U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

EXCHANGE ACT OF 1934

For the fiscal year ended January 31, 2008

Commission file number: 0--49996

AMERICAN GOLDFIELDS INC.

(Exact name of registrant as specified in its charter)

Nevada	71-0867612
(State of incorporation)	(I.R.S. Employer Identification No.)

200-4170 Still Creek Drive

Burnaby, B.C. Canada V5C 6C6

(Address of principal executive offices)

(604) 299-6600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

None

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

Common Stock, $0.001 par value

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ¨     No x

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not 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-K or any amendment to this Form 10-K.   ¨

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

Large accelerated filer ¨     Accelerated filer ¨     Non-accelerated filer ¨ (Do not check if a smaller reporting company)     Smaller Reporting Company x

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

The issuer’s revenues for its most recent fiscal year were $Nil

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the average bid and asked price of such common equity as July 31, 2007 was approximately $26,868,241.

The number of shares of the issuer’s common stock issued and outstanding as of April 28, 2008 was 21,292,878 shares.

Documents Incorporated By Reference:  None

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TABLE OF CONTENTS

		Page
PART I
Item 1	Business	4
Item 1A	Risk Factors	8
Item 1B	Unresolved Staff Comments	11
Item 2	Properties	11
Item 3	Legal Proceedings	35
Item 4	Submission of Matters to a Vote of Security Holders	35
PART II		36
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6	Selected Financial Data	38
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operation	38
Item 7A	Quantitative and Qualitative Disclosures About Market Risk.	41
Item 8	Financial Statements and Supplementary Data.	41
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	63
Item 9A	Controls and Procedures	63
Item 9A(T)	Controls and Procedures	63
Item 9B	Other Information	63
PART III		64
Item 10	Directors, Executive Officers and Corporate Governance	64
Item 11	Executive Compensation	66
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	68
Item 13	Certain Relationships and Related Transactions, and Director Independence	69
Item 14	Principal Accountant Fees and Services	72
PART IV		73
Item 15	Exhibits, Financial Statement Schedules	73
SIGNATURES		74

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PART I

ITEM 1.                      DESCRIPTION OF BUSINESS

General

American Goldfields Inc. (the “Company” or “we”), f/k/a Baymont Corporation, is a natural resource exploration stage company engaged in the acquisition and exploration of properties for deposits of gold or silver. We were incorporated on December 21, 2001 under the laws of the State of Nevada. Since then, we have engaged primarily in the acquisition and exploration of mining interests in properties that may potentially have deposits of gold and silver. To date, we have not earned any revenues.

In December 2001, we caused the incorporation of our wholly owned subsidiary, Baymont Explorations Inc., under the laws of British Columbia. Through this subsidiary we acquired a 75% undivided interest in a group of mineral claims known as the Bor Claims, being four mineral claims covering a total area of 247 acres located in the Omineca Mining Division of the Province of British Columbia, Canada. The interest was purchased from Lorne B. Warren of Smithers, British Columbia, the beneficial owner of the claims, for US$2,500. In April 2004 we terminated our interest in this property.

On various dates in 2004 and 2005, we entered into separate agreements with MinQuest Inc. (“MinQuest”) granting us an option to purchase 100% of MinQuest’s mining interests in six different properties located in various parts of the State of Nevada, which we plan to explore for the purpose of determining whether there are any commercially exploitable deposits of gold or silver. None of the properties presently has any mineral deposits. The properties are undeveloped and do not contain any open-pit or underground mines. There is no mining plant or equipment located on the properties, and there is no power supply to the properties. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

Further exploration of all of our mineral claims is required before a final determination as to their viability can be made. No commercially viable mineral deposit may exist on our mineral claims. Our plan of operations is to carry out exploration work on these claims in order to ascertain whether they possess deposits of gold or silver. We can provide no assurance to investors that our mineral claims contain a commercially viable mineral deposit until appropriate exploratory work is done and an evaluation based on that work concludes further work programs are justified. At this time, we definitely have no reserves on our mineral claims.

Corporate History

From the date of its incorporation until February 5, 2004, the Company was controlled by Mr. Alfredo De Lucrezia, who was its sole officer and director and had legal and beneficial ownership of 6,000,000 (pre-forward split) shares of the Company’s common stock, or 66.8% of the issued and outstanding share capital of the Company.  On February 5, 2004 Mr. Lucrezia appointed Donald Neal and Gregory Crowe to the Board and resigned as the Company’s sole officer. Mr. Neal was duly appointed as the Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary of the Company. Mr. Neal’s appointment to the Board became effective on February 5, 2004, and Mr. Crowe became a member of the Board on February 23, 2004, ten days after the mailing of the Information Statement regarding such changes. On such date, Mr. Lucrezia resigned as a director of the Company.

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On February 10, 2004, Mr. Lucrezia sold 3,000,000 shares of Common Stock to each of Donald Neal and Gregory Crowe pursuant to a Purchase and Sale Agreement dated as of such date.  The purchase price for each share of common stock was $0.035, amounting in the aggregate to $105,000 for each of Messrs. Crowe and Neal. Immediately subsequent to this sale Mr. Lucrezia no longer held any shares of capital stock or other equity in the Company.

On February 10, 2004, Messrs. Neal and Crowe entered into a Shareholders’ Agreement dated as of such date. The agreement provided that for so long as the person holds any of the 3,000,000 shares which he received from Alfredo De Lucrezia, the directors shall vote such shares to maintain two persons on our board, or such number as the shareholders agree. Upon any vote to appoint representatives to the Board, each shareholder agreed that he shall vote his shares for the other shareholder. If one of the shareholders is no longer a shareholder, or if the Board or our shareholders decided to remove one of the Board members, or the shareholder no longer holds any of the 3,000,000 shares which he received from Mr. Lucrezia, then the other shareholder agreed to vote his shares to either maintain the number of Board members as one or to nominate a second Board member. The agreement also provided that for all other matters in which shares are voted, the two shareholders shall vote their 3,000,000 shares together as determined by the unanimous decision of the shareholders.  Each of the shareholders also agreed that he would not, directly or indirectly, sell, pledge, gift or in any other way dispose of any of the 3,000,000 shares which he received from Mr. Lucrezia. This transfer restriction shall apply to such shares in all situations during all times that such individual holds any of the 3,000,000 shares.

On February 23, 2004, the Company approved a 6:1 forward stock split. As a result of the stock split, an additional 44,928,565 shares of common stock were issued. The par value of the common stock remained unchanged at $0.001 per common share but the authorized number of common stock increased to 600,000,000 from 100,000,000.

On February 24, 2004, the Company and a majority of the Company’s stockholders authorized the changing of the Company’s name to American Goldfields Inc. The name change became effective March 31, 2004.

On March 31, 2004, each of Messrs. Neal and Crowe returned 15,000,000 shares (such number reflects the 6:1 stock split) of common stock to treasury for no proceeds. The Company did not record a gain or loss as a result of this transaction. Since it is customary for a mining exploration company to acquire properties  with the  issuance  of stock, this is an option which Messrs. Neal and Crowe  considered not only feasible and reasonable, but the only  practicable  method for the  company to acquire  property in light of the Company’s current financial condition. The  stockholders/directors determined that they would prefer to dilute their personal equity interests in the Company now rather than have the stockholders incur significant  dilution in the future when,  and if, a potential seller feels that the directors of the company have too significant of an equity interest.

On May 26, 2004, Mr. Richard Kern joined the Board of Directors of the Company. Mr. Kern is also the President of MinQuest Inc. All of the Company’s current mineral properties have been optioned from MinQuest. In addition, MinQuest has been engaged by the Company as its principal exploration contractor for all exploration performed on the Company’s current properties. As a result, a significant portion of the Company’s expenses have been the result of activities performed directly by Mr. Kern or by subcontractors managed by Mr. Kern or MinQuest.

On January 11, 2006 the Company's Board of Directors elected Dr. David Gladwell as a member of the Board of Directors of the Company.

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On July 12, 2006, the Company granted stock options to Mr. Neal.  Pursuant to such agreement, Mr. Neal was granted 200,000 options, with each option entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.

On July 12, 2006 the Company and Mr. Neal entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Company’s stock owned by Mr. Neal for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made on April 30, 2007.

On July 14, 2006 Mr. Crowe resigned as a Director of the Company.  In connection with his resignation, the Company and Mr. Crowe entered into a Redemption Agreement, dated July 14, 2006, pursuant to which Mr. Crowe agreed to sell the 3,000,000 common shares of the Company owned by Mr. Crowe to the Company at a price of $0.01 per share.  The Company paid Mr. Crowe $30,000 and returned the shares to treasury for cancellation.

On September 15, 2006, the Company's Board of Directors elected Mr. Jared Beebe as a member of the Board of Directors of the Company.

Since May 2004, the Company has focused its exploration activity in the State of Nevada and the Company’s subsidiary, Baymont Explorations Inc. has been inactive. As a result, during the year ended January 31, 2007, Baymont Exploration Inc. was dissolved for failure to file Annual Reports with the Registrar of Companies in British Columbia.  Baymont Explorations Inc. had no assets and its sole liability was to its Parent Company.

Competition

The mineral exploration industry, in general, is intensively competitive and even if commercial quantities of ore are discovered, a ready market may not exist for sale of same. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our not receiving an adequate return on invested capital.

Compliance with Government Regulation

We are required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the United States. The federal government and various state and local governments have adopted laws and regulations regarding the protection of natural resources, human health and the environment. We will be required to conduct all exploration activities in accordance with all applicable laws and regulations. These may include requiring working permits for any exploration work that results in physical disturbances to the land and locating claims, posting claims and reporting work performed on the mineral claims. The laws and regulations may tell us how and where we can explore for natural resources, as well as environmental matters relating to exploration and development.  Because these laws and regulations change frequently, the costs of compliance with existing and future environmental regulations cannot be predicted with certainty.

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Any exploration or production on United States Federal land will have to comply with the Federal Land Management Planning Act which has the effect generally of protecting the environment. Any exploration or production on private property, whether owned or leased, will have to comply with the Endangered Species Act and the Clean Water Act. The costs of complying with environmental concerns under any of these acts vary on a case by case basis. In many instances the cost can be prohibitive to development. Environmental costs associated with a particular project must be factored into the overall cost evaluation of whether to proceed with the project.

There are no costs to us at the present time in connection with compliance with environmental laws other than the reclamation bonding requirements of the Bureau of Land Management. However, since we do anticipate engaging in natural resource projects, these costs could occur at any time. Costs could extend into the millions of dollars for which we could be liable. In the event of liability, we would be entitled to contribution from other owners so that our percentage share of a particular project would be the percentage share of our liability on that project. However, other owners may not be willing or able to share in the cost of the liability. Even if liability is limited to our percentage share, any significant liability would wipe out our assets and resources.

Employees

We have no employees as of the date of this report other than Mr. Donald Neal, our sole officer. Our sole officer and four directors (one of which is Mr. Neal) provide planning and organizational services for us on a part-time basis.

Any other services required will be conducted largely through consultants and other third parties.

Research and Development Expenditures

We have not incurred any research or development expenditures since our incorporation.

Subsidiaries

We previously incorporated a wholly-owned British Columbia subsidiary, Baymont Explorations Inc.   Since May 2004, the Company has focused its exploration activity in the State of Nevada and the Company’s subsidiary, Baymont Explorations Inc. has been inactive. As a result, during the year ended January 31, 2007, Baymont Exploration Inc. was dissolved for failure to file Annual Reports with the Registrar of Companies in British Columbia.  Baymont Explorations Inc. had no assets and its sole liability was to its Parent Company.

Patents and Trademarks

We do not own any patents or trademarks.

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ITEM 1A.                      RISK FACTORS

Factors that May Affect Future Results

1. We will require additional funds to achieve our current business strategy and our inability to obtain funding will cause our business to fail.

Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the acquisition and exploration of natural resource properties. We will need to raise additional funds through public or private debt or equity sales in order to fund our operations and fulfill our contractual obligations. These financings may not be available when needed. Even if these financings are available, it may be on terms that we deem unacceptable or are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our inability to obtain financing would have an adverse effect on our ability to implement our current exploration in Nevada, and as a result, could require us to diminish or suspend our operations and possibly cease our existence. Obtaining additional financing would be subject to a number of factors, including the market prices for the mineral property and silver and copper. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

2. If we do not complete the required option payments and capital expenditure requirements mandated in our respective agreements with MinQuest, we will lose our interest in that respective property and our business may fail.

If we do not make all of the property payments to MinQuest or incur the required expenditures in accordance with the respective property option agreements we will lose our option to purchase the respective property for which we have not made the payments and may not be able to continue to execute our business objectives if we are unable to find an alternate exploration interest. Since our payment obligations are non-refundable, if we do not make any payments, we will lose any payments previously made and all our rights to the properties.

3. Because all of our mineral properties have been optioned from MinQuest and one of the Directors of the Company is also a Director of MinQuest, potential conflicts of interest could impact our business.

Mr. Kern joined the Board of Directors of the Company on May 26, 2004. Mr. Kern is also the president of MinQuest. All of the Company’s mineral properties have been optioned from MinQuest. As a result, MinQuest and Mr. Kern are related parties to the Company and both MinQuest and Mr. Kern receive substantial payments from the Company. In addition, the Company has agreed to use Mr. Kern as the primary contractor on exploration undertaken to date on all of its properties. The potential exists for conflicts of interest to occur from time to time that could adversely affect the Company’s ability conduct its business. Also, Mr. Kern is the most knowledgeable person regarding the historical and current state of exploration on the mineral properties currently optioned by the Company. If Mr. Kern were to terminate his relationship with the Company, the Company would be adversely affected while we found a suitable replacement.  To date, there have not been any conflicts of interest between the Company and MinQuest or Mr. Kern.

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4. Because our Directors serve as Officers and Directors of other companies engaged in mineral exploration, a potential conflict of interest could negatively impact our ability to acquire properties to explore and to run our business.

All of our Directors and Officers work for other mining and mineral exploration companies.  Due to time demands placed on our Directors and Officers, and due to the competitive nature of the exploration business, the potential exists for conflicts of interest to occur from time to time that could adversely affect our ability to conduct our business. The Officers and Directors’ full-time employment with other entities limits the amount of time they can dedicate to us as a director or officer. Also, our Directors and Officers may have a conflict of interest in helping us identify and obtain the rights to mineral properties because they may also be considering the same properties. To mitigate these risks, we contract several geologists in order to ensure that we are not overly reliant on any one of our Directors to provide us with geological services.  However, we cannot be certain that a conflict of interest will not arise in the future.  To date, there have not been any conflicts of interest between any of our Directors or Officers and the Company.

5. Because of the speculative nature of exploration and development, there is a substantial risk that our business will fail.

The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the property we have optioned in Nevada contains commercially exploitable reserves. Exploration for natural reserves is a speculative venture involving substantial risk. Few properties that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.

6. Because our sole executive officer does not have formal training specific to the technicalities of mineral exploration, there is a higher risk our business will fail

Mr. Neal, our sole executive officer, does not have formal training as a geologist or in the technical aspects of management of a mineral exploration company. Our management lacks technical training and experience with exploring for, starting, and operating a mine. With no direct training or experience in these areas, our management may not be fully aware of the specific requirements related to working within this industry. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to management’s lack of experience in this industry.

7. Because we have not commenced business operations, we face a high risk of business failure due to our inability to predict the success of our business

We are in the initial stages of exploration of our mineral claims, and thus have no way to evaluate the likelihood that we will be able to operate the business successfully. We were incorporated on December 21, 2001 and to date have been involved primarily in organizational activities, and the acquisition and exploration of the mineral claims. We have not earned any revenues as of the date of this report.

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8. Because of the unique difficulties and uncertainties inherent in mineral exploration and the mining business, we face a high risk of business failure

Potential investors should be aware of the difficulties normally encountered by early-stage mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.

9. Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

10. Because of the speculative nature of exploration of mineral properties, there is substantial risk that no mineral deposits will be found and this business will fail

The search for valuable minerals as a business is extremely risky. Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures to be made by us in the exploration of the mineral claims may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.

11. Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business

The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.

12. Because access to our mineral claims may be restricted by inclement weather, we may be delayed in our exploration

Access to our mineral properties may be restricted through some of the year due to weather in the area. As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities. These limitations can result in significant delays in exploration efforts. Such delays can have a significant negative effect on our results of operations.

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13. Because our President has only agreed to provide his services on a part-time basis, he may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail

Mr. Neal, our sole officer, provides his management services to a number of companies. Because we are in the early stages of our business, Mr. Neal will not be spending a significant amount of time working for the Company. Mr. Neal expects to expend approximately five hours per week on our business. Later, if the demands of our business require the full business time of Mr. Neal, he is prepared to adjust his timetable to devote more time to our business. However, it still may not be possible for Mr. Neal to devote sufficient time to the management of our business, as and when needed, especially if the demands of Mr. Neal’s other interests increase. Competing demands on Mr. Neal’s time may lead to a divergence between his interests and the interests of other shareholders.

Risks Related To Legal Uncertainty and Regulations

14. As we undertake exploration of our mineral claims, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program

There are several governmental regulations that materially restrict mineral exploration. We will be subject to the federal, state and local laws of the United States and Nevada as we carry out our exploration program. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out exploration program.

ITEM 1B                      UNRESOLVED STAFF COMMENTS

There are no unresolved staff comments.

ITEM 2.                      DESCRIPTION OF PROPERTIES

We currently maintain our corporate office at 200-4170 Still Creek Drive, Burnaby, B.C., Canada, at a cost of CDN $616 per month. This rental is based on a one year lease that commenced March 1, 2008.

We have interests in the following real properties:

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GILMAN PROPERTY

Map of Gilman Property located in western Nevada.

On May 7, 2004, the Company completed the formal agreement with MinQuest for an option to acquire a 100% interest in a property known as the Gilman Property.  The agreement requires minimum annual property option payments with a total of $85,000 required to be paid by May 15, 2009. The agreement also requires minimum annual exploration expenditures with a grand total of $450,000 in expenditures required to be incurred on the property by May 15, 2009. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $1,000,000 for each 1% repurchased. The Company is not required to use MinQuest for exploration undertaken on the Gilman Property. However, at its discretion, the Company has engaged MinQuest as the principal contractor for exploration performed to date.

On March 22, 2005, the Company executed an amendment to the Gilman Property Option Agreement. As a result of the amendment, the Company’s obligation to incur $50,000 in exploration expenditures on the Gilman Property by May 2005 was moved to May 2009.  On May 29, 2006 by way of a letter agreement the Company and MinQuest agreed to adjust the exploration expenditure commitments such that the amount due to be spent by May 15, 2006 was moved to May 15, 2007.  The result is that the Company was required to spend approximately $153,000 by May 15, 2007.  With agreement from MinQuest, upon completion of the drill program expected to be completed by the second quarter of 2008, the Company will have met its exploration obligations to January 31, 2008.  All other terms and commitments of the original agreement remain unchanged.

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To January 31, 2008, the Company had made the initial option payment of $10,000 due on signing as well as the $15,000 annual option payments due in May 2007, 2006 and 2005.  In addition the Company has incurred approximately $132,000 in exploration expenditures on the property. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

Description and Location of the Gilman Property

The Gilman Property is located in Lander County, Nevada approximately 28 kilometers south of the town of Austin, 282 kilometers east of Reno. The property consists of 19 contiguous, unpatented mineral claims covering an approximate 390 acre area over the eastern flank of the Toiyabe Range on the North Toiyabe Peak and Kingston US Geological Survey 7 ½’ quadrangle mapsheets. The property is accessed from Austin by following State Highway 376 for 16 kilometers. A gravel road leads west 3.5 kilometers to the main area of interest on the property.

Land claims in the district are administered under Department of Interior, Bureau of Land Management (“BLM”) and Department of Agriculture, Forest Service (“USFS”) under the Federal Land Policy and Management Act of 1976. The Gilman claims cover portions of Sections 7, 8, 17, and 18 in Township 16 North, Range 44 East in Lander County, Nevada. None of the claims have been legally surveyed. All of the claims are on USFS administered lands, while the access to the property is across BLM land.

Three of the claims on the Gilman Property are registered in the name of Mr. Herb Duerr. Under a Letter Agreement dated July 25, 2002, MinQuest leased the three claims. The Letter Agreement permits MinQuest to assign the property and terms of the agreement to third parties. This agreement covers an approximate 1.6 kilometer area. MinQuest located an additional 16 claims which all fall within the area of interest covered by the agreement MinQuest has with Mr. Duerr. Mr. Duerr subsequently granted to MinQuest the rights necessary to allow MinQuest to enter into agreements with third parties for the additional 16 claims. To maintain the claims in good standing, maintenance fees totaling $135 per claim are payable to the BLM on or before September 1 of each year. Recording fees of approximately $15 per claim are required by Lander County each year.

All of the Gilman Property is within the Toiyabe National Forest, administered by the USFS. Exploration within national forest lands must be permitted by the USFS. Prior to undertaking exploration activities a Plan of Operations must be submitted to the USFS for review. An environmental assessment and public input is required necessitating an approximate four month lead time before undertaking any disturbance. A reclamation bond to cover costs of such disturbances is required to be posted with the USFS. Access to the Gilman Property is across BLM administered land. As there are existing roads and tracks in place, no permit is required to cross these lands. No permits have been applied for or are currently issued for the Gilman Property.

Exploration History of the Gilman Property

There is no known production or history data from the Gilman Property, but several pits and two adits are evidence of prior exploration activities. Numerous companies conducted property reviews and sampled the showings in the area, which have locally returned high concentrations of gold.

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Geology of the Gilman Mineral Claims

The geology of the property is described in a December, 2002 report by Geoffrey N. Goodall, President of Global Geological Consultants Ltd., a private consulting firm. Mineralization on the Gilman Property is associated with a steep, easterly dipping and northerly trending range front fault. Jasperoid and massive quartz veining have developed along the fault zone and local east trending faults offset the jasperoid. Sulphide rich quartz veining occurs at the base of the silicified fault zone. Sulphides identified at Gilman include pyrite, arsenopyrite, galena, chalcopyrite and sphalerite. The primary focus of exploration at the Gilman Property is for structurally hosted high-grade gold/silver mineralization. Mineralization at Gilman consists of a gossanous shear zone and quartz veins along the base of a range front fault zone. Gold, silver, and copper associated with the fault system have been located in the area.

Current State of Exploration

The Gilman claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

Geological Exploration Program

Evaluation of the Gilman claims to January 31, 2007 had consisted of the preparation of a topographic base map, and surface and underground geochemical sampling. In addition, as part of the permitting process the Company undertook an archeological review of the property.  During 2008, the Company received a permit to drill on the Gilman Property.  The Board of Directors has approved an $112,500 (excluding reclamation bond and claim filing fees) drilling budget that includes three reverse circulation holes for a total of 3,000 feet of drilling.  The program began in January 2008 with the goal of testing a previously untested range front fault hosted quartz vein system. Testing has been initiated at the northern end of a mile-long target zone.  Due to heavy snowfall only one hole was drilled in January 2008 before the rig had to be removed from the property.  It is hoped that drilling will be restarted in April 2008.

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IMPERIAL PROPERTY

Map of Imperial Property located in western Nevada.

On June 30, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in a property known as the “Imperial Property.”  The Company made the first scheduled option payment of $60,000 upon signing the agreement. The agreement requires certain additional minimum annual property option payments with a total of $80,000 required to be paid by July 1, 2008. The agreement also requires minimum annual exploration expenditures with a grand total of $500,000 in expenditures required to be incurred on the property by July 1, 2009. The property option agreement is subject to a 3% royalty payable to MinQuest. The Company is required to use MinQuest for exploration conducted on the Imperial Property.

To January 31, 2008, the Company had made the initial option payment of $60,000 upon signing the agreement as well as the $20,000 option payments due in July 2007, 2006 and 2005.  In addition the Company has incurred approximately $276,000 in exploration expenditures on the property which satisfies the Company’s expenditure requirements to July 1, 2007.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

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Description and Location of the Imperial Property

The Imperial Property is located in Esmeralda County, Nevada, approximately 60 kilometres southwest of Tonopah and 300 kilometers northwest of Las Vegas in the Railroad Springs Mining District. The property consists of 24 mineral claims elongated in an east-west direction, covering approximately 450 acres located in Railroad Pass between the Montezuma Range to the northeast and the Silver Peak Range to the southwest. The property covers portions of two adjacent US Geological Survey 7 ½’ quadrangle map sheets:  Lida Wash, Nevada and Montezuma Peak, SW Nevada. The center of the property is situated at approximately 117o 31’ 43” West longitude and 37o 33’ North latitude.

Land claims in the district are administered under Department of Interior, Bureau of Land Management (“BLM”) under the Federal Land Policy and Management Act of 1976. The Imperial claims cover portions of Sections 34, 35, and 36 in Township 4S, Range 40 East in Esmeralda County, Nevada. None of the claims have been legally surveyed. The property is most easily accessed from the community of Silver Peak, Nevada by following US route 95 west from Tonopah for a distance of 35 kilometers and turning south onto paved State Highway 295 for 21 kilometers and then west on a secondary gravel road for 500 meters to the eastern claim boundary.

MinQuest is the registered owner of 14 of the claims that make up the Imperial Property. Ten of the claims (Lida 1 to Lida 10) are registered to Richard Kern, Michael Forth, and James Motter. Under the terms of a Letter Agreement, the Lida claims have been leased to MinQuest for a period of 20 years. The lease allows MinQuest to transfer title to third parties providing all conditions of the original agreement are met. To maintain the claims in good standing, maintenance fees totaling $135 per claim are payable to the BLM on or before September 1 of each year. Recording fees of approximately $15 per claim are required by Lander County each year.

Exploration History of the Imperial Property

The Imperial was first developed in the 1920’s but apparently had little or no production until the late 1930’s. The Imperial Mine produced approximately 10,000 tons of ore and was probably shut down at the beginning of World War II. The mine has two adits, the longest of which has approximately 2,600 feet of drifts and crosscuts. A 200 foot shaft, which is not accessible, is also located on the property.

The property has been explored by Energy Reserves Group, Goldsil Mining, Felmont Oil, and Nevada Star Resource Corporation. Felmont conducted the bulk of the work during 1983 – 1984 including drilling 19 reverse circulation holes. Five of these holes intercepted significant thickness of oxide gold in “Carlin-style” mineralization. Six of their holes were drilled on the area that hosted the Imperial Mine. No other holes were drilled on this target that is more than a mile long. Felmont dropped the property partly because they lost the rights to the portion of the claim covering the Imperial Mine and partly because they were taken over by Homestake.

Nevada Star conducted a soil survey over the non-Imperial Mine claim block in 1987 and partially tested the area around two of the better Felmont holes with shallow, close-spaced grid drilling. This work which defined an area of gold mineralization and confirmed the presence of Carlin-style gold in silty rocks adjacent to northeast trending high angle feeder faults, was to be followed up by drill testing of this and several other targets. However, Nevada Star was unable to raise the capital needed to continue and relinquished the property.

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Geology of the Imperial Mineral Claims

The geology of the property is described in a December, 2002 report by Geoffrey N. Goodall, President of Global Geological Consultants Ltd., a private consulting firm. Regionally, the Imperial Property is located within the Walker Lane which hosts several precious metal deposits. Two distinct types of gold mineralization occur on the Imperial Property. The first type is associated with high angle bodies of jasperoid that outcrop along the east-west axis of the property. The second type of mineralization is identified from drill hole data in the eastern part of the property. Here gold mineralization is associated with flat lying bedding and is disseminated throughout highly altered limonite stained decalcified siltstones.

Structurally, two fault sets appear closely related to mineralization. The Imperial Fault and other associated west-northwest structural zones have received the bulk of the exploration within the district. Numerous northeast trending faults, some of which are shown by soil geochemistry, have received little attention as possible feeders. Nearly all gold anomalies from the eastern half of the claims have a northeast trend. These anomalies are thought to be leakage along feeder faults.

Three primary Carlin-type targets are present at Imperial. The first and most important is the Imperial Target that has only one hole on the favourable side of the approximately 1,600 meter long structure. The second target, called the Resource Target is an open-ended 500 meter long gold in soil anomaly along a northeast trending fault system. A final target called the Jasperoid Breccia Target is a large anomaly under cover in the central portion of the claim group. The anomaly is 400 meters long and has gold in soil anomaly at its west end.

Current State of Exploration

The Imperial claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped but does contain two adits, the longest of which has approximately 2,600 feet of drifts and crosscuts. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim.

Exploration of the enargite-bearing high-grade vein system is warranted simultaneously with Carlin-style exploration. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

Geological Exploration Program

The Company has completed a two phase exploration drill program that focused on the high-grade vein and disseminated gold targets within the Imperial Property. The program included 31 reverse circulation holes for a total of 7,935 feet of drilling.

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The results of the drilling are shown below:

IMPERIAL DRILLING RESULTS
Hole			Vertical	Total	From	To	Interval	Gold	Silver
No.	Target	Azimuth	Angle	Depth	(feet)	(feet)	(feet)	(oz/ton)	(oz/ton)
IR-1	Imperial Fault	218	-40	120	70	80	10	0.026	<0.01
IR-2	Imperial Fault	218	-72	300				<0.01	<0.01
IR-3	Imperial Fault	202	-40	250	50	55	5	0.048	0.03
IR-4	Imperial Fault	202	-75	355	100	105	5	0.026	0.02
IR-4					105	115	10	0.502	0.54
IR-4					115	145	30	0.036	0.06
IR-5	Imperial Fault	202	-45	300	0	15	15	0.011	0.047
IR-5					95	105	10	0.016	<0.01
IR-6	Imperial Fault	202	-80	275				<0.01	<0.03
IR-7	Imperial Fault	202	-45	200	80	85	5	0.019	0.02
IR-7					120	140	20	0.037	0.14
IR-8	Imperial Fault	202	-75	400	30	45	15	0.012	0.03
IR-8					190	225	35	0.020	0.06
IR-9	Imperial Fault	202	-45	255	160	175	15	0.071	0.05
IR-10	Imperial Fault	202	-75	450	145	160	15	0.020	0.012
IR-10					170	180	10	0.014	0.02
IR-11	Resource	304	-46	150				<0.01	<0.05
IR-12	Resource	303	-45	200				<0.01	<0.13
IR-13	Resource	302	-45	200	55	60	5	0.018	0.04
IR-13	Resource				90	100	10	0.022	0.02
IR-14	Resource	302	-45	205	45	60	15	0.032	0.01
IR-15	Resource	303	-45	200				<0.01	<0.03
IR-16	Resource	305	-45	200	40	45	5	0.011	0.26
IR-17	Resource	305	-45	200	45	65	20	0.035	0.08
IR-18	Resource	303	-45	200	50	55	5	0.012	0.15
IR-19	Resource	304	-45	200				<0.01	<0.28
IR-20	Resource	303	-45	200				<0.01	<0.02
IR-21	Resource	304	-45	200	115	125	10	0.018	0.01
IR-22	Resource	302	-45	190	0	35	35	0.072	0.08
IR-23	Resource	305	-45	85	10	25	15	0.017	0.01
IR-23					60	85	25	0.034	0.02
IR-23		Including at bottom of hole			80	85	5	0.096	0.01
IR-24	Resource	305	-45	150	25	55	30	0.023	0.20
IR-25	Jasperoid Breccia	325	-45	250				<0.010	<0.52
IR-26	Jasperoid Breccia	200	-60	300				<0.010	<0.02
IR-27	Imperial Fault	345	-60	400	85	105	20	0.017	0.05
IR-27					110	120	10	0.018	0.01
IR-28	Imperial Fault	180	-70	400	265	270	5	0.035	0.28
IR-29	Imperial Fault	204	-45	300	15	25	10	0.022	0.01
IR-29					30	50	20	0.079	0.03
IR-29					70	75	5	0.407	0.114
IR-29					75	105	30	0.069	0.132
IR-30	Imperial Fault	204	-75	400				<0.01	<0.02
IR-31	Imperial Fault	206	-75	400				<0.01	<0.01
Total				7,935

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The first phase of the program was completed in the fall of 2004 and included 10 drill holes for a total of 2,995 feet. All of these holes were drilled on the Imperial Target.  In addition to the drilling the Company has also conducted underground sampling. A total of 40 samples have been taken of quartz vein related mineralization underground. This work confirmed the presence of high grade values in the two adits sampled and will help target further drilling.

Of the first ten drill holes drilled, several intersected stopes which were not visible on existing underground maps. This was to be expected to some extent, as Phase I of the drill program was designed to test an area of previous underground mining which had already had extensive workings. Of particular interest was drill hole IR-4 which intersected 10 feet of high grade gold. This 10 foot interval (105’ to 115’) averages 0.50 oz/ton gold occurs within a 40 foot interval (110’ to 140’) that averages 0.154 oz/ton gold. Seven of the ten holes drilled contain gold intercepts exceeding 1.0 ppm (0.029 oz/ton).

The second phase of the drilling was completed in the fall of 2005.  This phase included 21 holes for a total of 4,940 feet.  The Company drilled 14 holes in the Resource Target area with all but 5 containing +0.01 oz/ton gold intercepts.  Two of the holes intersected, or came close to intersecting, the feeder structure within the favorable host sediment. Hole IR-22 contained 35 feet averaging 0.072 oz/ton gold and IR-23 contained 25 feet at 0.034 oz/ton gold including 5 feet at 0.096 oz/ton at the bottom of the hole.  The drilling indicates the gold is located within one nearly flat-lying favorable sedimentary unit (a calcareous siltstone) that is approximately 50 feet thick. Gold grade drops off quickly as one moves away from the feeder fault. Holes drilled beneath the mineralized unit, even those intersecting the feeder fault, were barren. The flat-lying mineralization appears to dip gently to the northwest and is approximately 200 feet wide and 40 to 50 feet thick. The gold bearing horizon has not been drilled to the southwest.

Two holes targeted the Jasperoid Breccia Target with one hole being drilled under the gold bearing jasperoid and another targeting the possible intersection of the northeast trending feeder fault with the Imperial fault.   Both of these holes (IR-25 and26) were barren. Just as at the Resource Target, these holes drilled beneath the favorable stratigraphy and missed the mineralization. Future drilling should be collared above the favorable horizon in proximity to the feeder fault.

In addition to the drilling, a total of 40 channel (continuous and consistent amount) samples were taken across veins exposed in the upper and lower adits. Sample widths were noted. Once at the assay lab each was weighed. Sample preparation, performed by ALS Chemex in Reno, Nevada, consisted of crushing the entire sample, splitting off 1,000 grams, pulverizing all 1,000 grams and splitting off 50 grams of this pulp for fire assay for gold and 50 grams for silver.

Results of all of the channel sampling done are noted in the table below:

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IMPERIAL UPPER ADIT RESULTS

Sample Number	Weight (lb)	Width (ft)	Gold (oz/ton)	Silver (oz/ton)
IUA 0	4.97	6.0	0.232	0.123
IUA 10	5.08	4.0	0.507	0.464
IUA 30	7.63	4.0	0.035	0.020
IUA 40	6.86	4.0	0.275	0.079
IUA 50	8.80	2.5	0.248	0.201
IUA 65	5.76	3.0	0.340	0.239
IUA 70	9.10	3.0	0.271	0.213
IUA 80	7.46	3.0	0.165	0.239
IUA 93	6.18	2.0	0.249	0.181
IUA 105	9.26	4.0	0.331	0.175
IUA 120	9.88	3.0	0.615	0.978
IUA 128	6.31	2.5	1.517	1.083
IUA 140	8.60	1.5	0.106	0.149
IUA 150	6.31	1.5	0.045	0.018
IUA 175	7.59	2.5	7.636	0.251
IUA 190	11.18	3.0	0.112	0.032
IUA 210	10.10	3.0	0.127	0.114
IUA 230	11.79	2.5	0.012	<0.015
IUA 250	10.67	2.0	0.014	0.018

IMPERIAL LOWER ADIT

Sample Number	Weight (lb)	Width (ft)	Gold (oz/ton)	Silver (oz/ton)
ILA 50	7.04	1.0	0.143	0.742
ILA 70	5.72	1.5	0.033	0.053
ILA 90	8.87	2.5	0.183	0.850
ILA 110	10.12	3.0	0.154	0.844
ILA 137	11.53	2.0	0.506	1.451
ILA 152	10.19	1.5	0.045	0.085
ILA 170	7.00	1.5	0.004	0.015
ILA 202	9.13	2.0	0.048	0.020
ILA 250	7.72	2.5	0.053	<0.015
ILA 300	7.37	3.0	0.004	0.035
ILA 350	8.16	3.0	0.002	0.064
ILA 400	8.65	2.0	0.013	0.015
ILA 420	7.15	2.5	0.341	0.044
ILA 430	10.52	1.5	0.379	0.020
ILA 444	7.90	2.0	0.159	0.020
ILA 450	10.01	3.0	0.102	0.023
ILA 460	12.52	1.5	0.089	0.053
ILA 500	10.27	2.5	0.178	0.397
ILA 510	8.98	3.0	0.497	0.131
ILA 520	5.19	3.0	0.148	0.155
ILA 527	5.96	2.0	0.113	0.018

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The Company is currently reviewing its plans for the Imperial Property but did not undertake an exploration on the Imperial Property in 2007 nor does it intend to incur any significant exploration expenses on the property in 2008.

HERCULES PROPERTY

Map of Hercules Property located in western Nevada.

On October 22, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in a property known as the “Hercules Property.”  Concurrent with the signing of the agreement, the Company made the first property option payment of $20,000. The agreement requires certain additional minimum annual property option payments totaling $200,000 and minimum annual exploration expenditures totaling $4,050,000 to be paid or incurred by November 25, 2014. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $3,000,000.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $300,000 was to be spent by September 1, 2006.

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To January 31, 2008, the Company had made the initial option payment of $20,000 due on signing as well as the $20,000 option payments due in November 2007, 2006 and 2005.  In addition the Company has incurred approximately $714,000 in exploration expenditures on the property which satisfies the Company’s expenditure requirements to January 31, 2008.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

Description and Location of the Hercules Property

The Hercules Property is located in Lyon County, Nevada, approximately 40 kilometers southwest of Reno. Access is via 11 kilometers of paved and dirt road from Dayton.  The property consists of 40 unpatented claims.  Land claims in the district are administered under Department of Interior, Bureau of Land Management (“BLM”) under the Federal Land Policy and Management Act of 1976. MinQuest holds a 100% interest in these claims via unpatented mining claims.

Exploration History of the Hercules Property

The Hercules Property was first discovered in 1860 by pioneers during the famous “Washoe Rush”. Production from high grade veins started as early as 1870 and occurred as late as 1956. The Hercules Mine, located on the property, had production of 5,000 ounces of gold and 20,000 ounces of silver as indicated from stoping. Recent exploration efforts began in the early 1980’s when placer mining was attempted on the eastern portion of the property, below the Hercules Mine. Since then, Asamera, St. Joe, Horizon Gold, Phelps Dodge and Adamas\GSL have conducted exploration efforts totaling over US$2,000,000 in expenditures.  Drilling undertaken by predecessor companies are as follows:

	St. Joe	1985	11 RC holes for 2,715 feet (882 m)
	Asamera	1985	10 Core holes for 4,314 feet (1,400 m)
	Horizon Gold	1986-90	138 RC holes for 18,091 feet (5,874 m)
	Phelps-Dodge	1995-97	17 RC holes for a total of 8,805 feet (2,859 m)

A total of 33,925 feet (11,015 m) in 176 holes have been completed on the property. The vast majority of the drilling targeted shallow open pit heap-leachable gold mineralization. No systematic exploration of the high-grade vein targets has been completed.

Geology of the Hercules Mineral Claims

The property lies within the Walker Lane structural corridor.  The Walker Lane is characterized by a strong northwesterly structural fabric causing easterly rifting. As with much of the Walker Lane rocks at Hercules consist dominantly of Tertiary age pyroclastic volcanics and volcaniclastic sediments cover the entire property. The pyroclastic rocks have been intruded by several volcanic vents and plugs. Thin post-mineral basalt and rhyodacite of Pliocene age cover mineralization on the northern and western sides of the property.

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The Hercules Property contains one of the most significant untested Comstock-type vein systems in the Western U.S. The depth of erosion of the Hercules vein system is evidenced by the following:

1. Multiple parallel veins that should merge at depth.

2. Presence of low-temperature alteration minerals such as chalcedony, calcite, and kaolinite in exist in veins at current surface.

3. Presence of low temperature elements such as mercury, arsenic and antimony.

4. A low silver to gold ratio relative to bonanza horizon.

5. Low base metal content (lead, zinc) relative to bonanza horizon.

6. Localized high-grade gold (+0.5 oz/ton) in veins at current erosion surface.

The Hercules mineralization is largely localized along two parallel dip-slip multi-vein structures which trend north-northeast. The structures have near-vertical dips and have been offset by two east-west faults. Gold/silver is hosted by permeable volcanics/volcaniclastics as well as by the high-angle structures. The highest grade mineralization occurs in quartz veins within the faults. Silicification and banded quartz-adularia veins are surrounded by intense clay alteration grading to weak propylitic alteration.

The second target type at Hercules is bulk-minable, heap-leachable gold/silver.This area contains the following individual target areas:

• Zones C/D/E contain significant mineralization.within three separate pods. Drilling is wide spaced and incomplete between the three pods. The pods remain open ended along strike and down dip. These pods may join along strike.  Two claims not owned by MinQuest cover part of this resource. In the past, these claims were leased for reasonable terms.

• Zone A/B is an extension of the C/D/E/ zone. The A/B zone contains additional mineralization of gold and silver.

• The West Cliff Zone also contains additional mineralization as indicated in widely spaced drilling and surface sampling results. Untested mineralization occurs north of the West Cliff resource. This area has a 5,000 feet (1620 m) strike length.

• The Loaves Zone is the last target in this area.

All of these areas remain open along strike and at depth.

St. Joe and Horizon Gold performed bulk tests from drill cuttings and surface samples. The average recovery for gold was 88%. The process involved crushing and pulverizing the sample and completing a bottle roll using over 50 separate samples. Although the tests are encouraging, further metallurgy is needed to determine recoveries of various size fractions.

A bonanza grade gold/silver deposit is the primary target at Hercules. All of the mineralized vein structures listed previously are targets. Exploration should begin in areas with higher-grade gold values at surface, with higher silver/gold ratios, more base metals, higher temperature alteration suites and where multiple veins occur. This will ensure the shallowest targets will be tested first. The most likely site to start as indicated by initial study is area D and E of the Hercules Mine target. Accurate drilling down dip in 100 m steps will allow spot coring of the target horizon at 300-400 m beneath the surface.

The secondary target is open pit bulk-minable heap leachable gold/silver for which some resources have already been established. The size and grade of these resources could be increased by drilling across their feeder structures and by drilling possible extensions.

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The West Cliff target is located in the southwest portion of the property. This area is defined by 17 widely spaced drill holes and underground and surface channel sampling results. Soil sampling and drilling suggests a second en-echelon zone occurs 300 feet (100 m) east of the main zone.  The area is open ended for 1000 feet (305m) north, 600 feet (180 m) south and down dip to the west.  Only two holes have tested the parallel zone.

The Loaves target consists of a zone of silicified volcanics containing banded quartz veins. The zone has a strike length of over 5,000 feet (1520 m) and extends under cover to the northwest. This zone is probably the offset extension of the West Cliffs resource. Only two of ten holes drilled to date have tested the structure. Previous drilling has targeted the footwall side of the fault. Even so, long intervals of anomalous gold with occasional short intervals of higher grade were encountered. This target requires angle drilling to test the hanging wall side of the structure to penetrate the fault zone at depth and along strike.

The Hercules Mine and Extensions (C\D\E) targets cover the main Hercules structure and parallel fault zones. Drilling and sampling from underground and outcrop areas have encountered relatively thick intercepts of gold and silver. This wide spaced drilling (both core and RC) and underground sampling indicate multiple mineralized structures with associated disseminated mineralization. The core samples were only partially assayed and may contain more gold than is displayed on the cross sections. The zone remains open for at least 1000 feet (300 m) north, over 1000 feet (300 m) south. Parallel mineralized structures are known to exist further to the east within the claim block.

The southern of the three Loaves targets contains 3 holes and surface panel sampling. Soil sampling suggests a minimum of 1700 feet (515 m) of strike length that remains untested.

Current State of Exploration

The Hercules claims have had a significant amount of exploration undertaken in their history. However, they do not currently have any mineral reserves. The property that is the subject to our mineral claims is undeveloped. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

Geological Exploration Program

The exploration potential at the Hercules Property is considered excellent. Several of the near-surface targets were poorly tested and are open between the current targets. Obvious extensions of drilling, soil and rock gold anomalies and high grade veins in old workings suggest not only an excellent chance of increasing the known resource of open pit mineralization but of finding a world class bonanza gold/silver deposit at depth. The vast majority of the previous resource drilling was vertical and did not test for these potentially higher grade fault zones.

During 2005 the Company undertook an exploration program on the Hercules Property.  The program consisted of geologic mapping, geochemical sampling, compilation of previous drilling data, and a re-evaluation of geophysical surveys.  Also, a total of 105 soil samples were collected on the north end of the property.  The geophysical targets on the northern portion of the claim block were reviewed and evaluated.  The information developed from previous exploration groups was combined with new information from the geophysical surveys and recent mapping to place 7 reverse circulation holes to determine strike, dip and stratigraphy within the A, B, C, West Cliffs and Bread Loaves mineralized zones.  The structures believed to be present in these areas would provide a pathway for mineral rich fluids.  The fluids should pond within certain porous rock types below impermeable stratigraphy.

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Six drill holes were located on the margins of the previously defined mineralized zones. The seventh hole tested a parallel alteration zone to the west of any previous drilling.  Seven drill holes were completed for 2,470 feet (753 m).  The drilling extended the known precious metals mineralization near surface and between pods A-C.  The holes also defined several fault zones that fed these mineralized areas.  Generally, the fault zones were encountered within an impermeable mudstone unit.  The faults were represented by bleaching, iron oxide and clay alteration within the mudstone.  The faults were 3 to 8 meters wide and contained anomalous gold values in the 0.01 to 0.05 g/t range.  It is believed that this mudstone unit restricted the flow of mineralizing fluids and may have caused ponding of the fluids at its base.

The following table lists the intercepts in each drill hole:

Drill Hole #	Gold Eq g/t	Thickness (m)	From (m)	To (m)
HY 05-01	0.95	12.2	6.1	18.3
HY 05-02	0.379	1.5	32.0	33.5
	0.33	10.7	44.2	54.9
	0.83	3.0	65.5	68.5
HY 05-03	0.58	3.0	32.0	35.0
	0.32	4.5	41.2	45.7
	0.54	3.0	51.8	54.8
	0.59	6.1	83.8	89.9
HY 05-04	0.38	6.1	3.0	9.1
	0.61	1.5	10.7	12.2
	0.45	1.5	42.7	44.2
	0.42	1.5	54.9	56.4
HY 05-05	NSV
HY 05-06	0.55	1.5	51.8	53.3
HY 05-07	NSV

NSV = no significant values found

All holes successfully identified altered and mineralized structures.  Holes 05-01 through 05-04 extended the known ore zones of A through C east and north.  It appears that drill hole 05-05 may have missed the West Cliffs vein due to thicker alluvial cover than anticipated.  Hole 05-07 was the only hole that tested outside of the known mineralization.  The hole intersected an opaline rich structure hosted within basalt and andesite west of any previous drilling. The structure contained sulfide minerals (mainly pyrite) and low temperature quartz, but did not contain any significant precious metal values.  The cuttings were not assayed for trace elements.  This structure is along strike of an interpreted fault defined by an IP geophysical survey to the north.

During 2006 the Company completed a drill program consisting of 10 holes for a total of 4,805 feet which was completed in March 2007.

Hole H0601 - tested altered volcanic rock on the west side of the property.  This hole was angled at -45 degrees N25E to test a fault zone containing silicified and pyritic mudstone and tuff at surface.  This near surface zone of alteration was encountered from surface to 45 feet. The hole passed through clay altered volcanic tuff and remained in unaltered mudstone from 140 feet to 480 feet.  The last 20 feet of the drill hole from 480 to 500 feet contained unaltered latite.  In other areas of the property the mudstone unit varies from 140 to 210 feet in thick.  Given the angle of the drill hole and the possibility of relatively flat bedding, the true thickness of the mudstone in H0601 is probably 230 to 240 feet.  This is consistent although a little thicker than the suggested thickness from elsewhere on the property.

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Holes H0602 to H0605 - targeted the eastern structural trend.  H0602, H0602A and H0603 were step offs of the 2005 drilling efforts.  This year’s drill holes were drilled at steeper angles from -60o to -70o and to depths of 500 to 600 feet to provide deeper penetration of the mudstone unit in resource area “A”.  The holes were stepped back east from the 2005 drill holes by 100 feet.  No faults were apparent in the mudstone, although the faulting projected from the 2005 drilling suggested a 60 to 65 degree dip to the east.

Hole H0602 was drilled 100 feet east of H0501 N60W at an angle of -70.  The hole penetrated 65 feet of post mineral dacite then encountered silicified and clay altered volcanic agglomerate to 120 feet.  At this point the hole was lost due to caving.  A five foot intercept of 2.32 ppm gold within a broader 20 feet zone of .89 ppm gold was encountered immediately below the dacite cap.

Hole H0602A was drilled 20 feet northeast of 0602 due east at an angle of -60.  This hole encountered 10 feet of 0.2 ppm gold from 75 to 85 feet and at least one five foot sample that was a void (no sample collected).  The alteration was similar to H0602 just below the dacite.  H0602A contained 260 feet of mudstone before encountering an unaltered crystal tuff to volcanic agglomerate at 490 feet.  No alteration or elevated gold values were encountered below the initial gold values described above.

Hole H0603 was drilled 400 feet north of H0602 on the northern margin of the “A” resource described in previous reports.  H0603 offset H0503 by 125 feet east.  Hole H0603 was set up to intersect the projected “A” structure perpendicularly.  The hole was angled N60W at -70 degrees.  It entered the mudstone unit at 30 feet and remained in mudstone for its entire length.  Clay alteration of the mudstone was noted between 30 and 125 feet, but no significant gold values or silica were present within this zone.   It is assumed that a fault zone down dropping the mudstone to the west, artificially thickening the unit by repeating the sequence.

Holes H0604 and H0605 were drilled to the west of resource area “C”.  Hole H0604 was drilled due east at -45o.  Hole H0605 was drilled S80E at -45o.  The “C” resource area is poorly defined by drilling.  Only 2 holes were previously drilled on the western side of the “C” resource fault zone.  Only one of those contained ore grade values and that hole was positioned on top of the fault.  The 2006 drill program stepped back 100 to 200 feet from the fault to determine if the fault rolled back to the west.  Both holes encountered significant near surface alteration and mineralization from 40 feet to depth.

Hole H0604 was drilled furthest south and encountered 50 feet of 0.45 ppm gold from 70 feet to 120 feet.  An additional five feet assayed 0.42 ppm at 250 feet.  Both mineralized zones contained significant quartz veining, silicification and argillization.  The second area of deeper mineralization may be related to high-angle faulting.  Drill hole H0605 was positioned 300 feet northwest of H0604.  H0605 penetrated 105 feet of alluvium before encountering 60 feet of 0.49 ppm gold.  Within this mineralized interval, 25 feet of 0.71 ppm was intercepted with a best of 1.345 ppm over five feet.  These intercepts have significantly increased the area of the “C” resource and provided excellent potential for discovery of additional resources to the west of the known mineralization.

Holes H0606 to 0608 – were all drilled in the West Ridge resource area.  The holes offset known mineralization in the pediment and were projected to encounter vein mineralization at depth.  All of the drill holes encountered significant alteration with anomalous gold and silver values over widths of 25 to 80 feet thick.  Generally, these altered zones start immediately below alluvial cover.  The alteration consists of stockwork quartz-calcite veining and silicification within a crystal tuff to tuff breccia.

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H0606 was the furthest south drill hole in the 2006 drill program.  It offset Phelps Dodge drill holes with significant mineralization in alluvium cover.  Hole 0606 intersected the best overall gold and silver values of the three holes drilled in this area.  The mineralization started at the base of the alluvium (140 feet) and continued over a width of 55 feet.  The best interval averaged 0.47 ppm gold and 11 ppm silver over 40 feet or 10 feet of 0.72 ppm gold and 13 ppm silver.  Although these values are not stunning, this hole extends mineralization from the Phelps Dodge drilling.  It is the furthest west hole drilled to date and indicates the mineralization continues to get better further to the west.

H0607 was drilled about 400 feet northeast of H0606.  This hole contained approximately 50 feet with an average of 0.1 ppm gold and 1 ppm silver.  Although this is not ore grade, the zone is definitely significant.  It suggests a rather large area of alteration which is totally blind and open to the north, west and south in relatively flat landscape which would be easy to explore.  Weak alteration and mineralization continues in H0607 to 480 feet.  The drilling continued to 530 feet, but alteration tapers off dramatically.

H0608 was drilled about 300 feet further to the northeast to offset a Phelps Dodge drill hole.  The PD hole encountered 20 feet of 0.23 opt gold (about 7.5 ppm gold).  In H0608 the entire hole contained moderately altered volcanic breccias with minor quartz stockworks and moderate bleaching of mafic minerals.  The entire hole was anomalous in gold (0.0X ppm).  Several individual zones contained 15 to 20 feet thick intercepts of mineralized quartz veining.  The gold and silver values remained weak compared to the previous drilling by Phelps Dodge.  However, the discreet zones of mineralization generally averaged 0.2 ppm gold and 12 ppm silver within thicker intercepts of 0.0X ppm.  Individual five feet samples assayed 0.3 to 0.45 ppm gold and up to 30 ppm silver.

Holes H0609 and H0610 - targeted two altered structures within a crystal tuff unit.  The mineralized area is 800 feet west of the western margin of resource “A”.  Both drill holes were located to intersect apparent mineralized structures observed on surface.  Drill hole H0609 was drilled due east at -60 degrees.  It intersected 15 feet of gold mineralization (0.66 ppm) from 65 to 80 feet.  This zone may be related to bedding replacement of a volcanic tuff.

Hole H0610 encountered 15 feet of 0.24 ppm gold and 3 ppm silver in a near surface zone of silicified volcanic material between 55 and 70 feet.  An additional zone of silicified and mineralized material was encountered between 180 and 200 feet.  This zone included an average of 0.2 ppm gold and 2 ppm silver which is likely coincident with the obvious structure on surface.  Both drill holes encountered blind near surface mineralization adjacent to structures that had been previously recognized and drilled.

The 2006 drilling program was successful in expanding the known target areas and finding new areas of near-surface, low grade gold and silver.  The new intercepts in the “C” resource area (H0604 and H0605), and the West Cliffs zone (H0606 through 0608) combined with the intercepts from the 2005 drilling program in the “A” area indicate potential for an increase in the historic target zones.  Drilling in the north central area also provided new evidence for increasing targets (H0609 and 0610). The interpretation of the 2006 drilling results also suggests faults previously believed to dip to the east may roll to the west at relatively shallow depth.  This finding coupled with the potential for increase of near-surface resources indicates changes are necessary to the exploration philosophy at Hercules.

Future drill programs will be concentrated on further developing the shallow targets on both the east and west sides of the known structures.  Previously, the historic drilling had concentrated on the east side of the structures, defining the shallow resources in “A” through “C”.   The recent holes drilled in the 2005 and 2006 exploration programs suggest further near-surface targets are likely to be developed within the “A” through “C” areas, the West Cliffs hanging wall and the central core between these two areas.  The topography is relatively flat allowing for an inexpensive, shallow drilling program.

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Drilling to depth on the structural zones remains a significant target for developing high grade resources at depth.  Because of the interpretation of the deeper drill holes completed during this program, it is recommended that the next set of deep holes on the property should be drilled from west to east on the northeastern veins within the “B” to “C” resource areas.  The interpretation of the recent drilling suggests that the veins may roll over developing dips of near vertical to westerly at depths of less than 500 feet.

During 2007 the Company conducted a drill program that was completed in March 2008. The program included the drilling of 24 holes for a total 7,415 feet.  The budget for the program approved by the Board of Directors was $275,000.  The Company is awaiting the final assay and report results.

CORTEZ PROPERTY

Map of the Cortez Properties located in western Nevada.

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On February 28, 2005, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in properties known as the “Crescent Fault Property,” the “Bankop Property,” and the “Bullion Mountain Property” (collectively, the “Cortez Property”). Concurrent with the signing of the agreement, the Company made the first property option payment of $65,000. The agreement requires certain additional minimum annual property option payments totaling $445,000 and minimum annual exploration expenditures totaling $1,150,000 to be paid or incurred by February 15, 2010. The agreement is subject to a 3% royalty payable to MinQuest. In addition, the Company is required to use MinQuest for exploration activities undertaken on the properties.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $250,000 was to be spent by September 1, 2006.

To January 31, 2008, the Company had made the initial option payment of $65,000 due on signing as well as the $40,000 option payment due February 2007 and the $30,000 option payment due in February 2006.  In addition the Company has incurred approximately $230,000 in exploration expenditures on the property.  With agreement from MinQuest, upon the completion of the drill program planned for the second quarter of 2008 the Company will have met its exploration requirements to February 15, 2008.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

CRESCENT FAULT PROPERTY

Description and Location of the Crescent Fault Property

The Crescent Fault Property is located in Eureka County, Nevada and consists of 33 unpatented claims. Access to the property is via paved highway and graded gravel road. Land claims in the district are administered under Department of Interior, Bureau of Land Management (“BLM”) under the Federal Land Policy and Management Act of 1976. All claims are held by Desert Pacific Exploration (‘DPE’) and under a Letter Agreement dated February 26, 2005 MinQuest acquired the rights to the claims comprising the Crescent Fault Property from DPE. The Letter Agreement allows MinQuest to assign its interest to third parties.

Exploration History of the Crescent Fault Property

The Crescent Fault Property was explored by Homestake from 1983 to 1986, Noranda from 1992 to 1994, and North Mining from 1995 to 1996. Past exploration includes considerable rock chip sampling, geologic mapping, and drilling. Clastic sediments have been silicified and argillized along a range front fault zone. Drilling has tested part of the range front and some of the down dropped section. Drilling on the property is summarized as follows:

Homestake	1985-1986	2 holes drilled for 1,855 feet
Noranda	1992-1993	8 holes drilled for 4,436 feet
North	1995	8 holes drilled for 3,930 feet

Drilling has intersected significant sphalerite and galena. The lead-zinc mineralization appears to be related to epidote-chlorite skarn. The drilling has focused on testing the surface expression of pyritic jasperoid and quartz veining developed within parallel to sub-parallel faults to the range front. Potential down dropped sections of mineralization may exist under alluvial cover. Outcrops of jasperoid are developed along low angle thrust faults and high angle shear zones. Tertiary age dikes have been noted along high angle faults trending northwesterly.

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Geology of the Crescent Fault Property Mineral Claims

The property was discovered while prospecting along the Crescent fault. One short adit and a few small prospect pits were the only evidence of previous exploration efforts prior to the first drill holes. The drilling has focused along the range front, intersecting significant alteration and mineralization.

The regional geology consists of a package of Pennsylvanian to Permian carbonate to siliciclastic sediments. This sediment package has been intruded by a possible Cretaceous granodiorite to porphyry rhyolite. The range front has had both strike-slip and dip-slip movement, down dropped along the Crescent fault. Placer Dome has determined the strike-slip movement to be up to 1 mile in an east-northeasterly direction. Many parts of the Crescent fault have been down dropped over 1000 feet under alluvial cover. In the vicinity of the property, drilling and geophysical data indicate a shelf of bedrock has been preserved at depths ranging from 250 to 400 feet deep for up to 1000 feet from the fault zone. Potential for a preserved portion of mineralized bed rock at reasonable depth is very good.

Tertiary volcanoclastics on the eastern part of the property are altered and quartz veined along strike of the fault. Jasperoid shows slickensides indicating two movements, one down dropped and one left lateral. Low angle faulting was noted near the top of the ridge and has been down faulted along the range front, in the next section west. The low angle faulting is represented by Ordovician chert and quartzite thrust over Pennsylvanian carbonate. North to northwest trending faults bisect the range front fault zone, down dropping and offsetting mineralization in several areas. Possible Tertiary age dikes and sills have intruded and healed several northwesterly faults and the crescent fault zone. These dikes are argillized, iron stained and in a few places, quartz veined.

The property covers a well defined zone of alteration exposed along the range front fault zone bounding the southeast portion of Crescent Valley. The alteration is composed of jasperoid, decalcified limestone, silicified shale, and quartz veining filling faults and fractures in intrusive rocks and siliciclastic sediments. Tertiary age dikes have intruded the sediments and older intrusive rocks, generally following a northwesterly trend. Alteration zones carry low values in gold, silver and copper along with minor elevations of trace elements typically identified in other disseminated gold deposits of the area. The jasperoid is vuggy with weak, erratic gold and anomalous arsenic, mercury and antimony on the surface.

The Jasperoid target dips northwesterly under alluvium, paralleling the Crescent Fault. Drilling has intercepted relatively shallow bedrock under the alluvium, but no gold has been encountered to date. Extensions of the zone will be mapped and sampled to further define this target area.

Skarn mineralization is hidden. Skarn is weakly developed and spotty throughout the area. Drilling has encountered high grade gold and base metals in carbonate rocks.  Mapping of alteration phases may better define the Skarn target. At present, the best potential target is a blind skarn zone with high-grade gold potential.

Current State of Exploration

The Crescent Fault claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

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Paved roads come within 5 miles of the property and well maintained gravel roads provide access within 1,000 feet of the property boundary. A dirt road is in place and provides adequate access throughout the property. All currently proposed drilling can be done without further road building.

Geological Exploration Program

Potential exists for the existence of relatively high-grade gold. The exploration completed to date has identified mineralization within fault zones parallel to the range front fault. Sampling has indicated weakly anomalous gold values exist over 12,000 feet of strike length.  In 2005 the Company initiated a program of geophysical and geochemical surveys over the pediment area along strike of the mineralization.  The surveys were following up on the observations of previous geophysicists and drill-hole data from former property owners suggesting shallow pediment.  Five CSMT (Controlled Source Magneto Telluric) survey lines were collected to determine changes in lithology and potential parallel faulting to the main Crescent Fault.

Also in 2005 a reconnaissance auger sampling program was designed to test for concealed gold mineralization in pediment cover.  The auger holes were positioned 30 meters apart along each line and the lines were separated about 300 meters apart, perpendicular to the range front.  The holes tested the caliche layer developed within transported material.  Gold mineralization is known to leak from sources below and become entrapped in the caliche layer.  This system is not widely used but is proven technology in finding buried gold deposits in desert environments in both Nevada and Australia.  It has been successful in finding at least two gold deposits in the Battle Mountain area.

A total of 175 samples were collected along 9 widely separated lines.  The samples were tested for calcium carbonate on site and 31 elements in the ALS/Chemex lab.  No gold was identified in any of the samples.

The 2005 program of CSMT and auger drilling did not identify any significant drill targets within the pediment zone.  The topography is too steep to effectively conduct geophysical surveys to identify new drill targets on the rest of the property.  However, the original drill targets still remain.

The exploration contractor has made several recommendations to the Company.  Amongst the recommendations are that at least one drill hole should be spotted to intersect the favorable host rocks at a depth of 300 meters and a second hole should be placed to twin the original drill hole that intersected 4 g/t gold.  This hole would determine the alteration type and structural control of the mineralization.  It has also been recommended that 5 additional drill holes be targeted at areas of gold in rock chip that have yet to be drill tested.  Offsetting known mineralization in previous drilling is also highly recommended.

The Crescent Fault Property forms part of the Cortez Property and as such is covered by the Cortez Property Option Agreement such that annual minimum property expenditures can be incurred on any of the three properties making up the Cortez Property.  Based on an evaluation of the previous work undertaken on the Cortez Property and based upon recommendations from MinQuest, the Company elected to conduct a drill exploration program on the Bankop Property in 2006 in order to meet the Company’s exploration expenditure commitments under the Cortez Property Option Agreement.  As a result, the Company did not undertake an exploration program on the Crescent Fault claims in 2006.

For 2007 the Board of Directors has approved a budget of $150,000 for the Crescent Fault Property.  The exploration plan includes drilling three or four holes for a total of 2,000 feet.  The work has not yet been completed but it is hoped that it will be undertaken in April or May 2008.  The Company has not yet made its determination on its 2008 exploration programs.

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BANKOP PROPERTY

Description and Location of the Bankop Property

The Bankop Property is located in eastern Lander County, Nevada, approximately 40 kilometers (25 miles) southeast of Battle Mountain and six kilometers (4 miles) northwest of the Pipeline Mine. The property consists of 24 unpatented mining claims. Land claims in the district are administered under Department of Interior, Bureau of Land Management (“BLM”) under the Federal Land Policy and Management Act of 1976. All claims are held by Desert Pacific Exploration (‘DPE’) and under a Letter Agreement dated February 26, 2005 MinQuest acquired the rights to the claims comprising the Bankop Property from DPE. The Letter Agreement allows MinQuest to assign its interest to third parties.

Exploration History of the Bankop Property

There has been no production from the Bankop claims.

Historic prospect pits, adits, and shafts occur throughout the low lying hills of the area. The property has seen recent exploration efforts beginning as early as 1965. Exploration companies involved included U.S Mining and Exploration Company, Inc., Phelps Dodge, Inc., Placer Amex, Inc., Cyprus Exploration Company, Homestake Mining Company, U.S Borax, Placer Dome U.S. Inc., Noranda Exploration, Inc. (Hemlo Gold, Inc.), Uranerz U.S.A., Inc. and Minorca Resources Inc. This very large volume of geologic information is an extremely valuable tool for further study of the property.

Geology of the Bankop Mineral Claims

Regionally, the Utah Camp property is situated within the Battle Mountain-Eureka Trend, a northwest striking 30 to 40 mile wide (45 to 60 km) belt of mostly Paleozoic rocks which are intruded by numerous Cretaceous to Tertiary age intrusives. All bedrock mapped to date on the Bankop property is Upper Plate fine-grained clastic rocks. Although these rocks are dominated by siliceous lithologies, they do contain an appreciable thickness of carbonate-rich rocks. Deep drilling by Uranerz contains thick sections of calcareous siltstone within the Valmy. Calcareous sandstones make up a significant portion of the middle Elder Formation. Both of these rock types are good host rocks for Carlin style mineralization.

A significant portion of the property is covered by Quaternary alluvium. Outcrop is normally sparse, except where thick sections of quartzite occur. Colluvial cover is relatively thick once the break in slope is reached traversing from ridge top to valley.

Besides the bedding plane faults associated with thrust slices, several high angle faults have been mapped. The dominant trend is northeast and the next most abundant trend is northwest. East-west high angle structures are most common in the southern portion of the property.

Mineralization occurring within the property is gold associated with arsenic and mercury. The main alteration type is clay, and therefore, it is rare for the mineralization to outcrop. Instead it is usually found in topographic lows. Bulldozer work has exposed decalcified sandstone. This and several other gold anomalies in rocks and soils within the property are indications of Carlin style mineralization. Significant gold intercepts of Carlin style mineralization occur around a bulldozer trench. Several holes drilled in this area have shown mineralization.  All of the above holes were drilled vertically.

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A number of companies have explored for Carlin style systems within the property. Although these efforts provide an excellent database for further studies they failed to define or test a single feeder structure. Because the property is underlain by upper plate rocks not known to host large gold deposits elsewhere in the district, the emphasis has been on deep drilling to test lower plate carbonate rocks.  Without an associated feeder fault this effort will be fruitless.

Current State of Exploration

The Bankop claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

Geological Exploration Program

The work program undertaken by the Company in 2005 included an auger program that grid-sampled the entire claim block with 30 by 300 meter centers.  This program was successful in further defining the trend and extent of gold mineralization and identifying four other gold anomalies elsewhere on the property.  The reconnaissance auger sampling program was designed to further extend the known gold anomaly and potentially identify a widening of the gold zone.  Areas of blossoming gold anomalies may suggest structural intersections that should be drill tested.  The auger holes were positioned 30 meters apart along each line and lines were separated about 200 meters apart.  The holes penetrated the loess cover in almost every instance and collected soil and/or rock from the bottom of the hole.  Depths of penetration ranged from less than 0.3 meters to over 7 meters.

Gold values were generally widespread within the south half of the property.  High grade values were encountered along several lines.  The best value was collected from Line D near the middle of the traverse.  A compilation of rock, soil, auger and drill geochemistry for gold indicates three anomalous areas with multiple sample sites and two single point anomalies.  The anomalous areas range from 600 by 150 meters to 30 by 30 meters.

A second gold anomaly was identified on the southern portion of the claim block.  This zone trends northerly and is 600 meters long and 150 meters wide.  The zone is hosted partly within the Ordovician Valmy quartzite.  A brecciated fault zone defines the contact between the Valmy and Elder Formations.   Gold values are elevated along this fault zone.  However, the fault is oblique to the sample lines and has limited coverage by the auger survey.

A third gold anomaly was identified by Uranerz, but missed by the Auger survey.  The anomaly is represented by two sample sites that fall midway between lines A and B on the northern portion of the claim block.

During 2006 the Company conducted a drill program that was completed in January 2007.    A total of seven holes covering 2,440 feet of the initially planned 3,000 feet of drilling were completed on the Property.  The drilling was terminated early because of extreme winter weather causing equipment failure.  The 2006 drill program on the Bankop Property was designed to test the expression of surface gold values discovered in the previous work programs at relatively shallow depths.  The surface expression of the gold values indicates at least three separate targets variously named the South, Central and East Targets.  The South and Central targets were drill-tested to determine the strike and extent of faulting that presumably controlled the gold deposition at surface.  The Company determined not to undertake an exploration program on the Bankop portion of the Cortez property in 2007.  The Company focused its resources on the Crescent Fault portion of the property in 2007.

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The Bankop Property forms part of the Cortez Property and as such is covered by the Cortez Property Option Agreement such that annual minimum property expenditures can be incurred on any of the three projects making up the Cortez Property.  Based on an evaluation of the previous work undertaken on the Cortez Property and based upon recommendations from MinQuest, the Company elected to conduct a drill exploration program on the Crescent Fault Property in 2007 in order to meet the Company’s exploration expenditure commitments under the Cortez Property Option Agreement.  The Company has not yet made its determination on its 2008 exploration programs.

BULLION MOUNTAIN PROPERTY

Description and Location of the Bullion Mountain Property

The Bullion Mountain Property is located in Lander County, Nevada within T29N, R46E and consists of 18 mining claims. A portion of the claims is made up of the Bully and Chief groups of claims.  Access is via gravel road south from Battle Mountain  Land claims in the district are administered under Department of Interior, Bureau of Land Management (“BLM”) under the Federal Land Policy and Management Act of 1976. All claims are held by Desert Pacific Exploration (‘DPE’) and under a Letter Agreement dated February 26, 2005 MinQuest acquired the rights to the claims comprising the Bullion Mountain Property from DPE. The Letter Agreement allows MinQuest to assign its interest to third parties.

Exploration History of the Bullion Mountain Property

The property may have been prospected as early as the 1870’s. Numerous prospect pits and shallow adits dot the top of the ridge that makes up part of Bullion Mountain. The most extensive prospecting occurs along low and high angle fault zones with clear quartz veins. The fault zones generally trend east-northeasterly. These veins can assay over a half ounce of gold across 1 meter.

The property lies along the Pipeline fault zone which has been defined by Placer Dome as having a northwesterly trend.  The Chief and Bully claims have been previously explored by Placer Dome, Asarco, Hemlo, Lac, Barrick, and Pallum. Recent work includes drilling by Asarco on the Bully claims and drilling by Placer Dome and Pallum on the Chief claims.

Numerous surface samples have identified high grade gold (>0.5 opt) in fault zones in upper plate rocks. Drilling by Asarco has encountered 3 meters of 0.204 opt gold on the Bully claims. Drilling by Pallum encountered 1.5 meters of 0.08 opt gold and 15 meters of 0.02 opt gold on the Chief claims. Drilling by Placer Dome and Pallum has identified a small, low grade gold target on the Chief Claims.

Geology of the Bullion Mountain Mineral Claims

Upper plate Silurian to Devonian siliciclastic rocks have been thrust over Cambrian to Silurian carbonate facies. The entire package of sediments has been intruded by Tertiary age granite (Bullion Mountain granite). The Upper Plate assemblage is hornfelsed and bleached near the margin of the intrusive.

The entire area within the claim block is structurally complex with both low and high angle faulting. High angle faults have displaced all rock types.  ENE faults on the Bully claims contain significant gold values.  Many of these ENE faults and shears have been healed with quartz veins and jasperoid silica. Gold is generally found associated with clear, crystalline quartz veins and narrow, argillized dikes. Many of the faults of the area show secondary movement represented by several stages of quartz veining. Recent exploration efforts have been limited to low angle fault zones on the Chief claims and within a discreet area on the Bully claims.

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Drilling has identified significant gold values on the Chief and Bully Claim groups.  The Bully target area contains several high grade fault zones within a breccia zone of lower grade material. The Chief area has been drilled on a grid with roughly 200 foot centers. The drilling suggests a shallow dipping fault breccia zone with consistent gold values. Both target areas may have high angle faults providing plumbing for the gold mineralization in the area. At present, a feeder fault has not been identified within the Chief claim boundary. Exploratory drilling in the valley between Chief and Bully has encountered minor gold values in upper plate rocks. Further work in this area is also recommended.

Current State of Exploration

The Bullion Mountain claims presently do not have any mineral reserves. The property that is the subject to our mineral claims is undeveloped and does not contain any open-pit or underground mines. There is no mining plant or equipment located on the property that is the subject of the mineral claim. Currently, there is no power supply to the mineral claim. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

Geological Exploration Program

Recommended exploration work at the Bully and Chief portion on the property includes detailed geologic mapping and sampling of the claim blocks. Drilling is recommended within the previously defined resource area on the Chief claims. Previous sampling on the Bully claims has identified high grade gold in narrow veins throughout the claim block. Infrastructure is well established in the Chief area. Access roads may have to be built into much of the Bully area. A modest program of infill sampling and detailed mapping should help define drill targets within the Bully claim group. Permitting should be relatively simple since roads are in and the surrounding area is a well known mining field situated on land administered by the US Bureau of Land Management.  No exploration work was carried out on this property during 2006 or 2005.

The Bullion Mountain Property forms part of the Cortez Property and as such is covered by the Cortez Property Option Agreement such that annual minimum property expenditures can be incurred on any of the three projects making up the Cortez Property.  Based on an evaluation of the previous work undertaken on the Cortez Property and based upon recommendations from MinQuest, the Company elected to conduct a drill exploration program on the Bankop Property in 2006 and the Crescent Fault Property in 2007 in order to meet the Company’s exploration expenditure commitments under the Cortez Property Option Agreement.  As a result, the Company did not undertake an exploration program on the Bullion Mountain claims in 2007 or 2006.  The determination for expenditure allocation in 2008 will be dependent upon the review and analysis of the results of the 2007 drill program undertaken on the Crescent Fault Property.  Once that process is complete, the Company will determine its course of action for 2008.

ITEM 3.                      LEGAL PROCEEDINGS

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.  The Company’s property is not the subject of any pending legal proceedings.

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

There was no matter submitted to a vote of security holders during the fourth quarter of the fiscal year ended January 31, 2008.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock is traded on the Over the Counter Bulletin Board sponsored by the National Association of Securities Dealers, Inc. under the symbol “AGFL.OTC:BB”. The Over the Counter Bulletin Board is maintained by the NASDAQ Stock Market, but does not have any of the quantitative or qualitative standards such as those required for companies listed on the NASDAQ Small Cap Market or National Market System. The following table sets forth the range of quarterly high and low closing bids of the common stock as reported on http://finance.yahoo.com during the fiscal years ending January 31, 2008 and 2007:

Financial Quarter		Bid Information*
Fiscal Year Ended January 31,	Quarter	High Bid	Low Bid
2008	Fourth Quarter	$1.23	$0.46
	Third Quarter	$0.61	$0.35
	Second Quarter	$1.10	$0.51
	First Quarter	$1.74	$0.70
2007	Fourth Quarter	$0.82	$0.62
	Third Quarter	$1.06	$0.70
	Second Quarter	$1.85	$0.75
	First Quarter	$2.11	$0.60

*The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Holders of Our Common Stock

The Company estimates that as of April 15, 2008, we had fifty (50) registered holders of shares of common stock.

Recent Sales of Unregistered Securities

There were no sales of equity securities of the Company by the Company during the period covered by this report that were not registered under the Securities Act of 1933, as amended.

Dividend Policy

As of April 28, 2008, there had been no dividends declared on the Company’s Common Stock.  We have never declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

36

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends.  The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

1.           We would not be able to pay our debts as they become due in the usual course of business; or

2.           Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

Securities Authorized for Issuance under Equity Compensation Plans

The following table presents certain information as of January 31, 2008 with respect to compensation plans under which equity securities of the Company are authorized for issuance:

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a)	Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (b)	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity Compensation Plans Approved by Security Holders	-	-	-
Equity Compensation Plans Not Approved by Security Holders	2,685,800(1)	$1.41	1,800,000
Total	2,685,800	$1.41	1,800,000

(1) Such amount includes 850,000 common stock purchase options which are outstanding and exercisable pursuant to the American Goldfields Inc.’s 2004 Stock Option Plan.  It also includes 1,835,800 common stock purchase warrants.

The 2004 Stock Option Plan

In March 2004, the Board of Directors adopted the American Goldfields Inc.’s 2004 Stock Option Plan (the 2004 Plan) reserving 5,000,000 common shares for grant to employees, directors and consultants. As of April 28, 2008, there were a total of 3,200,000 options that had been granted under the plan. Of these, 850,000 remain outstanding and exercisable at a weighted average exercise price of $1.09 per option.  The following discussion describes material terms of grants made pursuant to the stock option plans:

37

Pursuant to the 2004 Stock Option Plan, grants of shares can be made to employees, officers, directors, consultants and independent contractors of non-qualified stock options as well as for the grant of stock options to employees that qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986 (“Code”) or as non-qualified stock options. The Plan is administered by the Option Committee of the Board of Directors (the “Committee”), which has, subject to specified limitations, the full authority to grant options and establish the terms and conditions for vesting and exercise thereof. Currently the entire Board functions as the Committee.

In order to exercise an option granted under the Plan, the optionee must pay the full exercise price of the shares being purchased. Payment may be made either: (i) in cash; or (ii) at the discretion of the Committee, by delivering shares of common stock already owned by the optionee that have a fair market value equal to the applicable exercise price.

Subject to the foregoing, the Committee has broad discretion to describe the terms and conditions applicable to options granted under the Plan. The Committee may at any time discontinue granting options under the Plan or otherwise suspend, amend or terminate the Plan and may, with the consent of an optionee, make such modification of the terms and conditions of such optionee’s option as the Committee shall deem advisable.

Purchases of equity securities by the issuer and affiliated purchasers

None.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable to smaller reporting companies

ITEM 7.                      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AND PLAN OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Form 10-K. The matters discussed herein contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which involve risks and uncertainties. All statements other than statements of historical information provided herein may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes”, “anticipates”, “plans”, “expects” and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, those discussed under the heading “Factors that May Affect Future Results” and elsewhere in this report and the risks discussed in our other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof.

38

Plan of Operations

Our business plan is to proceed with the exploration of the Gilman, Imperial, Hercules and Cortez Properties to determine whether there are commercially exploitable reserves of gold and silver or other metals. We had cash of $29,771 and a working capital deficit of ($171,456) as of January 31, 2008.  Subsequent to January 31, 2008 we received total proceeds of $218,750 from the exercise of share purchase warrants.  Even with the receipt of these proceeds we do not have sufficient cash available to fund all of our planned exploration activities.  We shall require additional funding and we anticipate that such funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund additional phases of the exploration program, should we decide to proceed. We believe that debt financing will not be an alternative for funding any further phases in our exploration program. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing.

During our exploration stage, our President will only be devoting approximately five hours per week of his time to our business. We do not foresee the limited involvement of our President as negatively impacting our Company over the next twelve months as all exploratory work is being performed by outside consultants. Additionally, we will not have a need to hire any employees over the next twelve months; nor do we plan to make any purchases of equipment over the next twelve months due to reliance upon outside consultants to provide all tools needed for the exploratory work being conducted.

Results of Operations for the Fiscal Year Ended January 31, 2008

We did not earn any revenues during the fiscal year ended January 31, 2008 or 2007. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.

For the year ended January 31, 2008 we had a net loss of $955,613 compared to $692,299 for the prior year, an increase of $263,314.  Our loss for 2008 has increased substantially over 2007 primarily due to an increase in mineral claim payments and exploration expenditures to $860,227 in 2008 from $393,787 in 2007, an increase of $466,440.   The increase was due to higher exploration costs, stock-based compensation, and option payments.  The increase in exploration expenditures was largely due to more exploration expenses being incurred in 2008 compared to 2007.  In 2008 the Company completed the 2008 drill program on the Hercules Property, commenced drilling on the Gilman Property, and completed the 2007 drill programs on the Hercules and Bankop Properties.  In 2007, the Company undertook a portion of the drill programs on the Hercules and Bankop Properties.  Both of these 2007 exploration programs carried over into February and March 2007. Stock-based compensation was $187,800 in 2008 compared to $195,600 in 2007.  In 2008, the stock-based compensation related to geology consultants and as a result has been expensed to exploration expense. In 2007, the stock-based compensation related to the granting of stock options to the Company’s President and accordingly the expense was allocated to Consulting Fees.  The balance of the increase in mineral claim payments and exploration expenditures was a result of the Company making option payments totaling $95,000 in 2008 compared to $85,000 in 2007.  During 2008 the Company made option payments under the Hercules $20,000 (2007 - $20,000), Imperial $20,000 (2007 - $20,000), Gilman $15,000 (2007 - $15,000), and the Cortez $40,000 (2007 - $30,000) property option agreements.

39

General and administrative expenses were largely consistent between 2008 and 2007.  However, Professional Fees and Directors’ Fees both increased in 2008.  Professional Fees increased from $25,219 in 2007 to $37,524 in 2008 due to an increase in the cost of audit and legal fees.  Directors’ fees increased as a Director was added to the Board in September 2006 so that for 2008 the Board had four members for the whole year while in 2007 it had four members for only a portion of the year.

Liquidity and Capital Resources

We had cash of $29,771 and a working capital deficit of ($171,456) as of January 31, 2008. We anticipate that we will incur over the next twelve months:

$105,000 in connection with property payments under the Company’s four option agreements. Of this amount, $50,000 was paid by the Company on February 15, 2008 under the Cortez Property Option Agreement;

$793,000 in property exploration expenses in order to meet the requirements of the Company’s property option agreements;

$90,000 for operating expenses, including working capital and general, legal, accounting and administrative expenses associated with reporting requirements under the Securities Exchange Act of 1934.

Net cash used in operating activities during the year ended January 31, 2008 was $704,014 compared to $372,950 during the year ended January 31, 2007.  The increased cash used in operations was primarily due to an increase in the net loss in 2008 ($955,613) compared to 2007 ($692,299). In addition, in 2008 there was an outflow from the payment of Prepaid Expenses of $21,089 compared to an inflow of $4,930 in 2007.  Also, in 2008 the Company increased its accounts payable and accrued liabilities by $84,388 while in 2007 the amount of the increase was $112,819.

Cash from financing in 2008 related to $200,000 received from a private placement and $199,500 from the exercise of common stock options partially offset by the payment of the related party payable of $30,000.  In 2007 cash from financing was due to $480,000 received from the exercise of stock options partially offset by a $30,000 outflow related to the redemption of 3,000,000 common shares.  Cash used in investing activities in 2008 and 2007 related to the payment of refundable reclamation deposits to the State of Nevada of $21,227 in 2008 and $6,534 in 2007.

Subsequent to January 31, 2008 we received total proceeds of $218,750 from the exercise of share purchase warrants.  Even with the receipt of these proceeds current cash on hand is not sufficient to fund all of the Company’s operating requirements for the next twelve months. We shall require additional funding and we anticipate that such funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund additional phases of the exploration program, should we decide to proceed. We believe that debt financing will not be an alternative for funding any further phases in our exploration program. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing.

40

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

ITEM 7A                      QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 8.                      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements:

1. Auditors’ Report;

2. Audited Consolidated Financial Statements for the year ended January 31, 2008, including:

a. Consolidated Balance Sheets as at January 31, 2008 and 2007;

b. Consolidated Statements of Operations for the years ended January 31, 2008 and 2007 and for the period from inception on December 21, 2001 to January 31, 2008;

c. Consolidated Statements of Cash Flows for the years ended January 31, 2008 and 2007 and for the period from inception on December 21, 2001 to January 31, 2008;

d. Statements of Stockholders’ Equity for the years ended January 31, 2008 and 2007 and for the period from inception on December 21, 2001 to January 31, 2008;

e. Notes to the Consolidated Financial Statements.

41

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

FINANCIAL STATEMENTS

JANUARY 31, 2008 and 2007

(Stated in U.S. Dollars)

42

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

American Goldfields Inc.

(An exploration stage company)

We have audited the accompanying balance sheets of American Goldfields Inc. (an exploration stage company) as at January 31, 2008 and 2007 and the related statements of operations, cash flows, and stockholders’ (deficiency) equity for each of the two years in the period ended January 31, 2008 and the cumulative period from inception, December 21, 2001 to January 31, 2008.  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 audit 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 audits 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  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 the Company as at January 31, 2008 and 2007 and the results of its operations and its cash flows for the years ended January 31, 2008 and 2007 and the cumulative period from inception, December 21, 2001 to January 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, has negative cash flows, has a stockholders’ deficiency and is dependent upon obtaining adequate financing to fulfill its exploration activities.  These factors raise substantial doubt about its ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Vancouver, Canada	“Morgan & Company
April 28, 2008	Chartered Accountants

43

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

BALANCE SHEETS

(Stated in U.S. Dollars)

	JANUARY 31
	2008			2007
ASSETS
Current Assets
Cash and cash equivalents	$	29,771		$	385,512
Prepaid expenses		22,788			1,699
		52,559			387,211
Reclamation deposit (note 4)		54,968			33,741
Web-site development costs, net (note 5)		-			500
	$	107,527		$	421,452
LIABILITIES AND STOCKHOLDERS’ (DEFICIENCY) EQUITY
Current Liabilities
Acco unts payable and accrued liabilities	$	224,015		$	139,627
Accounts payable – related party (note 7)		-			30,000
		224,015			169,627
Stockholders’(deficiency) equity
Preferred Stock
100,000,000 shares authorized with a par value of $0.001 per share, none issued or outstanding		-			-
Common Stock (note 6)
Authorized:
600,000,000 shares with a par value of $0.001 per share
Issued:
20,980,378 shares issued and outstanding at January 31, 2008 (January 31, 2007 – 20,292,878)		20,980			20,293
Additional paid-in capital		2,919,530			2,460,257
Warrants		829,604			702,264
Deficit accumulated during the exploration stage		(3,886,602	)		(2,930,989	)
Total stockholders’ (deficiency) equity		(116,488	)		251,825
	$	107,527		$	421,452

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

44

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

STATEMENTS OF OPERATIONS

(Stated in U.S. Dollars)

	YEAR ENDED JANUARY 31						CUMULATIVE PERIOD FROM INCEPTION, DECEMBER 21, 2001 TO
							JANUARY 31
	2008			2007			2008
Expenses
Mineral claim payments and exploration expenditures	$	860,227		$	393,787		$	2,569,335
Office and sundry		39,138			37,047			499,418
Rent		4,855			4,166			20,021
Professional fees		39,480			25,219			177,676
Transfer agent fees		255			470			6,290
Amortization		500			6,000			18,000
Interest expense		-			-			1,070
Directors’ fees		11,158			6,489			23,078
Consulting fees		-			222,100			583,027
Total expenses		(955,613	)		(695,278	)		(3,897,915	)
Interest income		-			2,979			11,313
Net loss for the period	$	(955,613	)	$	(692,299	)	$	(3,886,602	)
Basic and diluted loss per share	$	(0.05	)	$	(0.03	)
Weighted average number of shares outstanding – basic and diluted		20,577,330			22,673,700

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

45

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

STATEMENTS OF CASH FLOWS

(Stated in U.S. Dollars)

	YEAR ENDED JANUARY 31,						CUMULATIVE PERIOD FROM INCEPTION, DECEMBER 21, 2001 TO
							JANUARY 31
	2008			2007			2008
Cash provided by (used in):
Operating activities
Net loss for the period	$	(955,613	)	$	(692,299	)	$	(3,886,602	)
Adjustments to reconcile net loss to net
Cash flows used in operating activities
Stock-based compensation		187,800			195,600			1,729,000
Amortization		500			6,000			18,000
Changes in assets and liabilities
Prepaid expenses		(21,089	)		4,930			(22,788	)
Accounts payable and accrued liabilities		84,388			112,819			228,558
		(704,014	)		(372,950	)		(1,933,832	)
Financing activities
Proceeds from the exercise of stock options		199,500			480,000			774,000
Proceeds from the issue of common stock		200,000			-			1,304,571
Payment of amounts due to related party		(30,000	)		-			(30,000	)
Proceeds from loan		-			-			60,000
Repayment of loan principal		-			-			(60,000	)
Cancellation of common stock		-			(30,000	)		(30,000	)
		369,500			450,000			2,018,571
Investing activity
Reclamation deposit		(21,227	)		(6,534	)		(54,968	)
Increase (decrease) in cash and cash equivalents		(355,741	)		(70,516	)		29,771
Cash and cash equivalents, beginning of period		385,512			314,996			-
Cash and cash equivalents, end of period	$	29,771		$	385,512		$	29,771

SCHEDULE OF NON-CASH ACTIVITIES

Cancellation of common stock (note 7)	$	-	$	30,000	$	30,000
Settlement of accounts payable by contribution from a stockholder	$	-	$	-	$	4,543
Web-site development costs related to non-employee stock-based compensation	$	-	$	-	$	8,000

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

46

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

STATEMENT OF STOCKHOLDERS’ (DEFICIENCY) EQUITY

Period from Inception, December 21, 2001 to January 31, 2008

(Stated in U.S. Dollars)

	COMMON STOCK
	NUMBER OF COMMON SHARES			PAR VALUE			ADDITIONAL PAID IN CAPITAL			WARRANTS		DEFICIENCY ACCUMULATED DURING THE EXPLORATION STAGE			TOTAL STOCKHOLDERS’ (DEFICIENCY) EQUITY
Shares issued for cash on Incorporation at $0.001 per share		6,000,000		$	6,000		$	-		$	-	$	-		$	6,000
Shares issued for cash at $0.03 per share on January 31, 2002		2,985,713			2,986			86,585			-		-			89,571
Net loss for the period		-			-			-			-		(10,745	)		(10,745	)
Balance, January 31, 2002		8,985,713			8,986			86,585			-		(10,745	)		84,826
Net loss for the year		-			-			-			-		(54,598	)		(54,598	)
Balance, January 31, 2003		8,985,713			8,986			86,585			-		(65,343	)		30,228
Net loss for the year		-			-			-			-		(28,366	)		(28,366	)
Balance, January 31, 2004		8,985,713			8,986			86,585			-		(93,709	)		1,862
Stock split adjustment on February 23, 2004		44,928,565			44,928			(44,928	)		-		-			-
Contributions by shareholders		-			-			4,543			-		-			4,543
Cancellation of common shares on March 31, 2004		(30,000,000	)		(30,000	)		30,000			-		-			-
Stock-based compensation		-			-			61,200			-		-			61,200
Exercise of common stock options		1,500,000			1,500			88,500			-		-			90,000
Private placement, common share issuances for cash at $2.50 per unit on November 4, 2004		403,600			404			306,332			702,264		-			1,009,000
Net loss for the year		-			-			-			-		(325,261	)		(325,261	)
Balance, January 31, 2005		25,817,878			25,818			532,232			702,264		(418,970	)		841,344
Exercise of common stock options		75,000			75			4,425			-		-			4,500
Stock-based compensation		-			-			1,302,400			-		-			1,302,400
Net loss for the year		-			-			-			-		(1,819,720	)		(1,819,720	)
Balance, January 31, 2006 –carried forward		25,892,878		$	25,893		$	1,839,057		$	702,264	$	(2,238,690	)	$	328,524

47

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

STATEMENT OF STOCKHOLDERS’ (DEFICIENCY) EQUITY

Period from Inception, December 21, 2001 to January 31, 2008

(Stated in U.S. Dollars)

(Continued)

	COMMON STOCK
	NUMBER OF COMMON SHARES			PAR VALUE			ADDITIONAL PAID IN CAPITAL			WARRANTS		DEFICIENCY ACCUMULATED DURING THE EXPLORATION STAGE			TOTAL STOCKHOLDERS’ (DEFICIENCY) EQUITY
Balance, January 31, 2006 – brought forward		25,892,878		$	25,893		$	1,839,057		$	702,264	$	(2,238,690	)	$	328,524
Cancellation of common stock on July 12, 2006		(3,000,000	)		(3,000	)		(27,000	)		-		-			(30,000	)
Cancellation of common stock on July 14, 2006		(3,000,000	)		(3,000	)		(27,000	)		-		-			(30,000	)
Exercise of common stock options		400,000			400			479,600			-		-			480,000
Stock-based compensation		-			-			195,600			-		-			195,600
Net loss for the year		-			-			-			-		(692,299	)		(692,299	)
Balance, January 31, 2007		20,292,878			20,293			2,460,257			702,264		(2,930,989	)		251,825
Private placement, common share issuances for cash at $0.64 per unit on December 6, 2007		312,500			312			72,348			127,340		-			200,000
Exercise of common stock options		375,000			375			199,125			-		-			199,500
Stock-based compensation		-			-			187,800			-		-			187,800
Net loss for the year		-			-			-			-		(955,613	)		(955,613	)
Balance, January 31, 2008		20,980,378		$	20,980		$	2,919,530		$	829,604	$	(3,886,602	)	$	(116,488	)

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

48

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

1.      NATURE OF OPERATIONS

Organization

The Company was incorporated in the State of Nevada, U.S.A., on December 21, 2001.

Exploration Stage Activities

The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations.  It is primarily engaged in the acquisition and exploration of mining properties.  Upon location of a commercial, minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage.

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.

As shown in the accompanying financial statements, the Company has incurred a net losses of $3,886,602 for the period from December 21, 2001 (inception) to January 31, 2008, and has no sales.  The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties.  Management has plans to seek additional capital through a private placement and public offering of its common stock.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

2.      SIGNIFICANT ACCOUNTING POLICIES

The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

Basis of Presentation

In prior years the annual financial statements were presented on a consolidated basis, which included the accounts of the Company and its wholly-owned Canadian subsidiary, Baymont Explorations Inc. (“Baymont”).  Since May 2004, the Parent Company has focused its exploration activity in the State of Nevada and the Company’s subsidiary has been inactive. As a result, during the year ended January 31, 2007, Baymont was dissolved for failure to file Annual Reports with the Registrar of Companies in British Columbia.  Baymont had no assets and its sole liability was to its Parent Company.

In accordance with generally accepted accounting principles in the United States financial statements for years prior to the dissolution of Baymont are to be restated to eliminate the effect of Baymont.  Since Baymont had no assets and its sole liability and its equity were eliminated on consolidation there is no effect on prior years’ financial statements.

49

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

2.      SIGNIFICANT ACCOUNTING POLICIES - Continued

Capital Assets

Web-site development, including upgrades that extend the useful life of the web-site, is recorded at cost.  Web-site development costs are amortized on a straight-line basis over their estimated useful life of three years.

Mineral Claim Payments and Exploration Expenditures

The Company expenses all costs related to the acquisition, maintenance and exploration of its unproven mineral properties, to which it has secured exploration rights.  If and when proven and probable reserves are determined for a property and a feasibility study prepared with respect to the property, then subsequent development costs of the property will be capitalized.  To date, the Company has not established the commercial feasibility of its exploration prospects. Therefore, all costs have been expensed.

Use of Estimates

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions of future events that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period.  Areas requiring the use of estimates include stock-based compensation, and accounts payable and accrued liabilities.  Management believes the estimates are reasonable.  However, actual results could differ materially from those reported.

Stock-Based Compensation

Effective February 1, 2006, the Company adopted the provisions of SFAS No. 123(R) “Share Based Payment” (SFAS No. 123(R)).  SFAS No. 123(R) requires employee equity awards to be accounted for under the fair value method.  Accordingly, share-based compensation is measured at grant date based on the fair value of the award.  No stock options were granted to employees during the years ended January 31, 2008 or 2007, therefore no compensation expense is required to be recognized under provisions of SFAS No. 123(R).

Prior to February 1, 2006, the company accounted for awards granted to employees under its equity incentive plans using the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations, and provided the required pro forma disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), as amended.   No stock options were granted to employees during the year ended January 31, 2006 and accordingly, no compensation expense was recognized under APB No. 25 and no compensation expense was required to be recognized under provisions of SFAS No. 123(R) with respect to employees.

50

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

2.      SIGNIFICANT ACCOUNTING POLICIES - Continued

Stock-Based Compensation - continued

Under the modified prospective method of adoption for SFAS No. 123(R), the compensation cost recognized by the company beginning on February 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of February 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to February 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R).  The company uses the straight-line attribution method to recognize share-based compensation costs over the service period of the award. Upon exercise, cancellation, forfeiture, or expiration of stock options, or upon vesting or forfeiture of restricted stock units, deferred tax assets for options and restricted stock units with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each vesting period was a separate award. To calculate the excess tax benefits available for use in offsetting future tax shortfalls as of the date of implementation, the company followed the alternative transition method discussed in FASB Staff Position No. 123(R)-3.

Impairment and Disposal of Long-Lived Assets

The carrying value of intangible assets and other long-lived assets are reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment, in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”.  For assets that are to be held and used, an impairment loss is recognized when the estimated undiscounted future cash flows associated with the asset or group of assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and fair value.

Environmental Costs

Environmental expenditures that relate to current operations are charged to operations or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.

Cash and Cash Equivalents

The Company considers all liquid investments, with an original maturity of three months or less when purchased, to be cash equivalents.

51

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

2.      SIGNIFICANT ACCOUNTING POLICIES - Continued

Foreign Currency Translation

The Company’s functional currency is the U.S. dollar.  Transactions in foreign currency are translated into U.S. dollars as follows:

i) monetary items at the rate prevailing at the balance sheet date;

ii) non-monetary items at the historical exchange rate;

iii) revenue and expense at the average rate in effect during the applicable accounting period.

Exchange gains or losses arising on translation are included in income (loss) for the year.

Income Taxes

The Company follows Statement of Financial Accounting Standards No. 109 – “Accounting for Income Taxes” (SFAS 109).  Pursuant to SFAS No. 109, deferred income tax assets and liabilities are computed for differences between the financial statement carrying amounts and the respective tax bases.  Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the periods in which those differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.  Potential benefits of net operating losses have not been recognized in the financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

Loss Per Share

Basic earnings (loss) per share of common  stock is computed  by dividing net income  (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period.  Diluted  earnings  per  share of common  stock  reflect  the  potential dilution that could occur if securities or other contracts to issue common stock were  exercised  or  converted  into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

At January 31, 2008,  potential  common  shares of 2,685,800 (January 31, 2007 – 2,135,800) related  to  common  stock  options and warrants were  excluded  from  the computation  of diluted  earnings  per share since their  effect is anti-dilutive.

Financial Instruments

The Company's financial assets and liabilities consist of cash and accounts payable and accrued liabilities.  Except as otherwise noted, it is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.  The fair values of these financial instruments approximate their carrying values due to the short-term maturities of these instruments.

52

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

2.      SIGNIFICANT ACCOUNTING POLICIES - Continued

Asset Retirement Obligations

The Company has adopted SFAS No. 143, “Accounting for Asset Retirement Obligations”, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset.

SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement.

New Accounting Pronouncements

FAS 155

In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement No. 155, Accounting for Certain Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and 140 (“FAS 155”). This Statement amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” This Statement:

a) permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation,

b) clarifies which interest-only strips and principal-only strips are not subject to the requirements of Statement 133,

c) establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation,

d) clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and

e) amends Statement 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.

This Statement is effective for all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. Earlier adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Provisions of this Statement may be applied to instruments that an entity holds at the date of adoption on an instrument-by-instrument basis.

53

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

2.      SIGNIFICANT ACCOUNTING POLICIES - Continued

New Accounting Pronouncements - continued

FIN 48

In June 2006, the FASB issued interpretation No. 48, “Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109” (“FIN 48”). This interpretation prescribes a recognition threshold and measurement attribute for tax positions taken or expected to be taken in a tax return. This interpretation also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The evaluation of a tax position in accordance with this interpretation is a two-step process. In the first step, recognition, the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step addresses measurement of a tax position that meets the more-likely-than-not criteria. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Differences between tax positions taken in a tax return and amounts recognized in the financial statements will generally result in a) an increase in a liability for income taxes payable or a reduction of an income tax refund receivable, b) a reduction in a deferred tax asset or an increase in a deferred tax liability or c) both a and b. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met.

Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be de-recognized in the first subsequent financial reporting period in which that threshold is no longer met. Use of a valuation allowance as described in FAS 109 is not an appropriate substitute for the de-recognition of a tax position. The requirement to assess the need for a valuation allowance for deferred tax assets based on sufficiency of future taxable income is unchanged by this interpretation. This Interpretation is effective for fiscal years beginning after December 15, 2006.

FAS 157

In September 2006, FASB issued Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. The provisions of FAS 157 are effective for fiscal years beginning after November 15, 2007.

54

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

2.      SIGNIFICANT ACCOUNTING POLICIES - Continued

New Accounting Pronouncements - continued

FAS 158

In September 2006, FASB issued Statement No. 158 Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106, and 132(R) (“FAS 158”). This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006.

FAS 159

In February 2007, FASB issued Statement No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115”. This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.

This Statement is expected to expand the use of fair value measurement, which is consistent with the Board’s long-term measurement objectives for accounting for financial instruments. This Statement applies to all entities, including not-for-profit organizations. Most of the provisions of this Statement apply only to entities that elect the fair value option. However, the amendment to FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities, applies to all entities with available-for-sale and trading securities. Some requirements apply differently to entities that do not report net income. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007.

Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of FASB Statement No. 157, Fair Value Measurements. No entity is permitted to apply this Statement retrospectively to fiscal years preceding the effective date unless the entity chooses early adoption. The choice to adopt early should be made after issuance of this Statement but within 120 days of the beginning of the fiscal year of adoption, provided the entity has not yet issued financial statements, including required notes to those financial statements, for any interim period of the fiscal year of adoption. This Statement permits application to eligible items existing at the effective date (or early adoption date).

55

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

2.      SIGNIFICANT ACCOUNTING POLICIES - Continued

New Accounting Pronouncements - continued

SFAS 141(4)

In December 2007, the FASB issued SFAS 141(4) “Business Combinations” and SFAS 160 “Non-controlling Interests in Consolidated Financial Statements”, which are both effective for fiscal years beginning after December 15, 2008. SFAS 141(4), which will replace FAS 141, is applicable to business combinations consummated after the effective date of December 15, 2008.

The Company will adopt these policies when required.  The implementation of these new standards is not expected to have a material effect on the Company’s financial statements.

3.      MINERAL PROPERTY INTERESTS

Gilman Property

On May 7, 2004, the Company completed an agreement with MinQuest Inc. (‘MinQuest’) for an option to acquire a 100% interest in the Gilman Property.   The Gilman property consists of 19 contiguous, unpatented mineral claims covering approximately 390 acres located in Lander County, Nevada, U.S.A.  Upon signing the agreement the Company paid MinQuest $10,000.  By May 15, 2009 the Company must make additional minimum annual option payments totaling $75,000 and incur annual exploration expenditures of an aggregate $450,000 on the property.  The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $1,000,000 for each 1% repurchased.

On March 22, 2005, the Company executed an amendment to the Gilman Property Option Agreement with MinQuest.  As a result of the amendment, the Company’s obligation to incur $50,000 in exploration expenditures on the Gilman Property by May 2005 was moved to May 2009.  On May 29, 2006 by way of a letter agreement the Company and MinQuest agreed to adjust the exploration expenditure commitments such that the amount due to be spent by May 15, 2006 was moved to May 15, 2007. With agreement from MinQuest, upon completion of the drill program expected to be completed by the second quarter of 2008, the Company will have met its exploration obligations to January 31, 2008.  All other terms and commitments of the original agreement remain unchanged.

To January 31, 2008, the Company had made the initial option payment of $10,000 due on signing as well as the $15,000 option payments due in May 2007, 2006 and 2005.  In addition the Company has incurred approximately $132,000 in exploration expenditures on the property. In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

56

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

3.      MINERAL PROPERTY INTERESTS - Continued

Imperial Property

On June 30, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Imperial Property. The Imperial Property consists of 22 contiguous, unpatented mineral claims covering approximately 450 acres located in Esmeralda County, Nevada, U.S.A.  Upon signing the agreement the Company paid MinQuest $60,000.  The agreement requires certain additional minimum annual option payments totaling $80,000 to be paid by July 1, 2008.  The agreement also requires minimum annual exploration expenditures with a grand total of $500,000 in expenditures required to be incurred on the property by the July 1, 2009.  The property option agreement is subject to a 3% royalty payable to MinQuest.  The Company is required to use MinQuest for exploration conducted on the Imperial Property.

To January 31, 2008, the Company had made the initial option payment of $60,000 upon signing the agreement (see also note 7) as well as the $20,000 option payments due in July 2007, 2006 and 2005.  In addition the Company has incurred approximately $276,000 in exploration expenditures on the property which satisfied the Company’s expenditure requirements to July 1, 2007.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

Hercules Property

On October 22, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Hercules Property.  The Hercules Property consists of 40 mineral claims located in Lyon County, Nevada, USA.  Upon signing the agreement the Company paid MinQuest $20,000.  The agreement requires certain additional minimum annual option payments totaling $200,000 and minimum annual exploration expenditures totaling $4,050,000 to be paid or incurred by November 25, 2014.  The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $3,000,000.

To January 31, 2008, the Company had made the initial option payment of $20,000 due on signing as well as the $20,000 option payments due in November 2007, 2006 and 2005.  In addition the Company has incurred approximately $714,000 in exploration expenditures on the property which satisfies the expenditure requirements to January 31, 2008.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

57

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

3.      MINERAL PROPERTY INTERESTS - Continued

Cortez Property

On February 28, 2005, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Crescent Fault Claims, the Bankop Property, and the Bullion Mountain Property (collectively, the ‘Cortez Property’).  The Cortez Property consists of an aggregate of approximately 75 mineral claims located in Eureka and Lander Counties, Nevada, U.S.A.  Upon signing the agreement the Company paid MinQuest $65,000.  By February 15, 2010 the Company must make additional minimum annual option payments totaling $445,000 and incur annual exploration expenditures of an aggregate $1,150,000 on the property.  The property option agreement is subject to a 3% royalty payable to MinQuest and the Company is required to use MinQuest for exploration conducted on the Cortez Properties.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $250,000 was to be spent by September 1, 2006.

To January 31, 2008, the Company had made the initial option payment of $65,000 due on signing as well as the $40,000 option payment due in February 2007 and the $30,000 option payment due in February 2006.  In addition the Company has incurred approximately $230,000 in exploration expenditures on the property.  With agreement from MinQuest, upon the completion of the drill program planned for the second quarter of 2008 the Company will have met its exploration requirements to February 15, 2008.  In the event the Company does not make the indicated option payments and incur the exploration expenditures, when demanded, the Company will lose its interest in the property.

4.      RECLAMATION DEPOSIT

The Company has been granted exploration permits from the State of Nevada for several of its properties.  As part of the application process, the Company is required to pay refundable deposits to the State as surety for the estimated reclamation costs associated with planned exploration programs.  Upon completion of required reclamation the Company will receive a refund of the deposit.

5. WEB-SITE DEVELOPMENT COSTS

Web-site development costs, totaling $18,000, represent capitalized costs of design, configuration, coding, installation and testing of the Company’s web-site up to initial installation.  Ongoing web-site post-implementation costs will be charged to operations as incurred.

58

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

6. COMMON STOCK

a) Issued Common Shares

i) On July 12, 2006, the Company granted stock options to its President.  Pursuant to such agreement, the Company’s President was granted 200,000 options, with each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.

ii) On July 12, 2006 the Company and its President entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Company’s stock owned by the President for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made in April 2007.  The shares were returned to treasury for cancellation.

ii) In connection with the resignation of a Director, the Company and the Director entered into a Redemption Agreement (the “Agreement”), dated July 14, 2006, whereby the Director agreed to sell 3,000,000 common shares of the Company owned by the Director to the Company at a price of $0.01 per share.  Pursuant to the Agreement the Company paid $30,000 to the Director and returned the shares to treasury for cancellation.

iii) During the year ended January 31, 2008, 375,000 (2007 - 400,000) shares were issued, pursuant to exercise of stock options, for total consideration of $199,500 (2007 - $480,000).

iv) On December 6, 2007 the Company closed a private placement of 312,500 units at $0.64 per unit for a total offering price of $200,000.  Each unit consisted of one common share and two non-transferable share purchase warrants, designated Class A and Class B.  Each warrant entitles the subscriber to purchase one common share of the Company for a period of five years from the vesting date at a price of $0.70 per share for the Class A warrants and $0.74 per share for the Class B warrants.  The Class A warrants are exercisable commencing December 6, 2007 and the Class B warrants are exercisable commencing February 6, 2008.  Values of $72,660 and $127,340 were assigned to the common shares and warrants, respectively, based on their relative fair values at the closing date.

b) Stock Options

In March 2004, the Board of Directors adopted the American Goldfields Inc.’s 2004 Stock Option Plan (the 2004 Plan) reserving 5,000,000 common shares for grant to employees, directors and consultants.  Because additional stock options are expected to be granted in future periods, the following stock-based compensation expenses are not representative of the effects on reported financial results for future periods.

59

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

6. COMMON STOCK - Continued

b) Stock Options - continued

During the year ended January 31, 2008, the Company granted 300,000 (2007 – 200,000) options under the 2004 plan.  These options were valued using the Black-Scholes option pricing model with the following assumptions:

	2008	2007
Dividend yield	0%	0%
Volatility	126%	139%
Risk-free interest rate	4.61%	4.4%
Expected life	10 years	10 years

The weighted average fair value of options granted for the year ended January 31, 2008 was $0.63 (January 31, 2007 - $0.98).  As a result of the recognition of stock-based compensation, the following amounts have been included in the Statements of Operations:

	2008		2007
Mineral property acquisition and exploration expenditures	$	187,800	$	-
Consulting		-		195,600
	$	187,800	$	195,600

Activity under the 2004 Plan is summarized as follows:

	Options Outstanding			Weighted Average Exercise Price
Balance, January 31, 2006		1,225,000		$	1.08
Options granted		200,000		$	1.00
Options cancelled		(100,000	)	$	1.20
Options exercised		(400,000	)	$	1.20
Balance, January 31, 2007		925,000		$	1.00
Options granted		300,000		$	0.65
Options exercised		(375,000	)	$	0.53
Balance, January 31, 2008		850,000		$	1.09

The following table summarizes information concerning outstanding and exercisable common stock options under the 2004 Plan at January 31, 2008:

Range of Exercise Prices		Options Outstanding		Remaining Contractual Life (in years)		Number of Options Currently Exercisable		Weighted Average Exercise Price
$	0.06		50,000		6.17		50,000	$	0.06
$	1,00		200,000		8.42		200,000	$	1.00
$	1.20		600,000		7.75		600,000	$	1.20
			850,000		7.81		850,000	$	1.09

The aggregate intrinsic value of stock options outstanding and exercisable at January 31, 2008 is $30,500.  All options granted by the Company under the 2004 plan have vested immediately.  As a result, there is no unrecognized compensation expense for unvested options at period end for any of the periods shown.  The intrinsic value of stock options exercised during the year ended January 31, 2008 was $92,250.

60

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

6. COMMON STOCK - Continued

c)      Warrants

	Warrants Outstanding
Balance, January 31, 2006 and 2007		1,210,800
Warrants granted		625,000
Balance, January 31, 2008		1,835,800

The following table lists the common share warrants outstanding at January 31, 2008.  Each warrant is exchangeable for one common share.

Quantity	Exercise Price	Exercise Period
403,600	$ 1.50	November 4, 2005 to November 4, 2010
403,600	$ 2.00	May 4, 2006 to May 4, 2011
403,600	$ 2.50	November 4, 2006 to November 4, 2011
312,500	$ 0.70	December 6, 2007 to December 6, 2012
312,500	$ 0.74	February 6, 2008 to February 6, 2013
1,835,800

7. RELATED PARTY TRANSACTIONS

a) Operations

On May 26, 2004, Mr. Richard Kern joined the Company’s Board of Directors.  Mr. Kern is also the President of MinQuest Inc. (“MinQuest”).  The Company has optioned all of its mineral property interests from MinQuest.  Further, the Imperial and Cortez Property option agreements require the Company to use MinQuest as the primary contractor for exploration activity undertaken on the property.  All exploration work undertaken on any of the Company’s properties will be at the direction and discretion of the Company.

For the year ended January 31, 2008, the Company paid MinQuest a total of $95,000 (January 31, 2007 - $85,000) related to property option payments for the Imperial ($20,000), Hercules ($20,000), Cortez ($40,000) and Gilman ($15,000) Properties.  Included in the net loss for the twelve months ended January 31, 2008 is an amount of $7,500 (January 31, 2007 - $12,100) with respect to fees paid to Mr. Kern for geological services rendered to the Company.

b) Share Redemption

On July 12, 2006 the Company and its President entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Company’s stock owned by the President for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made in April 2007.

61

AMERICAN GOLDFIELDS INC.

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

JANUARY 31, 2008 AND 2007

(Stated in U.S. Dollars)

8. INCOME TAXES

Deferred tax assets of the Company are as follows:

	2008			2007
Loss carry-forwards	$	728,000		$	463,000
Less:  Valuation allowance		(728,000	)		(463,000	)
Deferred tax asset recognized	$	-		$	-

A valuation allowance has been recorded to reduce the net benefit recorded in the financial statements related to these deferred tax assets.  The valuation allowance is deemed necessary as a result of the uncertainty associated with the ultimate realization of these deferred tax assets.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate of 34% (2007 – 34%) to net loss for the year.  The sources and tax effect of the differences are as follows:

	2008			2007
Computed “expected” tax benefit	$	325,000		$	235,000
Permanent differences		(64,000	)		(67,000	)
Change in Valuation Allowance		(261,000	)		(168,000	)
Income tax provision	$	-		$	-

As at January 31, 2008 the Company has net operating loss carry-forwards of approximately $2,140,000 (2007 - $1,372,000), which expire between 2017 and 2028.

9. SUBSEQUENT EVENT

Subsequent to January 31, 2008 the Company received $218,750 in total proceeds from the exercise of 312,500 common share purchase warrants.

62

ITEM 9.                      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

We have had no disagreements with our independent auditors on accounting or financial disclosures.

ITEM 9A.                      CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

The Company’s principal executive and principal financial officers believe that the Company’s disclosure controls and procedures, as defined in Securities Exchange Act Rules 13a-15(e) or 15(d)-15(e), are effective. This conclusion was based on an evaluation of these controls and procedures as of January 31, 2008

Changes in Internal Control Over Financial Reporting

There have been no changes over financial reporting in our internal control over financial reporting that occurred during the period ended January 31, 2008 that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Evaluation of Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system has been designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of our published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management has assessed the effectiveness of our internal controls over financial reporting as of January 31, 2008. To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we believe that, as of January 31, 2008, our internal controls over financial reporting were effective.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and the Principal Financial and Accounting Officer, of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Principal Financial and Accounting Officer concluded that our disclosure controls and procedures are effective.

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

ITEM 9B.                      OTHER INFORMATION

None

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PART III

ITEM 10.                      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

Set forth below is certain information concerning the Company’s executive officers and directors as of April 28, 2008.

Name	Position	Age	Date of First Election Or Appointment
Donald Neal	Director,  President, Chief Executive and Operating Officer, Treasurer, and Secretary	57	February 5, 2004
Jared Beebe	Director	57	September 15, 2006
Richard Kern	Director	61	May 26, 2004
David Gladwell	Director	51	January 11, 2006

The following is a brief account of the education and business experience of each director and executive officer during the past five years:

Donald Neal is a professional engineer with a background in Projects Engineering Management. In his 30 year career, Mr. Neal has developed extensive industrial expertise in areas relating to power plant and refinery engineering and design. He has been involved in the construction supervision and start-up phases of plants throughout the world, including the United States, Canada, Europe and Asia. His experience in industrial project management encompasses a range of capabilities including field service expertise, performance testing, failure analysis and pulverized coal firing, milling, feeding and fuel conveying systems. Mr. Neal is a graduate of the University of Waterloo (Applied Science), and is a member of the Association of Professional Engineers and Geoscientists of British Columbia. From 2000 to present, Mr. Neal has worked as an independent consultant for Mocait’s Development Corp. which is a privately held corporation. Prior to his present position, Mr. Neal worked as an Engineering Manager for Utility and Recovery Engineering Ltd.  Mr. Neal is also the Vice President of Giant Oil & Gas Inc. which is a publicly traded oil and gas company.

Jared Beebe is an experienced geologist with an extensive background in mineral exploration.   In his nearly 20 years of working in the mining industry, he has worked for a variety of exploration companies in Canada and the United States.  He is currently a Project Manager in Mexico for Soho Resources.  Prior to joining his current employer he worked for Globex Mining in 2006, Scorpio Mining in 2005 and from 1999 to 2004 he worked as a researcher at the University of Quebec where he studied Geographic Information Systems.  Mr. Beebe earned a Bachelor of Science degree in Geology from Metropolitan State College, Denver, Colorado, in 1981.  He is a member of the Association of Applied Geochemists, the Geological Society of Nevada, the Ordre du Géologues du Québec, and the Society of Economic Geologists.

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Richard Kern is an exploration geologist with over twenty-five years experience in base and precious metals exploration in the United States, Central and South America, and Australia. Mr. Kern worked for Homestake Mining for over thirteen years, where his positions included Exploration Manager Eastern Australia and District Geologist Western United States. Mr. Kern directly managed major exploration programs in diverse locations, including Malaysia, Ecuador, Mexico and the Western U.S. In Nevada, his team drilled the discovery holes into a 1.6 million ounce gold deposit which has since gone into production, and a 9 million ounce gold-equivalent deposit in Australia, also in production. Mr. Kern has operated as an independent mineral exploration geologist for the last several years, with a focus on the Western United States. He holds a Bachelor of Science in Geology (Montana State) and Master of Science in Geology (Idaho State).

David Gladwell is an experienced geochemist with an extensive background in mineral exploration utilizing advanced technologies. After completing his formal geological education, Dr. Gladwell came to Canada to work as staff geochemist and later airborne operations geochemist for Barringer Magenta and then Barringer Research. During this time Dr. Gladwell conducted research on several significant gold zones including the Kerr Addison deposit in Ontario (later published) and the Cortez deposit/trend in Nevada. As geochemist at Barringer, Dr. Gladwell developed a suite of multivariate statistical software tools to provide interpretation of exploration programs in northern Ontario. In a joint effort between Barringer and British Petroleum, he also assisted with the development of a pressurized airborne Flame Ionization Detector (AIRTRACE) which he used to manage and interpret surveys in the North Sea, the Minches, the Irish Sea, the English Channel, the Mediterranean offshore of Egypt, the Baltic Sea, the Gulf Coast, the Beaufort Sea and large tracts of the Northwest Territories. From 1999 to 2005, Dr. Gladwell worked as a Pastor, in 2006 he was an instructor at Georgian College and Applegate School in Ontario, Canada, and from 2007 to present he has been employed as a Senior Geochemist at Klohn Crippen Berger Ltd.  Dr. Gladwell earned a Bachelor of Science degree in Chemistry and Geology from the University of Liverpool, and a Ph.D. in Geochemistry from the Royal School of Mines, London University, UK. 

None of our directors holds any directorships in companies with a class of securities registered pursuant to Section 12 of the Securities Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940, as amended.

Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

The Board of Directors has not established an audit committee and does not have an audit committee financial expert. The Board is of the opinion that an audit committee is not necessary since the Company’s directors have been performing the functions of an audit committee.

The Board has established an Option Committee and a Compensation Committee, each consisting of Messrs. Neal and Beebe. The Option Committee recommends and grants options to individuals under the option plans adopted by the company. The Compensation Committee recommends and grants compensation to individuals who work for the company.

The Board does not have a nominating committee, the functions of which are performed by the Board.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s executive officers, directors and persons who beneficially own more than 10% of a registered class of the Company’s equity securities to file with the Commission initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Such persons are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they filed.

We are not aware of any instances in fiscal year 2008 when an executive officer, director or owners of more than 10% of the outstanding shares of our common stock failed to comply with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934.

Code of Ethics

The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. For purposes of this Item, the term code of ethics means written standards that are reasonably designed to deter wrongdoing and to promote:

· honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

· full, fair, accurate, timely, and understandable disclosure in reports and documents that the issuer files with, or submits to, the Commission and in other public communications made by the issuer; compliance with applicable governmental laws, rules and regulations;

· the prompt internal reporting of violations of the code to the board of directors or another appropriate person or persons; and

· accountability for adherence to the code.

The Company hereby undertakes to provide to any person without charge, upon request, a copy of such code of ethics. Such request may be made in writing to the board of directors at the address of the issuer.

ITEM 11.                      EXECUTIVE COMPENSATION

Summary Compensation.

Mr. Donald Neal has been serving as our Director, President, Chief Executive and Operating Officer, Treasurer, and Secretary since February 5, 2004.  We had no other officers during the fiscal year ended January 31, 2008.

On July 12, 2006 the Company entered into a Stock Option Agreement with Mr. Neal.  Pursuant to such agreement, Mr. Neal was issued 200,000 options, each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.

On July 12, 2006 the Company and Mr. Neal entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Company’s stock owned by Mr. Neal for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made on April 30, 2007.

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During the fiscal years ended January 31, 2008 and 2007, Mr. Neal received no other compensation for his services.

We have no employment agreements with any of our directors or our sole executive officer.  We have no pension, health, annuity, bonus, insurance, equity incentive, non-equity incentive, stock options, profit sharing or similar benefit plans.

The following table sets forth information concerning the compensation paid or earned during the fiscal years ended January 31, 2008 and 2007 for services rendered to our Company in all capacities by the following persons: (i) all individuals who served as the principal executive officer or acting in a similar capacity during the fiscal year ended January 31, 2008, regardless of compensation level; (ii) all individuals who served as officers at January 31, 2008 and whose total compensation during the fiscal year ended January 31, 2008 exceeded $100,000; and (iii) up to two additional individuals who served as officers during the fiscal year ended January 31, 2008 and whose total compensation during the fiscal year ended January 31, 2008 exceeded $100,000, regardless of whether they were serving as officers at the end of such fiscal year.

SUMMARY COMPENSATION TABLE
Name and principal position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f)	Non-Equity Incentive Plan Compensation ($) (g)	Nonqualified Deferred Compensation Earnings ($) (h)	All Other Compensation ($) (i)	Total ($) (j)
Donald Neal(1)	2008	0	0	0	0	0	0	0	0
	2007	0	0	0	$195,600 (2)	0	0	0	$195,600 (2)

(1) Mr. Donald Neal has been serving as our Director, President, Chief Executive and Operating Officer, Treasurer, and Secretary since February 5, 2004.

(2) Represents the fair value of 200,000 common stock purchase options granted to Mr. Neal on July 12, 2006.  Each such stock option entitles him to purchase one share of common stock at a price of $1.00 until July 12, 2016.  The value of such stock options was based on the following assumptions: dividend yield of 0%, volatility of 139%, risk-free interest rate of 4.4%, and an expected life of 10 years.

Outstanding Equity Awards

On July 12, 2006 the Company entered into a Stock Option Agreement with Mr. Neal.  Pursuant to such agreement, Mr. Neal was issued 200,000 options, each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.

The table set forth below presents certain information concerning unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer above outstanding as of January 31, 2008.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS							STOCK AWARDS
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)	Number of Securities Underlying Unexercised Options (#) Unexercisable (c)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)	Option Exercise Price ($) (e)	Option Expiration Date (f)	Number of Shares or Units of Stock That Have Not Vested (#) (g)	Market Value of Shares or Units of Stock That Have Not Vested ($) (h)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) (j)
Donald Neal	200,000	0	0	1.00	7/12/2016	0	0	0	0

Compensation of Directors

Except as disclosed above under the section entitled “Summary Compensation,” our directors did not receive any compensation during the fiscal year ended January 31, 2008.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of April 28, 2008 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors, and (iii) officers and directors as a group. Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days.

Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest.

The percentages below are calculated based on 21,292,878 shares of common stock issued and outstanding.

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Name of Beneficial Owner	Title Of Class	Amount and Nature of Beneficial Ownership	Percent of Class
Donald Neal 200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6	Common	200,000(1)	1.0%
Jared Beebe 200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6	NA	0	0
Richard Kern 200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6	NA	0	0
David Gladwell 200-4170 Still Creek Drive, Burnaby, B.C., Canada, V5C 6C6	NA	0	0
All directors and executive officers as a group (4 persons)	Common	200,000(1)	1.0%

(1) Includes 200,000 stock options granted to Mr. Neal on July 12, 2006, each of which entitles him to purchase one share of common stock at a price of $1.00 until July 12, 2016.

The persons or entities named in this table, based upon the information they have provided to us, have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

ITEM 13.                      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Related Transactions Involving Richard Kern

Mr. Richard Kern joined the Board of Directors of the Company on May 26, 2004. Mr. Kern is also the president of MinQuest. All of the Company’s mineral properties have been optioned from MinQuest. Such properties are discussed above under Item 2, “Description of Properties,” and the material terms of the agreements entered into between our Company and Minquest with respect to such properties are summarized below.  As a result, MinQuest and Mr. Kern are related parties to the Company and both MinQuest and Mr. Kern receive substantial payments from the Company. In addition, the Company has agreed to use Mr. Kern as the primary contractor on exploration undertaken to date on all of its properties. The potential exists for conflicts of interest to occur from time to time that could adversely affect the Company’s ability conduct its business of exploration. Also, Mr. Kern is the most knowledgeable person regarding the historical and current state of exploration on the mineral properties currently optioned by the Company. If Mr. Kern were to terminate his relationship with the Company, the Company would be adversely affected while we found a suitable replacement.

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Gilman Property  On May 7, 2004, the Company completed the formal agreement with MinQuest for an option to acquire a 100% interest in the Gilman Property.  Concurrently, the Company made the first $10,000 option payment to MinQuest.  The agreement requires certain additional minimum annual property option payments with a total of $75,000 required to be paid by May 15, 2009. The agreement also requires minimum annual exploration expenditures with a grand total of $450,000 in expenditures required to be incurred on the property by May 15, 2009. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $1,000,000 for each 1% repurchased. The Company is not required to use MinQuest for exploration undertaken on the Gilman Property. However, at its discretion, the Company has engaged MinQuest as the principal contractor for exploration performed to date.  On March 22, 2005, the Company executed an amendment to the Gilman Property Option Agreement. As a result of the amendment, the Company’s obligation to incur $50,000 in exploration expenditures on the Gilman Property by May 2005 was moved to May 2009.  On May 29, 2006 by way of a letter agreement the Company and MinQuest agreed to adjust the exploration expenditure commitments such that the amount due to be spent by May 15, 2006 was moved to May 15, 2007.  The result is that the Company is now required to spend approximately $153,000 by May 15, 2007.  With agreement from MinQuest, upon completion of the drill program expected to be completed by the second quarter of 2008, the Company will have met its exploration obligations to January 31, 2008.  All other terms and commitments of the original agreement remain unchanged.  To January 31, 2008, the Company had made the initial option payment of $10,000 due on signing as well as the $15,000 option payments due in May 2007, 2006 and 2005.  In addition the Company has incurred approximately $132,000 in exploration expenditures on the property.

Imperial Property  On June 30, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Imperial Property.  The Company made the first scheduled option payment of $60,000 upon signing the agreement. The agreement requires certain additional minimum annual property option payments with a total of $80,000 required to be paid by July 1, 2008. The agreement also requires minimum annual exploration expenditures with a grand total of $500,000 in expenditures required to be incurred on the property by July 1, 2009. The property option agreement is subject to a 3% royalty payable to MinQuest. The Company is required to use MinQuest for exploration conducted on the Imperial Property.  To January 31, 2008, the Company had made the initial option payment of $60,000 upon signing the agreement as well as the $20,000 option payments due in July 2007, 2006 and 2005.  In addition the Company has incurred approximately $276,000 in exploration expenditures on the property which satisfies the Company’s expenditure requirements to July 1, 2008.

Hercules Property  On October 22, 2004, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in the Hercules Property.  Concurrent with the signing of the agreement, the Company made the first property option payment of $20,000. The agreement requires certain additional minimum annual property option payments totaling $200,000 and minimum annual exploration expenditures totaling $4,050,000 to be paid or incurred by November 25, 2014. The agreement is subject to a 3% royalty payable to MinQuest with the Company being able to repurchase up to two-thirds of the royalty for $3,000,000.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $300,000 was to be spent by September 1, 2006.  To January 31, 2008, the Company had made the initial option payment of $20,000 due on signing as well as the $20,000 option payments due in November 2007, 2006 and 2005.  In addition the Company has incurred approximately $714,000 in exploration expenditures on the property.  The Company’s drill program that was completed in March 2007 resulted in the Company satisfying the expenditure requirements to January 31, 2008.

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Cortez Property On February 28, 2005, the Company entered into an agreement with MinQuest for an option to acquire a 100% interest in properties known as the “Crescent Fault Property,” the “Bankop Property,” and the “Bullion Mountain Property” (collectively, the “Cortez Property”). Concurrent with the signing of the agreement, the Company made the first property option payment of $65,000. The agreement requires certain additional minimum annual property option payments totaling $445,000 and minimum annual exploration expenditures totaling $1,150,000 to be paid or incurred by February 15, 2010. The agreement is subject to a 3% royalty payable to MinQuest. In addition, the Company is required to use MinQuest for exploration activities undertaken on the properties.  On May 29, 2006 by way of a letter agreement, the Company and MinQuest agreed to adjust the timing of exploration expenditures such that an aggregate amount of approximately $250,000 was to be spent by September 1, 2006.  With agreement from MinQuest, upon the completion of the drill program planned for the second quarter of 2008 the Company will have met its exploration requirements to February 15, 2008.  To January 31, 2008, the Company had made the initial option payment of $65,000 due on signing as well as the as the $40,000 option payment due in February 2007 and the $30,000 option payment due in February 2006.  In addition the Company has incurred approximately $230,000.

Related Transactions Involving Greg Crowe

On July 14, 2006 Mr. Greg Crowe resigned as a Director of the Company.  In connection with his resignation, the Company and Mr. Crowe entered into a Redemption Agreement, dated July 14, 2006, pursuant to which Mr. Crowe agreed to sell the 3,000,000 common shares of the Company owned by Mr. Crowe to the Company at a price of $0.01 per share.  The Company paid Mr. Crowe $30,000 and returned the shares to treasury for cancellation.

Related Transactions Involving Donald Neal

On July 12, 2006 the Company granted Donald Neal, our Director, President, Chief Executive and Operating Officer, Treasurer, and Secretary, 200,000 stock options, each entitling him to purchase one share of common stock at a price of $1.00 until July 12, 2016.

On July 12, 2006 the Company and Mr. Neal entered into an Agreement, pursuant to which the Company acquired 3,000,000 common shares of the Company’s stock owned by Mr. Neal for a purchase price of $0.01 per share.   The payment of the $30,000 purchase price was made on April 30, 2007.

Director Independence

We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.”  We believe that the following directors currently meet the definition of “independent” as that term is defined in the rules and regulations of the American Stock Exchange: Jared Beebe; and David Gladwell.

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ITEM 14                      PRINCIPAL ACCOUNTING FEES AND SERVICES

Morgan & Company has served as the Company’s Principal Accountant since the Company’s incorporation. Their fees billed to the Company for the fiscal years ending January 31, 2008 and 2007 are set forth below:

	Fiscal year ending January 31, 2008		Fiscal year ending January 31, 2007
Audit Fees	$	32,000	$	16,800
Audit Related Fees	NIL		NIL
Tax Fees		2,000		2,000
All Other Fees	NIL		NIL

As of January 31, 2008, the Company did not have a formal, documented pre-approval policy for the fees of the principal accountant. It is in the process of adopting such a policy.

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PART IV

ITEM 15. EXHIBITS

Exhibit No.	Description	Where Found
3.1	Articles of Incorporation	Previously filed with the Company’s Form SB-2, filed with the SEC on March 13, 2002, as amended on Jun 12, 2002, July 18, 2002, and August 22, 2002
3.2	Bylaws	Previously filed with the Company’s Form SB-2, filed with the SEC on March 13, 2002, as amended on Jun 12, 2002, July 18, 2002, and August 22, 2002
4.1	Share Certificate	Previously filed with the Company’s Form SB-2, filed with the SEC on March 13, 2002, as amended on Jun 12, 2002, July 18, 2002, and August 22, 2002
10.1	Property Option Agreement  (relating to the Gilman Property)	Previously filed with the Company’s Current Report on Form 8-K, filed with the SEC on May 13, 2004
10.2	Property Option Agreement  (relating to the Imperial Property)	Previously filed with the Company’s Current Report on Form 8-K, filed with the SEC on July 9, 2004
10.3	Property Option Agreement  (relating to the Hercules Property)	Previously filed with the Company’s Current Report on Form 8-K, filed with the SEC on November 1, 2004
10.4	Property Option Agreement  (relating to the Cortez Properties)	Previously filed with the Company’s Current Report on Form 8-K, filed with the SEC on March 2, 2005
10.5	Stock Option Agreement, dated July 12, 2006, between American Goldfields Inc. and Donald Neal	Previously filed with the Company’s Current Report on Form 8-K, filed with the SEC on July 18, 2006
10.6	Buy-Back Option Agreement, dated July 12, 2006, between American Goldfields Inc. and Donald Neal	Previously filed with the Company’s Current Report on Form 8-K, filed with the SEC on July 18, 2006
10.7	Redemption Agreement dated July 14, 2006, between American Goldfields Inc. and Greg Crowe	Previously filed with the Company’s Current Report on Form 8-K, filed with the SEC on July 18, 2006
31.1	Rule 13a-14(a)/15d14(a) Certifications	Attached Hereto
32.1	Section 1350 Certifications	Attached Hereto

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SIGNATURES

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

AMERICAN GOLDFIELDS INC.
Dated: April 28, 2008	By:	/s/ Donald Neal
	Name:	Donald Neal
	Title:	President, Chief Executive and Operating Officer, Secretary and Treasurer, and Director (Principal Executive, Financial and Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/Donald Neal Donald Neal	Director, President, Chief Executive and Operating Officer, Secretary, and Treasurer (Principal Executive, Financial, and Accounting Officer)	April 28, 2008
/s/ Richard Kern Richard Kern	Director	April 28, 2008
/s/ Jared Beebe Jared Beebe	Director	April 28, 2008
/s/ David Gladwell David Gladwell	Director	April 28, 2008