UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 6-K

    REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
                       THE SECURITIES EXCHANGE ACT OF 1934


                          For the month of MARCH, 2006.

                        Commission File Number: 001-32558


                              IMA EXPLORATION INC.
--------------------------------------------------------------------------------
                 (Translation of registrant's name into English)


  #709 - 837 West Hastings Street, Vancouver, British Columbia, V6C 3N6, Canada
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


Indicate by check mark whether the registrant  files or will file annual reports
under cover of Form 20-F or Form 40-F:   FORM 20-F  [X]   FORM 40-F  [ ]

Indicate by check mark if the  registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______

Indicate by check mark if the  registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): _______

Indicate by check mark whether the  registrant  by  furnishing  the  information
contained  in this Form,  is also  thereby  furnishing  the  information  to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
YES [ ] NO [X]

If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3- 2(b): 82-_____________


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf of the
undersigned, thereunto duly authorized.

                                           IMA EXPLORATION INC.
                                           -------------------------------------

Date: March 29, 2006                       /s/ Joseph Grosso
     ------------------------------        -------------------------------------
                                           Joseph Grosso,
                                           President & CEO








                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS
                               FOR THE YEARS ENDED
                        DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)























MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The  accompanying  consolidated  financial  statements  of the Company have been
prepared by  management  in  accordance  with  accounting  principles  generally
accepted in Canada and reconciled to accounting principles generally accepted in
the  United  States  as set  out in  Note  10 and  contain  estimates  based  on
management's  judgement.  Management maintains an appropriate system of internal
controls to provide  reasonable  assurance  that  transactions  are  authorized,
assets safeguarded, and proper records maintained.

The  Audit  Committee  of the  Board of  Directors  has met  with the  Company's
independent auditors to review the scope and results of the annual audit, and to
review the financial statements and related financial reporting matters prior to
submitting the financial statements to the Board for approval.

The Company's independent auditors, PricewaterhouseCoopers LLP, are appointed by
the  shareholders  to conduct an audit in  accordance  with  generally  accepted
auditing standards in Canada and the Public Company  Accounting  Oversight Board
(United States), and their report follows.



/s/ JOSEPH GROSSO                                  /s/ ART LANG
-----------------                                  -----------------------
Joseph Grosso                                      Art Lang
President                                          Chief Financial Officer


March 24, 2006







PRICEWATERHOUSECOOPERS
--------------------------------------------------------------------------------
                                                    PricewaterhouseCoopers LLP
                                                    Chartered Accountants
                                                    PricewaterhouseCoopers Place
                                                    250 Howe Street, Suite 700
                                                    Vancouver, British Columbia
                                                    Canada V6C 3S7
                                                    Telephone 1 604 806 7000
                                                    Facsimile 1 604 806 7806






INDEPENDENT AUDITORS' REPORT


TO THE SHAREHOLDERS OF
IMA EXPLORATION INC.

We have audited the  consolidated  balance sheets of IMA EXPLORATION  INC. as at
December  31, 2005 and  December  31, 2004 and the  consolidated  statements  of
operations  and deficit and cash flows for the years ended  December  31,  2005,
2004  and  2003.  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 and the standards of the Public  Company  Accounting  Oversight  Board
(United  States).  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 December 31, 2005
and 2004 and the  results  of its  operations  and its cash  flows for the years
ended  December 31, 2005,  2004 and 2003 in accordance  with Canadian  generally
accepted accounting principles.


/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
CHARTERED ACCOUNTANTS
Vancouver, B.C., Canada
March 24, 2006







PricewaterhouseCoopers refers to the Canadian firm of PricewaterhouseCoopers LLP
  and the other memeber firms of PricewaterhouseCoopers International Limited,
            each of which is a seperate and independent legal entity.




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                        AS AT DECEMBER 31, 2005 AND 2004
                         (EXPRESSED IN CANADIAN DOLLARS)



                                                       2005            2004
                                                         $               $

                                     ASSETS

CURRENT ASSETS

Cash and cash equivalents                             7,731,395       5,227,354
Accounts receivable, prepaids and
     deposits (Note 5 and 7)                            548,492         162,802
Marketable securities (Note 4)                          186,000         186,000
                                                   ------------    ------------
                                                      8,465,887       5,576,156

EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Note 5)                 -          94,102

MINERAL PROPERTIES AND
     DEFERRED COSTS (Notes 2 and 8)                  15,032,107       6,551,598
                                                   ------------    ------------
                                                     23,497,994      12,221,856
                                                   ============    ============


                                   LIABILITIES

CURRENT LIABILITIES

Accounts payable and accrued liabilities                976,811         523,378

FUTURE INCOME TAX LIABILITIES (Note 8)                1,760,110         885,093
                                                   ------------    ------------
                                                      2,736,921       1,408,471
                                                   ------------    ------------

                              SHAREHOLDERS' EQUITY

SHARE CAPITAL (Note 6)                               50,414,672      36,982,307

CONTRIBUTED SURPLUS (Note 6)                          5,854,445       3,428,382

DEFICIT                                             (35,508,044)    (29,597,304)
                                                   ------------    ------------
                                                     20,761,073      10,813,385
                                                   ------------    ------------
                                                     23,497,994      12,221,856
                                                   ============    ============

NATURE OF OPERATIONS AND CONTINGENCY (Note 1)

COMMITMENTS (Note 7)

SUBSEQUENT EVENTS (Note 12)

APPROVED BY THE BOARD

/s/ DAVID HORTON        , Director
------------------------

/s/ ROBERT STUART ANGUS , Director
------------------------

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





                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)




                                                       2005            2004            2003
                                                         $               $               $

                                                                         

EXPENSES

Administrative and management services                  150,340         240,084         119,921
Corporate development and investor relations            525,938         317,987         196,537
General exploration                                      55,914         228,961         226,956
Office and sundry                                       148,015         107,678          52,118
Professional fees                                     2,327,278         894,780         198,876
Rent, parking and storage                                72,791          90,629          35,552
Salaries and employee benefits                          585,560         313,409          98,202
Stock based compensation (Note 6)                     1,800,000       1,972,860       1,487,235
Telephone and utilities                                  26,648          34,165          18,681
Transfer agent and regulatory fees                      199,715          57,743          34,078
Travel and accommodation                                256,035         203,591          52,175
Cost recoveries (Note 7)                                      -        (149,271)        (17,290)
                                                   ------------    ------------    ------------
                                                      6,148,234       4,312,616       2,503,041
                                                   ------------    ------------    ------------
LOSS BEFORE OTHER ITEMS                              (6,148,234)     (4,312,616)     (2,503,041)
                                                   ------------    ------------    ------------
OTHER EXPENSE (INCOME)

Foreign exchange                                       (232,954)        195,285          12,763
Reorganization costs                                          -         346,103               -
Interest and other income                              (150,406)       (101,589)        (66,561)
Gain on options and disposition of
     mineral properties                                       -        (328,346)              -
Write-down of marketable securities                           -          99,762               -
                                                   ------------    ------------    ------------
                                                       (383,360)        211,215         (53,798)
                                                   ------------    ------------    ------------
LOSS FROM CONTINUING OPERATIONS                      (5,764,874)     (4,523,831)     (2,449,243)

Loss allocated to spin-off assets (Note 2)                    -         131,232         969,175
                                                   ------------    ------------    ------------
LOSS FOR THE YEAR                                    (5,764,874)     (4,655,063)     (3,418,418)

DEFICIT - BEGINNING OF YEAR                         (29,597,304)    (17,577,363)    (14,158,945)

DISTRIBUTION OF EQUITY ON SPIN-OFF OF ASSETS
     TO GOLDEN ARROW (Note 2)                          (145,866)     (7,364,878)              -
                                                   ------------    ------------    ------------
DEFICIT - END OF YEAR                               (35,508,044)    (29,597,304)    (17,577,363)
                                                   ============    ============    ============


BASIC AND DILUTED LOSS PER COMMON SHARE
     FROM CONTINUNG OPERATIONS                           $(0.12)         $(0.11)         $(0.08)
                                                   ============    ============    ============

BASIC AND DILUTED LOSS PER COMMON SHARE                  $(0.12)         $(0.11)         $(0.11)
                                                   ============    ============    ============
WEIGHTED AVERAGE NUMBER OF
     COMMON SHARES OUTSTANDING                       46,197,029      40,939,580      32,251,753
                                                   ============    ============    ============




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




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)





                                                       2005            2004            2003
                                                         $               $               $

                                                                         

CASH PROVIDED FROM (USED FOR)

OPERATING ACTIVITIES

Net loss for the year                                (5,764,874)     (4,655,063)     (3,418,418)
Net loss allocated to spin-off assets                         -         131,232         969,175
                                                   ------------    ------------    ------------
Net loss from continuing operations                  (5,764,874)     (4,523,831)     (2,449,243)

Items not affecting cash
     Depreciation                                             -          26,665          13,257
     Stock based compensation                         1,800,000       1,972,860       1,487,235
     Gain on options and disposition of
          mineral properties                                  -        (328,346)              -
     Write-down of marketable securities                      -          99,762               -
                                                   ------------    ------------    ------------
                                                     (3,964,874)     (2,752,890)       (948,751)
Change in non-cash working capital balances             115,256          74,785         182,698
                                                   ------------    ------------    ------------
                                                     (3,849,618)     (2,678,105)       (766,053)
Cash used in spin-off operations                              -        (283,629)       (653,496)
                                                   ------------    ------------    ------------
                                                     (3,849,618)     (2,961,734)     (1,419,549)
                                                   ------------    ------------    ------------
INVESTING ACTIVITIES

Expenditures on mineral properties
     and deferred costs                              (7,025,492)     (4,448,659)     (1,069,228)
Net mineral properties and marketable securities
     cash flow related to spin-off assets                     -          32,592        (781,533)
Proceeds from sale/(purchase) of equipment               46,589         (93,650)        (21,875)
                                                   ------------    ------------    ------------
                                                     (6,978,903)     (4,509,717)     (1,872,636)
                                                   ------------    ------------    ------------
FINANCING ACTIVITIES
Issuance of common shares                            14,215,165       9,707,897       6,467,245
Share issuance costs                                   (736,737)       (411,237)       (188,850)
                                                   ------------    ------------    ------------
                                                     13,478,428       9,296,660       6,278,395
                                                   ------------    ------------    ------------
INCREASE IN CASH AND CASH EQUIVALENTS                 2,649,907       1,825,209       2,986,210

CASH TRANSFERRED TO GOLDEN ARROW (Note 2)              (145,866)     (1,020,189)              -
                                                   ------------    ------------    ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS             2,504,041         805,020       2,986,210

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR         5,227,354       4,422,334       1,436,124
                                                   ------------    ------------    ------------
CASH AND CASH EQUIVALENTS - END OF YEAR               7,731,395       5,227,354       4,422,334
                                                   ============    ============    ============

CASH AND CASH EQUIVALENTS IS COMPRISED OF:
Cash                                                    151,395         927,354       1,622,334
Term Deposits                                         7,580,000       4,300,000       2,800,000
                                                   ------------    ------------    ------------
                                                      7,731,395       5,227,354       4,422,334
                                                   ============    ============    ============


SUPPLEMENTARY CASH FLOW INFORMATION (Note 11)


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




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
               CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS
                      FOR THE YEAR ENDED DECEMBER 31, 2005
                         (EXPRESSED IN CANADIAN DOLLARS)





                                                                      NAVIDAD
                                                      NAVIDAD          AREAS          IVA TAX          TOTAL
                                                         $               $               $               $

                                                                                      

Balance, beginning of year                            5,770,968         112,694         667,936       6,551,598
                                                   ------------    ------------    ------------    ------------
Expenditures during the year
     Assays                                             316,220               -               -         316,220
     Communications                                      28,100              51               -          28,151
     Drilling                                         2,188,346               -               -       2,188,346
     Engineering                                         53,340               -               -          53,340
     Environmental                                      391,816               -               -         391,816
     Geophysics                                         176,036               -               -         176,036
     Metallurgy                                         501,070               -               -         501,070
     Office and other                                    95,310             640               -          95,950
     Petrography                                         13,563               -               -          13,563
     Salaries and Contractors (Note 6 (d))            1,539,569               -               -       1,539,569
     Supplies and Equipment                             441,012              41               -         441,053
     Transportation                                     248,554               -               -         248,554
     Project Development                                828,036               -               -         828,036
     IVA Tax                                                  -               -         783,788         783,788
                                                   ------------    ------------    ------------    ------------
                                                      6,820,972             732         783,788       7,605,492
                                                   ------------    ------------    ------------    ------------
Future income tax (Note 8)                              875,017               -               -         875,017
                                                   ------------    ------------    ------------    ------------
Balance, end of year                                 13,466,957         113,426       1,451,724      15,032,107
                                                   ============    ============    ============    ============






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




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
               CONSOLIDATED SCHEDULE OF MINERAL PROPERTY INTERESTS
                      FOR THE YEAR ENDED DECEMBER 31, 2004
                         (EXPRESSED IN CANADIAN DOLLARS)






                                                                                                   GOLDEN ARROW
                                                      NAVIDAD                        SUBTOTAL         RELATED
                                      NAVIDAD          AREAS          IVA TAX         NAVIDAD       PROPERTIES         TOTAL
                                         $               $               $               $               $               $

                                                                                                

Balance, beginning of year            1,253,391          16,178         199,457       1,469,026       6,744,907       8,213,933
                                   ------------    ------------    ------------    ------------    ------------    ------------
Expenditures during the year

     Assays                             567,364               -               -         567,364           1,702         569,066
     Communications                      13,729               -               -          13,729               -          13,729
     Drilling                         1,663,984               -               -       1,663,984               -       1,663,984
     Environmental                      252,201               -               -         252,201          65,166         317,367
     Office and other                   172,874          22,786               -         195,660          48,798         244,458
     Salaries and Contractors           994,912           2,949               -         997,861           2,339       1,000,200
     Supplies and Equipment             147,422             529               -         147,951               -         147,951
     Transportation                      51,583               -               -          51,583               -          51,583
     Option payments                     19,595          70,252               -          89,847          12,048         101,895
     IVA Tax                                  -               -         468,479         468,479               -         468,479
                                   ------------    ------------    ------------    ------------    ------------    ------------
                                      3,883,664          96,516         468,479       4,448,659         130,053       4,578,712
                                   ------------    ------------    ------------    ------------    ------------    ------------
Balance, before transfer              5,137,055         112,694         667,936       5,917,685       6,874,960      12,792,645
Future income tax (Note 8)              633,913               -               -         633,913               -         633,913
Property transfer to Golden Arrow             -               -               -               -      (6,874,960)     (6,874,960)
                                   ------------    ------------    ------------    ------------    ------------    ------------
Balance, end of year                  5,770,968         112,694         667,936       6,551,598               -       6,551,598
                                   ============    ============    ============    ============    ============    ============






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




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)



1.       NATURE OF OPERATIONS AND CONTINGENCY

         The Company is a natural  resource  company  engaged in the business of
         acquisition,  exploration  and  development  of mineral  properties  in
         Argentina. The Company presently has no proven or probable reserves and
         on the basis of information to date, it has not yet determined  whether
         these  properties  contain   economically   recoverable  ore  reserves.
         Consequently the Company  considers  itself to be an exploration  stage
         company.  The amounts shown as mineral  properties  and deferred  costs
         represent costs incurred to date, less amounts amortized and/or written
         off, and do not  necessarily  represent  present or future values.  The
         underlying  value  of the  mineral  properties  and  deferred  costs is
         entirely  dependent  on  the  existence  of  economically   recoverable
         reserves, securing and maintaining title and beneficial interest in the
         properties,  the  ability  of  the  Company  to  obtain  the  necessary
         financing to complete  development,  and future profitable  production.
         The Company  considers  that it has adequate  resources to maintain its
         core  operations  for the next fiscal year but currently  does not have
         sufficient  working capital to fund all of its planned  exploration and
         development  work.  The Company will  continue to rely on  successfully
         completing additional equity financing.

         In March 2004 Aquiline Resources Inc. ("Aquiline")  commenced an action
         against  the  Company  seeking a  constructive  trust over the  Navidad
         properties and damages. On September 29, 2005 the Company made an offer
         to Aquiline to settle the litigation. The Board of Directors decided to
         make the offer due to the inherent risks of litigation, to minimize the
         significant  legal costs and most  importantly  to allow the Company to
         continue  with its  business  plan to  develop  Navidad.  The offer was
         rejected and the action  continued on to trial.  The trial commenced on
         October 11, 2005 and ended on December 12, 2005.  The Court's  decision
         is expected in the first half of 2006.  At this date the outcome is not
         determinable.  The  Company  has not made any  provision  for costs for
         which it might become liable in what management  considers the unlikely
         event of an  adverse  judgment.  However,  in the  event of an  adverse
         judgment  the Company may suffer loss and such loss could be  material;
         the  Company  might  not be able to  proceed  with  its  plans  for the
         development of Navidad and could lose the ownership rights it currently
         has over the  project.  The Company  continues to expense the legal and
         related  costs of defending the action as they are incurred and has not
         made a  provision  for the future  costs that will be incurred or their
         potential recovery from the plaintiff.

2.       SPIN-OFF OF ASSETS

         On July 7, 2004, the Company completed a corporate  restructuring  plan
         (the "Reorganization")  which resulted in dividing the Company's assets
         and   liabilities   into  two   separate   companies.   Following   the
         Reorganization   the  Company   continued  to  hold  the  Navidad  Area
         properties,   while  all  other  mineral  property  interests,  certain
         marketable  securities and cash were spun-off to Golden Arrow Resources
         Corporation  ("Golden  Arrow"),  a newly created  company.  The Navidad
         project, located in the province of Chubut Argentina, was staked by the
         Company  in late 2002 and  continues  to be the focus of the  Company's
         activities.  The  Reorganization of the Company was accomplished by way
         of a statutory plan of  arrangement.  The  shareholders  of the Company
         were  issued  shares in Golden  Arrow on the basis of one Golden  Arrow
         share  for  ten  shares  of  the   Company.   On   completion   of  the
         Reorganization, the Company transferred to Golden Arrow:

         i)       all of the  Company's  investment  in its mineral  properties,
                  excluding the Navidad  project and Navidad Area properties and
                  related future income tax liabilities;
         ii)      the assets and  liabilities  of IMPSA  Resources  (BVI)  Inc.,
                  Inversiones  Mineras  Argentinas  Holdings  (BVI)  Inc.,  both
                  wholly-owned  subsidiaries of the Company, and IMPSA Resources
                  Corporation, an 80.69% owned subsidiary of the Company;
         iii)     certain  marketable  securities at their recorded values;
         iv)      cash and cash equivalents




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)




2.       SPIN-OFF OF ASSETS (continued)

         The aggregate  carrying amount of the net assets  transferred  from the
         Company to Golden Arrow during 2004 is as follows:
                                                                       2004
                                                                         $

         Cash and cash equivalents                                    1,020,189
         Marketable securities and other current
              assets and liabilities                                    548,841
         Mineral properties and deferred cost and equipment           6,874,960
         Future income tax liabilities                               (1,079,112)
                                                                   ------------
                                                                      7,364,878
                                                                   =============

         During 2005 the Company paid $145,866 to Golden Arrow from the exercise
         of warrants of the Company  that  resulted in the issue of Golden Arrow
         shares as required by the terms of the Reorganization.  As all warrants
         that were  outstanding as of the effective  date of the  reorganization
         have been  exercised  the  Company  has no  further  obligation  to pay
         amounts to Golden  Arrow for the issue of its shares on the exercise of
         the Company's warrants.

         The Company's  comparative  amounts in the Statement of Operations  and
         Deficit include an allocation of general and administrative expenses as
         Loss allocated to spin-off assets. The allocation was calculated on the
         basis  of the  ratio  of the  specific  assets  transferred  to  assets
         retained.  Certain "Other Income and Expense" items have been allocated
         to spin-off assets on a cost specific basis.


3.       SIGNIFICANT ACCOUNTING POLICIES

         BASIS OF PRESENTATION

         These   consolidated   financial   statements  have  been  prepared  in
         accordance  with  Canadian  generally  accepted  accounting  principles
         ("Canadian  GAAP").  The significant  measurement  differences  between
         those  principles  and those that would be applied  under United States
         generally accepted accounting principles ("US GAAP") as they affect the
         Company are disclosed in Note 10.

         USE OF ESTIMATES

         The  preparation  of financial  statements in conformity  with Canadian
         GAAP requires  management to make estimates and assumptions that affect
         the  reported  amount of  assets  and  liabilities  and  disclosure  of
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements and the reported  amount of revenues and expenses during the
         period.  Significant  areas  requiring the use of management  estimates
         include   the   determination   of   environmental   obligations,   the
         recoverability of mineral  properties,  and the assumptions used in the
         determination  of the fair value of stock  based  compensation.  Actual
         results may differ from these estimates.

         PRINCIPLES OF CONSOLIDATION

         These  consolidated  financial  statements  include the accounts of the
         Company  and its  subsidiaries,  all of which  are  wholly  owned.  The
         Company's principal  subsidiary is Inversiones Mineras Argentinas S.A..
         All inter-company transactions and balances have been eliminated.




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         CASH AND CASH EQUIVALENTS

         Cash and cash  equivalents  include  cash  and  short-term  investments
         maturing within 90 days of initial investment.

         MARKETABLE SECURITIES

         Marketable securities are carried at the lower of cost and market.

         MINERAL PROPERTIES AND DEFERRED COSTS

         Direct costs  related to the  acquisition  and  exploration  of mineral
         properties  held  or  controlled  by the  Company  are  deferred  on an
         individual  property  basis  until  the  viability  of  a  property  is
         determined.  Administration  costs and  general  exploration  costs are
         expensed  as  incurred.   When  a  property  is  placed  in  commercial
         production,    deferred    costs   will   be    depleted    using   the
         units-of-production  method.  Management  of the  Company  periodically
         reviews  the  recoverability  of the  capitalized  mineral  properties.
         Management takes into consideration various information including,  but
         not limited to,  results of exploration  activities  conducted to date,
         estimated  future  metal  prices,  and reports and  opinions of outside
         geologists, mine engineers and consultants.  When it is determined that
         a project or property will be abandoned then the costs are written-off,
         or if its carrying value has been impaired, then the mineral properties
         and deferred costs are written down to fair value.

         The  Company  accounts  for  foreign  value added taxes paid as part of
         mineral properties and deferred costs. The recovery of these taxes will
         commence on the  beginning  of foreign  commercial  operations.  Should
         these  amounts be  recovered  they would be treated as a  reduction  in
         carrying costs of mineral properties and deferred costs.

         Although  the  Company  has  taken  steps to  verify  title to  mineral
         properties  in  which  it  has an  interest,  these  procedures  do not
         guarantee the Company's title.  Such properties may be subject to prior
         agreements  or  transfers  and  title  may be  affected  by  undetected
         defects.

         From time to time,  the Company  acquires  or  disposes  of  properties
         pursuant to the terms of option  agreements.  Options  are  exercisable
         entirely  at the  discretion  of the  optionee  and,  accordingly,  are
         recorded as mineral  property costs or recoveries when the payments are
         made or  received.  After  costs  are  recovered,  the  balance  of the
         payments  received are recorded as a gain on option or  disposition  of
         mineral property.

         EQUIPMENT

         Equipment,  which comprises leasehold improvements and office furniture
         and  equipment,  is  recorded  at cost  less  accumulated  amortization
         calculated using the  straight-line  method over their estimated useful
         lives of five years.




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         ASSET RETIREMENT OBLIGATIONS

         Asset   retirement   obligations   are  recognized   when  a  legal  or
         constructive  obligation  arises.  This  liability is recognized at the
         fair value of the asset  retirement  obligation.  When the liability is
         initially  recorded the Company  capitalizes the cost by increasing the
         carrying  amount  of the  related  long-lived  assets.  Over  time  the
         liability  is  accreted  to its  present  value  each  period,  and the
         capitalized  cost is  amortized  over the  useful  life of the  related
         asset.  Upon settlement of the liability,  the Company may incur a gain
         or loss.  As at December  31, 2005 the Company  does not have any asset
         retirement obligations.

         IMPAIRMENT OF LONG-LIVED ASSETS

         Long-lived   assets  are  reviewed  for   impairment   when  events  or
         circumstances   suggest  their  carrying  value  has  become  impaired.
         Management  considers  assets  to be  impaired  if the  carrying  value
         exceeds  the  estimated  undiscounted  future  projected  cash flows to
         result  from the use of the  asset  and its  eventual  disposition.  If
         impairment is deemed to exist,  the assets will be written down to fair
         value. Fair value is generally  determined using a discounted cash flow
         analysis.

         TRANSLATION OF FOREIGN CURRENCIES

         The Company's  foreign  operations  are  integrated  and are translated
         using the temporal method.  Under this method,  the Company  translates
         monetary  assets and liabilities  denominated in foreign  currencies at
         period-end rates. Non-monetary assets and liabilities are translated at
         historical rates. Revenues and expenses are translated at average rates
         in effect during the period except for  depreciation  and  amortization
         which are translated at historical rates. The resulting gains or losses
         are reflected in operating results in the period of translation.

         CONCENTRATION OF CREDIT RISK

         Financial  instruments  that  potentially  subject  the  Company  to  a
         significant  concentration of credit risk consist primarily of cash and
         cash  equivalents  and  amounts  receivable.  The  Company  limits  its
         exposure to credit loss by placing its cash and  cash-equivalents  with
         major financial institutions.

         FAIR VALUES OF FINANCIAL INSTRUMENTS

         The fair value of the  Company's  financial  instruments  consisting of
         cash and cash equivalents,  amounts receivable and accounts payable and
         accrued  liabilities  approximate  their  carrying  values  due  to the
         short-term  nature of those  instruments.  As of December 31, 2005, the
         market value of marketable securities was $270,000 (2004 - $270,000).

         INCOME TAXES

         The Company uses the liability  method of accounting  for future income
         taxes.  Under  this  method  of  tax  allocation,   future  income  tax
         liabilities   and  assets  are   recognized   for  the   estimated  tax
         consequences  attributable to differences  between the amounts reported
         in the  consolidated  financial  statements  and their  respective  tax
         bases, using substantively enacted tax rates and laws that are expected
         to be in effect in the periods in which the future income tax assets or
         liabilities  are  expected to be settled or  realized.  The effect of a
         change in income tax rates on future income tax  liabilities and assets
         is recognized in income in the period that the change occurs. Potential
         future income tax assets are not recognized to the extent that they are
         not considered likely to be realized.




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


3.       SIGNIFICANT ACCOUNTING POLICIES (continued)

         LOSS PER SHARE

         Loss per share is calculated  based on the weighted  average  number of
         common shares  issued and  outstanding  during the year.  The effect of
         potential  issuances  of shares  under  options and  warrants  would be
         anti-dilutive  and therefore basic and diluted losses per share are the
         same.  Information  regarding  securities that could potentially dilute
         basic earnings per share in the future is presented in Note 6.

         STOCK BASED COMPENSATION

         The Company has an employee stock option plan.  The Company  recognizes
         an  expense  or  addition  to   exploration   properties  and  deferred
         exploration  expenditures  arising from stock  options  granted to both
         employees and non-employees using the fair value method. The fair value
         of option grants is generally  established at the date of grant using a
         Black  Scholes  option  pricing  model and the  expense or  addition to
         mineral properties is recognized over the vesting period.

         VARIABLE INTEREST ENTITIES

         Effective  January 1, 2005, the Company  adopted  Accounting  Guideline
         AcG-15,  Consolidation of Variable  Interest  Entities,  which requires
         consolidation  of entities  in which the Company  expects to receive or
         absorb the majority of the entity's expected losses,  expected residual
         returns or both.  The  Company has  determined  that it has no variable
         interest entities.

         COMPARATIVE FIGURES

         Certain  of the  prior  year  comparatives  have been  reclassified  to
         conform with the current year's presentation.

4.       MARKETABLE SECURITIES



                                                   ----------------------------    ----------------------------
                                                               2005                            2004
                                                   ----------------------------    ----------------------------
                                                                       QUOTED                          QUOTED
                                                      RECORDED         MARKET         RECORDED         MARKET
                                                       VALUE           VALUE           VALUE           VALUE
                                                         $               $               $               $
                                                                                      

         Tinka Resources Limited
              - 300,000 common shares                    96,000         126,000          96,000         180,000
         Consolidated Pacific Bay Minerals Ltd.
              - 900,000 common shares                    90,000         144,000          90,000          90,000
                                                   ------------    ------------    ------------    ------------
                                                        186,000         270,000         186,000         270,000
                                                   ============    ============    ============    ============


         The Company has entered into option and sale  agreements  on certain of
         its non-core  mineral  property  holdings in which the Company received
         common shares of publicly-traded companies as partial consideration.




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


5.       EQUIPMENT AND LEASHOLD IMPROVEMENTS

                                                       2005            2004
                                                         $               $

         Office equipment and computers                       -         231,724
         Leasehold improvements                               -          96,634
                                                   ------------    ------------
                                                              -         328,358
         Less: Accumulated depreciation                       -        (234,256)
                                                   ------------    ------------
                                                              -          94,102
                                                   ============    ============

         On May 6, 2005, on the signing of an Administration Services Agreement,
         the  Company   transferred   its  corporate   equipment  and  leasehold
         improvements  to Grosso Group  Management  Ltd. (the "Grosso Group") at
         their  carrying  values of  $93,177  as of  December  31,  2004.  As of
         December  31,  2005 the Company has  received  $46,589  from the Grosso
         Group for these assets. The remaining balance due from the Grosso Group
         is included in Accounts Receivable.


6.       SHARE CAPITAL

         Authorized   - unlimited common shares without par value
                      - 100,000,000 preferred shares without par value

                                                      NUMBER             $
         Issued - common shares

         Balance, December 31, 2002                  26,550,606      21,354,823

         Private placement                            2,900,000       2,610,000
         Exercise of options                          1,855,850         895,859
         Exercise of warrants                         4,969,066       2,940,428
         Exercise of agent's options                    105,930          95,337
         Less share issue costs                               -       (188,850)
                                                   ------------    ------------
         Balance, December 31, 2003                  36,381,452      27,707,597

         Private placement                            1,500,000       4,650,000
         Exercise of options                            441,650         597,910
         Exercise of agents' options                    121,820         184,838
         Contributed surplus reallocated on
              exercise of options                             -         226,630
         Exercise of warrants                         5,371,285       4,275,149
         Proceeds collected and paid on behalf
              of Golden Arrow shares                          -        (107,544)
         Less share issue costs                               -        (552,273)
                                                   ------------    ------------
         Balance, December 31, 2004                  43,816,207      36,982,307

         Private placement                            3,333,340      10,000,020
         Exercise of options                             10,000          31,000
         Exercise of agents' options                    168,000         546,000
         Contributed surplus reallocated
              on exercise of options                          -         131,270
         Exercise of warrants                         1,485,517       3,784,011
         Proceeds collected and paid on behalf
              of Golden Arrow shares                          -        (145,866)
         Less share issue costs                               -        (914,070)
                                                   ------------    ------------
         Balance, December 31, 2005                  48,813,064      50,414,672
                                                   ============    ============




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


6.       SHARE CAPITAL (continued)

         (a)      During fiscal 2005, the Company  completed a brokered  private
                  placement for 3,333,340  units at $3.00 per unit, for proceeds
                  of $9,263,283 net of $600,001 agent's  commission and $136,736
                  of related  issue  costs.  Each unit  consisted  of one common
                  share and one half common share  purchase  warrant.  Each full
                  warrant entitles the holder thereof to purchase one additional
                  common share at a price of $3.45 per share until September 14,
                  2009. In addition to the cash commission the underwriters were
                  granted  as   commission   233,334   underwriter's   warrants,
                  representing   7%  of  the  number  of  units   issued.   Each
                  underwriter's  warrant is exercisable for one share at a price
                  of $3.25,  for a period of twenty  four  months,  expiring  on
                  September  12, 2007.  The  underwriter's  warrants were valued
                  using the Black-Sholes Pricing Model. The warrants were valued
                  at $0.76 per warrant  for a total  value of $177,333  and have
                  been  recorded  as  share  issue  costs  with a  corresponding
                  increase to  contributed  surplus.  At December 31,  2005,  no
                  underwriter's warrants had been exercised.

         (b)      During fiscal 2004, the Company  completed a brokered  private
                  placement of 1,500,000 units at $3.10 per unit for proceeds of
                  $4,238,763,  net of $339,000 agent's commission and $72,237 of
                  related issue costs.  Each unit  consisted of one common share
                  and one half  non-transferable  share purchase  warrant.  Each
                  whole  warrant  entitles the holder to purchase a common share
                  for  $3.70  per  share on or before  February  23,  2005.  The
                  Company also issued 200,000  compensation options to the agent
                  to  acquire  200,000  shares at $3.25  per  share and  100,000
                  warrants at $3.70 per share on or before  February  23,  2005.
                  The  compensation  options  granted  were valued at $0.705 per
                  option using the  Black-Scholes  Option Pricing  Model,  for a
                  total  value of  $141,036,  which has been  recorded  as share
                  issue  costs  with a  corresponding  increase  to  contributed
                  surplus.  At December 31, 2004, a total of 32,000 compensation
                  options   had  been   exercised.   The   balance   of  168,000
                  compensation options was exercised during 2005.

         (c)      During fiscal 2003, the Company  completed a brokered  private
                  placement  for  2,900,000  units at a price of $0.90 per unit,
                  for cash proceeds of  $2,421,150,  net of share issue costs of
                  $188,850.  Each  unit  consisted  of one  common  share of the
                  Company and one-half  non-transferable  common share  purchase
                  warrant. One whole warrant entitles the holder to purchase one
                  common share for the  exercise  price of $1.10 per share on or
                  before April 28, 2004.  Certain  officers and directors of the
                  Company purchased 445,000 units of the private placement.

         (d)      Stock options and stock based compensation

                  The  Company  grants  stock  options  in  accordance  with the
                  policies  of the TSX  Venture  Exchange  ("TSXV").  The  stock
                  options  granted  during 2005 are subject to a four month hold
                  period and  exercisable  for a period of five years. A summary
                  of the  Company's  outstanding  options at December  31, 2005,
                  2004 and 2003 and the  changes  for the years  ending on those
                  dates is presented below:



                                           ---------------------    ---------------------     ---------------------
                                                   2005                    2004                      2003
                                           ---------------------    ---------------------     ---------------------
                                             OPTIONS    WEIGHTED      OPTIONS    WEIGHTED       OPTIONS    WEIGHTED
                                           OUTSTANDING  AVERAGE     OUTSTANDING  AVERAGE      OUTSTANDING  AVERAGE
                                               AND      EXERCISE        AND      EXERCISE         AND      EXERCISE
                                           EXERCISABLE   PRICE      EXERCISABLE   PRICE       EXERCISABLE   PRICE
                                                           $                        $                         $
                                                                                         

                  Balance,                   3,568,500    2.10        2,528,150    1.32         2,465,500    0.44
                       Beginning of year
                  Granted                    1,360,000    3.74        1,512,000    3.14         1,918,500    1.60
                  Exercised                    (10,000)   3.10         (441,650)   1.14        (1,855,850)   0.44
                  Cancelled                    (37,500)   3.92          (30,000)   3.10                 -       -
                                           -----------              -----------               -----------
                  Balance, end of year       4,881,000    2.54        3,568,500    2.10         2,528,150    1.32
                                           ===========              ===========               ===========




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


6.       SHARE CAPITAL (continued)

                  Stock options outstanding and exercisable at December 31, 2005
                  are as follows:

                            NUMBER       EXERCISE PRICE     EXPIRY DATE
                                               $

                           205,000            0.40          July 19, 2006
                           119,000            0.50          May 2, 2007
                           115,000            0.50          September 23, 2007
                            90,000            0.84          March 7, 2008
                           300,000            0.90          May 30, 2008
                         1,305,000            1.87          August 27, 2008
                         1,347,000            3.10          March 24, 2009
                            25,000            3.10          March 24, 2007
                            50,000            4.20          December 01, 2009
                           865,000            4.16          March 16, 2010
                           460,000            2.92          November 16, 2010
                        ----------
                         4,881,000
                        ==========

                  During  fiscal  2005,  the  Company  granted  1,360,000  stock
                  options (2004 - 1,512,000;  2003 - 1,918,500).  The fair value
                  of stock  options  granted is estimated on the dates of grants
                  using  the   Black-Scholes   Option  Pricing  Model  with  the
                  following  assumptions  used for the  grants  made  during the
                  year:
                                                2005        2004        2003

                  Risk-free interest rate  3.32% - 3.70%   2.38%   3.76% - 4.16%
                  Estimated volatility       70% - 77%       77%     74% - 78 %
                  Expected life              2.5 years   2.5 years   2.5 years
                  Expected dividend yield        0%          0%          0%


                  For  2005,  stock  based  compensation  of  $2,380,000  (2004:
                  1,972,869;  2003:  1,487,235) was recorded by the Company,  of
                  which  $1,800,000  (2004:  $1,972,860;  2003:  $1,487,235)  is
                  included in expenses and $580,000  (2004:  Nil; 2003:  Nil) is
                  included in capitalized mineral property expenditures,  with a
                  corresponding increase in contributed surplus.

                  The  weighted  average  fair value per share of stock  options
                  granted  during  the year was $1.76  per share  (2004 - $1.28;
                  2003 -  $0.63).  Option  pricing  models  require  the  use of
                  estimates and assumptions  including the expected  volatility.
                  Changes in the underlying  assumptions  can materially  affect
                  the fair value  estimates and,  therefore,  existing models do
                  not necessarily  provide reliable measure of the fair value of
                  the Company's stock options.

         (e)      Warrants

                  A summary of the number of common shares reserved  pursuant to
                  the  Company's   outstanding   warrants  and  agents  warrants
                  outstanding  at  December  31,  2005,  2004  and  2003 and the
                  changes for the years ending on those dates is as follows:



                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


6.       SHARE CAPITAL (continued)
                                         ----------    ----------    ----------
                                            2005          2004          2003
                                         ----------    ----------    ----------
                  Balance,
                     beginning of year    1,422,017     6,042,448     9,511,550
                  Issued                  1,984,004       810,909     1,502,965
                  Exercised              (1,485,517)   (5,371,285)   (4,969,066)
                  Cancelled                       -       (38,955)            -
                  Expired                   (20,500)      (21,100)       (3,001)
                                         ----------    ----------    ----------
                  Balance,
                     end of year          1,900,004     1,422,017     6,042,448
                                         ==========    ==========    ==========

                  Common shares reserved pursuant to warrants and agent warrants
                  outstanding at December 31, 2005 are as follows:

                      NUMBER         EXERCISE PRICE          EXPIRY DATE
                                           $

                    1,666,670             3.45               September 14, 2009
                      233,334             3.25               September 13, 2007
                   ----------
                    1,900,004
                   ==========


7.       RELATED PARTY TRANSACTIONS

         (a)      Effective January 1, 2005 the Company engaged the Grosso Group
                  to provide services and facilities to the Company.  The Grosso
                  Group is a private company owned by the Company, Golden Arrow,
                  Amera  Resources  Corporation  ("Amera") and Gold Point Energy
                  Corp., each of which owns one share. The Grosso Group provides
                  its   shareholder   companies   with   geological,   corporate
                  development,   administrative  and  management  services.  The
                  shareholder  companies  pay monthly fees to the Grosso  Group.
                  The fee is based upon a  reasonable  pro-rating  of the Grosso
                  Group's  costs  including  its staff and overhead  costs among
                  each  shareholder  company with regard to the mutually  agreed
                  average annual level of services  provided to each shareholder
                  company.  During  fiscal 2005,  the Company  incurred  fees of
                  $730,802  to the  Grosso  Group:  $764,012  was paid in twelve
                  monthly   payments   and   $33,210  is  included  in  accounts
                  receivable,  prepaids  and deposits as a result of a review of
                  the  allocation  of the  Grosso  Group  costs  to  the  member
                  companies  for the year.  In  addition,  included  in accounts
                  receivable, prepaids and deposits is a $205,000 deposit to the
                  Grosso  Group for the  purchase  of  equipment  and  leasehold
                  improvements and for operating working capital.

         (b)      During  fiscal  2005,   the  Company  paid  $241,088  (2004  -
                  $476,226;  2003 -  $330,600)  to  directors  and  officers  or
                  companies controlled by directors and officers of the Company,
                  for accounting, management and consulting services provided.

         (c)      Prior to the signing of the Administration  Services Agreement
                  with the Grosso Group in 2005,  the Company  shared its office
                  facilities  with Amera and Golden  Arrow.  During fiscal 2005,
                  the  Company  received  $nil (2004 - $66,390;  2003 - $35,110)
                  from Amera and $nil (2004 - $57,000;  2003 - $Nil) from Golden
                  Arrow for shared rent and administration costs.

         (d)      The Company has  agreements  with a company  controlled by the
                  wife of the  President of the Company for the rental of office
                  premises.  Effective January 1, 2005 the Company subleased the
                  office premises to the Grosso Group.




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

7.       RELATED PARTY TRANSACTIONS (continued)

         (e)      The  President  of the  Company  provides  his  services  on a
                  full-time  basis  under  a  contract  with a  private  company
                  controlled by the  President.  The President is paid an annual
                  amount of $102,000.  The contract also  provides  that, in the
                  event the  services  are  terminated  without  cause or upon a
                  change in control of the Company, a termination  payment would
                  include a bonus of $6,500  per month,  retroactive  to July 1,
                  1999,  plus an  additional  three  years  of  compensation  at
                  $15,000 per month. If the termination had occurred on December
                  31, 2005,  the amount  payable  under the  agreement  would be
                  $1,047,000.

         Other  related  party  transactions  are  disclosed  elsewhere in these
         consolidated financial statements.


8.       INCOME TAXES

         The recovery of income taxes shown in the  consolidated  statements  of
         operations  and deficit  differs from the amounts  obtained by applying
         statutory  rates to the loss before  provision  for income taxes due to
         the following:



                                                       2005            2004            2003
                                                         $               $               $
                                                                         

         Statutory tax rate                            34.12%          35.62%          37.62%
                                                   ============    ============    ============

         Loss for the year                           (5,764,874)     (4,655,063)     (3,418,418)
                                                   ============    ============    ============

         Provision for income taxes based on
            statutory Canadian combined federal
               and provincialincome tax rates        (1,966,975)     (1,658,133)     (1,286,009)
         Differences in foreign tax rates                     -        (114,390)       (383,116)
         Losses for which an income tax benefit
            has not been recognized                   1,966,975       1,722,523       1,669,125
                                                   ------------    ------------    ------------
                                                              -               -               -
                                                   ============    ============    ============


         The  significant  components of the Company's  future tax assets are as
         follows:

                                                       2005            2004
                                                         $               $

         Future income tax assets
              Financing costs                           472,437         192,369
              Operating loss carryforward             4,709,496       3,594,455
                                                   ------------    ------------
                                                      5,181,933       3,786,824
         Valuation allowance for future tax assets   (5,181,933)     (3,786,824)
                                                   ------------    ------------
                                                              -               -
                                                   ============    ============

         FUTURE INCOME TAX LIABILITIES

         For  certain  acquisitions  and other  payments  for  mineral  property
         interests,  the Company  records a future  income tax  liability  and a
         corresponding  adjustment to the related asset carrying amount.  During
         the year ended December 31, 2005, the Company  recorded a future income
         tax  liability  of  $875,017  (2004  -  $633,913)  and a  corresponding
         adjustment to mineral properties.



                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


8.       INCOME TAXES (continued)

                                                       2005            2004
                                                         $               $

         Future income tax liabilities                1,760,110         885,093
                                                   ============    ============

         The Company has Canadian  non-capital loss carryforwards of $13,684,112
         that may be available for tax purposes. The losses expire as follows:

                    EXPIRY DATE               $

                        2006              1,255,915
                        2007              1,261,932
                        2008                841,160
                        2009              1,317,729
                        2010              1,545,964
                        2014              2,752,324
                        2015              4,709,088
                                        -----------
                                         13,684,112
                                        ===========


9.       SEGMENTED INFORMATION

         The  Company  is  involved  in  mineral   exploration  and  development
         activities,  which are conducted principally in Argentina.  The Company
         is in the exploration stage and, accordingly, has no reportable segment
         revenues or operating results for each of fiscal 2005 and 2004.

         The Company's total assets are segmented geographically as follows:
                                   --------------------------------------------
                                                DECEMBER 31, 2005
                                   --------------------------------------------
                                     CORPORATE       ARGENTINA         TOTAL
                                         $               $               $

         Current assets               8,331,000         134,887       8,465,887
         Mineral properties
              and deferred costs              -      15,032,107      15,032,107
                                   ------------    ------------    ------------
                                      8,331,000      15,166,994      23,497,994
                                   ============    ============    ============

                                   --------------------------------------------
                                                DECEMBER 31, 2004
                                   --------------------------------------------
                                     CORPORATE       ARGENTINA         TOTAL
                                         $               $               $

         Current assets               5,438,079         138,077       5,576,156
         Equipment                       93,177             925          94,102
         Mineral properties
              and deferred costs              -       6,551,598       6,551,598
                                   ------------    ------------    ------------
                                      5,531,256       6,690,600      12,221,856
                                   ============    ============    ============






                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


10.      DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
         ACCEPTED ACCOUNTING PRINCIPLES

         The consolidated financial statements of the Company have been prepared
         in accordance  with  Canadian  GAAP,  which differ in certain  material
         respects from US GAAP.

         The effects of significant  measurement  differences  between  Canadian
         GAAP and US GAAP for certain items on the consolidated  balance sheets,
         statements of operations  and deficit and  statements of cash flows are
         as follows:



                                                                       2005            2004            2003
                                                                         $               $               $
                                                                                         

         CONSOLIDATED STATEMENTS OF OPERATIONS

         Loss for the year under Canadian GAAP                       (5,764,874)     (4,655,063)     (3,418,418)
         Mineral properties and deferred costs for the year (i)      (8,480,509)     (5,212,625)     (2,134,757)
         Reversal of Future income tax liability (i)                    875,017         633,913         322,217
         Write down of marketable securities                                  -          99,762               -
         Mineral properties and deferred costs written off
              during the year which would have been
                  expensed in the year incurred (i)                           -               -         776,626
         Stock-based compensation (iii)                                       -               -        (144,000)
                                                                   ------------    ------------    ------------
         Loss for the year under US GAAP                            (13,370,366)     (9,134,013)     (4,598,332)

         Unrealized gains (losses)
              on available-for-sale securities (ii)                           -        (387,160)        434,346
                                                                   ------------    ------------    ------------
         Comprehensive loss (iv)                                    (13,370,366)     (9,521,173)     (4,163,986)
                                                                   ============    ============    ============

         Basic and diluted loss per share under US GAAP                   (0.29)          (0.22)          (0.14)
                                                                   ============    ============    ============

         Weighted average number of common shares outstanding        46,197,029      40,939,580      32,251,753
                                                                   ============    ============    ============





                                                                       2005            2004
                                                                         $               $
                                                                            

         SHAREHOLDERS' EQUITY

         Balance per Canadian GAAP                                   20,761,073      10,813,385
         Mineral properties and deferred costs expensed (i)         (15,032,107)     (6,551,598)
         Reversal of Future income tax liability (i)                  1,760,110         885,093
         Accumulated other comprehensive income (ii)                     84,000          84,000
                                                                   ------------    ------------
         Balance per US GAAP                                          7,573,076       5,230,880
                                                                   ============    ============

                                                                       2005            2004
                                                                         $               $
         MINERAL PROPERTIES AND DEFERRED COSTS

         Balance per Canadian GAAP                                   15,032,107       6,551,598
         Mineral properties and deferred costs
              expensed under US GAAP (i)                            (15,032,107)     (6,551,598)
                                                                   ------------    ------------
         Balance per US GAAP                                                  -               -
                                                                   ============    ============





                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

10.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)


                                                       2005            2004
                                                         $               $
         FUTURE INCOME TAX LIABILITY

         Balance per Canadian GAAP                    1,760,110         885,093
         Reversal of future income tax liability(i)  (1,760,110)       (885,093)
                                                   ------------    ------------
         Balance per US GAAP                                  -               -
                                                   ============    ============



                                                       2005            2004            2003
                                                         $               $               $
                                                                         

         CONSOLIDATED STATEMENTS OF CASH FLOWS

         OPERATING ACTIVITIES

         Cash used per Canadian GAAP                 (3,849,618)     (2,961,734)     (1,419,549)
         Mineral properties and deferred costs(i)    (7,025,492)     (4,578,712)     (1,850,761)
                                                   ------------    ------------    ------------
         Cash used per US GAAP                      (10,875,110)     (7,540,446)     (3,270,310)
                                                   ============    ============    ============

                                                       2005            2004            2003
                                                         $               $               $
         INVESTING ACTIVITIES

         Cash used per Canadian GAAP                 (6,978,903)     (4,509,717)     (1,872,636)
         Mineral properties and deferred costs(i)     7,025,492       4,578,712       1,850,761
                                                   ------------    ------------    ------------
         Cash provided by (used) per US GAAP             46,589          68,995         (21,875)
                                                   ============    ============    ============


         i)       Mineral Properties and Deferred Costs

                  Mineral  properties  and deferred  costs are  accounted for in
                  accordance  with  Canadian GAAP as disclosed in Note 3. For US
                  GAAP purposes, the Company expenses exploration costs relating
                  to unproven mineral  properties as incurred,  and reverses any
                  associated  future  income tax  liabilities.  When  proven and
                  probable  reserves are determined  for a property,  subsequent
                  exploration  and   development   costs  of  the  property  are
                  capitalized.  The capitalized  costs of such properties  would
                  then be assessed,  on a periodic basis,  to determine  whether
                  the carrying  value can be recovered on an  undiscounted  cash
                  flow basis.  If the carrying value cannot be recovered on this
                  basis,  the mineral  properties  would be written down to fair
                  value determined using discounted cash flows.

         ii)      Investments

                  The  Company's   marketable   securities   are  classified  as
                  available-for-sale  investments  under US GAAP and  carried at
                  the lower of cost and market value for Canadian GAAP purposes.
                  Such  investments are not held  principally for the purpose of
                  selling in the near term and, for US GAAP purposes,  must have
                  holding gains and losses  reported as a separate  component of
                  shareholders'  equity  until  realized  or until an other than
                  temporary impairment in value occurs.




                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)

10.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

         iii)     Accounting for Stock-Based Compensation

                  For US GAAP purposes,  the Company  accounted for  stock-based
                  employee  compensation  arrangements using the intrinsic value
                  method  prescribed  in  Accounting  Principles  Board  ("APB")
                  Opinion No. 25,  "ACCOUNTING  FOR STOCK  ISSUED TO  EMPLOYEES"
                  until December 31, 2003. Under US GAAP, when stock options are
                  cancelled  and  immediately  reissued at a revised  price (the
                  "Repricing"),  these  options  are  accounted  for as variable
                  compensation from the date of the Repricing.  As a result of a
                  Repricing, the Company recorded compensation cost in 2003.

                  During fiscal 2004, for US GAAP purposes,  the Company adopted
                  the fair value  based  method of  accounting  for  stock-based
                  compensation  on a modified  prospective  basis in  accordance
                  with FAS 148. This  application  is consistent  with the early
                  application  of  CICA  3870  under  Canadian  GAAP  (Note  3).
                  Accordingly, effective January 1, 2004, there is no difference
                  on accounting for stock-based  compensation under Canadian and
                  US GAAP.

         iv)      Comprehensive Income

                  US GAAP  requires  disclosure of  comprehensive  income (loss)
                  which is  intended  to  reflect  all other  changes  in equity
                  except those resulting from  contributions  by and payments to
                  owners.

         v)       Spin-Off of Assets to Golden Arrow

                  Under Canadian GAAP, a spin-off of assets is accounted for and
                  disclosed  in  accordance  with  CICA  Handbook  Section  3475
                  "Disposal of Long-Lived  Assets and Discontinued  Operations".
                  Under US GAAP,  such a  spin-off  would be  accounted  for and
                  disclosed as a dividend in kind and would not require separate
                  carve-out of results in the  statements of operations and cash
                  flows nor separate balance sheet classification.

         vi)      Recent Accounting Pronouncements

                  ACCOUNTING CHANGES AND ERROR CORRECTIONS


                  SFAS  154  ,  effective  for  accounting   changes  and  error
                  corrections  made in fiscal years beginning after December 15,
                  2005, has been introduced and requires,  unless impracticable,
                  retroactive  application as the required  method for reporting
                  changes   in   accounting   principles   in  the   absence  of
                  transitional   provisions   specific  to  the  newly   adopted
                  accounting principle. The Company will apply this standard for
                  US GAAP purposes commencing in fiscal 2006.







                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)



10.      DIFFERENCES  BETWEEN  CANADIAN  AND UNITED  STATES  GENERALLY  ACCEPTED
         ACCOUNTING PRINCIPLES (continued)

                  FINANCIAL INSTRUMENTS

                  On January  27,  2005,  the CICA  issued  Section  3855 of the
                  Handbook  titled  "Financial  Instruments  -  Recognition  and
                  Measurement".  It expands  Handbook  section 3860,  "Financial
                  Instruments - Disclosure and Presentation" by prescribing when
                  a  financial  instrument  is to be  recognized  on the balance
                  sheet and at what  amount.  It also  specifies  how  financial
                  instrument gains and losses are to be presented. All financial
                  instruments  will be required to be  classified  into  various
                  categories.   Held  to   maturity   investments,   loans   and
                  receivables  are measured at amortized cost with  amortization
                  of premium or discounts and losses and impairment  included in
                  current period  interest  income or expense.  Held for trading
                  financial  assets and  liabilities are measured at fair market
                  value with all gains and losses  included in net income in the
                  period in which they arise.  All available for sale  financial
                  assets are  measured  at fair  market  value with  revaluation
                  gains and losses included in other comprehensive  income until
                  the asset is removed from the balance  sheet except that other
                  than  temporary  losses due to impairment  are included in net
                  income.  All other financial  liabilities are to be carried at
                  amortized cost. This new Handbook  section will bring Canadian
                  GAAP more in line with U.S. GAAP. The mandatory effective date
                  is for fiscal  years  beginning  on or after  October 1, 2006,
                  with optional early  recognition for fiscal years beginning on
                  or after  December 31, 2004. At present,  the  Company's  most
                  significant   financial   instruments   are   cash   and  cash
                  equivalents,  accounts  receivable and accounts payable.  This
                  new section requires little difference in accounting for these
                  financial instruments from current standards.

                  HEDGE ACCOUNTING

                  Handbook   Section   3865,   "Hedges"   provides   alternative
                  treatments to Handbook  Section 3855 for entities which choose
                  to designate qualifying  transactions as hedges for accounting
                  purposes.  The  effective  date of this  section is for fiscal
                  years  beginning on or after  October 1, 2006,  with  optional
                  early  recognition  for  fiscal  years  beginning  on or after
                  December 31, 2004.

                  The Company does not currently have any hedging relationships.

                  NON-MONETARY TRANSACTIONS

                  CICA Handbook Section 3831 "Non-Monetary Transactions" will be
                  applicable to the company  commencing  with the 2006 financial
                  year.  Under this standard,  exchanges of non-monetary  assets
                  after  January 1, 2006 would be recorded at carrying  value if
                  they lack commercial substance.

                  COMPREHENSIVE INCOME

                  New Handbook Section 1530, "Comprehensive Income",  introduces
                  a new  requirement  to temporarily  present  certain gains and
                  losses outside of income.  Section 1530 defines  comprehensive
                  income as a change in value of net  assets  that is not due to
                  owner activities.  Assets that are classified as available for
                  sale will have revaluation  gains and losses included in other
                  comprehensive  income  until  the  asset is  removed  from the
                  balance sheet.

                  At present,  the Company  has  investments  in shares of arm's
                  length  corporations  that may be  classified as available for
                  sale  investments.  The Company would be required to recognize
                  unrealized  gains and losses on these  securities  and include
                  these amounts in comprehensive  income.  The effective date of
                  this section is for fiscal years beginning on or after October
                  1, 2006,  with  optional  early  recognition  for fiscal years
                  beginning on or after  December 31,  2004.  Implementation  of
                  this section will more closely  align  Canadian GAAP with U.S.
                  GAAP.





                              IMA EXPLORATION INC.
                         (AN EXPLORATION STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003
                         (EXPRESSED IN CANADIAN DOLLARS)


  11.    SUPPLEMENTARY CASH FLOW INFORMATION


         Non-cash  investing  and  financing  activities  were  conducted by the
         Company as follows:




                                                                       2005            2004            2003
                                                                         $               $               $
                                                                                         

         Investing activities
              Proceeds on disposition of mineral properties                   -        (252,000)       (272,982)
              Acquisition of marketable securities                            -         252,000         272,982
              Expenditures on mineral properties and deferred costs    (580,000)              -               -
              Stock based compensation capitalized                      580,000               -               -
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============


                                                                       2005            2004            2003
                                                                         $               $               $
         Financing activities
              Shares issue costs                                       (177,333)              -               -
              Shares issued on exercise of options                            -         204,070          74,379
              Contributed surplus                                       177,333        (204,070)        (74,379)
                                                                   ------------    ------------    ------------
                                                                              -               -               -
                                                                   ============    ============    ============




12.      SUBSEQUENT EVENTS

         Subsequent to December 31, 2005, the Company:

         a)       Completed  on March 21,  2006 a  syndicated  brokered  private
                  placement financing of 2,865,000 special warrants at $3.50 per
                  warrant  for  gross  proceeds  of  $10,027,500.  Each  special
                  warrant will entitle the holder to acquire one unit consisting
                  of one  common  share  and  one  half  common  share  purchase
                  warrant.  Each full  warrant  entitles  the holder  thereof to
                  purchase  one  additional  common  share in the capital of the
                  Company at a price of $3.80 per share until March 21, 2010. In
                  addition  to a cash  commission  of 6% the  underwriters  were
                  granted  171,900  agents'  warrants,  representing  6% of  the
                  number of special  warrants  issued.  Each agents'  warrant is
                  exercisable for one share at a price of $3.80, for a period of
                  twenty four months, expiring on March 21, 2008.

         b)       Issued  120,000 common shares for $172,900 on the exercises of
                  stock options.




                              IMA EXPLORATION INC.
                       MANAGEMENT DISCUSSION AND ANALYSIS
                      FOR THE YEAR ENDED DECEMBER 31, 2005


INTRODUCTION

The following management discussion and analysis and financial review,  prepared
as of March 29, 2006,  should be read in conjunction with the Company's  audited
annual consolidated  financial  statements and related notes for the years ended
December 31, 2005 and 2004.  The  consolidated  financial  statements  have been
prepared in accordance with Canadian  generally accepted  accounting  principles
("Canadian  GAAP").  Except as otherwise  disclosed  all dollar  figures in this
report are stated in Canadian dollars.  Additional  information  relevant to the
Company can be found on the SEDAR website at WWW.SEDAR.COM.

FORWARD LOOKING STATEMENTS

Certain information  included in this discussion may constitute  forward-looking
statements.  Forward-looking  statements are based on current  expectations  and
entail  various risks and  uncertainties.  These risks and  uncertainties  could
cause or contribute to actual results that are  materially  different than those
expressed  or implied.  The Company  disclaims  any  obligation  or intention to
update or  revise  any  forward-looking  statement,  whether  as a result of new
information, future events or otherwise.

OVERVIEW

The  Company  is  a  natural   resource  company  engaged  in  the  business  of
acquisition,  exploration and development of mineral properties in Argentina. At
present, the Company has no producing properties and consequently has no current
operating  income or cash flows.  As of this date the Company is an  exploration
stage  company  and has not  generated  any  revenues.  The  Company is entirely
dependent  on the equity  market for its source of funds.  There is no assurance
that a  commercially  viable mineral  deposit  exists on any of the  properties.
Further  evaluation  and  exploration  will  be  required  before  the  economic
viability of any of the properties is determined.

In March 2004 Aquiline Resources Inc.  ("Aquiline")  commenced an action against
the  Company  seeking a  constructive  trust  over the  Navidad  properties  and
damages.  On September  29, 2005 the Company made an offer to Aquiline to settle
the  litigation.  The Board of  Directors  decided  to make the offer due to the
inherent risks of litigation,  to minimize the significant  legal costs and most
importantly  to allow the Company to continue  with its business plan to develop
Navidad.  The  offer was  summarily  rejected  within  24 hours  and the  action
continued  on to trial.  The trial  commenced  on October  11, 2005 and ended on
December 12, 2005.  The Court is currently  reviewing  the thousands of pages of
transcripts  from the two month long trial along with  testimony  from  numerous
witnesses  and the lengthy  arguments  submitted  by both  parties.  The Court's
decision is expected in the first half of 2006.  At this date the outcome is not
determinable.  The  Company  has not made any  provision  for costs for which it
might  become  liable in what  management  considers  the  unlikely  event of an
adverse judgment.  However,  in the event of an adverse judgment the Company may
suffer loss and such loss could be  material;  the Company  might not be able to
proceed  with its plans  for the  development  of  Navidad  and  could  lose the
ownership  rights it currently  has over the project.  The Company  continues to
expense the legal and related costs of defending the action as they are incurred
and has not made a provision for the future costs that will be incurred or their
potential recovery from the plaintiff.

During  the  year  ended   December   31,   2004  the  Company   completed   its
reorganization, which had the effect of transferring all the non-Navidad mineral
properties  and related  assets to a new  corporation,  Golden  Arrow  Resources
Corporation  ("Golden Arrow").  The reorganization  allowed the Company to focus
all its efforts and resources on the Navidad project located in Chubut Province,
Argentina. The ongoing exploration programs have returned excellent results.

Effective  January 1, 2005, the Company  engaged Grosso Group  Management  Ltd.,
("Grosso  Group") to provide  services and facilities to the Company.  On May 6,
2005,  an  administrative  services  agreement was finalized and executed by the
Company and the Grosso  Group.  The Grosso Group is a private  company  which is
owned by the Company,  Golden Arrow, Amera Resources  Corporation  ("Amera") and
Gold Point Energy Corp. ("Gold Point"),  each of which own one share. The Grosso
Group provides its shareholder companies with geological, corporate development,



                                      -1-



administrative and management  services.  The Grosso Group staff is available to
the  shareholder  companies on a cost recovery basis without the expense of full
time personnel.  The shareholder companies pay monthly fees to the Grosso Group.
The fee is based  upon a  reasonable  pro-rating  of the  Grosso  Group's  costs
including  its staff and  overhead  costs among each  shareholder  company  with
regard to the mutually agreed average annual level of services  provided to each
shareholder company.

In March 2005 the Company engaged the services of Augusto Baertl of Lima,  Peru,
to determine the economic feasibility of the Navidad Project, through a contract
with Mr. Baertl's company, Gestora de Negocios e Inversiones SA. A scoping study
is in process as a first step in the determination of the economic  viability of
Navidad.  Mr. Baertl's mandate is a continuing one whose objective is ultimately
the achievement of commercial production.

PROPERTIES UPDATE

NAVIDAD

On February 3, 2003 the Company  announced the  discovery of  silver-lead-copper
mineralization  at its 100% owned 10,000 hectare (24,700 acres) Navidad property
in north central Chubut Province,  Argentina.  A Phase I drill program commenced
in November  2003 and was completed in late March 2004. A Phase II drill program
commenced in late May 2004 and was completed in September 2004.  Phase III drill
program  commenced in November  2004 and was  completed in September  2005.  The
Company  commenced a Phase IV drill  program in January  2006 that is ongoing at
the present time.

On May 25,  2004,  just six  months  after the  first  drilling  on the  Navidad
Project,  the Company  released the first resource  estimate for the Galena Hill
deposit.  Since then, a number of resource  estimate updates have been released,
the most recent on February 16, 2006 in which the Company  reported that Navidad
Project Indicated resources are estimated at 93.4 million tonnes grading 102 g/t
silver  and  1.41%  lead for a total of 305.7  million  ounces  silver  and 2.90
billion  pounds of lead (1.32  million  tonnes)  making the Navidad  discovery a
truly world class silver-lead deposit.

In December 2005 the Company released preliminary metallurgical test results and
announced that it has retained the international mining consulting firm Pincock,
Allen and Holt of Denver, Colorado, to prepare a conceptual study of the Navidad
project. This study is expected to provide preliminary technical, legal, social,
environmental  and  economic  parameters  of the  Navidad  project  to guide the
ongoing  development of the project.  It will be based on the resources outlined
in the February 2006 update.

In addition  to its active  exploration  program,  the Company has made a strong
commitment to its ongoing community  relations and  environmental  baseline data
collection  programs  in the  project  area.  The  Company  intends to  continue
expanding  the silver and lead  resources  at  Navidad by  systematically  drill
testing exploration targets as well as expanding and better defining areas where
resources have been defined.

INDICATED AND INFERRED RESOURCES

On February 16, 2006 the Company  announced  the results of an updated  resource
estimation carried out by Snowden Mining Industry  Consultants Inc.  ("Snowden")
which  included  Indicated  and  Inferred  Resources  at Calcite NW. IMA has now
defined continuous silver resources over a 3.6 kilometre strike length along the
Navidad Trend in the Galena Hill, Connector Zone, Navidad Hill, Calcite Hill and
Calcite NW deposits.  Inferred and indicated  resources estimated to date on the
Navidad Project are presented in the table below at a range of cut-off grades:


   NAVIDAD PROJECT INDICATED RESOURCES AT 50 G/T SILVER EQUIVALENT CUT-OFF(1):

--------------------------------------------------------------------------------
                 THOUSAND                                   CONTAINED  CONTAINED
CUT-OFF GRADE     TONNES     SILVER   COPPER   LEAD   ZINC    SILVER      LEAD
(g/t AgEq(1))                (g/t)      (%)     (%)    (%)    (M ozs)    (M lbs)
--------------------------------------------------------------------------------

      50          93,393       102     0.05    1.41   0.16    305.73      2,900
--------------------------------------------------------------------------------
      60          83,134       110     0.05    1.52   0.17    293.86      2,792
--------------------------------------------------------------------------------
      80          74,498       118     0.05    1.64   0.18    281.83      2,690
--------------------------------------------------------------------------------
      100         66,615       126     0.05    1.76   0.19    269.06      2,583
--------------------------------------------------------------------------------
      200         53,715       141     0.06    2.01   0.21    243.99      2,376
--------------------------------------------------------------------------------
      300         22,456       213     0.06    3.03   0.29    153.57      1,498
--------------------------------------------------------------------------------




                                      -2-




   NAVIDAD PROJECT INFERRED RESOURCES AT 50 G/T SILVER EQUIVALENT CUT-OFF(1):

--------------------------------------------------------------------------------
                 THOUSAND                                   CONTAINED  CONTAINED
CUT-OFF GRADE     TONNES     SILVER   COPPER   LEAD   ZINC    SILVER      LEAD
(g/t AgEq(1))                (g/t)      (%)     (%)    (%)    (M ozs)    (M lbs)
--------------------------------------------------------------------------------

      50          11,063        65     0.03    0.85   0.12     23.03       207
--------------------------------------------------------------------------------
      60           9,056        72     0.03    0.91   0.12     20.93       183
--------------------------------------------------------------------------------
      80           5,576        92     0.04    1.02   0.13     16.44       125
--------------------------------------------------------------------------------
      100          3,920       107     0.04    1.11   0.14     13.43        96
--------------------------------------------------------------------------------
      200            597       145     0.06    2.50   0.26      2.77        33
--------------------------------------------------------------------------------
      300             41       312     0.17    1.02   0.13      0.41         1
--------------------------------------------------------------------------------
Notes:
1.   Silver  equivalent  calculated using  US$6.00/oz  silver and $0.35/lb lead.
     (AgEq = Ag +  (%Pb*10,000/250).  No attempt  has been made to adjust  these
     relative values by accounting for metallurgical  recoveries as insufficient
     information is available to do so.
2.   Strict quality control and quality assurance  procedures have been observed
     at all stages of data collection leading to this resource. Please see IMA's
     website   (www.imaexploration.com)   for  a  detailed   overview  of  these
     procedures.
3.   Resource categories  (Indicated and Inferred) used here and the preparation
     of this resource estimate conform to National  Instrument 43-101 "Standards
     of disclosure for mineral projects" and those of the Canadian  Institute of
     Mining,  Metallurgy,  and Petroleum  (the "CIM")  "Definition  Standards on
     Mineral Resources and Reserves, 2004".
4.   A National  Instrument  43-101  Technical  Report  documenting  the Snowden
     Resource Estimate will be filed at www.sedar.com as is required by Security
     Commission regulations.
5.   An `INFERRED MINERAL RESOURCE' is that part of a Mineral Resource for which
     quantity and grade or quality can be  estimated on the basis of  geological
     evidence and limited  sampling and  reasonably  assumed,  but not verified,
     geological  and  grade  continuity.   The  estimate  is  based  on  limited
     information  and sampling  gathered  through  appropriate  techniques  from
     locations such as outcrops, trenches, pits, workings and drill holes.
6.   An  `INDICATED  MINERAL  RESOURCE'  is that part of a Mineral  Resource for
     which   quantity,   grade  or  quality,   densities,   shape  and  physical
     characteristics,  can be estimated with a level of confidence sufficient to
     allow the appropriate application of technical and economic parameters,  to
     support mine  planning  and  evaluation  of the  economic  viability of the
     deposit.  The estimate is based on detailed and  reliable  exploration  and
     testing information gathered through appropriate  techniques from locations
     such as outcrops,  trenches, pits, workings and drill holes that are spaced
     closely  enough  for  geological  and  grade  continuity  to be  reasonably
     assumed.

Detailed review of the geological  interpretation and block model shows that the
Calcite  Hill  deposit,  the  Connector  Zone and  Calcite  NW  remain  open and
insufficiently drill tested in several areas.

METALLURGICAL TESTWORK

On December 1, 2005 the Company released a summary of preliminary  Metallurgical
testwork  carried out on samples of Galena Hill,  Navidad Hill, and Calcite Hill
mineralization   demonstrating  that  Navidad   mineralization  is  amenable  to
concentration by simple, cost effective, and environmentally benign differential
flotation  processes.  In addition to  flotation  testwork,  the Company is also
currently    investigating    the    production    of   silver   metal   through
hydrometallurgical means from low-grade,  high-recovery silver concentrates.  On
February  16, 2006 IMA  released  highly  encouraging  preliminary  results from
alkaline  pressure  oxidation  followed  by  thiosulphate   leaching  of  silver
concentrates.

Flotation  testwork has been  conducted by G&T  Metallurgical  Services  Ltd. of
Kamloops B.C.  (G&T), an ISO 9001:2000  accredited  firm. All work was performed
under the supervision of Tom Shouldice, P. Eng., General Manager - Operations at
G&T. Peter Taggart,  P.Eng, of P. Taggart & Associates  Ltd.,  provided  overall
program direction, acting as IMA's representative. Both are considered Qualified
Persons as defined by National Instrument 43-101.

Limited flotation testwork on two composite samples (high  lead-moderate  silver
and high silver-low lead) from Calcite Hill yielded  excellent  results.  Locked
cycle  flotation  tests  performed on the lead-rich  sample  yielded a very high
quality  lead  concentrate  containing  80.4%  lead and 709 g/t silver at a lead
recovery of 92% and silver  recovery of 86%. The  silver-rich  sample produced a
silver concentrate grading 10,500 g/t silver at a silver recovery of 88%.

Mineralization at Galena Hill consists  predominantly of fine-grained galena and
pyrite with lesser amounts of sphalerite and chalcopyrite.  Electron  microprobe
studies have shown silver to be contained  within the lattice of both galena and
pyrite,  with the bulk of the silver present within pyrite.  Flotation  tests to



                                      -3-



date have focused on producing  separate lead and silver  (pyrite)  concentrates
through  differential  flotation.  Fourteen  rougher and 37 open circuit cleaner
tests were performed on the Galena Hill composite samples.  The results of three
locked  cycle tests  confirm  data  produced  in the open  circuit  tests.  Lead
metallurgical  performance  at Galena Hill was generally  good with 74 to 84% of
the lead reporting to the lead  concentrates  which grade between 62.0 and 75.3%
lead and include 386 to 968 g/t silver. Subsequent to galena flotation, a pyrite
concentrate  was  produced  that  recovered  37 to 57% of the total  silver  and
contains  1,083 to 3,546 g/t silver.  Total locked cycle test silver  recoveries
(lead  concentrate  plus  silver  concentrate)  range  from  54 to  82%.  Silver
recoveries  as high as 93.2%  have been  obtained  with  batch  flotation  tests
designed  to maximize  silver  recovery  at the  expense of  concentrate  grade.
Ongoing work  targeting  improved  silver  recoveries  for Galena Hill  includes
additional flotation tests using alternate reagents,  and mineralogical  studies
to identify distinct pyrite types present in concentrates and tails.

Hydrometallurgical  testwork carried out at SGS Lakefield under the direction of
Dr. David Dreisinger, P.Eng. of Dreisinger Consulting Inc. has shown that silver
concentrates  from Galena Hill are amenable to pressure  oxidation under neutral
to  alkaline   conditions   followed  by  atmospheric   leaching  using  calcium
thiosulphate  as a  lixiviant.  Preliminary  bench-scale  testwork  has produced
silver  recoveries  of 87% after 24 hours  and 89%  after 72 hours of  leaching.
These tests were  conducted  on a very  low-grade  silver  concentrate  (235 g/t
silver),  it is hoped that  additional  improvements  in silver  recovery may be
realized in future  testwork on higher-grade  concentrates.  The company is very
encouraged  by these  results as they  indicate  that the Navidad  Project could
produce silver dore on-site using an  environmentally  benign  lixiviant  rather
than the more commonly used sodium  cyanide.  Calcium  thiosulphate is routinely
used as fertilizer in the agricultural industry.

Two distinct  styles of  mineralization  from Navidad  Hill were  studied.  Both
samples  had high  silver  values  (436  and 287 g/t Ag) but only one  contained
significant  lead  (3.11%  Pb)  and  both  comprised  mixed  sulfide  and  oxide
mineralization.  Flotation  testwork  on both  samples  produced  a single  bulk
sulphide concentrate. Silver recoveries of approximately 64 to 85% were achieved
in concentrates grading from 10,449 to 12,246 g/t silver.

While significant  progress has been made in understanding the metallurgy of the
Navidad deposits,  the Company is confident that with additional  testwork,  our
highly  skilled  and  experienced  metallurgical  team will  continue  to unlock
additional value through improvements to metallurgical performance.

EXPLORATION PROGRAM:

The Phase I drill program at Navidad comprised 8,859.6 metres in 53 holes, 37 of
which were  drilled on Galena Hill.  Phase II drill  program  comprised  9,596.5
metres of diamond  core  drilling in 67 holes.  Drilling in the Phase II program
focused on the Esperanza Trend, the Barite Hill target,  and on the Navidad Hill
and  Connector  Zone  targets.  The Phase III drill  program  was  completed  in
September 2005 and comprised 23,732 metres in 131 holes.  Results from the Phase
III drilling have been  described in News Releases dated January 13, March 4 and
March 22, April 19, June 21, August 17,  September 29 and October 13, 2005.  The
Phase III drill program has focussed on drilling in the Calcite Hill and Calcite
Hill Northwest  Extension areas and expansion and infill drilling on the Navidad
Hill and  Connector  Zone areas.  In addition  five holes were  completed at the
southern end of the Loma de la Plata prospect.

The Phase IV drill  program  commenced in January 2006 and is ongoing with 8,252
metres of drilling in 44 holes  completed as at March 19th,  2006,  bringing the
project  total to 50,440  metres in 294 holes.  The Phase IV program to date has
focussed on infill and expansion  drilling on Calcite Hill Northwest  Extension,
exploratory  drilling  along  Esperanza,  infill  drilling  on  Galena  Hill and
stratigraphic  drilling  between the Esperanza and Argenta Trends.  Results from
the Phase IV  program  will be  released  in batches  as they are  received  and
compiled.  No  results  have been  released  to date from the Phase IV  drilling
program and therefore are not discussed in the following sections.

The  exploration  program at the Navidad  Project is being carried out under the
supervision  of Dr.  Paul  Lhotka,  P.Geo.,  a  Qualified  Person as  defined by
National Instrument 43-101.

GALENA HILL:

The  Galena   Hill   Deposit  is  hosted   primarily   within   gently   dipping
trachyandesitic  volcanic breccias with a matrix of galena, pyrite, calcite, and
barite.  These  breccias are  interpreted  to have formed  primarily by multiple
hydrothermal fluid pulses. Calcareous mudstones overlie the mineralized volcanic
breccias;  these  generally  contain  significant  silver,  lead and zinc values
within one to five metres of the volcanic-mudstone  contact.  Sulphides occur in
the mudstone both as  crosscutting  veinlets and as strataform beds suggesting a



                                      -4-



syn-depositional  timing for the  mineralization  event. The Galena Hill deposit
measures  approximately  450  by 500  metres  in  plan  view  (at 50 g/t  silver
equivalent  cut-off) and is up to 125 metres thick in its centre.  A total of 39
drillholes delineate the Galena Hill resource.  Highlights from Phase I drilling
on Galena  Hill  include  115 metres of 497 g/t silver and 5.71% lead in hole 14
and 63.0 metres of 418.4 g/t silver,  including 20.6 metres of 703.0 g/t silver,
in hole 22.  During  Phase III,  hole 175 and 197 were drilled at Galena Hill in
order to collect  metallurgical  samples. Hole 175 intercepted 194 metres of 188
g/t silver and 5.8% lead including 49.8 metres of 481 g/t silver and 14.2% lead.
Hole 197 intercepted  74.04 metres of 239 g/t silver and 1.97% lead.  Results of
these two holes  were  incorporated  into the  resource  estimate  published  on
February 16, 2006.

NAVIDAD HILL:

A total of 62 drill  holes  have been  completed  to date at  Navidad  Hill.  In
addition to the structurally controlled mineralization located on top of Navidad
Hill,  near-surface  stratigraphically  controlled silver mineralization has now
been identified along the southwest and southeast flanks of Navidad Hill.

Intercepts of structurally  controlled,  near vertical mineralized bodies on the
top of Navidad Hill include hole NV04-110 which  intersected  61.5 metres of 128
grams per tonne silver, including 5.34 metres of 1,006 grams per tonne silver.

Highlights of  stratigraphically-controlled  mineralization on the western flank
of the Navidad volcanic dome include the exceptional intercept from hole NV04-90
that  returned 35.8 metres of 2,850 grams per tonne (83.2 ounces per ton) silver
including  7.3 metres of 11,995  grams per tonne  (350.3  ounces per ton) silver
starting from 16.5 metres depth.  Drill hole 90 was drilled at an inclination of
-45(degree)  towards  the  northeast  on the  western  flank  of  Navidad  Hill,
approximately  275  metres  northwest  of drill  holes 1 and 2 and in an area of
little or no  outcrop.  Bonanza-grade  mineralization  in drill hole 90 contains
semi-massive   silver-copper-lead   sulphides  and/or  sulphosalts.  In  several
locations  native  silver occurs as fine veinlets and grains up to 5 millimetres
in size.  Further intercepts in the area include 28.15 metres of 1,115 grams per
tonne silver (32.6  ounces per tonne)  including  5.97 metres of 4,579 grams per
tonne  (133.7  ounces per  tonne) in hole 117 and 58.68  metres of 208 grams per
tonne silver (6.1 ounces per tonne) in hole 112.

Phase III  drilling in the area of hole 90 included  holes 139 to 142 which were
completed to provide more detailed  information on this zone of very  high-grade
silver mineralization. Of these, holes 139 (17.8 metres of 1,037 g/t silver) and
142 (34.5  metres of 1,220 g/t silver)  intersected  significantly  higher grade
than that predicted from the wider spaced  drilling and the prior resource block
model.  Results of these new holes were  incorporated into the resource estimate
published on February 16, 2006.

CONNECTOR ZONE:

At the Connector Zone 37 drill holes have been  completed to date.  Drilling has
demonstrated that both structurally and stratigraphically  controlled high-grade
silver  mineralization  occurs  in  this  area,  as  at  Navidad  Hill.  In  the
northwestern  part of the Connector  Zone (holes 40, 68, 105, 106, and 107), the
control on mineralization  appears to be stratigraphic  with the  mineralization
occurring in the same  stratigraphic  position as at the Galena Hill deposit and
on the flank of  Navidad  Hill (hole 90).  Highlights  from this  mineralization
style  include  46.7 metres of 334 grams per tonne silver from hole 107 and 13.3
metres  of 545  grams  per tonne  silver  from  hole  105.  In the  southeastern
Connector  Zone  (holes 32, 86, 87, 108,  131,  153,  154,  155.  and 156),  the
controls on mineralization  and the  stratigraphic  correlations are less clear.
Hole 108 was drilled towards the east to cross a northerly  trending  structural
zone  partially  exposed on surface and  intersected an impressive 485 grams per
tonne silver over 39.0 metres.

Phase III drilling at the Connector Zone (holes 153-156 and 228-237)),  aimed at
providing  additional  drill  density to  upgrade  previously  defined  Inferred
Resources to the Indicated Resources category, intersected moderate-grade silver
mineralization  over long  intervals  with rare  high-grade  structures  (e.g. 2
metres  of 2,171  g/t  silver  in hole 234)  outside  of the  current  Indicated
Resource.  Results  include  88.8  metres of 107 g/t silver in hole 153 and 28.8
metres of 148 g/t  silver in hole 154,  26 metres of 104 g/t silver in hole 230,
37 metres of 107 g/t silver in hole 231, 21 metres of 237 g/t silver in 234, and
32 metres of 110 g/t silver in hole 237. Much of this  mineralization  starts at
or very near surface.




                                      -5-




CALCITE HILL:

Near the end of the Phase II program a single hole, NV04-88, was drilled to test
favourable  stratigraphy  on the edge of Calcite Hill in an area where there are
few indications of mineralization or geochemical  anomalies at surface. The hole
intersected 72.3 metres averaging 202 grams per tonne silver and 3.45% lead from
70.3 to 142.6 metres depth and included a higher-grade  interval containing 12.4
metres averaging 672 grams per tonne silver.

Highlights from Phase III drilling at Calcite Hill include:  122.6 metres of 195
g/t silver in hole 124, 196.1 metres of 113 g/t silver in hole 126, 123.6 metres
of 139 g/t  silver in hole 138,  46.6  metres of 300 g/t silver  including  10.3
metres of 1,257 g/t  silver in hole 143,  83.0  metres of 209 g/t silver in hole
148,  80.2 metres of 246 g/t silver  including  25.3 metres of 476 g/t silver in
hole  151,  27  metres  of 407 g/t  silver  in hole 207 and 21 metres of 545 g/t
silver in hole 209.

Mineralization  encountered  to date at  Calcite  Hill is  predominantly  hosted
within trachyandesite volcanic rock and to a lesser degree within mudstone which
overlies  the  volcanic  rock.  The  volumetrically   most  important  style  of
mineralization   consists  of   calcite-barite   veinlets  and   breccias   with
argentite-acanthite,  native  silver and  lesser  galena  and  chalcopyrite.  In
general,  this style of  mineralization  contains  high silver grades with minor
amounts of lead and copper. In the upper portions of the host volcanic unit, and
in the  overlying  mudstone,  mineralization  tends to be lead-rich and consists
predominantly of  medium-grained  galena with moderate silver values. A total of
60 drill holes were used in the  estimate  of  resources  published  in February
2006.

CALCITE HILL NW:

Exploration  drilling  in Phase III along  strike  towards  the  northwest  from
Calcite Hill discovered new  mineralization.  This new  mineralization  is named
Calcite  NW. The  mineralization  at  Calcite  Hill NW is  dominantly  hosted in
sedimentary  rocks that overly the volcanic rocks which host the majority of the
mineralization  at Navidad Project.  Within the overlying  sediments strong clay
alteration is widespread  and affects  pelites,  sandstones  and  conglomerates.
Mineralization  can be lead-rich  with silver (hole 201),  or lead-poor but with
minor  values  in  copper  and  higher   silver  grades  (holes  202  and  203).
Fine-grained  but  visible,  disseminated  native  silver was  located  within a
carbonaceous  bed in hole  203.  This is a new mode of  occurrence  of silver at
Navidad   Project.   At   Calcite   Hill  NW   mineralization   appears   to  be
stratigraphically  controlled  and is  disseminated  in the host rock;  veins or
feeder structures have not been recognized. The zone is nearly flat-lying, shows
good continuity  from hole to hole and typically  starts at shallow depths of 15
to 50 meters below surface.

Drilling at Calcite  Hill NW has defined a central area of  approximately  400 x
150 metres x 5 to 60 meters thick (defined by drill holes 178, 179, 202, 203 and
223-227).  Highlights include:  holes 178 and 179 (30.0 metres of 122 g/t silver
and 25.0  metres of 251 g/t  silver,  respectively),  202 (10  metres of 435 g/t
silver),  and 203 (29 metres of 154 g/t silver).  Results  outside the core area
include  intercepts from holes 199 (31.1 metres of 62 g/t silver and 1.29% lead)
and 201 (22.5  metres of 104 g/t silver and 2.79% lead).  The resource  estimate
released in February 16, 2006 used 23 holes.

ESPERANZA TREND:

A total of 11  drillholes  have been  completed to date in two areas along the 6
kilometre Esperanza Trend.  Highlights include 2.7 metres of 831 grams per tonne
silver in hole 62 and 2.6  metres  of 513  grams  per  tonne  silver in hole 79.
Interestingly, hole 79 shows signs of the mineralization being stratigraphically
rather than  structurally  controlled  as had been  interpreted  to date in this
area.  Hole 63 intersected  45.8 metres of 94 grams per tonne silver,  including
4.0 metres of 246 grams per tonne silver,  800 metres to the  northwest.  In the
same  area,  hole 82  intersected  54.6  metres of 64 grams  per  tonne  silver,
including  26.1 metres of 106 grams per tonne  silver and also 6.0 metres of 140
grams per tonne silver.  These results confirm the high grades and potential for
a  significant   structurally  and/or   stratigraphically   controlled  zone  at
Esperanza.  Significantly  more  drilling  will  be  required  to  evaluate  the
6-kilometre Esperanza Trend.

BARITE HILL:

A total of 8 holes were completed at Barite Hill during Phase II.  Although many
of these holes contain  significant near surface  intersections of galena matrix
breccia  similar  in style to that at Galena  Hill,  they have  generally  lower
silver and lead values.  The most  significant  intercept  was from hole NV04-76
that cut 22.1  metres  of galena  matrix  breccia  averaging  34 grams per tonne
silver  and 0.63%  lead in the  upper  part of the hole and then  intersected  a


                                      -6-




different style of mineralization  deeper in the hole that contained 21.7 metres
of 88 grams per tonne silver including 8.4 metres of 191 grams per tonne silver.
This  deeper   mineralization  is  associated  with  calcite  veining  within  a
fine-grained  muddy sedimentary rock and is characterized by high silver to base
metal ratios.

LOMA DE LA PLATA:

The  surface  exploration  program  launched  September  2004  resulted  in  the
discovery of the Loma de la Plata Zone,  approximately  4 kilometres west of the
Galena Hill deposit, through grid soil sampling. At Loma de la Plata, an area of
approximately 400 x 400 metres has been systematically sampled with twelve lines
of continuous and semi-continuous  channel samples;  these sample lines range in
length from 12.5 to 135.9 metres. Highlights of channel samples include:

                  Line LP-1: 40.1 metres of 740 g/t silver
                  Line LP-3: 42.9 metres of 684 g/t silver
                  Line LP-4: 135.9 metres of 159 g/t silver
                  Line LP-7: 48.5 metres of 315 g/t silver
                  Line LP-2: 103.3 metres of 290 g/t silver
                  Line LP-9: 49.5 metres of 410 g/t silver
                  Line LP-10: 56.0 metres of 452 g/t silver

The Loma de la Plata  zone is hosted  within  quartz-eye  phyric  trachyandesite
volcanic  rocks that dip to the  northeast  at 15 to 45 degrees.  Mineralization
occurs in  micro-veinlets  and breccia  zones and  consists  primarily  of minor
galena and copper oxides with common native silver.

Initial  drilling  of five holes at Loma de la Plata has  confirmed  the surface
discovery   but  has  tested  only  a  small   portion  of  the  known   surface
mineralization.  Trenches 7 and 10 are located up to 275 metres from the current
drilling and returned values of 48.5 metres of 315 g/t silver and 56.0 metres of
452 g/t silver,  respectively.  Of the five drill holes  completed at Loma de la
Plata,  two (241 and 242) were drilled at angles of -45 and were  collared  near
trenches  where  high-grade  silver  had  been  defined  on  surface.  Hole  241
intersected  31.5 metres of 562 g/t silver  (grade was  incorrectly  stated in a
October 13, 2005 News Release as 684 g/t) and was drilled under trenches 1 and 3
that  returned  40.1 metres of 740 g/t silver and 42.9 metres of 684 g/t silver,
respectively. Hole 242 intersected 28.4 metres of 236 g/t silver and was drilled
under  trench 2 which  returned  103.3  metres  of 290 g/t  silver.  The  strong
correlation  between surface results from trenching and sub-surface results from
drilling suggests that little or no surface enrichment of silver has occurred at
Loma de la Plata.  The  remaining  three  holes  were  collared  40 to 90 metres
further to the east and drilled at -60 angles.  These holes (243-245)  appear to
have  missed  the  better-mineralized  north-south  trending  zone as defined by
trenches 1-3, 8, and 9 and drill holes 241 and 242.

Drilling  at Loma de la Plata  has  confirmed  the basic  geological  model of a
favourable, mineralized, upper-volcanic sequence comprised of quartz-eye bearing
trachyandesites.  The units  dip  approximately  25 to 30  degrees  towards  the
northeast and the favourable unit is  approximately 30 to 35 metres thick in the
area drilled to date.  The form and shape of  mineralized  zones of veinlets and
brecciation  is not yet well  defined,  but is  hosted  exclusively  within  the
trachyandesite  upper  volcanic  rocks.  Further  drilling  will be  required to
confirm the orientation and ultimate size potential of this zone.

SECTOR ZETA

At Sector  Zeta,  approximately  5 kilometres  west of the Galena Hill  Deposit,
seven sample lines ranging in length from 6.7 to 60.0 metres have been completed
covering  an area of  approximately  80 by 100  metres  (see  attached  figure).
Highlights of the Sector Zeta results include:

                  Line Z-5: 8.0 metres of 105 g/t Silver and 1.14% Copper
                  Line Z-6: 12.0 metres of 112 g/t Silver and 1.13% Copper
                  Line Z-7: 12.0 metres of 133 g/t Silver and 3.27% Copper

Mineralization  at Sector Zeta  predominantly  consists of green  copper  oxides
within argillicly  altered latite volcanic rocks that are often brecciated.  IMA
geologists  interpret that the volcanic rocks which host mineralization here are
part of the same volcanic unit that hosts  mineralization  at Galena and Navidad
Hills  and  also  at  Loma de la  Plata.  At  present,  the  orientation  of the
mineralized  zone at  Sector  Zeta is  unknown;  drill  data  will be  needed to
unambiguously define the geometry and size of the mineralization.



                                      -7-




The  possibility  of leaching,  or  alternatively,  concentration  of silver and
copper  values at or near  surface,  particularly  at Sector Zeta in the case of
copper,  cannot be determined  from the data available to date and drilling will
be required; no drilling has been carried out in the Sector Zeta area.

ARGENTA TREND:

On January 21, 2005 the Company  released the results from a large  expansion to
the soil sample grid and follow-up  prospecting  which uncovered a series of new
mineralized  zones to the  southeast  of Loma de la  Plata.  The  Argenta  Trend
includes Sector Zeta and Loma de la Plata and extends approximately 8 kilometres
to the southeast, parallel with the Esperanza and Navidad Trends.

The Argenta Trend is  highlighted by anomalous  silver,  lead and zinc values in
soils with subordinate and sporadic anomalous copper.  Recent surface work along
the Argenta trend has discovered high-grade lead values over significant widths.
New  discoveries  include  the "Bajo del Plomo",  "Filo del Plomo" and  "Ginger"
zones  where lead  values of up to 10.7% lead over 10 metres,  7.3% lead over 17
metres and 4.8% lead over 21 metres  respectively,  have been discovered.  These
new  discoveries  are located  southeast of the Loma de la Plata zone.  With the
addition of the three new zones,  the Argenta  Trend now  consists of five named
mineralized zones along an 8 kilometre strike length. Mineralization styles vary
from  silver-copper  rich at the northwest end at Sector Zeta, to silver-rich at
Loma de la Plata, to lead-dominant at Bajo del Plomo, Filo del Plomo and Ginger.
Mineralization  is  hosted  by the same  trachyandesitic  volcanic  rocks as the
Galena,  Navidad,  and  Calcite  Hill  deposits,  and in some cases in  adjacent
sedimentary  rocks. It appears to occur at approximately the same  stratigraphic
position as the known resources but with significant  differences in sedimentary
facies.

The Company now has over 58 square kilometres of geophysical  surveying covering
and extending beyond the Navidad and Argenta Trends. The Galena Hill deposit has
a strong geophysical signature, while other deposits such as Navidad and Calcite
Hills have much more subtle  signatures.  This additional  geophysical  coverage
provides a wealth of  information  about the geology and structure at Navidad in
addition to highlighting new areas prospective for mineralized zones that may be
completely buried.

NAVIDAD AREA PROPERTIES:

The  Company has 18  exploration  properties  in Chubut  Province in addition to
Navidad.  The Regalo  property  is  currently  the  subject  of a joint  venture
agreement.

REGALO:

Work by  Consolidated  Pacific Bay Minerals Ltd.  ("Pacific  Bay") on the Regalo
Property,  currently under option from IMA, has identified highly anomalous gold
in soils and silt samples over a large area. In a January 12, 2005 News Release,
Pacific Bay  reported  that the Yastekt  South zone has strong  associated  gold
anomalies consistent over almost one square kilometre. The Yastekt South anomaly
comprises 98 soil analyses that average 299 ppb gold. Normal,  "background" gold
values in the area are less  than 5 ppb.  Two of the 98 soil  analyses  returned
values in excess of 3 grams per tonne gold.  In a June 21,  2005 press  release,
Pacific Bay reported that an outcrop  sample on Pacific Bay's Regalo project has
returned an assay  value of 205 ppm  uranium.  On August 22, 2005 press  release
Pacific Bay reported  that a total of 163 rock samples  were  collected  from 26
backhoe trenches  excavated within the large soil and stream sediment  anomalies
described  above.  Of these,  13 rock samples had detectable gold in the 6 to 41
ppb range. The trench samples identified anomalous arsenic, molybdenum, vanadium
and zinc pathfinder elements in porous,  permeable  sandstones and conglomerates
with strong quartz-hematite alteration.





                                      -8-




SELECTED ANNUAL FINANCIAL INFORMATION

The following selected  consolidated  financial  information is derived from the
audited consolidated financial statements and notes thereto. The information has
been prepared in accordance with Canadian GAAP.


                                                   --------------------------------------------
                                                              YEARS ENDED DECEMBER 31
                                                   --------------------------------------------
                                                       2005            2004            2003
                                                         $               $               $
                                                   ------------    ------------    ------------
                                                                         
Total Assets                                         23,497,994      12,221,856      13,419,876
Long Term Financial Liabilities                               -               -               -
Total Revenues                                                -               -               -
General and Administrative Expenses                   6,148,234       4,312,616       2,503,041
Loss from Continuing Operations                      (5,764,874)     (4,523,831)     (2,449,243)
Loss per Common Share from Continuing Operations          (0.12)          (0.11)          (0.08)
Loss allocated to Spin-Off Assets                             -        (131,232)       (969,175)
Net Loss                                             (5,764,874)     (4,655,063)     (3,418,418)
Net Loss per Common Share Basic and Diluted               (0.12)          (0.11)          (0.11)
                                                   --------------------------------------------



Total assets increased  $11,276,138 from December 31, 2004 to 2005 primarily due
to the  expenditures on the Navidad project.  Total assets decreased  $1,198,021
from  December  31,  2003 to December  31,  2004 as a result of the  transfer of
assets to Golden Arrow offset by  corresponding  increases in the Company's cash
balance and in the Navidad property  carrying value.  General and  adminstrative
expenses have  increased  mainly due to the increases in legal costs incurred in
connection  with  the  Aquiline  legal  action  and due to the  increase  in the
activity level related to continued  exploration at the Navidad  project and the
necessary support required.

SELECTED QUATERLY FINANCIAL INFORMATION AND FOURTH QUARTER

The following selected  consolidated  financial  information is derived from the
unaudited   consolidated  interim  financial  statements  of  the  Company.  The
information has been prepared in accordance with Canadian GAAP.




                            --------------------------------------------------  --------------------------------------------------
                                                   2005                                                2004
                            --------------------------------------------------  --------------------------------------------------
                              DEC. 31      SEP. 30      JUN. 30      MAR. 31      DEC. 31      SEP. 30      JUN. 30      MAR. 31
                                 $            $            $            $            $            $            $            $
                            -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                                                                                              

Revenues                              -            -            -            -            -            -            -            -

Loss from Continuing
     Operations              (1,041,118)  (1,233,392)    (972,894)  (2,517,470)  (1,164,504)    (492,562)    (466,021)  (2,400,744)
Loss per Common Share from
     Continuing Operations        (0.02)       (0.03)       (0.02)       (0.06)       (0.03)       (0.01)       (0.01)       (0.06)
Income (Loss) Allocated to
     Spin-off Assets                  -            -            -            -            -            -     (355,252)     224,020
Net Loss                     (1,041,118)   (1,233,392)   (972,894)  (2,517,470)  (1,164,955)    (492,562)    (821,273)  (2,176,273)
Net Loss per Common Share
     Basic and Diluted            (0.02)       (0.03)       (0.02)       (0.06)       (0.02)       (0.01)       (0.02)       (0.06)
                            --------------------------------------------------  --------------------------------------------------


The Net Loss for the periods includes the following:

    -    Q1 2004 Net Loss includes  $1,871,360 non-cash stock based compensation
         expense for the stock options granted during the period
    -    Q2 2004 includes $313,801 gain on disposition of mineral property
    -    Q1 2005 Net Loss includes  $1,800,000 non-cash stock based compensation
         for the stock options granted during the period
    -    Q3 2005 Net Loss  includes  the  increased  legal  fees  related to the
         Aquiline litigation
    -    In the quarter ended December 31, 2005, the Company's  legal costs were
         substantially higher compared to 2004 period as the Aquiline trial took
         place during the quarter  ended  December 31, 2005.  This  increase was
         offset with a foreign  exchange  gain  recorded in the last  quarter of
         2005 and with a decrease in stock based compensation in the 2005 period
         compared to 2004.

SUMMARY OF FINANCIAL RESULTS

For the year ended December 31, 2005, the Company  reported a consolidated  loss
of  $5,764,874  ($0.12 per share),  an increase of  $1,109,811  from the loss of
$4,655,063  ($0.11 per share) for the year ended December 31, 2004. The increase


                                      -9-



in the loss in 2005,  compared to 2004 amount, was due to a number of factors of
which  $1,835,618  can be  attributed  to increases  in  operating  expenses and
$725,807 decrease in other items.

The  Company's  prior period  financial  statements  have been  reclassified  in
accordance  with Canadian GAAP. The net assets  transferred to Golden Arrow were
described  as  "Spin-Off  Assets  Transferred"  and the  allocated  expenses are
described as "Loss Allocated to Spin-Off Assets" in the  consolidated  financial
statements.  This  reclassification  did not change  previously  reported  total
losses.  The  allocation of expenses was calculated on the basis of the ratio of
the  specific  assets  transferred  to assets  retained.  A loss of $131,231 was
allocated to spin-off assets in the 2004 period.

RESULTS OF OPERATIONS

The  Company's  operating  expenses  for the year ended  December  31, 2005 were
$6,148,234 an increase of $1,835,618  from  $4,312,616 in 2004.  $339,516 of the
2004 operating  expenses had been  reclassified  as "Loss  Allocated to Spin-Off
Assets" which relate to the assets  transferred to Golden Arrow.  The allocation
was calculated on the basis of the ratio of the specific  assets  transferred to
assets retained. Certain "Other Income and Expense" items have been allocated to
spin-off assets on a cost specific basis.

Professional fees increased  $1,432,498 to $2,327,278 in 2005,  primarily due to
legal costs  incurred in  connection  with the Aquiline  legal action as well as
increased costs of compliance. In 2005 the Company recorded non-cash stock based
compensation  of $2,380,000  compared to  $1,972,860 in 2004,  for stock options
granted to its  employees,  consultants  and directors,  of which  $1,800,000 is
included in expenses in 2005 compared to $1,972,860 in 2004 and $580,000 in 2005
compared  to  Nil  in  2004  is  included  in   capitalized   mineral   property
expenditures.  Other notable changes in the operating expenses are: (i) Salaries
increased $272,151 due to staff increases (salaries in 2005 are a portion of the
monthly fee charged for  services by the Grosso  Group while in 2004 the Company
directly  employed  its staff);  (ii)  Administrative  and  management  services
decreased by $89,744 due to some of the services provided by consultants in 2004
were  provided by  employees of the Grosso Group during 2005 and are included in
salaries (iii) there are no cost recoveries (for shared administrative costs and
rent)  from  Amera or  Golden  Arrow in 2005;  (iv)  Corporate  development  and
investor relations increased $207,951,  as the Company has made its shareholders
and others more aware of its Navidad  project and its potential,  (v) Office and
Sundry increased $40,337 mainly due to the increase in insurance premiums and an
increase in activity, (vi) Transfer agent and regulatory fees increased $141,972
mainly due to the costs of the Company's listing on the American Stock Exchange,
(vii) General  exploration  decreased by $173,047 as the  Company's  focus is on
Navidad  property for which costs are included in capitalized  mineral  property
expenditures,   (viii)  Travel  increased  $52,444  due  to  travel  related  to
conferences and investor presentations as well as to South America.

In 2005 the Company recorded interest income of $150,406 compared to $101,589 in
2004,  primarily as a result of increase of funds on deposit. In 2005 there were
no reorganization costs recorded by the Company, in 2004 reorganization costs of
$346,103  were  recorded.  There was no gain on the  optioning of  properties to
other mining exploration  companies,  in 2004 a gain of $328,346 was recognized.
No  write  down for the  carrying  value of  marketable  securities  in 2005 was
recognized  while a $99,762  write  down for the  carrying  value of  marketable
securities  was recorded in 2004.  A gain of $232,954  for foreign  exchange was
recorded  in 2005  compared  to loss of 195,285 in 2004.  The  foreign  exchange
adjustment  in 2005 is a result of a  continued  strengthening  of the  Canadian
dollar compared to US dollar and due to the exchange  movements between expenses
being incurred in US$ and amounts exchanged to settle such payables.  No gain or
loss was  allocated to spin-off  assets in 2005,  in 2004 a loss of $131,232 was
recorded.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash position at December 31, 2005 was $7,731,395,  an increase of
$2,504,041  from December 31, 2004.  Total assets  increased to  $23,191,738  at
December 31, 2005 from $12,221,856 at December 31, 2004. This increase is mainly
due to the increase in Navidad carrying value and in cash balance. During fiscal
2005, the Company  completed a brokered private placement for 3,333,340 units at
$3.00 per unit,  for proceeds of $9,263,283 net of $600,001  agent's  commission
and $136,736 of related issue costs. Each unit consisted of one common share and
one half common share purchase  warrant.  Each full warrant  entitles the holder
thereof to purchase  one  additional  common share at a price of $3.45 per share
until  September 14, 2009. In addition to the cash  commission the  underwriters
were granted as commission 233,334  underwriter's  warrants,  representing 7% of
the number of units issued.  Each  underwriter's  warrant is exercisable for one
share at a price of $3.25,  for a period  of twenty  four  months,  expiring  on


                                      -10-



September  12,  2007.   The   underwriter's   warrants  were  valued  using  the
Black-Sholes  Pricing Model. The warrants were valued at $0.76 per warrant for a
total  value of  $177,333  and have been  recorded  as share  issue costs with a
corresponding   increase  to  contributed   surplus.   At  March  29,  2006,  no
underwriter's warrants had been exercised.

On March 21, 2006 the Company completed a syndicated  brokered private placement
financing of 2,865,000  special warrants at $3.50 per warrant for gross proceeds
of $10,027,500. Each special warrant will entitle the holder to acquire one unit
consisting of one common share and one half common share purchase warrant.  Each
full warrant entitles the holder thereof to purchase one additional common share
in the  capital  of the  Company at a price of $3.80 per share  until  March 21,
2010.  In addition to a cash  commission  of 6% the  underwriters  were  granted
171,900  agents'  warrants,  representing  6% of the number of special  warrants
issued.  Each agents'  warrant is exercisable for one share at a price of $3.80,
for a period of twenty four months, expiring on March 21, 2008.

Options  and  warrants  were  exercised  which  resulted  in  cash  proceeds  of
$4,215,145  during  2005.  The Company  paid  $145,866 to Golden  Arrow from the
exercise of warrants  that  resulted  in the issue of Golden  Arrow's  shares as
required  by  the  terms  of  the  reorganization.  As all  warrants  that  were
outstanding as of the effective date of the  reorganization  have been exercised
the Company  has no further  obligation  to pay amounts to Golden  Arrow for the
issue of its shares on the exercise of the Company's warrants.

The Company has received $172,900 from the exercise of options from January 1 to
March 29,  2006.  As at March 29,  2006,  the  Company  had  working  capital of
approximately $14,000,000.

The Company  considers  that it has  adequate  resources to maintain its ongoing
operations but currently may not have sufficient  working capital to fund all of
its planned  exploration and development work. The Company will continue to rely
on successfully  completing  additional equity financing to further  exploration
and  development of Navidad.  There can be no assurance that the Company will be
successful  in  obtaining  the  required  financing.  The failure to obtain such
financing could result in the loss of or substantial dilution of its interest in
its properties.

Except  as  disclosed  the  Company  does  not  know  of  any  trends,   demand,
commitments, events or uncertainties that will result in, or that are reasonably
likely to result in, its liquidity either materially increasing or decreasing at
present  or in the  foreseeable  future.  Material  increases  or  decreases  in
liquidity  are  substantially  determined  by  the  success  or  failure  of the
exploration programs.

The Company  does not now and does not expect to engage in  currency  hedging to
offset any risk of currency fluctuations.

OPERATING CASH FLOW

Cash outflow from operating  activities for the year ended December 31, 2005 was
$3,849,618,  compared  to cash  outflow  for 2004 of  $2,961,734  as a result of
increases in activities and changes in non-cash working capital.

FINANCING ACTIVITIES

During the year ended December 31, 2005, the Company  received  $14,215,165 from
the issue of common shares from a brokered private placement and on the exercise
of warrants  and options less costs of $736,737,  compared to  $9,707,897,  less
costs of $411,237, for the year ended December 31, 2004.

INVESTING ACTIVITIES

Investing  activities  required  cash of  $6,978,903  during  2005,  compared to
$4,509,717 for 2004, these investing  activities were primarily for additions to
the Navidad project in Argentina.

RELATED PARTY TRANSACTIONS

Effective  January  1, 2005 the  Company  engaged  the  Grosso  Group to provide
services and  facilities to the Company.  The Grosso Group is a private  company
owned by the Company, Golden Arrow, Amera and Gold Point, each of which owns one
share.  The Grosso Group provides its  shareholder  companies  with  geological,
corporate development, administrative and management services on a cost recovery
basis.  During fiscal 2005, the Company  incurred fees of $730,802 to the Grosso
Group:  $764,012 was paid in twelve monthly  payments and $33,210 is included in
the  Accounts  receivable,  prepaids and deposits as a result of a review of the


                                      -11-



allocation  of the Grosso Group costs to the member  companies  for the year. In
addition,  included  in the  Accounts  receivable,  prepaids  and  deposits is a
$205,000  deposit to the Grosso Group.  The deposits  from the member  companies
were used for the  purchase of  equipment  and  leasehold  improvements  and for
operating working capital.

CRITICAL ACCOUNTING ESTIMATES

Reference  should  be  made to the  Company's  significant  accounting  policies
contained in Note 3 of the Company's  consolidated  financial statements for the
year ended December 31, 2005. These  accounting  policies can have a significant
impact of the financial  performance and financial  position of the Company.  As
disclosed  previously,  the Company has not made any provision for any potential
loss in the event of an adverse judgement related to the Aquiline legal action.

RECENT ACCOUNTING PRONOUNCEMENTS

Reference should be made to the recent  accounting  pronouncements in Canada and
in US  that  described  in  Note  10 of  the  Company's  consolidated  financial
statements for the year ended December 31, 2005.

USE OF ESTIMATES

The  preparation  of financial  statements  in  conformity  with  Canadian  GAAP
requires  management to make estimates and assumptions  that affect the reported
amount of assets  and  liabilities  and  disclosure  of  contingent  assets  and
liabilities at the date of the financial  statements and the reported  amount of
revenues and expenses during the period.  Significant areas requiring the use of
management  estimates relate to the  determination of environmental  obligations
and  impairment of mineral  properties  and deferred  costs.  Actual results may
differ from these estimates.

MINERAL PROPERTIES AND DEFERRED COSTS

Consistent  with the  Company's  accounting  policy  disclosed  in Note 3 of the
annual  consolidated   financial   statements,   direct  costs  related  to  the
acquisition  and  exploration  of mineral  properties  held or controlled by the
Company have been  capitalized  on an  individual  property  basis.  For certain
acquisitions and related payments for mineral  property  interests,  the Company
records a future  income tax  liability  and a  corresponding  adjustment to the
related asset carrying amount if the expenditures do not have the  corresponding
tax basis.  It is the  Company's  policy to expense any  exploration  associated
costs not related to specific projects or properties.  Management of the Company
periodically  reviews the recoverability of the capitalized  mineral properties.
Management  takes into  consideration  various  information  including,  but not
limited to,  results of  exploration  activities  conducted  to date,  estimated
future  metal  prices,  and reports and  opinions  of outside  geologists,  mine
engineers and consultants. When it is determined that a project or property will
be abandoned or its carrying  value has been  impaired,  a provision is made for
any expected loss on the project or property.  In 2005 and in 2004 no impairment
of long-lived assets was identified.

FINANCIAL INSTRUMENTS

The Company's  financial  instruments  consisting of cash and cash  equivalents,
accounts  receivable and accounts  payable and accrued  liabilities  approximate
their carrying values due to the short-term nature of those  instruments.  As of
December 31, 2005, the market value of marketable  securities was $270,000 (2004
- $270,000).

RISK FACTORS

The Company's  operations and results are subject to a number of different risks
at any given time.  These  factors,  include  but are not limited to  disclosure
regarding   exploration,   additional   financing,   project  delay,  titles  to
properties,  price  fluctuations and share price volatility,  operating hazards,
insurable  risks and limitations of insurance,  management,  foreign country and
regulatory  requirements,  currency  fluctuations and environmental  regulations
risks.  Exploration  for mineral  resources  involves a high degree of risk. The
cost of conducting  programs may be substantial and the likelihood of success is
difficult to assess.

METAL  PRICE  RISK:  The  Company's  portfolio  of  properties  has  exposure to
predominantly  silver and lead. The prices of these metals,  especially  silver,
greatly  affect  the  value  of the  Company  and  the  potential  value  of its
properties and investments.



                                      -12-


FINANCIAL  MARKETS:  The Company is dependent on the equity  markets as its sole
source of operating  working  capital and the  Company's  capital  resources are
largely  determined  by the strength of the junior  resource  markets and by the
status of the Company's  projects in relation to these markets,  and its ability
to compete for the investor support of its projects.

POLITICAL RISK: Exploration is presently carried out in Argentina.  This exposes
the Company to risks that may not  otherwise be  experienced  if all  operations
were  domestic.  Political  risks may adversely  affect the  Company's  existing
assets and operations.  Real and perceived  political risk in some countries may
also affect the Company's  ability to finance  exploration  programs and attract
joint venture partners, and future mine development opportunities.

CURRENCY RISK:  Business is transacted by the Company in a number of currencies.
Fluctuations  in exchange rates may have a significant  effect on the cash flows
of the Company.  Future  changes in exchange rates could  materially  affect the
Company's results in either a positive or negative direction.

ENVIRONMENTAL RISK: The Company seeks to operate within environmental protection
standards that meet or exceed  existing  requirements  in the countries in which
the Company  operates.  Present or future  laws and  regulations,  however,  may
affect the Company's operations.  Future environmental costs may increase due to
changing  requirements or costs  associated with exploration and the developing,
operating  and closing of mines.  Programs may also be delayed or  prohibited in
some  areas.  Although  minimal  at this  time,  site  restoration  costs  are a
component of exploration expenses.

TITLE RISK:  Although  the  Company  has taken steps to verify  title to mineral
properties  in which it has an interest,  these  procedures do not guarantee the
Company's title. Such properties may be subject to prior agreements or transfers
and title may be affected by undetected defects. In addition, Navidad properties
title has being challenged in Aquiline legal action as previously discussed.

DISCLOSURE CONTROL AND PROCEDURES

Disclosure  controls and  procedures are defined under  Multilateral  Instrument
52-109 -  Certification  of Disclosure  Controls in Issuers'  Annual and Interim
Filings ("MI  52-109") as "...  controls and other  procedures of an issuer that
are designed to provide  reasonable  assurance that  information  required to be
disclosed by the issuer in its annual filings,  interim filings or other reports
filed or submitted by it under provincial and territorial securities legislation
is  recorded,  processed,  summarized  and  reported  within  the  time  periods
specified in the provincial and territorial  securities legislation and include,
without limitation,  controls and procedures designed to ensure that information
required to be disclosed by an issuer in its annual filings,  interim filings or
other reports filed or submitted  under  provincial and  territorial  securities
legislation  is  accumulated  and  communicated  to  the  issuer's   management,
including its chief executive  officers and chief financial officers (or persons
who perform similar  functions to a chief executive officer or a chief financial
officer),   as  appropriate  to  allow  timely  decisions   regarding   required
disclosure". The Company has conducted a review and evaluation of its disclosure
controls and procedures,  with the conclusion that it has an effective system of
disclosure controls, and procedures as defined under MI 52-109. In reaching this
conclusion, the Company recognizes that two key factors must be and are present:

a)       the  Company  is very  dependant  upon  its  advisors  and  consultants
         (principally its legal counsel) to assist in recognizing, interpreting,
         understanding  and complying  with the various  securities  regulations
         disclosure requirements; and

b)       an active Board and management with open lines of communication.

The Company has a small staff with varying  degrees of knowledge  concerning the
various regulatory disclosure  requirements.  The Company is not of a sufficient
size to justify a separate department or one or more staff member specialists in
this area.  Therefore the Company must rely upon its advisors and consultants to
assist it and as such they form part of the disclosure controls and procedures.

Proper  disclosure  necessitates  that one not  only be  aware of the  pertinent
disclosure requirements, but one is also sufficiently involved in the affairs of
the Company  and/or  receives the  communication  of  information  to assess any
necessary disclosure  requirements.  Accordingly,  it is essential that there be
proper communication among those people who manage and govern the affairs of the
Company,  this being the Board of Directors and senior  management.  The Company
believes this communication exists.


                                      -13-



While the Company believes it has adequate disclosure controls and procedures in
place,  lapses in the  disclosure  controls  and  procedures  could occur and/or
mistakes could happen.  Should such occur,  the Company will take whatever steps
necessary to minimize the consequences thereof.

SHARE DATA INFORMATION

As of March 29, 2006 there were 48,933,065 common shares, 2,071,904 warrants and
4,761,000  stock  options  outstanding.  As  a  result  of a  private  placement
completed  on March  21,  2006,  the  Company  has  2,865,000  special  warrants
outstanding.  Each special  warrant will entitle the holder to acquire one unit,
without payment of additional consideration,  consisting of one common share and
one half common share purchase  warrant.  Each full warrant  entitles the holder
thereof to purchase one additional common share in the capital of the Company at
a price of $3.80 per share until March 21, 2010.

INVESTOR RELATIONS

The  Company   currently  does  not  engage  any  outside   investor   relations
consultants.  Mr. Sean Hurd is the Company's Vice-President,  Investor Relations
and coordinates investor relations' activities.



                                      -14-



                                  FORM 52-109F1
                         CERTIFICATION OF ANNUAL FILINGS


I, Joseph Grosso, President and Chief Executive Officer of IMA Exploration Inc.,
certify that:

1.       I have  reviewed  the  annual  filings  (as  this  term is  defined  in
         Multilateral  Instrument 52-109 CERTIFICATION OF DISCLOSURE IN ISSUERS'
         ANNUAL AND INTERIM  FILINGS),  of IMA Exploration Inc. (the issuer) for
         the year ended December 31, 2005;

2.       Based on my  knowledge,  the annual  filings do not  contain any untrue
         statement of a material  fact or omit to state a material fact required
         to be stated or that is necessary to make a statement not misleading in
         light of the circumstances under which it was made, with respect to the
         period covered by the annual filings;

3.       Based on my knowledge,  the annual financial  statements  together with
         the other financial  information  included in the annual filings fairly
         present in all material  respects the financial  condition,  results of
         operations  and cash  flows of the  issuer,  as of the date and for the
         periods presented in the annual filings.

4.       The  issuer's  other  certifying  officers  and I are  responsible  for
         establishing and maintaining disclosure controls and procedures for the
         issuer, and we have:

         (a)      designed such disclosure  controls and  procedures,  or caused
                  them  to  be  designed  under  our  supervision,   to  provide
                  reasonable assurance that material information relating to the
                  issuer, including its consolidated subsidiaries, is made known
                  to us by others within those entities, particularly during the
                  period in which the annual filings are being prepared; and

         (b)      evaluated  the   effectiveness  of  the  issuer's   disclosure
                  controls and procedures as of the end of the period covered by
                  the annual  filings  and have caused the issuer to disclose in
                  the annual MD&A our conclusions about the effectiveness of the
                  disclosure controls and procedures as of the end of the period
                  covered by the annual filings based on such evaluation.


Date:  March 29, 2006


/s/  JOSEPH GROSSO
-------------------------------------
JOSEPH GROSSO
President and Chief Executive Officer





                                  FORM 52-109F1
                         CERTIFICATION OF ANNUAL FILINGS


I, Arthur Lang, Chief Financial Officer of IMA Exploration Inc., certify that:

1.       I have  reviewed  the  annual  filings  (as  this  term is  defined  in
         Multilateral  Instrument 52-109 CERTIFICATION OF DISCLOSURE IN ISSUERS'
         ANNUAL AND INTERIM  FILINGS),  of IMA Exploration Inc. (the issuer) for
         the year ended December 31, 2005;

2.       Based on my  knowledge,  the annual  filings do not  contain any untrue
         statement of a material  fact or omit to state a material fact required
         to be stated or that is necessary to make a statement not misleading in
         light of the circumstances under which it was made, with respect to the
         period covered by the annual filings;

3.       Based on my knowledge,  the annual financial  statements  together with
         the other financial  information  included in the annual filings fairly
         present in all material  respects the financial  condition,  results of
         operations  and cash  flows of the  issuer,  as of the date and for the
         periods presented in the annual filings.

4.       The  issuer's  other  certifying  officers  and I are  responsible  for
         establishing and maintaining disclosure controls and procedures for the
         issuer, and we have:

         (a)      designed such disclosure  controls and  procedures,  or caused
                  them  to  be  designed  under  our  supervision,   to  provide
                  reasonable assurance that material information relating to the
                  issuer, including its consolidated subsidiaries, is made known
                  to us by others within those entities, particularly during the
                  period in which the annual filings are being prepared; and

         (b)      evaluated  the   effectiveness  of  the  issuer's   disclosure
                  controls and procedures as of the end of the period covered by
                  the annual  filings  and have caused the issuer to disclose in
                  the annual MD&A our conclusions about the effectiveness of the
                  disclosure controls and procedures as of the end of the period
                  covered by the annual filings based on such evaluation.


Date:  March 29, 2006


/s/ ARTHUR LANG
-------------------------------------
ARTHUR LANG
Chief Financial Officer