Corporate Profile

Cadillac Ventures Inc. is a Canadian mining company positioned to leverage historical Canadian
production. With two active projects, both in historic producing areas, the Company is employing
the most up-to-date survey and exploration technology and processes to develop exploration
strategies and define targets.

Highlights

x Cadillac Ventures Inc. acquired an option on the Burnt Hill Project in New Brunswick, a
known historic tungsten occurrence;
x Cadillac completed the target selection process in preparation for a summer/fall season of
activity at the New Alger Project near Cadillac, Quebec;
x Cadillac acquired 100% of Chilly-Bin by issuing a total of 5,000,000 common
shares to the shareholders of Chilly-Bin in exchange for all of the outstanding
common shares of Chilly-Bin;
x During April of 2007 Mr. Michael S. Harrington joined the Board of Cadillac, bringing to
the Company over 4 decades of experience in the mining industry
x Total assets increased from $411,914 in 2006 to $2,024,066 in 2007 including an
increase in mineral property assets from $227,842 in 2006 to $616,556 in 2007,
and;
x The Company became listed, and publicly quoted for trading on the CNQ
Exchange, during May of 2007.

Table Of Contents

Corporate profile ……………………………..….……….………………...... Inside front cover

President’s Message …………….…………….…..……..………………….…….…..…. Page 1
Management’s Discussion and Analysis…....……………..…..………………….…….....Page 3
Management’s Statement of Responsibility….…..………. …………………….…….…Page 13
Auditor’s Report…………….…………………………….…...…………….…….…..…Page 13
Consolidated Balance Sheets.….……………………………….……….………….….…Page 14
Consolidated Statements of Operations and Retained Earnings……..……….…........…..Page 15
Consolidated Statements of Cash Flows…………….…………….…………..…….……Page 16
Notes to Consolidated Financial Statements…………....…………….……….…….…....Page 17
Corporate Information..…….………………...……………..……………...................Back cover
 Letter to Shareholders

In fiscal 2007, Cadillac Ventures Inc. (formerly Blue Power Energy Corporation) experienced
some significant developments in both business and operations. These changes are, we think,
pivotal to the Company’s future.

On the business side, the Company now trades on the CNQ Exchange, effective May 2007, under
the ticker symbol CDEX. Although the CNQ is not closely followed by institutional investors, it
is a very strong exchange for early-stage companies, especially from a governance perspective.
We are, in addition, pursuing a TSX or TSX-V listing.

During the spring, Cadillac raised $615,000 for working capital purposes, and brought the total
cash reserves of the Company to $1.25 million, including $630,000 in flow-through funds to be
spent in calendar 2007.

Near the end of the fiscal year, adding to an already strong Board, Michael S. Harrington joined
Cadillac’s Board of Directors. He brings more than 40 years of mining experience and expertise
to the Company.

On the operations side, the Company is now positioned in two areas. Cadillac Ventures
completed the target selection process in preparation for summer and fall activity at the New
Alger Project. Located in the “Cadillac Break” mining camp, this is a historic productive gold
property in proximity to the LaRonde Mine and adjacent to the O’Brien Mine.

Also, the Company acquired an option on the Burnt Hill Project in New Brunswick, a known
historic tungsten/molybdenum occurrence. This project includes four claim areas, and a pilot
plant ran pre-feasibility on the main claim of this project.

In terms of finances, Cadillac Ventures posted a loss in fiscal 2007 of $423,000, reflecting our
increased exploration activity during the period and expenditures on professional fees as well as
options issued to officers, directors, and consultants. As mentioned above, we have also raised
funds for operations, increasing our asset base. As the exploration program grows, we will likely
need to raise more funds for operations.

To give you a bit more detail on the operational side of the business, the New Alger Mine was
historically productive, with a shaft sunk to 1,124 feet. Mining operations only reached a depth
of 600 feet, with veining encountered as deep as the 1000 ft. level. But productive mining
operation ceased by 1939, and the property fell idle some years later.

Based on induced polarization (IP) survey work we have completed over the entire property,
there are several attractive identifiable anomalies, which Cadillac is targeting with a fall 2007
drill campaign that is scheduled to begin mid-September 2007 at a budgeted cost of $600,000.
The survey work identified several areas of interest outside of the area of historical workings and
development. The Company will first pursue these new targets, before confirming the formerly
productive areas.

The Company has acquired a significant amount of historical mapping data and information, and
is compiling this information in a model, in conjunction with the current aerial mapping, to
provide a comprehensive overview of the entire land position, and aid in formulating the
exploration strategy.

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 Letter to Shareholders

The Company is excited by the proximity to the LaRonde Mine, especially given the depth of
production there (2,250 metres) and the O’Brien Mine next door.

The Burnt Hill Project consists of 4 claim areas, Burnt Hill, Tin Hill, McLean Brook and Todd
Mountain. This project is a joint venture with Noront Resources (see the press release, dated
April 4, 2007). The Burnt Hill claim had reached the pre-feasibility stage, with a pilot plant in
operation on the property, in the early 1980s, at which point the price of tungsten plummeted.
Tungsten is a strategic metal, the second-hardest mineral in the world, (diamond is number one),
with the highest melting point, and is critical in numerous industrial and military applications.

In the short term, Cadillac Ventures will spend the

balance of the flow-through funds held on deposit
surveying the four claim groups (both physically and
IP). A drill program is planned to begin mid-
September 2007, with two drills initially. The
program is designed to both confirm the historic data
and test the known mineralization along strike at Burnt
Hill. Cadillac Ventures will also explore the other
three claim areas.

Initially, the program will encompass twinning some

of the historical holes, for which most of the collars were located in a recent site visit. In
conjunction with the drill program , the Company will commenced cutting base lines in each
claim group, and has retained geologists, one of whom will focus on the Burnt Hill claim, and the
other on the three remaining project areas. Additionally, the Company has access to a significant
amount of historical information and maps to aid in exploration endeavors.

This year, the Company has achieved its goal of making a strong start on exploration by raising
capital and putting it to good use. We more than doubled our mineral property assets through the
acquisition of the Burnt Hill option. We will continue to use our cash carefully in the coming
year, as we continue to explore energetically.

Many people have helped us to make this year a success. I would like to thank our board, our
staff and mining consultants, and especially our shareholders for their commitment and support.

“Jim Voisin”

Jim Voisin
President

2
 Management’s Discussion and Analysis

Cadillac Ventures Inc.

Management’s Discussion And Analysis
Fiscal year ended May 31, 2007

Introduction

This is the management discussion and analysis (“MD&A”) of results, operations and financial
condition of Cadillac Ventures Inc. (“Cadillac” or the “Company”)) (formerly Blue Power
Energy Corporation) the operating and financial results of the Company for the fiscal year ended
May 31, 2007. The MD&A supplements, but does not form part of the consolidated financial
statements of the Company, and should be read in conjunction with Cadillac’s consolidated
financial statements and related notes for the fiscal year ended May 31, 2007, as well as the
results of fiscal years 2006 and 2005. The Company prepares and files its consolidated financial
statements in accordance with Canadian generally accepted accounting principles (“GAAP”). The
currency referred to in this document is the Canadian Dollar.

Overview the Fiscal Year

During the fiscal year ended May 31, 2007 the Company made numerous developmental strides.
Your Company became listed, and publicly quoted for trading on the CNQ Exchange, during
May of 2007. Additionally the Company acquired an option on the Burnt Hill Project in New
Brunswick, a known historic tungsten occurrence, and completed the target selection process in
preparation for a summer/fall season of activity at the New Alger Project near Cadillac, Quebec.
During April of 2007 Mr. Michael S. Harrington joined the Board of Cadillac, bringing to the
Company over 4 decades of experience in the mining industry.

Additional Information

Additional information relating to the Corporation is available on the Internet at the SEDAR
website at www.sedar.com.

1.1 Date of MD&A

This MD&A was prepared on August 1, 2007.

1.2 Overall Performance

The Company incurred a net loss in the period of $423,428 in fiscal 2007 as opposed to a net loss
of $37,001 for fiscal 2006. The increase in the loss during the period is reflective of the increased
level of activity of the Company during the period, and the issuance of stock options in the capital
of the Company to officers, directors and consultants. The expenses incurred by the Company are
detailed under Operations in Section 1.15. The Company has seen an increase in operating
expenses in every quarter, in addition to the stock based compensation category. During the
fourth quarter the Company paid consulting fees to professionals in conjunction with project
acquisition and program planning for the Company’s exploration program. The Company has
experienced this increase in expenses at the same time that the Company has raised further funds
for operations, and increased the asset base of the Company. The Company expects that ongoing
expenses will continue at these levels at a minimum, but more likely will increase as the project
activity level of the Company increases. The Company intends to continue to raise equity funds in

3
 Management’s Discussion and Analysis

order to meet these expenses, should the Company be unable to raise these funds on an ongoing
basis its ability to continue its business could be affected.

1.3 Selected Annual Information

Selected Annual Information Year Ended Year Ended Year Ended

31-May-07 31-May-06 31-May-05
Interest and other income 0 0 2,446

Income or Loss (In Total) -423,428 -37,001 -61,780

Income or Loss\per Share Basic (Note 1) -0.02 -0.01 -0.08
Income or Loss\per Share Diluted (Note 1) -0.02 -0.01 -0.08

Total Assets 2,024,066 411,914 4,040

Total Long Term Financial Liabilities 0 0 0

Cash Dividends Declared 0 0 0

1.4 Results of Operations

2007 Financing Activities

Date Amount Stated Use of Proceeds Actual Use of Proceeds

Raised
June 2006 $125,000.00 Working Capital As stated
Oct 2006 $144,000.00 Eligible Exploration Expenses Expended as stated
flow through
Dec 2006 $651,250 Eligible Exploration Expenses Expenditure ongoing as
flow through stated
Dec 2006 $378,500 Working Capital Requirements As stated
May 2007 $615,600 General Working Capital As stated
Purposes

Fiscal Year Project Activity Summary

During the fiscal year the Company acquired the option agreement on the Burnt Hill
Project, during the period the Company did not carry out any project activities on the
properties, subsequent to the period, in July 2007, operations began on the Burnt Hill
Project consisting of the initial mapping of the McLean Brook, Tin Hill and Todd
Mountain claims. It is anticipated that drilling will commence on both the Burnt Hill claim,
and the other 3 claims, with 2 drill rigs working, in late August/early September 2007.
The Company completed the IP survey program with requisite linecutting on the New
Alger Property, and has selected drill targets for the property. Subsequent to the period
the Company has commenced operations on the project with a project geologist collating
and compiling the historical exploration information, with the aim of building a 3d model
of the historic underground development, prior to the commencement of a drill program,
anticipated to be in late August/early September of 2007.

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 Management’s Discussion and Analysis

1.5 Summary of Quarterly Results

Fourth Third Second First

Quarter Quarter Quarter Quarter
31-May- 28-Feb- 30-Nov- 31-
07 07 06 Aug-06
Interest and other income 0 0 0 0

Income or Loss (Total) -388,060 115,190 -104,562 -45,996

Income or Loss\per Share Basic (Note 1) -0.02 0.01 -0.01 0.00
Income or Loss\per Share Diluted (Note 1) -0.02 0.01 -0.01 0.00

Note 1 - Earnings per share reflects a 1 for 5 common share consolidation that occurred during the
year ended May 31, 2006.

Fourth Third Second First

Quarter Quarter Quarter Quarter
31-May- 28-Feb- 30-Nov- 31-
06 06 05 Aug-05
Interest and other income 0 0 0 0

Income or Loss (Before Discontinued Operations and

Extraordinary Items) -48,432 43,303 -18,119 -13,753
Income or Loss\per Share Basic (Note 1) -0.01 0.00 0.00 0.00
Income or Loss\per Share Diluted (Note 1) -0.01 0.00 0.00 0.00

Note 1 - Earnings per share reflects a 1 for 5 common share consolidation that occurred during the
year ended May 31, 2006. Comparative earnings per share for 2005 have been restated
accordingly.

In the fourth quarter of 2007 there is a loss to the Company of $388,060, in part due to the stock
based compensation cost of $268,500 and the consulting fees cost of $91,100. With the exception
of the third quarter of 2007, which reflects the renouncement of flowthrough exploration charges,
each quarter has reflected a steadily increasing level of losses, While the expenses detailed in
Section 1.15 have fluctuated as against the same period in 2006, in general the activity level, the
financing transactions, and the shareholder base of the Company have all increased, all of which
affect the operating costs of the Company. The Company has also obtained a listing on the CNQ,
which has incurred legal fees and regulatory filing fees, and will continue to do so on an ongoing
basis. Additionally, as a subsequent event to the period, the Company obtained the option on the
Burnt Hill Project, and the Company will incur expenses related to this matter as well.

1.6 Liquidity

Cadillac Ventures Inc. had a cash balance of $1,305,811 as at May 31, 2007 compared with a
cash balance of $123,717 as at May 31, 2006. At May 31, 2007 the Company also held mineral
property assets with a cost value of $616,556 compared with $277,842 at May 31, 2006. These
are included in total assets of $2,024,066 at May 31, 2007 as compared to $411,914 at May 31,
2006. These amounts are a direct reflection of the financing activities undertaken by the
Company and the acquisition of the Burnt Hill option. Against this positive cash balance and
asset base the Company has liabilities which total $93,050 at May 31, 2007, increased from

5
 Management’s Discussion and Analysis

$91,977 at May 31, 2006. These are comprised of various professional fees and costs associated
with the ongoing operations of the Company, and are higher during the period due to the timing
of various invoices and payments.

The Company is continuing its efforts to raise funds for future developments and operations and
to meet its ongoing obligations as they arise. There is however, no assurance that the Company
will be successful in its efforts, in which case, the Company may not be able to meet its
obligations. The consolidated financial statements have been prepared on a going concern basis as
discussed in Note 1 of the May 31, 2007 consolidated financial statements.

Should the Company be unable to realize on its assets and discharge its liabilities in the normal
course of business, the net realizable value of its assets may be materially less than the amounts
recorded on the consolidated balance sheet.

1.7 Capital Resources

At May 31, 2007 the Company had the following capital requirements under existing
arrangements.
a) Accounts payable in the normal course of business.

1.8 Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements

1.9 Transactions With Related Parties

The Company has the following transactions with related parties during the twelve months ended
May 31, 2007

The Company was previously paying $2,000 per month to Harper Capital Inc. ("Harper") (a
company owned by the spouse of the former promoter of the Company) for managing and
supervising the Company's activities. Since August 2005, the Company has no longer required
Harper's services. During the fiscal year of 2007 the Company has paid no fees in conjunction
with this matter, in the fiscal year of 2006 the Company paid $6,000.

As of May 31, 2007, pursuant to the financing disclosed in Note 6(a)(vi) of the Consolidated
Financial Statements for the year ended May 31, 2007, the following related parties of the
Company participated in the private placement by purchasing offered units: Nominex Ltd. (of
which Neil Novak, a director of the Company, is the President) - 62,500 units; Nicole Brewster,
the former Secretary and a former director of the Company - 62,500 units; Jim Voisin, the
President and a director of the Company - 62,500 units; and Norm Brewster, an insider of the
Company - 250,000 units.

The Company has paid Billiken Management Services Inc., a private company, in which one
third of the ownership is held by a spouse of one of the directors of the Company, to manage the
New Alger Property. This company charges a fee of 10% of expenses incurred on behalf of the
Company. The fee totaled $3,089 (2006 - $nil) for the fiscal year 2007. At May 31, 2007 there
was a balance due to the Company of $11,439.
During the year, management and consulting fees for directors, officers and insiders of the
Company were paid or accrued for an aggregate total of $160,600. Management fees were paid or

6
 Management’s Discussion and Analysis

accrued as follows: Jim Voisin, the President and a director of the Company - $43,000; and
Nicole Brewster, the former Secretary and a former director of the Company - $27,600.
Consulting fees were paid or accrued as follows: Norm Brewster - $90,000.

These transactions have been measured at the exchange amount.

1.10 Fourth Quarter

The fourth quarter of fiscal 2007 saw and increase over the fourth quarter of fiscal 2006 in the
ares of consulting fees and stock based compensation. This is due to the Company paying
cumulative consulting charges related to the design of a program for NewAlger, and the
identification of drill targets for this program, as well as technical advice regarding the
acquisition of additional properties for the Company, which resulted in the Burnt Hill option
acquisition, noted as a subsequent event.

1.11 Proposed Transactions

The Company presently has no planned or proposed business or asset acquisitions or dispositions.

1.12 Critical Accounting Estimates

Cadillac did not rely on any critical accounting estimates in the most fiscal year.

1.13 Changes in Accounting Policies Including Initial Adoption

There have been no changes in accounting policies in fiscal 2006.

1.14 Financial Instruments and Other Instruments

The Company’s current financial instruments consist of cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities. The carrying values approximate the fair
values of these financial instruments due to the short-term maturity of these items.

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 Management’s Discussion and Analysis

1.15 Other MD&A Requirements

Additional Disclosure for Venture Issuers without Significant Revenue or

Exploration

Capitalized Costs - Mineral Properties

Cumulative Since
Balance Balance Inception of the
Development
At At Stage
New Alger Propery 31-May-07 31-May-06 (April 28, 2006)

Acquisition cost 75,000 75,000 75,000

Assays 202 0 202
Claim maintenance 13,156 0 13,156
IP Surveys 136,722 0 136,722
Geological 75,000 0 75,000
Consulting 1,658 0 1,658
Line Cutting 30,690 0 30,690
Taxes 10,686 10,686 10,686
Goodwill 183,419 183,419 183,419
Management fees 3,089 0 3,089
Other 14,370 11,173 14,370
- - -
543,992 280,278 543,992
Less Quebec refundable tax credits
and mining duty refunds. -2,436 -2,436 -2,436

541,556 277,842 541,556

Capitalized Costs - Mineral Properties

Cumulative Since
Balance Balance Inception of the
Development
At At Stage
31-May-
Burnt Hill Property 07 31-May-06 (April 28, 2006)

Acquisition cost 75,000 0 75,000

616,556 277,842 616,556

8
 Management’s Discussion and Analysis

Fourth Fourth Year

Operations Quarter Quarter Ended
31-May-07 31-May-06 31-May-06

Expenses
Accounting and Corporate Services 5,555 8,770 29,445
Consulting fees 91,100 0
Legal and audit 73,363 13,703 17,986
Management fees -73,100 0 6,892
Office and general 11,221 673 3,918
Shareholder relations 19,173 25,489 39,983
Stock based compensation 268,500 0
Flow-through tax expense -7,752

------------------- ------------------- -
Net loss before the following 388,060 48,635 98,224
Less: interest and other income 0 -203 0
Less: future income tax recovery 0 -61,223
------------------- ------------------- -
Loss for the period 388,060 48,432 37,001

========= ========= =========

Disclosure of Outstanding Share Data

At May 31, 2007 the Company had 23,101,489 common shares outstanding, 5,946,545 warrants
to purchase common shares outstanding, and 2,200,000 options outstanding.

* Refer to Notes to the Consolidated Financial Statements for May 31, 2007

RISKS AND UNCERTAINTIES

Additional Funding Requirements

The Company is reliant upon additional equity financing in order to continue its’ business and
operations, as the Company is in the business of mineral exploration and at present does not
derive any income from any of its mineral assets. There is no guarantee that future sources of
funding will be available to the Company. If the Company is not able to raise additional equity
funding in the future the Company will be unable to carry out its’ business in the future.

Commodity Price Volatility

The price of various commodities which the Company is exploring for can fluctuate drastically,
and is beyond the Company’s control. The Company is specifically concerned with the price of
Gold, a commodity which fluctuates daily. While the Company would benefit from an increase in
the value of this metal, the Company could be adversely affected by a decrease in the value of
this metal.

9
 Management’s Discussion and Analysis

Title to Mineral Properties

Acquisition of title to mineral properties is a very detailed and time-consuming process. Title to,
and the area of, mineral properties may be disputed or impugned. Although the Company has
investigated its title to the mineral properties for which it holds concessions or mineral leases or
licenses, there can be no assurance that the Company has valid title to such mineral properties or
that its title thereto will not be challenged or impugned. For example, mineral properties
sometimes contain claims or transfer histories that examiners cannot verify; and transfers under
foreign law often are complex. The Company does not carry title insurance with respect to its
mineral properties. A successful claim that the Company does not have title to a mineral property
could cause the Company to lose its rights to mine that property, perhaps without compensation
for its prior expenditures relating to the property.

Mineral Exploration

Mineral exploration involves a high degree of risk. Few properties that are explored are
ultimately developed into producing mines. Unusual or unexpected formations, formation
pressures, fires, power outages, labour disruptions, flooding, explosions, tailings impoundment
failures, cave-ins, landslides and the inability to obtain adequate machinery, equipment or labour
are some of the risks involved in mineral exploration and exploitation activities. The Company
has relied on and may continue to rely on consultants and others for mineral exploration and
exploitation expertise. Substantial expenditures are required to establish mineral reserves and
resources through drilling, to develop metallurgical processes to extract the metal from the ore
and, in the case of some properties, to develop the mining and processing facilities and
infrastructure at any site chosen for mining, or to upgrade existing infrastructure. There can be no
assurance that the funds required to exploit any mineral reserves and resources discovered by the
Company will be obtained on a timely basis or at all. The economics of exploiting mineral
reserves and resources discovered by the Company are affected by many factors, many outside
the control of the Company, including the cost of operations, variations in the grade of ore mined
and metals recovered, price fluctuations in the metal markets, costs of processing equipment, and
other factors such as government regulations, including regulations relating to royalties,
allowable production, importing and exporting of minerals and environmental protection. There
can be no assurance that the Company’s mineral exploration and exploitation activities will be
successful.

Country Risk

The Company could be at risk regarding any political developments in the Country in which it
operates. At present the Company is only active in the Province of Quebec, Canada.

Uninsurable Risks

Mineral exploration activities involve numerous risks, including unexpected or unusual

geological operating conditions, rock bursts, cave-ins, fires, floods, earthquakes and other
environmental occurrences and political and social instability. It is not always possible to obtain
insurance against all such risks and the Company may decide not to insure against certain risks as
a result of high premiums or other reasons. Should such liabilities arise, they could negatively
affect the Company’s profitability and financial position and the value of the common shares of
the Company. The Company does not maintain insurance against environmental risks.

10
 Management’s Discussion and Analysis

Environmental Regulation and Liability

The Company’s activities are subject to laws and regulations controlling not only mineral
exploration and exploitation activities themselves but also the possible effects of such activities
upon the environment. Environmental legislation may change and make the mining and
processing of ore uneconomic or result in significant environmental or reclamation costs.
Environmental legislation provides for restrictions and prohibitions on spills, releases or
emissions of various substances produced in association with certain mineral exploitation
activities, such as seepage from tailings disposal areas that could result in environmental
pollution. A breach of environmental legislation may result in the imposition of fines and
penalties or the suspension or closure of operations. In addition, certain types of operations
require the submission of environmental impact statements and approval thereof by government
authorities.

Environmental legislation is evolving in a manner which may mean stricter standards and
enforcement, increased fines and penalties for non-compliance, more stringent environmental
assessments of proposed projects and a heightened degree of responsibility for companies and
their directors, officers and employees. Permits from a variety of regulatory authorities are
required for many aspects of mineral exploitation activities, including closure and reclamation.
Future environmental legislation could cause additional expense, capital expenditures,
restrictions, liabilities and delays in the development of the Company’s properties, the extent of
which cannot be predicted. In the context of environmental permits, including the approval of
closure and reclamation plans, the Company must comply with standards and laws and
regulations which may entail costs and delays depending on the nature of the activity to be
permitted and how stringently the regulations are implemented by the permitting authority. The
Company does not maintain environmental liability insurance.

Regulations and Permits

The Company’s activities are subject to wide variety of laws and regulations governing health
and worker safety, employment standards, waste disposal, protection of the environment,
protection of historic and archaeological sites, mine development and protection of endangered
and protected species and other matters. The Company is required to have a wide variety of
permits from governmental and regulatory authorities to carry out its activities. These permits
relate to virtually every aspect of the Company’s exploration and exploitation activities. Changes
in these laws and regulations or changes in their enforcement or interpretation could result in
changes in legal requirements or in the terms of the Company’s permits that could have a
significant adverse impact on the Company’s existing or future operations or projects. Obtaining
permits can be a complex, time-consuming process. There can be no assurance that the Company
will be able to obtain the necessary permits on acceptable terms, in a timely manner or at all. The
costs and delays associated with obtaining permits and complying with these permits and
applicable laws and regulations could stop or materially delay or restrict the Company from
continuing or proceeding with existing or future operations or projects. Any failure to comply
with permits and applicable laws and regulations, even if inadvertent, could result in the
interruption or closure of operations or material fines, penalties or other liabilities.

Potential Dilution

The issue of common shares of the Company upon the exercise of the options and warrants will
dilute the ownership interest of the Company’s current shareholders. The Company may also

11
 Management’s Discussion and Analysis

issue additional option and warrants or additional common shares from time to time in the future.
If it does so, the ownership interest of the Company’s then current shareholders could also be
diluted.

12
 Management’s Responsibility For Financial Reporting

The accompanying consolidated financial statements and all the information in this annual report are the responsibility of
management and have been approved by the Board of Directors of the corporation.

The consolidated financial statements have been prepared by management in accordance with generally accepted accounting
principles in Canada and reflect management’s best estimates and judgments based on current available information.

The corporation has developed a system of internal accounting controls in order to ensure that transactions are authorized
and proper records are maintained. Management believes that this system of internal controls provides reasonable assurance
that financial records are both reliable and form a proper basis for the preparation of financial statements.

The Board of Directors carries out its responsibility for the consolidated financial statements through its audit committee and
has unrestricted access to the corporation’s auditors to ensure the integrity of management’s financial reporting. The audit
committee includes two independent board members.

The consolidated financial statements have been audited by BDO Dunwoody LLP, Chartered Accountants, in accordance
with Canadian generally accepted auditing standards.

“Jim Voisin” “Maurice Stekel”

Jim Voisin Maurice Stekel

Director Director

Auditors' Report
July 13, 2007
To the Shareholders of Cadillac Ventures Inc.
We have audited the consolidated balance sheets of Cadillac Ventures Inc. (A Development Stage
Company) as at May 31, 2007 and 2006 and the related statements of operations and deficit and cash flows
for each of the years then ended. 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 Canadian generally accepted auditing standards. Those
standards require that we plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. 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.
In our opinion, these consolidated financial statements present fairly, in all material respects, the financial
position of the Company as at May 31, 2007 and 2006 and the results of its operations and its cash flows for
each of the years then ended in accordance with Canadian generally accepted accounting principles.

Toronto, Canada
McCarney Greenwood LLP
Chartered Accountants
Licensed Public Accountants

13
 Consolidated Balance Sheets

Cadillac Ventures Inc.

(Incorporated under the laws of Ontario)
(A Development Stage Company)
Consolidated Balance Sheets
As at May 31,
2007 2006
Assets
Current assets
Cash (Note 5) $ 1,305,811 $ 123,717
Due from a related company (Note 8) 11,439 -
Accounts receivable 87,824 7,461
Prepaid - 458
Quebec refundable tax credits and
mining duty refunds 2,436 2,436
1,407,510 134,072
Mineral properties (Note 4) 616,556 277,842
$ 2,024,066 $ 411,914
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 93,050 $ 91,977
Shareholders' Deficit
Share capital (Note 6(a)) 3,236,474 2,394,498
Warrants (Note 6(c)) 864,441 25,425
Contributed surplus (Note 6(b)) 354,550 1,035
(Deficit) (2,524,449) (2,101,021)
1,931,016 319,937
$ 2,024,066 $ 411,914

Approved by the Board

“Jim Voisin” “Maurice Stekel”

Jim Voisin Maurice Stekel

Director Director

14
 Consolidated Statements of Operations and Deficit

Cadillac Ventures Inc.

(A Development Stage Company)
Consolidated Statements of Operations and Deficit

Cumulative
from date of
inception
of the
development
Year ended May 31 stage (April
2007 2006 28, 2006)
Expenses
Accounting and
corporate services $ 30,938 $ 29,445 $ 34,585
Consulting fees
(note 8) 106,100 - 106,100
Legal and audit 136,925 17,986 148,224
Management fees 3,500 6,892 3,500
Office and general 18,722 3,918 18,726
Shareholder relations 60,987 39,983 62,269
Stock-option compensation
(note 6(b)) 353,500 - 353,500
(Loss) for the period before taxes (710,672) (98,224) (726,904)
Future income tax recovery
(Note 7) 287,244 61,223 348,467
Net (loss) for the period (423,428) (37,001) (378,437)
(Deficit), beginning of period (2,101,021) (2,053,112) (2,135,104)
Restructuring cost - (10,908) (10,908)
(Deficit), end of period $ (2,524,449) $ (2,101,021) $ (2,524,449)
Basic and diluted (loss) per
share (Note 6(d)) $ (0.02) $ (0.01)

15
 Consolidated Statements of Cash Flows

Cadillac Ventures Inc.

(A Development Stage Company)
Consolidated Statements of Cash Flows

Cumulative
from date of
inception
of the
development
Year ended May 31 stage (April
2007 2006 28, 2006)
Cash flows from operating activities
Net (loss) for the period $ (423,428) $ (37,001) $ (378,437)
Adjustments for:
Future income tax recovery (287,244) (61,223) (348,467)
Stock-option compensation 353,500 - 353,500
Changes in non-cash working capital:
Accounts receivable (80,363) (6,410) (82,539)
Prepaids 458 (458) 458
Accounts payable and accrued
liabilities 1,073 110,604 (19,442)
Effect on non-cash working capital as
a result of acquisition of subsidiary - (5,885) (5,885)
Cash flows (used in) operating activities (436,004) (373) (480,812)
Cash flows from financing activities
Proceeds from issuance of common shares 1,914,350 169,500 1,914,350
Proceeds from exercise of warrants 84,700 - 84,700
Cost of share capital issuance (30,799) (1,016) (30,799)
Restructuring costs - (10,908) -
Due from a related company (11,439) - (11,439)
Due to a related party - (12,082) -
Cash flows from financing activities 1,956,812 145,494 1,956,812
Cash flows from investing activities
Expenditures on mining properties (338,714) (280,278) (589,096)
Cash acquired on acquisition of subsidiary - 10,363 10,363
Costs of acquisition of subsidiary - (30,357) (30,357)
Effect on mining interests as a result of
acquisition of subsidiary - 275,879 275,879
Cash flows (used in) investing activities (338,714) (24,393) (333,211)
Increase in cash during the period 1,182,094 120,728 1,142,789
Cash, beginning of period 123,717 2,989 163,022
Cash, end of period $ 1,305,811 $ 123,717 $ 1,305,811
Supplement Schedule of Non-Cash
Transactions
Share issuance for settlement of outstanding
liabilities (Note 6(a)(i)) $ - $ 171,119 $ -
Share issuance for the acquisition of
Chilly-Bin (Note 6(a)(v)) - 250,000 250,000

16
 Cadillac Ventures Inc.
(A Development Stage Company)
Notes to Consolidated Financial Statements
May 31, 2007 and 2006

1. Nature of Operations and Going Concern

Incorporation
Cadillac Ventures Inc. (formerly Blue Power Energy Corporation) was incorporated
under the laws of the Province of Ontario by articles of incorporation dated April 1,
1996. Pursuant to articles of amendment dated April 20, 2006, the name of the
Company was changed to "Cadillac Ventures Inc." ("the Company").

Nature of Operations
The Company is a development stage enterprise in the business of mineral
exploration and the continued operations of the Company and the recoverability of
amounts shown for mineral properties is dependent upon the existence of a deposit and
upon future profitable production, or alternatively, upon the Company's ability to recover
its costs through a disposition of its interest.

The amounts shown for mineral properties represent costs to date, less amounts written
off, and do not necessarily represent the future value. Changes in future conditions could
require a material change in the amount recorded for mineral properties.

Going Concern Assumption

These financial statements are prepared using Canadian generally accepted
accounting principles that are applicable to a going concern which assumes the
Company will continue to operate throughout its next fiscal period subsequent to May
31, 2007. The use of these principles may be inappropriate since there is significant
doubt regarding the appropriateness of this assumption. Significant doubt exists because
there has been substantial operating losses in the current and prior years and the
Company has no operating assets. The future of the Company is currently dependent
upon its ability to obtain sufficient cash from external financing, and/or related parties to
fund the Company's ongoing operations and expenditures on the property.

These statements do not include any adjustments which would be necessary if the
going concern assumption was not used.

2. Summary of Significant Accounting Policies

The preparation of these financial statements in conformity with Canadian generally
accepted accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those
estimates.
 Notes to Consolidated Financial Statements

2. Summary of Significant Accounting Policies (continued)

The significant accounting policies are as follows:

(a) Consolidation
These consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary, Chilly-Bin Inc. ("Chilly-Bin")
since its acquisition on April 28, 2006 (See Note 3).

(b) Mining Property

Mining property is recorded at cost. The costs relating to the acquisition and
exploration of this property are capitalized until the commencement of
commercial activities. If economically profitable ore reserves are developed, the
capitalized costs are amortized using the unit of production method. If it is
determined that the acquisition and exploration costs are not recoverable over the
estimated useful life of the property, or if the project is abandoned, the properties
are written down to their net realizable value. The mining property is reviewed
for impairment whenever events or circumstances indicate that its carrying
amount may not be recoverable.

(c) Income Taxes

The company follows the asset and liability method of accounting for income
taxes. Under this method, income taxes are recognized for the future income tax
consequences attributed to differences between the financial statement carrying
values and their respective income tax bases. Future income tax assets and
liabilities are measured using substantially enacted income tax rates expected to
apply when the asset is realized or the liability is settled. The effect on future
income tax assets and liabilities of a change in tax rates is included in income in
the period that includes the enactment date. Future income tax assets are
evaluated and if realization is not considered "more likely than not", a valuation
allowance is provided.

(d) Flow-Through Shares

The Company has financed a portion of its exploration activities through the
issue of flow-through shares which transfer the tax deductibility of exploration
expenditures to the investor. Proceeds received on the issue of such shares have
been credited to share capital and the related exploration costs have been charged
to mining and resource properties. When the renunciation is made, the tax impact
of the renunciation is recorded as a future income tax liability and charged
against share capital. Where the Company has sufficient tax loss carry-forwards
or other temporary deductible differences a future income tax asset is recognized
and an income tax recovery is recorded in the statement of operations.

18
 Notes to Consolidated Financial Statements

2. Summary of Significant Accounting Policies (continued)

(e) Stock-Based Compensation

The Company has a stock-based compensation plan which is described in Note
6(b) and accounted for using the recommendations in Section 3870 of the CICA
Handbook, "Stockbased Compensation and Other Stock based Payments". These
recommendations state that all stock-based awards be measured and recognized
at the date of grant using the fair value method. The estimated fair value of the
stock options is recorded as compensation expense over the vesting period or at
the date of grant if the options vest immediately, with the offset recorded in
contributed surplus. Any consideration paid to the company with the respect to
the exercise of stock options is credited to share capital along with any related
contributed surplus.

(f) Share Issue Costs and Restructuring Costs

Share issue costs are recorded as a reduction of share capital. Restructuring costs
are charged to deficit.

(g) Asset Retirement Obligation

The Company recognizes the fair value of a liability for an asset retirement
obligation in the year in which it is incurred when a reasonable estimate of fair
value can be made. The carrying amount of the mining property is increased by
the same amount as the liability.

Changes in the liability due to the passage of time will be recognized as an

increase to the liability and a charge to the statement of operations and deficit. As
at May 31, 2007 the Company has determined that it does not have material asset
retirement obligations. Accordingly, no such liability has been reflected in these
financial statements.

(h) Goodwill
Goodwill is the excess of the consideration paid over the net amounts assigned to
assets acquired and liabilities assumed. Goodwill is not amortized. It is tested for
impairment annually, or more frequently, if events or changes in circumstances
indicate that it is impaired.

(i) New Accounting Pronouncements

In January 2005, the Canadian Institute of Chartered Accountants issued four
new accounting standards: Handbook Section 1530, Comprehensive Income,
Handbook Section 3251, Equity, Handbook Section 3855, Financial Instruments
- Recognition and Measurement and Handbook Section 3865, Hedges. These
standards are effective for interim and annual financial statements for the
Company's reporting period beginning on June 1, 2007.

19
 Notes to Consolidated Financial Statements

3. Acquisition of Subsidiary
On April 28, 2006 the Company acquired 100% of Chilly-Bin by issuing a total of
5,000,000 common shares to the shareholders of Chilly-Bin in exchange for all of the
outstanding common shares of Chilly-Bin.

As a result of the share exchange, the Company acquired control of Chilly-Bin, a private
Ontario corporation, which holds as its main asset the New Alger Property located in
Cadillac Township, Quebec. Accordingly, the acquisition of Chilly-Bin is accounted for
by the purchase method. The cost of an acquisition should be based on the fair value of
the consideration given, except where the fair value of the consideration given is not
clearly evident. In such cases, the fair value of the net assets acquired is used.

As the shares issued on acquisition represent approximately 38% of the Company's

issued and outstanding common shares and the Company's shares were thinly traded, it
was impossible to estimate the actual market value of the 5,000,000 common shares.
Therefore, the value of the shares issued on acquisition was based on the fair value of the
net assets acquired. The fair value of Chilly-Bin's net assets was estimated by
management to be $250,000. The Company incurred additional costs totalling $30,357
related to the acquisition during the year ended May 31, 2006. The total purchase price
was allocated as follows:

Net assets acquired

Cash $ 10,363
Mineral property 92,460
Goodwill 183,419
Accounts payable and accrued liabilities (5,885)

$ 280,357
Consideration given
Shares issued $ 250,000
Additional costs 30,357
$ 280,357

20
 Notes to Consolidated Financial Statements

4. Mineral Properties

Cumulative
from date of
inception
of the
development
Year ended May 31, stage (April
2007 2006 28, 2006)
New Alger Property, Quebec (1)
Acquisition costs $ - $ 75,000 $ 75,000
Assays 202 - 202
Claim maintenance 13,156 - 13,156
IP surveys 136,722 - 136,722
Geological 75,000 - 75,000
Consulting 1,658 - 1,658
Line cutting 30,690 - 30,690
Taxes - 10,686 10,686
Goodwill - 183,419 183,419
Management fees 3,089 - 3,089
Other 3,197 11,173 14,370
- - -

Total expenditures 263,714 280,278 543,992

Less: Quebec refundable tax
credits and mining duty refunds - (2,436) (2,436)

Total expenditures for the period 263,714 277,842 541,556

Balance, beginning of period 277,842 - -

Balance, end of period $ 541,556 $ 277,842 $ 541,556

Burnt Hill Property, New

Brunswick (2)
Acquisition costs $ 75,000 $ - $ 75,000
Balance, beginning of period - - -

Balance, end of period $ 75,000 $ - $ 75,000

Total mining properties $ 616,556 $ 277,842 $ 616,556

21
 Notes to Consolidated Financial Statements

4. Mineral Properties (continued)

(1) The New Alger Property, a gold property, consists of a single mining concession in the
Township of Cadillac in the Province of Quebec. On January 31, 2005 Chilly-Bin
acquired 100% of the property from Alfer Inc. ("Alfer") in exchange for 5,000,000
Chilly-Bin shares and $19,589. Alfer also retained a 1% net smelter returns production
royalty from the sale of all minerals produced from the New Alger Property.

(2) On April 4, 2007, the Company was assigned an option agreement on the Burnt Hill
tungsten and molybdenum project located in New Brunswick. This property is wholly
owned by Noront Resources Inc. (“Noront”). The Company is assuming the obligations
under the option agreement for the right to earn an initial 51% interest. These obligations
include the payment of $100,000 in cash to Noront, the issuance of 2,500,000 shares in
the capital of the Company to Noront, and a work commitment of $1,500,000, all of these
obligations must be met prior to October 27, 2009.

See subsequent note for the amended option agreement.

5. Cash Restricted For Flow-Through Expenditures

Flow-through common shares require the Company to pay an amount equivalent to the
proceeds of the issue on prescribed resource expenditures. If the Company does not incur
the committed resource expenditures, it will be required to indemnify the holders of the
shares for any tax and other costs payable by them as a result of the Company not making
the required resource expenditures. As at May 31, 2007 the Company's remaining
commitment with respect to unspent resource expenditures under flow-through common
share agreements is $795,250 (2006 -$165,500).

22
 Notes to Consolidated Financial Statements

6. Share Capital

(a) Authorized
Unlimited number of non-participating, redeemable,
voting Class B preference shares
Unlimited number of Class C preference shares issuable in series
Unlimited number of common shares

Issued - Common shares

Number of $
Shares Amount
Balance, May 31, 2005 3,825,873 $ 1,891,543
Shares issued to settle debt (i) 28,519,855 171,119
Private placement - flow-through shares (ii)
8,475,000 169,500
Warrant valuation (ii) - (25,425)
Tax effect of flow-through renunciation (iii) - (61,223)
Consolidation of shares (iv) (32,656,448) -
Acquisition of Chilly-Bin Inc. (v) 5,000,000 250,000
Share issue costs - (1,016)

Balance, May 31, 2006 13,164,280 2,394,498

Private placement (vi) 1,562,500 125,000

Warrant valuation (vi) - (84,375)
Private placement - flow-through shares (vii) 2,400,000 144,000
Private placement (viii) 2,523,331 378,500
Warrant valuation (viii) - (285,116)
Private placement - flow-through shares (ix) 1,860,714 651,250
Warrant valuation (ix) - (494,950)
Private placement (x) 1,025,999 615,600
Shares issuance on exercise of warrants (xi) 564,665 84,700
Valuation of exercised warrants - 25,410
Tax effect of flow-through renunciation (vii)(ix)
- (287,244)
Share issue costs - cash - (30,799)
Balance, May 31, 2007 23,101,489 $ 3,236,474

(i) On November 1, 2005 the Company settled substantially all of its

outstanding liabilities amounting to $171,119 through the issuance
of an aggregate of 28,519,855 common shares to the following
arm's length creditors: Elen Enterprises Inc, Nominex Ltd, Kalwea
Financial Corp., Allan Ringler Services Inc, George Duguay
Services Inc, Jim Voisin and Peter Miller.

23
 Notes to Consolidated Financial Statements

6. Share Capital (continued)

(ii) On December 30, 2005 the Company completed a private

placement financing under which it issued 8,475,000 flow-through units
of the Company at a price of $0.02 per unit for aggregate gross proceeds
of $169,500. Each unit is comprised of one common share in the capital
of the Company and one-third common share purchase warrant. Each
warrant entitles the holder thereof to purchase one common share of the
Company at a price of $0.03 per warrant until December 30, 2006.

The fair value of the warrants was estimated using the Black-Scholes
pricing option model. The assumptions used for the valuation of the
respective warrants were: Dividend yield 0%, expected volatility 152%,
risk-free interest rate of 3.76% and an expected life of one year. Value
assigned to the 2,825,000 warrants was $25,425.

(iii) The amount from the flow-through shares in (ii) above has been
renounced and has created a future income tax liability of $61,223 which
has been allocated as a cost of issuing the flow-through shares.

(iv) On April 20, 2006 the outstanding common shares were consolidated on
the basis of one new common share for each five issued and outstanding
old common shares.

(v) In consideration of the acquisition of Chilly-Bin, the Company delivered

to the shareholders of Chilly-Bin a total of 5,000,000 post-consolidated
shares in the capital of the Company. This was considered a related party
transaction.

(vi) On June 14, 2006 the Company completed a private placement financing
under which it issued 1,562,500 units of the Company at a price of $0.08
per unit for aggregate gross proceeds of $125,000. Each unit consists of
one common share and one common share purchase warrant exercisable
for 2 years at $0.10.

The fair value of the warrants was estimated using the Black Scholes
pricing option model. The assumptions used for the valuation of the
respective warrants were: Dividend yield 0%, expected volatility 147%,
risk free interest rate of 4.22% and an expected life of two years. Value
assigned to 1,562,500 warrants was $84,375.

(vii) On October 4, 2006 the Company completed a private placement

financing under which it issued 2,400,000 flow-through shares of the
Company at a price of $0.06 per share for aggregate gross proceeds of
$144,000. Exploration expenditures of $144,000 were renounced during
the year which created a future income tax liability of approximately
$52,013, which has been allocated as a cost of issuing the flow-through
shares.

24
 Notes to Consolidated Financial Statements

6. Share Capital (continued)

(viii) On December 5, 2006 and December 8, 2006 the Company completed

two private placements which it issued 2,523,331 units at a price of
$0.15 per share for aggregate gross proceeds of totalling $378,500. Each
unit is comprised of one common share of the Company and one
common share purchase warrant which entitles the holder thereof to
purchase one common share of the Company at a price of $0.20 for a
period of 24 months from the date of closing.

The fair value of the warrants was estimated using the Black Scholes
pricing option model. The assumptions used for the valuation of the
respective warrants were: Dividend yield 0%, expected volatility 173%,
risk free interest rate of 3.82% and an expected life of 2 years. Value
assigned to 2,523,331 warrants was $285,116.

(ix) On December 29, 2006 the Company completed a private placement

which it issued 1,860,714 flow-through units of the Company at a price
of $0.35 per unit for gross proceeds of $651,250. Each unit is comprised
of one flow-through common share and one purchase warrant which
entitles the holder thereof to purchase one common share of the
Company at a price of $0.45 for a period of two years from the date of
closing.

The fair value of the warrants was estimated using the Black Scholes
pricing option model. The assumptions used for the valuation of the
respective warrants were: Dividend yield 0%, expected volatility 173%,
risk free interest rate of 4.02% and an expected life of 2 years. Value
assigned to 1,860,714 warrants was $494,950.

Exploration expenditures of $651,250 were renounced during the year

which created a future income tax liability of approximately $235,231,
which has been allocated as a cost of issuing the flow-through shares.

(x) On May 30, 2007 the Company completed two private placements which
it issued 1,025,999 common shares at a price of $0.60 per share for
aggregate gross proceeds of totalling $615,600.

(xi) The Company received proceeds of $84,700 resulting from the exercise
of 564,665 common share purchase warrants with an expiry date of
December 30, 2006. The remaining 333 warrants expired. These
warrants were initially issued in the private placement described in Note
6(a)(ii). As a result of Note 6 (a)(iv) the warrants were consolidated 5 for
1 and the exercise price was increased on the same basis resulting in an
exercise price of $0.15.

25
 Notes to Consolidated Financial Statements

6. Share Capital (continued)

(b) Stock Options

Under the Company's 2006 Stock Option Plan, the Company may grant options
to its employees, officers and directors to purchase common shares from the
Company at a fixed price not less than the fair market value of the stock on the
day preceding the grant date. The options are fully vested upon issuance. The
option's maximum term is five years.

The following table sets out the changes in the stock options for each of the years
ended May 31, 2007 and 2006:

2007 2006
Weighted Weighted
average average
No. of exercise No. of exercise
options price options price
Outstanding, beginning of year - $ - - $ -
Granted 2,200,000 - - - -
Outstanding, end of year 2,200,000 $ 0.17 - $ -
Options exercisable at year end 2,200,000 -
Weighted average fair value of
options granted during
the year $ 0.16 $ -

As of May 31, 2007, the following stock options were outstanding and exercisable:

Options outstanding Options exercisable

Weighted
average Weighted Weighted
remaining average average
Expiry No. of contractual exercise No. of exercise
Date options life price options price
December 4, 2011 (i) 1,700,000 4.51 years $ 0.10 1,700,000 $ 0.10
April 17, 2012 (ii) 500,000 4.88 0.40 500,000 0.40
2,200,000 4.59 years $ 0.10 2,200,000 $ 0.10

6. Share Capital (continued)

26
 Notes to Consolidated Financial Statements

During the year, 2,200,000 (2006 - Nil) stock options were granted to directors and consultants of
the Company. These options vested immediately and were expensed in the statement of
operations and deficit and credited to contributed surplus. For the year ended May 31, 2007, the
following options were expensed.

Number of options Amount

Option grant date expensed expensed
December 4, 2006 (i) 1,700,000 $ 280,500
April 17, 2007 (ii) 500,000 73,000
2,200,000 $ 353,500

(i) The amount expensed was calculated using the Black-Scholes option pricing
model with the following assumptions: dividend yield of 0%; expected volatility
of 180%; risk-free interest rate of 3.75% and an expected average life of 5 years.
The options were valued at $280,500.

(ii) The amount expensed was calculated using the Black-Scholes option pricing
model with the following assumptions: dividend yield of 0%; expected volatility
of 167%; risk-free interest rate of 4.15% and an expected average life of 5 years.
The options were valued at $73,000.

The following is a continuity of contributed surplus:

Amount
Balance, May 31, 2005 and 2006 $ 1,035
Stock-option compensation 353,500
Expired warrants 15
Balance, May 31, 2007 $ 354,550

27
 Notes to Consolidated Financial Statements

6. Share Capital (continued)

(c) Warrants
The following is continuity of warrants for the years ended May 31, 2007 and
2006:
Number of $
Warrants Value
Balance, May 31, 2005 (Note 6(a)(ii) 2,825,000 $ -
5 for 1 consolidation (Note 6(a)(iv) (2,260,002) -
Post consolidation balance 564,998 25,425
Balance, May 31, 2006 564,998 25,425
Private placement (Note 6(a)(vi)) 1,562,500 84,375
Private placement (Note 6(a)(viii)) 2,523,331 285,116
Private placement (Note 6(a)(ix)) 1,860,714 494,950
Exercised (Note 6(a)(xi)) (564,665) (25,410)
Expired (Note 6(a)(xi)) (333) (15)
Balance, May 31, 2007 5,946,545 $ 864,441

The following table summarizes the warrants outstanding at May 31, 2007 and 2006:

Exercise
price per Number of warrants
share outstanding at May 31,
$ Expiry Date 2007 2006
0.03 December 30, 2006 - 564,998
0.10 June 14, 2008 1,562,500 -
0.20 December 5, 2008 2,256,664 -
0.20 December 8, 2008 266,667 -
0.45 December 29, 2008 1,860,714 -
5,946,545 564,998

28
 Notes to Consolidated Financial Statements

6. Share Capital (continued)

(d) Basic and Diluted (Loss) per Share

The following table sets forth the computation of basic and diluted (loss) per
share:

2007 2006
Numerator:
(Loss) for the year $ (423,428) $ (37,001)
Numerator for basic and diluted (loss)
per share $ (423,428) $ (37,001)
Denominator:
Weighted average number of common
shares 18,886,635 5,573,445
Denominator for basic (loss) per share 18,886,635 5,573,445
Effect of dilutive securities:
Stock options (i) - -
Share purchase warrants (i) - -
Denominator for diluted (loss) per share 18,886,635 5,573,445
Basic (loss) per share $ (0.02) $ (0.01)
Diluted (loss) per share $ (0.02) $ (0.01)

(i) The stock options and share purchase warrants were not included in the
computation of diluted loss per share as their inclusion would be anti-
dilutive.

7. Income Taxes

Future income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts
for tax purposes. The Company has one future income tax liability which arose as a result
of issuing flow-through shares to investors. Since the expenditures generated by the flow-
through shares are renounced to the investors this lowers the tax bases of the resource
properties and results in a future income tax liability.

29
 Notes to Consolidated Financial Statements

7. Income Taxes (continued)

2007 2006
Future tax liability:
Resource property $ (287,244) $ (61,223)
Future tax asset:
Non-capital losses used to reduce
the future income tax liability 287,244 61,223
Net future income tax liability $ - $ -

In accordance with CICA Handbook EIC 146, the benefit of non-capital losses carried
forward has been used to reduce the futures income tax liability.

The Company has the following future tax assets:

2007 2006
Non-capital losses carried forward $ 525,339 $ 412,305
Exploration expenditures 22,533 21,744
Deferred financing costs 9,119 294
Cumulative eligible capital 11,858 4,619
Total future tax assets 568,849 438,962
Non-capital losses transferred to future income
tax liability (348,467) (61,223)
Valuation allowance for future tax assets (220,382) (377,739)
Net future tax assets $ - $ -

The Company provided a valuation allowance equal to the future tax asset because it is
not more likely than not that the future tax asset will be realized. The Company's income
tax recovery for each of the years ended May 31, 2007 and 2006 is as follows:

2007 2006
Current income tax expense $ - $ -
Future income tax expense (recovery) (287,244) (61,223)
Total income tax expense (recovery) $ (287,244) $ (61,223)

30
 Notes to Consolidated Financial Statements

7. Income Taxes (continued)

The Company's actual income tax expense for each of the years ended is made up as
follows:

2007 2006
(Loss) before income taxes $ (710,672) $ (98,224)
Income taxes recovery at combined federal and
provincial rate of 36.12% (256,695) (35,479)
Stock-option compensation 127,684 -
Non-deductible meals and entertainment 182 56
Share issue costs written off over five years (2,298) (73)
Renunciation of flow-through shares (287,244) (61,223)
Taxable benefit not recognized 131,127 35,496
Actual income tax expense (recovery) $ (287,244) $ (61,223)

As at May 31, 2007 the Company has non-capital losses available for carry forward of
approximately $1,454,000 and Canadian exploration and development expenditures of
approximately $326,000 available to be applied against taxable income in future years.
No benefit from these amounts has been recorded in these financial statements.

The non-capital losses expire as follows:

Year of Expiry Amount

2008 $ 91,000
2009 603,000
2010 141,000
2014 90,000
2015 68,000
2026 98,000
2027 363,000
$ 1,454,000

31
 Notes to Consolidated Financial Statements

8. Related Party Transactions

The Company was previously paying $2,000 per month to Harper Capital Inc. ("Harper")
(a company owned by the spouse of the former promoter of the Company) for managing
and supervising the Company's activities. Since August 2005, the Company has no longer
required Harper's services. During the year ended May 31, 2007 the Company was
charged the sum of $Nil (2006 - $6,000) as management fees for service provided by
Harper.

As at May 31, 2007, pursuant to the financing disclosed in Note 6(a)(vi), the following
related parties of the Company participated in the private placement by purchasing
offered units: Nominex Ltd. (of which Neil Novak, a director of the Company, is the
President) - 62,500 units; Nicole Brewster, the former Secretary and a former director of t
he Company - 62,500 units; Jim Voisin, the President and a director of the Company -
62,500 units; and Norm Brewster, an insider of the Company - 250,000 units.

During the year, the Company has paid Billiken Management Services Inc. ("Billiken"), a
private company, in which partial ownership is held by a spouse of one of the directors of
the Company, to manage the New Alger Property. This company charges a fee of 10% of
expenses incurred on behalf of the Company. The fee totaled $3,089 (2006 - $Nil). As at
May 31, 2007, there was a balance of $11,439 due to the Company from Billiken.

During the year, consulting fees paid/payable to directors, officers and insiders of the
Company were expensed or capitalized to mining properties for an aggregate of
$160,600. The amounts are as follows: Jim Voisin, the CFO and a director of the
Company - $43,000; Nicole Brewster, the former Secretary and a former director of the
Company - $27,600; and Norm Brewster, director - $90,000.
These transactions have been measured at the exchange amount.

Amounts due to related parties are unsecured, non-interest bearing and have no fixed
terms of repayment.

9. Financial Instruments
The Company's financial instruments include due from related company, accounts
receivable and accounts payable and accrued liabilities. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest rate,
currency or credit risks arising from these financial instruments. The fair value of the
financial instruments approximates their market value due to the short term nature of
these instruments.

10. Segmented information

The Company's operations comprise a single reporting operating segment engaged in
resource exploration. As the operations comprise a single reporting segment, amounts
disclosed in the financial statements for loss for the year and loss per share also represent
segment amounts.

All of the Company's operations and assets are located in Canada.

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 Notes to Consolidated Financial Statements

11. Subsequent Events

On June 11, 2007 the Company and Noront have agreed to amend the option agreement
on the Burnt Hill Project. Under the terms of this amendment Noront will immediately
commence a $1,500,000 exploration program on the Burnt Hill project. The Company
will issue to Noront, on or prior to December 31, 2007, $1,500,000 worth of common
shares of the Company to be valued at no more than $1.00 per share, or at the same price
as a proposed financing contemplated by the Company to be completed in the second or
third quarters of 2007. The Company will remain the operator of the program during this
time.

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