equity and assets are not pledged or subject to a court freezing order or claims and disputes; and

(e) no litigation, arbitration or administrative proceeding is currently taking place or pending or threatened against it or its assets.

The Selling Equityholders warrant to the Purchaser that:

(a) each has full legal right, power and authority to enter into this Equity Transfer Heads of Agreement and to perform and comply with its obligations thereunder; and

(b) their obligations under this Equity Transfer Heads of Agreement are legal, valid and binding and are enforceable against them in accordance with its terms; and

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(c) no litigation, arbitration or administrative proceeding is currently taking place or pending or threatened against them or their assets.

18.2Successors and assignment

The Purchaser is entitled to assign and/or nominate any of its affiliates to be a party to this Equity Transfer Heads of Agreement or any of the agreements referred to in clause 5.

The Selling Equityholders may not assign or otherwise dispose of their rights or obligations under this Equity Transfer Heads of Agreement without the prior written consent of the Purchaser.

18.3No partnership or agency

Nothing in this Equity Transfer Heads of Agreement shall create, or be deemed to create, a partnership between the parties or a relationship of agent and principal between the parties.

18.4Entire agreement

This Equity Transfer Heads of Agreement contains the entire agreement between the parties with respect to its subject matter, supersedes all previous agreements and understandings between the parties.

18.5Variation and waiver

Unless this Equity Transfer Heads of Agreement expressly states otherwise, a provision of this Equity Transfer Heads of Agreement, or right created under it, may not be waived or varied except in writing signed by the party or parties to be bound. Any waiver by the Purchaser of a breach of any provision of this Equity Transfer Heads of Agreement shall not be considered as a waiver of any subsequent breach of the same or any other provision.

18.6Copies

This Equity and Assets Transfer Heads of Agreement shall be executed in six copies in English and six copies in Chinese.

18.7Foreign Exchange

Where any amounts are to be converted between USD and RMB, the relevant exchange rate shall be the middle rate published by the People’s Bank of China on the relevant date.

18.8Partial invalidity

If at any time any provision of this Equity Transfer Heads of Agreement is or becomes illegal, invalid or unenforceable in any respect in any jurisdiction, the remaining provisions of this Equity Transfer Heads of Agreement shall not in any way be affected or impaired thereby.

18.9Amendment

This Equity Transfer Heads of Agreement may only be amended in writing signed by the parties.

12

18.10Binding effect

This Equity Transfer Heads of Agreement shall be binding on all the parties from the date first set out on the execution page.

13

Executed on 4 May 2007 by the following
EXECUTED by CHINA GLOBAL	)
MINING RESOURCES LIMITED	)
by its authorised director:	)
	)
	)
	)	For and on behalf of
Signature of director	)	CHINA GLOBAL MINING RESOURCES LIMITED
	)	[   ]
	)
	)	/s/
Name of director (block letters)	)	Authorised Signature(s)
	)
	)
	)
SIGNED by LU, BENZHAO [   ]:	)
	)
	)
/s/	)	/s/
Signature	)	Witness Signature
	)
	)
	)
Print Name	)
	)
	)
	)
SIGNED by Lu Nan [   ]	)
	)
	)
/s/	)
Signature	)
	)
	)
	)
Print Name	)
SIGNED by Jin Yao Hui [   ]	)
	)
	)
/s/	)
Signature	)
	)
	)
	)
Print Name	)

14

SCHEDULE 1

Exploration Licence

	Exploration Licence
Licence number	4200000630337
Licence holder	Hubei Yun County Changjiang Mining Company Limited
Project name	General exploration of Laowan Iron Mine in Yun County, Hubei Province
Geological location	Yun County, Hubei Province
Plot Number	I49E019012, I49E019013
Exploration area	17.78 km2
Exploration unit	No. 4 Geological Team of Henan Coloured Metal Geological Mining Bureau
Licence period	26 Oct 2006 to 25 Oct 2007

15

SCHEDULE 2

Joint Venture Contract

1. Registered Capital	Within 30 days of the issue of the Company’s amended business licence evidencing that it is registered as a sino-foreign joint venture, the Purchaser shall contribute RMB100 million and Mr Lu shall contribute RMB5,000,000 to the registered capital of the Company.
2. Board of Directors	(a)The Board of Directors of the Company (the “Board”) shall be comprised of 5 directors. Of these 5 directors, 4 directors are to be appointed by the Purchaser (one of whom shall be appointed as Chairman) and 1 director is to be nominated by the Mr Lu Benzhao. (b)All Board resolutions other than those that are required under PRC law to be passed unanimously shall be passed by a simple majority of the directors. (c)Quorum for meetings of the Board shall be two-thirds of all directors.
3. Disposal of Equity	Pre-emptive rights shall apply to equityholders seeking to dispose of equity to third parties. Mr Lu shall waive his pre-emptive rights against the Purchaser with respect to the transfer of equity by the Purchaser to its affiliate.
4. Future Financing	(a)Additional Capital Increase by both Parties If the Company requires capital, then the parties shall contribute capital to the Company in proportion to their respective equityholdings in the Company. However, if either party is not in a position or not willing to make such additional capital contribution, the party that does not contribute additional capital shall have their equityholding diluted and each party shall take all steps necessary to ensure that the adjustment and dilution are approved and registered with the relevant government authorities. (b)Bank Loans and Guarantees If the Company requires capital, then the parties may borrow that capital from a bank. If the Company borrows money from a bank, then each equityholder shall be responsible for providing a guarantee for that proportion of the loan that represents their equityholding in the Company.

16

EX-10.46

Exhibit 10.46

Equity and Asset Transfer Heads of Agreement

This Equity and Asset Transfer Heads of Agreement sets out the proposed terms for a purchase by China Global Mining Resources Limited or its nominee (the “Purchaser”) of equity in Nanjing Sudan Mining Co., Ltd [  ] and assets from Maanshan Zhaoyuan Mining Co., Ltd [  ] and assets from Xiaonanshan Mining Co., Ltd [  ] (the “Transactions”).

1 Sellers

(a)The Sellers are:

(i) Lu Benzhao [  ] of Room 204, No. 17 Liyuan Village, Huashan District, Maanshan, Auhui;

(ii) Lu Nan [  ] of Room 204, No. 17 Liyuan Village, Huashan District, Maanshan, Auhui;

(iii) Maanshan Zhaoyuan Mining Co., Ltd [  ] (“Zhaoyuan”) of No. 6 Hongqinan Road, Economic and Technology Development Zone, Maanshan, Anhui; and

(iv) Xiaonanshan Mining Co., Ltd [  ] (“Xiaonanshan”) of Xiaonanshan, Huoli Town, Huashan District, Maanshan, Anhui,

(collectively, the “Sellers”).

(b) The Sellers hold licences to mine iron ore at Maanshan and Xiaonanshan (“Mining Sites” or the “Mines”), which licences include those described in Schedule 1 (“Licences”).

2 Purchaser

The Purchaser is China Global Mining Resources Limited with its registered address at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands or its nominee.

3 Transactions

The Purchaser shall purchase:

(a) 52% of the registered capital of Nanjing Sudan Mining Co., Ltd [  ] of Danyang (Hengxi) Town; Jiangning District, Nanjing, Jiangsu (“Sudan”) from Mr Lu Benzhao; and

(b) 48% of the registered capital of Sudan from Mr Lu Nan; and

(c) the assets described in Schedule 1 from Zhaoyuan or Mr Lu Benzhao or Mr Lu Nan, as the case may be, along with any other assets owned or used in connection with such mining rights (including any renewal, variation or expansion of any Licence, which shall also be referred to as “Licences”) and the operation of the Mine Site; and

(d) the assets described in Schedule 1 from Xiaonanshan or Mr Lu Benzhao or Mr Lu Nan, as the case may be, along with any other assets owned or used in connection with such mining rights (including any renewal, variation or expansion of any Licence, which shall also be referred to as “Licences”) and the operation of the Mine Site; and

(e) management services from Mr Lu Benzhao or his nominee, as detailed in clause 1l of this Equity and Asset Transfer Heads of Agreement.

The Sellers acknowledge the receipt and sufficiency from the Purchaser of a deposit in the amount of HKD 20 million (“First Deposit”).

Within 10 working days of the execution of the Exclusive Supply Agreement (as defined in clause 6.1 (f) below), the Purchaser shall pay to the Sellers a further deposit of HKD 20 million (“Second Deposit”).

The First Deposit and the Second Deposit and any other amounts (“Additional Amounts”) that are paid by the Purchaser to the Sellers prior to completion of the Transactions shall be set-off against the Purchase Price to be paid to the Seller and the Purchase Price shall be correspondingly reduced by the First Deposit, the Second Deposit and any Additional Amounts.

The price to be paid by the Purchaser to the Sellers shall be USD 66 million or its RMB equivalent (“Purchase Price”), which shall be paid in cash or in shares in a listed company as shall be determined by the parties. The Purchase Price shall be reduced by the amount to be paid to Mr Lu Benzhao pursuant to the MSC (as defined below in clause 11).The portion of the Purchase Price to be paid to each Seller shall be specified in the Definitive Documents.

4 Exclusivity

(a) In consideration of the Purchaser entering into this Equity and Asset Transfer Heads of Agreement, the Sellers and Sudan shall not, and shall procure that their affiliates shall not, from the date of signing this Equity and Asset Transfer Heads of Agreement and 3 May 2012:

(i) solicit offers from;

(ii) negotiate or hold discussions with; or

(iii) enter into any agreement or arrangement with,

any person other than the Purchaser:

(i) to sell or transfer or encumber any part of their equity interest in the registered capital of Sudan, Zhaoyuan and Xiaonanshan; or

(ii) to sell, transfer or lease any assets owned or operated by the Sellers or Sudan in connection with the Mining Sites, including the Licences; or

(iii) to borrow, exchange for value, receive as a gift, or otherwise, any amount that is applied to, received or used in connection with the Mines or the Licences.

(b) In consideration of the Purchaser entering into this Equity and Asset Transfer Heads of Agreement the Sellers shall not, and shall procure that their affiliates shall not, from the date of signing this Equity and Asset Transfer Heads of Agreement, develop, finance, or mine at the Mine Site or sell, gift, or exchange for value any product derived from the Mine Site, without the consent of the Purchaser.

5 Due Diligence and Legal Documentation

(a) The Sellers and Sudan shall provide the Purchaser, its representatives and professional advisers with access to their premises, their documents and the Mining Sites at all reasonable times in order to conduct due diligence and the Sellers and Sudan shall keep the Purchaser promptly informed of all matters relevant to the Transactions, including without limitation the Licences, the Mining Sites and Sudan.

(b) The Purchaser and the Sellers shall use their best endeavours to negotiate and execute the following documents in form and substance satisfactory to the Purchaser:

(i) equity transfer agreement;

(ii) asset transfer agreements;

(iii) management services contract; and

(iv) such other transaction documents as the Purchaser may, in its sole discretion require,

(collectively, the “Definitive Documents”).

6 Undertakings

6.1Undertakings by the Sellers

The Sellers undertake, and shall procure that their affiliates undertake, to the Purchaser that each shall:

(a) use their best endeavours to negotiate and execute the Definitive Documents;

(b) provide the Purchaser, its representatives and professional advisers with access to their premises, their documents and the Mining Sites at all reasonable times in order to conduct due diligence and keep the Purchaser promptly informed of all matters relevant to the Transaction including, without limitation, the Licences, the Mining Sites and Sudan.

(c) rectify any irregularities in the corporate existence of Sudan, Zhaoyuan and Xiaonanshan and obtain any approvals, licences, consents, registrations or otherwise that the Purchaser may, in its sole discretion, require the Sellers or Sudan to obtain in connection with the Transactions;

(d) pay any amounts owing in respect of the Licences and perfect any irregularities in the Sellers' title to the Licences held and obtain any licence, including without limitation any environmental licences, necessary or required by the Sellers, in the Purchaser's sole discretion, to exploit the Mine Sites;

(e) conduct any restructuring or reorganisation required by the Purchaser, in its sole discretion, or the assets to be sold by the Sellers in connection with the Transactions; and

(f) execute an agreement for the exclusive supply of iron ore from the Mines to the Purchaser (“Exclusive Supply Agreement”) on terms satisfactory to the Purchaser.

6.2Undertakings by the Purchaser

The Purchaser undertakes to the Sellers that it shall:

(a) use its best endeavours to negotiate and execute the Definitive Documents; and

(b) execute the Exclusive Supply Agreement on terms satisfactory to the Purchaser.

7 Damages

(a) In the event that the Sellers or Sudan breach any of their obligations under this Equity and Assets Transfer Heads of Agreement, the Sellers and Sudan shall jointly and severally be liable to:

(i) refund to the Purchaser the First Deposit, the Second Deposit and Additional Amount (if any) referred to in clause 3;

(ii) pay damages to the Purchaser in the amount of two times the First Deposit and two times the Second Deposit and two times the Additional Amount (if any) referred to in clause 3; and

(iii) pay all direct and indirect costs incurred by the Purchaser in connection with the Transactions including, without limitation, all legal, accounting, finance, tax and technical mining advisor fees.

(b) In the event that the Sellers or Sudan:

(i) breach clause 4 (“Exclusivity”) of this Equity and Asset Transfer Heads of Agreement; or

(ii) breach clause 6.1(f) (“Exclusive Supply Agreement”) of this Equity and Asset Transfer Heads of Agreement; or

(iii) breach the Exclusive Supply Agreement;

(iv) do not own or cease to own the equity in Sudan, Xiaonanshan and Zhaoyuan;

(v) do not own or cease to own the Mine Site or the Licences;

(vi) cease business at the Mine Site or cease business or wind-up or deregister Sudan, Xiaonanshan and Zhaoyuan or

(vii) take any action or fail to take any action that prevents the Seller and/or the Purchaser from entering into the Definitive Documents or completing the Transactions contemplated by this Equity and Asset Transfer Heads of Agreement,

then the Sellers and Sudan shall jointly and severally be liable to:

(A) refund to the Purchaser the First Deposit, the Second Deposit and Additional Amount (if any) referred to in clause 3; and

(B) pay to the Purchaser an amount of USD 33 million (or its RMB equivalent) as liquidated damages (“Liquidated Damages”).

The Sellers acknowledge that the Liquidated Damages are a genuine pre-estimate of the Purchaser's loss. Any amount payable by the Sellers or Sudan pursuant to this clause 7(b)(B) constitutes liquidated damages only. It shall not affect the validity of other provisions in this Equity and Assets Transfer Heads of Agreement or any other remedies that the Purchaser may have against the Sellers and Sudan for enforcement of this Equity and Assets Transfer Heads of Agreement.

8 Conditions Precedent

Conditions precedent to completion of the Transactions and payment of the Purchase Price shall be detailed in the Definitive Documents and shall include, without limitation, where applicable, the following:

(a) Sudan, Zhaoyuan and Xiaonanshan have been duly incorporated with fully paid up registered capital;

(b) The Sellers and Sudan have fully cooperated with the Purchaser, its representatives and professional advisers to assist the Purchaser to conduct its (i) technical mining due diligence, (ii) financial due diligence, (iii) legal due diligence and (iv) commercial due diligence in respect of the Transactions and, in each case, there is a successful completion of such due diligence and the results of which shall be satisfactory to the Purchaser;

(c) The execution of the Definitive Documents in form and substance satisfactory to the Purchaser as the Purchaser may in its sole discretion require.

(d) Approval by the board of directors of the Purchaser;

(e) All necessary corporate approvals and consents having been obtained, including those of the board of directors of Zhaoyuan and Xiaonanshan

(f) each of Lu Benzhao and Lu Nan waiving their pre-emptive rights to purchase each other's equity interest in Sudan;

(g) All Chinese government approvals, registrations, filings, consents and permits required for entry into the Definitive Documents, completion of the Transactions contemplated by the Definitive Documents, transfer of the Licences, mining at the Mine Sites, processing of iron ore at Sudan's facility and the entry into, enforceability and performance of the Definitive Documents shall have been obtained and shall be in full force and effect, including without limitation, any environmental or mining approvals or licences;

(h) The Sellers, where applicable, hold valid, effective and fully paid licences to explore and mine iron ore at the Mine Sites, subject to such Licences being renewed and/or expanded, where applicable, for a period of no less than 3 years;

(i) An approval letter having been issued indicating that the Purchaser has received approval to own 100% of the registered capital of Sudan;

(j) A business licence having been issued indicating that the Purchaser is the registered owner of 100% of the registered capital of Sudan and that Sudan's business licence has a business scope satisfactory to the Purchaser, in its sole discretion;

(k) Receipt of a technical mining report issued by an internationally recognised mining consultant indicating that the iron ore reserves at the Mine Site pursuant to the Licence held by Zhaoyuan are 9,600,000 metric tonnes and at the Mine Site pursuant to the Licence held by Xiaonanshan are 1,000,000 metric tonnes;

(l) Issue of a valuation report on Sudan and the assets to be sold by Xiaonanshan and Zhaoyuan prepared by a PRC registered valuation firm indicating that the cumulative valuation of the Transactions is no more than the Purchase Price or its RMB equivalent;

(m) Evidence that all taxes and fees incurred in connection with the Licences and operation of the Mine Sites have been duly paid as at the date of completion of the relevant Transaction;

(n) Evidence that the Sellers have good title to all buildings used in connection with the operation of the Mine Sites or have obtained the consent of any landlord to the assignment of any leased premises;

(o) Evidence that the Sellers have good title to all land used in connection with the operation of the Mine Sites or have obtained the consent of any landlord to the assignment of any leased premises;

(p) Evidence that all loans between the Sellers, Sudan and any other third party have been unwound;

(q) Receipt of a copy of the Sellers PRC identity cards or business licences, as the case may be;

(r) There being no material adverse change in the financial condition or business prospects of Sudan or the Mining Sites or the Licences or the estimated iron ore reserves of the Mining Sites since the conclusion of the technical, financial, legal and commercial due diligence; and

(s) Other conditions precedent to be determined following the Purchaser's due diligence.

9 Warranties

The Sellers and the Company will provide Warranties to the Purchaser in the Definitive Documents that shall include, where applicable, among others:

(a) Sudan, Zhaoyuan and Xiaonanshan are corporations duly organized, validly existing and in good standing under the laws of the People's Republic of China (“PRC”), with fully paid up registered capital and full corporate power and authority to own, lease and dispose of their assets and properties;

(b) The percentage ownership of the registered capital of Sudan held by the Sellers;

(c) The Sellers having title to the Licences free from any security interest or third party claims;

(d) The equity and assets to be sold in connection with the Transactions being free from any security interest or third party claims;

(e) Sudan conducting business within its authorised business scope;

(f) Sudan having all consents, licences and approvals required to conduct its business, which consents, licences and approvals are not subject to cancellation or third party claims as a result of these Transactions or otherwise;

(g) Sudan, Zhaoyuan and Xiaonanshan having passed their annual inspection for 2006 and any other inspections conducted by any governmental or administrative authority, including without limitation any regarding mine safety and environmental compliance;

(h) There being no disputes, investigations, litigation, administrative proceedings, arbitration or mediation whether existing, threatened or potential with regard to the Sellers and Sudan;

(i) All documents provided by the Sellers and Sudan to the Purchaser is true, correct and not misleading in any respect;

(j) Sudan, Zhaoyuan and Xiaonanshan have no undisclosed or contingent liabilities and no outstanding loans;

(k) All tax liabilities incurred by the Sellers and Sudan as at the date of completion of the relevant Transaction have been paid in full or accrued sufficiently in their accounts;

(l) Any resource tax and resource compensation incurred in connection with the Licences and operation of the Mine Sites ha been fully paid as at the date of completion of the relevant Transaction or accrued sufficiently in their accounts;

(m) The Sellers have good title to all buildings used in connection with the operation of the Mine Sites or have obtained the consent of any landlord to the assignment of any leased premises;

(n) The Sellers have good titled to all land used in connection with the operation of the Mine Sites or have obtained the consent of any landlord to the assignment of any leased premises;

(o) All loans between the Sellers, Sudan and any other third party have been unwound;

(p) All environmental liabilities incurred by the Sellers and Sudan have been paid in full or, where applicable, accrued sufficiently in their accounts;

(q) All salaries, social security payments and any other employee benefits of Sudan, Zhaoyuan and Xiaonanshan employees have been paid in full or accrued sufficiently in their accounts;

(r) Sellers and Sudan have complied with all relevant laws and regulations, including without limitation, any laws regarding the environment, mine safety and worker safety;

(s) Sellers are not aware of any matter which may result in the loss of the Licences or inability to renew the Licences;

(t) Sellers have not given any guarantees to any Seller or any third party; and

(u) Other warranties that would be standard for a transaction of this type, as well as any others that may arise as a result of continuing due diligence by the Purchaser, its representatives and professional advisers.

10 Indemnities

The Sellers shall provide specific indemnities to the Purchaser in the Definitive Documents, where applicable, in respect of the following liabilities or obligations incurred by the Sellers and Sudan prior to completion of the Transaction:

(a) taxation;

(b) environmental and land degradation;

(c) mine and worker safety;

(d) all liabilities that are not disclosed to the Purchaser by the Sellers in writing;

(e) payment of amounts owing in connection with the operation of the Mine Sites, the Licences, leases, licences or land use rights;

(f) payment of employee salary and benefits;

(g) breach of any laws or regulations, including without limitation, any with respect to environment, mine safety, worker safety and the built environment;

(h) breach of any warranties provided in the Definitive Documents; and

(i) other appropriate matters that may become evident in the course of continuing due diligence by the Purchaser, its representatives and professional advisers.

11 Management Services Contract

Upon completion of the Transactions, the Purchaser will enter into a management services contract (“MSC”) with Mr Lu Benzhao or his nominee (“Consultant”). The key terms of the MSC are as follows:

(a) Consultant shall provide operational management services to the Purchaser;

(b) the term of the MSC shall be eight (8) years on a full time basis from completion of the Transaction; and

(c) Consultant shall be responsible for any approvals required for its entry into the MSC and all taxes, whether inside or outside the PRC, associated with payment of the Consultant's salary.

12 Non-competition

12.1Non-competition

(a) Following execution of this Equity and Asset Transfer Heads of Agreement for a period of five (5) years following completion of the Transactions, the Sellers and their affiliates shall not directly or indirectly or in any manner whatsoever own or participate or be involved in any way in any business that explores, exploits, processes, purifies, transports, trades or deals in any other way in any mined product in the PRC.

(b) Notwithstanding clause 12.1(a), the Sellers may hold a passive investment of less than 10% equity in listed companies that hold investments in any mined product and hold their investments in respect of these Transactions and hold their investment in Yun County Changjiang Mining Company Limited [  ]

12.2Right of First Refusal

Following execution of this Equity and Asset Transfer Heads of Agreement, the Sellers and their affiliates undertake to the Purchaser that if the Sellers or any other companies in which the Sellers directly or indirectly control 25% or more of the issued capital take(s) on or invest(s) in any businesses and/or activities, either on their own or in the form of a joint venture, that is engaged in the mining or processing of any mined product, then the Sellers undertake to grant and will use their best efforts to procure such companies to grant to the Purchaser a right of first refusal to acquire such businesses from the Sellers or such companies, as the case may be.

13 Time Schedule

It is the intention of the parties that, unless otherwise agreed among the Purchaser and the Sellers, due diligence shall take place from the date of signing this Equity and Assets Transfer Heads of Agreement , that execution of the Definitive Documents and submission of the Definitive Documents to the PRC government authorities for approval and registration purposes shall take place before 30 May 2007.

14 Language, Governing Law and Dispute Resolution

14.1Language

This Equity and Assets Transfer Heads of Agreement and the Definitive Documents shall be prepared in English and Chinese, and both languages shall be of equal validity.

14.2Governing Law

This Equity and Assets Transfer Heads of Agreement and the Definitive Documents shall be governed by PRC law.

14.3Dispute Resolution

All disputes arising from this Equity and Assets Transfer Heads of Agreement and the Definitive Documents shall first be resolved by friendly consultation between the parties, failing which the disputes shall be submitted to arbitration at the China International Economic Trade and Arbitration Commission in Beijing for arbitration.

15 General

15.1General Warranties

The Purchaser and Sudan, Zhaoyuan and Xiaonanshan warrant to each other party to this Equity and Assets Transfer Heads of Agreement that:

(a) it has full legal right, power and authority to enter into this Equity and Assets Transfer Heads of Agreement and to perform and comply with its obligations thereunder; and

(b) it has in full force and effect the authorisations necessary for it to enter into this Equity and Assets Transfer Heads of Agreement; and

(c) its obligations under this Equity and Assets Transfer Heads of Agreement are legal, valid and binding and are enforceable against it in accordance with its terms; and

(d) it is duly incorporated or established and validly existing at its place of registration and its equity and assets are not pledged or subject to a court freezing order or claims and disputes; and

(e) no litigation, arbitration or administrative proceeding is currently taking place or pending or threatened against it or its assets.

Mr Lu Benzhao and Mr Lu Nan warrant to each other party to this Equity Transfer Heads of Agreement that:

(a) each has full legal right, power and authority to enter into this Equity and Assets Transfer Heads of Agreement and to perform and comply with their obligations thereunder; and

(b) their obligations under this Equity and Assets Transfer Heads of Agreement are legal, valid and binding and are enforceable against them in accordance with their terms; and

(c) no litigation, arbitration or administrative proceeding is currently taking place or pending or threatened against them or their assets.

15.2Successors and assignment

The Purchaser is entitled to assign and/or nominate any of its affiliates to be a party to this Equity and Assets Transfer Heads of Agreement or any of the Definitive Documents.

The Sellers may not assign or otherwise dispose of their rights or obligations under this Equity and Assets Transfer Heads of Agreement without the prior written consent of the Purchaser.

15.3No partnership or agency

Nothing in this Equity and Assets Transfer Heads of Agreement shall create, or be deemed to create, a partnership between the parties or a relationship of agent and principal between the parties.

15.4Entire agreement

This Equity and Assets Transfer Heads of Agreement contains the entire agreement between the parties with respect to its subject matter, supersedes all previous agreements and understandings between the parties.

15.5Variation and waiver

Unless this Equity and Assets Transfer Heads of Agreement expressly states otherwise, a provision of this Equity and Assets Transfer Heads of Agreement, or right created under it, may not be waived or varied except in writing signed by the party or parties to be bound. Any waiver by the Purchaser of a breach of any provision of this Equity and Assets Transfer Heads of Agreement shall not be considered as a waiver of any subsequent breach of the same or any other provision.

15.6Copies

This Equity and Assets Transfer Heads of Agreement shall be executed in six copies in English and six copies in Chinese.

15.7Foreign Exchange

Where any amounts are to be converted between USD and RMB, the relevant exchange rate shall be the middle rate published by the People's Bank of China on the relevant date.

15.8Partial invalidity

If at any time any provision of this Equity and Assets Transfer Heads of Agreement is or becomes illegal, invalid or unenforceable in any respect in any jurisdiction, the remaining provisions of this Equity and Assets Transfer Heads of Agreement shall not in any way be affected or impaired thereby.

15.9Amendment

This Equity and Assets Transfer Heads of Agreement may only be amended in writing signed by the parties.

15.10Binding effect

This Equity and Assets Transfer Heads of Agreement shall be binding on all the parties from the date first set out on the execution page.

Executed on 4 May 2007 by the following

EXECUTED by CHINA GLOBAL	)
MINING RESOURCES LIMITED	)
by its authorised director:	)
	)	[AFFIX CHOP]
	)
	)		For and on behalf of
Signature of Director	)		CHINA GLOBAL MINING RESOURCES LIMITED
	)		[  ]
	)
	)		/s/
Name of Director (block letters)	)		Authorised Signature(s)
	)
	)
	)
SIGNED by LU BENZHAO [  ]:	)
	)
	)
/s/	)		/s/
Witness Signature	)		Signature
	)
	)
SK Bates	)
Print Name	)		Print Name
	)
	)
	)
SIGNED by LU NAN [  ]	)
	)
	)
	)		/s/
Witness Signature	)		Signature
	)
	)
	)
Print Name	)		Print Name

SIGNED by NANJING SUDAN	)
MINING CO., LTD [  ]	)
by its Legal Representative:	)
	)
	)	[AFFIX CHOP]
/s/	)
Signature of Legal Representative	)
	)
	)
	)
	)
Name of Legal Representative (block	)
Letters) Print	)
SIGNED by MAANSHAN	)
ZHAOYUAN MINING CO., LTD	)
[  ] by its Legal Representative:	)
	)
	)	[AFFIX CHOP]
/s/	)
Signature of Legal Representative	)
	)
	)
	)
	)
Name of Legal Representative (block	)
Letters) Print	)
SIGNED by XIAONANSHAN	)
MINING CO., LTD [  ]	)
by its Legal Representative:	)
	)
	)	[AFFIX CHOP]
/s/	)
Signature of Legal Representative	)
	)
	)
	)
	)
Name of Legal Representative (block	)
Letters) Print	)

SCHEDULE 1

Licences

Mining Licences

Number	3400000420105	3400000620001
Licences owner	Maanshan, Zhaoyuan Mining Company Limited	Maanshan, Xiaonanshan Mining Company Limited
Address	Maanshan City, Jiashan Town, Matang Village	Maanshan City, Xiaonanshan
Name of mine	Maanshan City, Zhaoyuan Mining Company Limited, Matang iron ore mine	Maanshan City, Xiaonanshan Mining Company Limited, Xiaonanshan Iron ore mine
Type of mine	Iron ore mine	Iron ore mine
Type of operations	Open cut operations	Open cut operations
Size of operations	500,000 tonnes per year	100,000 tonnes per year
Area	0.7886 square kilometres	0.1379 square kilometres
Depth	45 to -50 metres deep	85 to 5 metres deep
Validity	May 2004 to May 2021	January 2006 to January 2009
Reference numbers	1,3503084.00,40363236.00 2,3503074.00,40364027.00 3,3503998.00,40364039.00 4,3504008.00,40363249.00 5,3503660.00,40363162.00 6,3503333.00,40363034.00	1,3506130.00,40368260.00 2,3506216.00,40368310.00 3,3506347.00,40368417.00 4,3506335.00,40368575.00 5,3506234.00,40368553.00 6,3506183.00,40368587.00 7,3506093.00,40368610.00 8,3506032.00,40368599.00 9,3505883.00,40368537.00 10,3505882.00,40368342.00 11,3505894.00,40368272.00 12,3506045.00,40368191.00

EX-21

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

(1) AIQ, Inc., 100% owned by Wits Basin Precious Minerals Inc., a Minnesota corporation.

(2) Red Wing Business Systems, Inc., 100% owned by Wits Basin Precious Minerals Inc., a Minnesota corporation.

(3) Champion Business Systems, Inc., 100% owned by Wits Basin Precious Minerals Inc., a Colorado corporation.

(4) FMS Marketing, Inc., 100% owned by Wits Basin Precious Minerals Inc., an Illinois corporation.

(5) Active Hawk Minerals LLC, 100% owned by Wits Basin Precious Minerals Inc., Minnesota limited liability company.

(6) Wits-South America, Ltd., 100% owned by Wits Basin Precious Minerals Inc., a Minnesota corporation.

(7) Gregory Gold Producers, Inc., 100% owned by Wits Basin Precious Minerals Inc., a Colorado corporation.

(8) Wits-China Acquisition Corp. Inc., 100% owned by Wits Basin Precious Minerals Inc., a Minnesota corporation.

(9) China Global Mining Resources Limited, 100% owned by Wits Basin Precious Minerals Inc., a British Virgin Islands corporation.

(10) China Global Mining Resources Limited, 100% owned by Wits Basin Precious Minerals Inc., a Hong Kong corporation.

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-3 (No.’s 333-68088 and 333-90532) and Form S-8 (No.’s 333-68166, 333-105031, 333-110590, 333-131268 and 333-137616) of Wits Basin Precious Minerals Inc., and subsidiaries of our report dated March 31, 2008, relating to the financial statements, which appears on page F-2 of this annual report on Form 10-KSB.

 /s/ Carver Moquist & O’Connor, LLC

Minneapolis, Minnesota

March 31, 2008

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Stephen D. King, certify that:

1. I have reviewed this report on Form 10-KSB of Wits Basin Precious Minerals Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, and evaluated the effectiveness of our internal control over financial reporting, and printed in this report our conclusions about the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: April 2, 2008	By:	/s/ Stephen D. King
		Stephen D. King
		Chief Executive Officer
		Wits Basin Precious Minerals Inc.

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Mark D. Dacko, certify that:

1. I have reviewed this report on Form 10-KSB of Wits Basin Precious Minerals Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the Registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, and evaluated the effectiveness of our internal control over financial reporting, and printed in this report our conclusions about the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: April 2, 2008	By:	/s/ Mark D. Dacko
		Mark D. Dacko
		Chief Financial Officer
		Wits Basin Precious Minerals Inc.

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report of Wits Basin Precious Minerals Inc. (the “Company”) on Form 10-KSB for the quarter ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen D. King, the Chief Executive Officer of the Company, hereby certifies, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 2, 2008	By:	/s/ Stephen D. King
		Stephen D. King
		Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report of Wits Basin Precious Minerals Inc. (the “Company”) on Form 10-KSB for the quarter ending December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark D. Dacko, the Chief Financial Officer of the Company, hereby certifies, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: April 2, 2008	By:	/s/ Mark D. Dacko
		Mark D. Dacko
		Chief Financial Officer