Edgar Filing: RADIUS GOLD INC.

Radius Gold 2005 20-F Annual Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

___

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

_X_

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005

___

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to __________

Commission file number 0-30720

RADIUS GOLD INC.

(Exact name of Registrant as specified in its charter)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

355 Burrard Street, Suite 830, Vancouver, British Columbia, Canada V6C 2G8

(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

None

Name of each exchange on which registered

None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Common Shares, no par value

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 53,091,188 Common Shares, no par value

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

_X_ Yes ___ No

Indicate by check mark which financial statement item the registrant has elected to follow.

_X_ Item 17 ___Item 18

TABLE OF CONTENTS

PART I		1
Item 1.	Identity of Directors, Senior Management and Advisors	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	5
Item 5.	Operating and Financial Review and Prospects	25
Item 6.	Directors, Senior Management and Employees	34
Item 7.	Major Shareholders and Related Party Transactions	41
Item 8.	Financial Information	42
Item 9.	The Offer and Listing	43
Item 10.	Additional Information	45
Item 11.	Quantitative and Qualitative Disclosures about Market Risk	58
Item 12.	Description of Other Securities Other Than Equity Securities	58
PART II		58
Item 13.	Defaults, Dividend Arrearages and Delinquencies	59
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	59
Item 15.	Controls and Procedures	59
Item 16.	Reserved	59
Item 16A.	Audit Committee Financial Expert	59
Item 16B.	Code of Ethics	59
Item 16C.	Principal Accountant Fees and Services	59
Item 16D.	Exemptions from Listing Standards for Audit Committees	60
Item 16E.	Purchase of Equity Securities by the Issuer and Affiliated Purchasers	60
PART III
Item 17.	Financial Statements	60
Item 18.	Financial Statements	61
Item 19.	Exhibits	61

GLOSSARY OF TECHNICAL TERMS

In this Annual Report, the following technical terms have the following meanings:

“vein”, “veinlet” (small)		A tabular mineral deposit formed within or adjacent to faults or fractures by the deposition of minerals from hydrothermal fluids.
AA		Atomic absorption.
Adit		A passage driven horizontally into a mountainside providing access to a mineral deposit from the surface of the working of a mine.
Ag		The elemental symbol for silver.
alteration		The chemical and mineralogical changes in a rock mass resulting from the passage of hydrothermal fluids.
Anomalous or anomalies		A sample or location in which either (i) the concentration of an element(s) or (ii) geophysical response is significantly different from the average background values that typify an area.
anomaly		The geographical area corresponding to anomalous geochemical or geophysical values.
argillite		Unusually hard, fine-grained sedimentary rocks, such as shale, mudstone, siltstone, and claystone. Commonly black.
arsenopyrite		A sulphide of arsenic and iron.
As		The elemental symbol for arsenic.
Assay		An analysis to determine the presence, absence or quantity of one or more elemental components.
Au		The elemental symbol for gold.
Au Eq. g/t		Denotes gold equivalent grades: gold grade plus silver grades which have been converted to gold grades by using a ratio generally based on the prevailing spot prices of gold and silver.
auriferous		Containing anomalous concentrations of gold.

background		The average concentration of an element or typical geophysical response in an area.
breccia		A rock consisting of sharp fragments in fine grained material.
channel sample		A sample which has been collected by continuous sampling across a measured interval, and is considered to be representative of the area sampled.
Cretaceous.		The geologic period extending from 135 million to 63 million years ago.
development		Preparation of a mineral deposit for commercial production including installations of plant and machinery and the construction of all related facilities.
Diamond drill		A type of rotary drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock which is recovered in long cylindrical sections, an inch or more in diameter.
dip		The angle which a geological structure forms with a horizontal surface, measured perpendicular to the strike of the structure.
epidote		Calcium, aluminium, iron silicate mineral commonly occurring in hydrothermally altered carbonate-bearing rocks.
epithermal		A term applied to high-level hydrothermal systems which form at depths of ~1 km to surficial hotspring settings.
exploration		The prospecting, mapping, sampling, remote sensing, geophysical surveying, diamond drilling and other work involved in the searching for ore bodies.
FA		Fire assay.
fault		A fracture in a rock across which there has been displacement.
fracture		Breaks in a rock, usually planar.
Gangue		Minerals that occur with ore minerals, but are sub-economic to recover.

Gold Dore		A gold and silver alloy produced at a mine prior to refinement into high purity metal.
GPS		Global Positioning System — a space based satellite positioning system whereby receiver units on the ground or in the air use triangulation from known satellite signals to derive a location in three dimensional space.
graben		A downthrown block between two parallel faults.
grab sample		A sample of selected rock chips collected from within a restricted area of interest.
grade		The concentration of an ore metal in a rock sample, given either as weight percent for base metals (e.g. Cu, Zn, Pb) or in grams per tonne (g/t) or ounces per short ton (oz/t) for precious metals. The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.
g/t		Grams of per metric tonne. Usually used in association with gold or silver.
Heap leach		A process used for the recovery of metals from crushed ore in heaps using a suitable leaching solution.
ha or hectare		An area totaling 10,000 square metres.
Hg		The elemental symbol for mercury.
highly anomalous		An anomaly which is 50 to 100 times average background.
Host rock		The body of rock in which mineralization of economic interest occurs.
hydrothermal		Pertaining to hot fluids, dominantly water, in the earth’s crust which may carry metals and other compounds in solution to the site of ore deposition or wall rock alteration.
ICP		A type of assay technique.
intrusive		A rock mass formed below earth’s surface from magma which has intruded into a preexisting rock mass
limonite (limonitic)		A mixture of hydrated iron oxides and iron hydroxides. (Pertaining to or containing limonite.)
mesothermal		A hydrothermal ore deposit –typically a vein system- formed at intermediate temperatures (200-300ºC) and pressures/depths.
mineral resource, measured mineral resource, indicated mineral resource, inferred mineral resource		Under CIM standards, a mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. The terms “mineral resource”, “measured mineral resource”, “indicated mineral resource”, and “inferred mineral resource” used in this Joint Information Circular are mining terms defined under CIM standards and used in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects. They are not defined terms under United States standards and generally may not be used in documents filed with the SEC by U.S. companies. See “Joint Information Circular – Notice to United States Securityholders”. A mineral resource estimate is based on information on the geology of the deposit and the continuity of mineralization. Assumptions concerning economic and operating parameters, including cut-off grades and economic mining widths, based on factors typical for the type of deposit, may be used if these factors have not been specifically established for the deposit at the time of the mineral resource estimate. A mineral resource is categorized on the basis of the degree of confidence in the estimate of quantity and grade or quality of the deposit, as follows: inferred mineral resource: Under CIM standards, 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. indicated mineral resource: Under CIM standards, 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. measured mineral resource: Under CIM standards, a measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
mineralization		Minerals of value occurring in rocks.
Mt		A million tonnes.
ore		A natural aggregate of one or more minerals which, at a specified time and place may be mined, processed and sold at a profit, or from which some part may profitably be separated.
Ounce / oz		Troy ounce, equal to approximately 31.103 grams.
outcrop		An exposure of rock at the earth’s surface.
Paleozoic		The geological era ranging from 600 million to 230 million years ago.
phyllite		A cleaved metamorphic rock having affinities to both schists and slates.
Pleistocene		A division of the Tertiary period.
Pliocene		A division of the Tertiary period.
ppb or parts per billion		A unit of measurement: 1ppb = 0.001 gram/Tonne
ppm or parts per million		A unit of measurement which is 1000 times larger than ppb or “parts per billion” (1ppm = 1000ppb =1 gram/Tonne).
pseudomorph		One mineral occurring in the crystal form of another.
quartz		A common rock-forming mineral (SiO2) that is frequently a dominant constituent of veins, especially those containing gold and silver mineralization.
Quaternary		The latest period of geological time in the stratigraphic column from 0 to 2 million years ago.
RC		Reverse Circulation drilling.
rhyolite		A silica-rich volcanic rock chemically equivalent to granite. Usually light colored, very fine-grained or glassy-looking.
Sb		The elemental symbol for antimony.
scorodite		A hydrated iron arsenate, oxidation product of arsenopyrite.
sericite		A white variety of muscovite mica.
Silicification / silicified		Complete or partial replacement of a rock by quartz, often during hydrothermal alteration.
Stibnite		An antimony sulphide mineral.
stockwork		A densely packed network of small veins, veinlets or fissures which may be filled with mineralized material.
strike		Azimuth of a plane surface aligned at right angles to the dip of the plane used to describe the orientation of stratigraphic units or structures.
Tertiary		The geological period extending from the end of the Cretaceous (65 million years ago) to approximately 2 million years before the present time.
Tl		The elemental symbol for thallium.
Tonne		A metric tonne, 1000 kilograms or 2,204.6 pounds.
travertine		Calcium carbonate deposited by precipitation from carbonate-saturated waters, particularly from hot springs.
UTM		The UTM (Universal Transverse Mercator) system is a world-wide geographic coordinate system defined in meters.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report contains “forward-looking statements” within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), which represent expectations or beliefs of the Company about future events. These statements can be identified generally by forward-looking words such as “expect”, “believe”, “anticipate”, “plan”, “intend”, “estimate”, “may”, “will” or similar words. Information concerning the interpretation of drill results and mineral resource estimates also may be deemed to be forward-looking statements, as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed. Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those described in Item 3.D. of this Annual Report under the heading, “Risk Factors”, and elsewhere in this Annual Report.

The Company’s forward-looking statements contained in this Annual Report are made as of the respective dates set forth in this Annual Report. Such forward-looking statements are based on the beliefs, expectations and opinions of management as of the date the statements are made. The Company does not intend to update these forward-looking statements. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

PART I

Item 1.

Identity of Directors, Senior Management and Advisers.

Directors and Senior Management.

Not Applicable

Advisers.

Not Applicable

Auditors.

Not Applicable

Item 2.

Offer Statistics and Expected Timetable.

Not Applicable

Item 3.

Key Information.

Selected Financial Data.

The following tables set forth and summarize selected consolidated financial data for the Company, prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). The tables also summarize certain corresponding information prepared in conformity with United States generally accepted accounting principles (“U.S. GAAP”). Canadian GAAP, as applied to the Company, materially differs from U.S. GAAP, as set forth in Note 16 to the Consolidated Financial Statements of the Company.

The information presented in the tables was extracted from the financial statements of the Company. The information presented for the fiscal years ended December 31, 2005, 2004 and 2003 and as at December 31, 2005, 2004 and 2003 was extracted from financial statements of the Company which were audited by Amisano Hanson, Chartered Accountants.

The selected financial data should be read in conjunction with Item 5, “Operating and Financial Review and Prospects” and in conjunction with the Consolidated Financial Statements of the Company and the Notes thereto contained elsewhere in this Annual Report. The Company’s fiscal period ends on December 31 of each year.

The following is a summary of certain selected financial information for the Company’s most recently completed fiscal year and for the Company’s four preceding fiscal years.

Canadian GAAP

Under Canadian GAAP applicable to junior mining exploration companies, mineral exploration expenditures are deferred on mineral properties under exploration or development until such time as it is determined that further exploration or development is not warranted, at which time the property costs are written-off. Under U.S. GAAP, all exploration expenditures are expensed until an independent feasibility study has determined that the property is capable of economic commercial production. The following information has been reconciled for U.S. GAAP. See Note 16 to the Consolidated Financial Statements of the Company.

	(CDN$ in 000, except per share data)
	As at 12/31/05	As at 12/31/04	As at 12/31/03	As at 12/31/02	As at 12/31/01
Working Capital	13,765	17,071	14,795	1,952	2,744
Resource Properties (Cdn GAAP)	13,732	16,820	7,657	6,714	5,087
Resource Properties (US GAAP)	0	0	0	0	0
Long Term Debt (Cdn GAAP)	0	0	0	0	0
Long Term Debt (Cdn GAAP)	0	0	0	0	0
Shareholder’s Equity (Cdn GAAP)	(27,881)	(34,265)	(22,606)	(8,707)	(7,897)
Shareholders’ Equity (US GAAP)	(14,149)	(17,445)	(14,948)	(1,993)	(2,810)
Total Assets (Cdn GAAP)	28,168	34,612	23,108	8,826	8,105
Total Assets (US GAAP)	14,436	17,792	15,450	2,112	3,018

Revenue	0	0	0	0	0
Net Income(Loss) (Cdn GAAP)	(6,679)	(3,908)	(1,722)	(643)	(1,106)
Earnings(Loss) Per Share (Cdn GAAP)	(0.13)	(0.09)	(0.06)	(0.04)	(0.07)
Net Income(Loss) (US GAAP)	(3,592)	(13,070)	(2,666)	(2,384)	(4,419)
Earnings (Loss)Per Share (US GAAP)	(0.07)	(0.29)	(0.09)	(0.14)	(0.31)
Dividends Per Share (Cdn GAAP)	0	0	0	0	0
Dividends Per Share (US GAAP)	0	0	0	0	0
Wtd.Avg.No.Shares (Cdn GAAP)	52,899	44,917	28,446	18,056	14,860
Wtd.Avg.No.Shares (US GAAP)	52,899	44,917	28,446	17,306	14,110

Except where otherwise indicated, all information extracted from or based on the Consolidated Financial Statements of the Company are presented in accordance with Canadian GAAP.

No dividends have been declared in any of the years presented above.

Exchange Rate Information

In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars. References in this document to “$” and “CDN$” refer to Canadian dollars, unless otherwise specified; and references to “US$” refer to US dollars.

The following table sets forth the high and low rates of exchange for the Canadian dollar, expressed as Canadian dollars per U.S. dollar, for each month during the previous six months and the average of such exchange rates during the five most recent years ended December 31. The average rates presented in the table below represent the average of the exchange rates on the last day of each month during a year for the past five fiscal years. Exchange rates represent the noon buying rate in New York City for cable transfers payable in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York. The noon rate of exchange on June 8, 2006 as reported by the United States Federal Reserve Bank of New York for the conversion of Canadian dollars into United States dollars was US$1.00 = CDN$1.1233.

	Exchange Rate U.S. Dollars into Canadian Dollars
	High		Low
Month ended May 31, 2006		$1.1232		$1.0989
Month ended April 30, 2006		$1.1718		$1.1203
Month ended March 31, 2006		$1.1722		$1.1320
Month ended February 28, 2006		$1.1577		$1.1379
Month ended January 31, 2006		$1.1726		$1.1436
Month ended December 31, 2005		$1.1736		$1.1507

	Average
Fiscal year ended December 31, 2005	$1.2083
Fiscal year ended December 31, 2004	$1.3015
Fiscal year ended December 31, 2003	$1.4015
Fiscal year ended December 31, 2002	$1.5704
Fiscal year ended December 31, 2001	$1.5484

Capitalization and Indebtedness.

Not Applicable

Reasons for the Offer and Use of Proceeds.

Not Applicable

Risk Factors.

No Guarantee of Success of Business

There is no assurance that the business of the Company will be successful.

Foreign Countries and Regulatory Requirements

The mineral projects in which the Company has an interest are located in Nicaragua and Guatemala. Mineral exploration and mining activities in Nicaragua and, Guatemala may be affected in varying degrees by political instability and government regulations relating to the mining industry. Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business. Future operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriations of property, environmental legislation and mine safety.

Exploration and Mining Risks

The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. At present, there are no known bodies of commercial ore on any of the Company’s properties and the proposed exploration programs are an exploratory search for ore. Unusual or unexpected formation, formation pressures, fires, power outages, labour disruptions, flooding, explorations, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the conduct of exploration programs. Although the management of the Company has experience in the exploration and development of mineral properties, it has relied on and may continue to rely upon consultants and others for exploration and operating expertise. The economics of developing mineral properties is affected by many factors including the cost of operations, variation of the grade of minerals mined and fluctuations in the price of any minerals produced.

Financing Risks

The Company has not yet established work programs for its properties and the Company may not have enough financial resources to complete the work programs on all of its properties. There is no assurance that sufficient funding will be available to it for all of such work programs or for the further properties that the Company may acquire. There can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of its projects with the possible loss of such properties.

Uninsurable Risks

Hazards such as unusual or unexpected formations and other conditions are involved in mineral exploration and development. The Company may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it may elect not to insure. The payment of such liabilities may have a material, adverse effect on the Company’s financial position.

Titles to Property

While the Company has obtained the usual industry standard title reports with respect to its properties which confirms ownership and that there are no registered encumbrances against the properties, this should not be construed as a guarantee of title. The properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects or native land claims.

Permits and Licenses

The operations of the Company may require licenses and permits from various governmental authorities. There can be no assurance that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects.

Mineral Prices

Even if the Company’s exploration programs are successful, factors beyond the control of the Company may affect the marketability of any minerals discovered. Metal prices have historically fluctuated widely and are affected by numerous factors beyond the Company’s control, including international, economic and political trends, expectations for inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and worldwide production levels. The effect of these factors cannot accurately be predicted.

Competition

The mining industry is intensely competitive in all its phases. The Company competes with many companies possessing greater financial resources and technical facilities than itself for the acquisition of mineral interests as well as for the recruitment and retention of qualified employees.

Item 4.

Information on the Company.

History and Development of the Company

The Company was incorporated under the name “Radius Explorations Ltd.” on September 9, 1997 pursuant to the British Columbia Company Act by registration of its Memorandum and Articles. On July 1, 2004, the Company and PilaGold Inc. amalgamated (the “Amalgamation”) under the British Columbia Business Corporations Act by registration of a Notice of Articles with the new name “Radius Gold Inc.”. See Item 4D, Property, Plants and Equipment, for information regarding capital expenditures made by the Company on its properties.

Business Overview.

The Company is a natural resource property exploration company in the exploration stage with no history of cash flows from operations. In 1997, it commenced activities by carrying out exploration work in the Yukon Territory, Canada. In 1999, the Company changed its focus to Latin America and acquired property interests in Mexico and Guatemala. In February, 2001, the Company and its joint venture partner, Barrick Gold Corporation, decided to discontinue exploration work on the El Salitre Project in Mexico. In 2003, the Company commenced exploration in Nicaragua, and as a result of the Amalgamation in 2004, acquired property interests in the Dominican Republic. In 2005, the Company commenced property investigations in Colombia and Argentina.

Currently, the Company has property interests in Guatemala, Nicaragua and Mexico. Its exploration activities are largely focused in Nicaragua and Mexico, with some ongoing low-level activity in Guatemala. (See Properties of the Company, below, and Note 5, Notes to the Financial Statements).

Presently, the Company is in the exploration stage and its properties do not contain a known commercially viable minable deposit. There is no assurance that a commercially viable mineral deposit exists on any of the Company’s properties, and further exploration is required before a final evaluation of the economic and legal feasibility is determined.

Organizational Structure.

The following table sets forth the name of each material subsidiary of the Company, the jurisdiction of its incorporation and the direct or indirect percentage ownership by the Company of such subsidiary.

Name	Date of Incorporation	Jurisdiction	Percentage Owned

Exploraciones Minera de Guatemala, S.A.	July 5, 1996	Guatemala	100%
Minerales Sierra Pacifico, S.A.	November 17, 1999	Guatemala	100%
Minerales de Nicaragua S.A.	November 18, 2002	Nicaragua	100%
Radius (Cayman) Inc.	January 31, 2005	Cayman Isl.	100%
Pavon (Cayman) Inc.	January 31, 2005	Cayman Isl.	100%
Geometalos Del Norte-Geonorte	May 2, 2005	Mexico	100%

Property, Plants and Equipment

The Company holds rights to properties in Guatemala, Nicaragua and Mexico, as set out in the following map:

[radiusgold20f2005001.jpg]

and more particularly described as follows:

Guatemala Properties:

Tambor Project

The El Tambor Property consists of 6 exploration concessions located in south-central Guatemala, as set out in the following map:

[radiusgold20f2005002.jpg]

(a)

La Laguna, Unidad Tipo, Santa Margarita, El Injerto and Carlos Antonio Concessions

In 2002, the Company acquired a 100% interest in the La Laguna concession. In 2004, the Company acquired a 100% interest (subject to a 2.5% net smelter returns royalty) in the Unidad Tipo, the Santa Margarita, El Injerto and Carlos Antonio concessions.

(b)

Progreso Property

The Company acquired the right to a 100% interest (subject to a 4% net smelter returns royalty) in the Progreso II to VII Concessions under an exploration lease and option to purchase agreement dated May 7, 2002, and amended October 14, 2004, with Entre Mares De Guatemala, S.A. The Company has incurred the minimum aggregate exploration costs required to be made by May 6, 2006 of US$800,000, and on May 5, 2006, the Company elected to purchase the property (which had been reduced by that date to just the Progreso VII Concession) for US$250,000. One-half of the 4% royalty may be purchased by the Company for US$2.0 million.

The Company entered into an agreement dated November 29, 2001 with Orogen Holding (BVI) Limited (“Orogen”), an affiliate of Gold Fields Explorations Inc., pursuant to which Orogen acquired the right to acquire a 55% beneficial interest in the Tambor Project in consideration for incurring exploration expenses of at least US$5,000,000. Orogen subsequently conducted exploration work on the Tambor Project in the approximate amount of US$3,250,000.

Pursuant to an agreement dated November 19, 2003 with Orogen, the Company re-acquired from Orogen all of its interest in the Tambor Project in consideration for the issuance and delivery of 1,300,000 common shares of the Company (issued) to Orogen.

George A. Armbrust, PhD., CPG of the firm, Chlumsky, Armbrust and Meyer, LLC of Lakewood, Colorado, prepared a National Instrument 43-101 Technical Report compliant gold resource estimate on the Tambor Project for Radius. That report is dated January 7, 2004 and there are no material changes to the property since the date of this report. The Technical Report has been filed in SEDAR.com. The following is a summary, prepared by Greg Smith, B.Sc., PGeo of the Technical Report, prepared by George A. Armbrust, PhD., CPG.

Exploration and Development History

The Tambor Project is located in south-central Guatemala. Tambor is a metasediment and greenstone hosted, structurally controlled mesothermal lode gold deposit. Quartz-gold-arsenopyrite mineralization occurs in veins and breccias localized by kink bands in sheared host rocks. The project hosts at least 13 gold-bearing mineral occurrences spread over a 14km by 6km area.

The Tambor property received progressively more-detailed work programs between 2000 and 2003. The bulk of the work was completed by Gold Fields Ltd who formed a joint venture with The Company in 2001 to explore the property. The initial exploration program included the establishment of 100 line-kilometers of grid and soil sampling. A total of 3,958 soil samples were collected over an 11 square kilometer area. The grid area was also geologically mapped and over 1,400 rocks samples were collected along the 7-kilometer gold trend.

Early work focused on the Bella Vista area, including the Laguna North, Laguna South and JNL targets and on the Tierra Blanca area, all in the western end of the JV property. In the Bella Vista area, 15 hand trenches were excavated on six of the nine known soil anomalies.

During 2002, Gold Fields conducted initial scout drilling on seven areas, mainly on the western end and east end of the JV properties. Of these seven areas, only the Laguna North area has received follow up drilling. In the final months of 2002, high grade quartz vein hosted mineralization with visible gold was located at Guapinol South. Hand excavated trenches there returned values up to 10.1m of 31g/t Au in trench GP-5.

In early 2003, Gold Fields made a new high grade discovery 200 m east of the Guapinol South veins in an area called Poza del Coyote. The first trench on this zone returned a high-grade core of 10.93m at 66.83 g/t Au within a broader lower grade mineralized zone. An initial ten-hole reverse circulation (RC) drilling program returned high grade intercepts in five holes with moderate-grade intercepts in four additional holes.

After completing the first stage drilling at Poza del Coyote, Gold Fields moved a core drill onto the Guapinol South area and had completed 31 core holes by the end of July 2003. About half the holes had high grade intercepts, although some were fairly narrow (1.5 to 2.0 meter core length). The core drill was then moved to Poza del Coyote and the Cliff Zone between there and Coyote. The results from the cliff zone returned some high grade intercepts.

In late 2003, the Company commissioned Chlumsky, Armbrust and Meyer (CAM) to complete a resource estimate on Tambor which was completed (see above).

During February and March 2004, the Company completed a geophysical orientation survey over the Tambor gold project in Guatemala. The survey was designed to test the suitability of a new 3D Induced Polarization (IP) method to locate additional mineralization. At total of 18 line km of surveying was completed on the Guapinol and Laguna Norte zones, over drill sections containing known mineralized intercepts. Initial interpretations suggest that there is a correlation between the known geochemical anomalies and the 3D IP geophysical anomalies.

Management is currently investigating various options for advancing Tambor in the context of recent developments in the gold price. Options include: i) additional exploration of the property by Radius, with bulk sampling of the higher grade quartz lenses completed from limited underground development; and ii) looking for another joint venture partner, such as an established “mid-cap” gold producer, to advance the project to development. The broader land package at Tambor also includes a number of high priority gold-in-soil anomalies which have yet to be drill tested and that have potential to add to the known resources at Tambor.

Geology, Mineral Deposits and Resources

Current understanding of the gold mineralization on the Tambor property suggests that it is a classic example of an orogenic (“mesothermal”) lode gold deposit. Specifically, Tambor is a metasediment and greenstone hosted, structurally controlled mesothermal lode gold deposit. Quartz-gold-arsenopyrite mineralization occurs in veins and breccias localized by kink bands in sheared host rocks. The project hosts at least 13 gold-bearing mineral occurrences spread over a 14km by 6km area.

Gold mineralization is associated with the convergence of the North American and Caribbean plates along major structures which evolved from transpressional to transcurrent movement. Mineralization is post-peak metamorphism. The gold zones are structurally controlled discordant veins, quartz-crush zones and vein stock works associated with shear zones.

Gold Fields prepared several resource estimates for Tambor JV properties but has not made them public. The main part of the resource is in the Guapinol South, Cliff and Poza del Coyote area.

In December 2003, Chlumsky, Armbrust and Meyer LLC (CAM) of Lakewood Colorado completed a NI43-101 compliant gold resource estimate for the Tambor Gold Project. Tambor contains 216,000 ounces of gold in inferred resources and 57,800 ounces in indicated resources, according to the independent resource estimate prepared by George A. Armbrust, Ph.D. CPG, Kenneth L. Meyer, Robert L. Sandefur P.E. and William Walker, PhD of CAM.

Significantly, CAM commented that there are at least 2 major gold-in-soil anomalies with associated anomalous rock samples that have yet to be drill tested: a substantial strike length of strong gold-in-soil geochemistry associated with gold values in rock samples exists to the west of the Guapinol South-Cliff Zone trend, and another similar zone occurs roughly 1 km to the north of, and parallel to, Guapinol. Accordingly, CAM states that “it is considered likely that the current resource (at Tambor) could be doubled or tripled or even more with a concerted drilling program”.

CAM’s resource estimate is tabulated below:

Cautionary Note to U.S. Investors concerning estimates of Indicated Resources

This section uses the term “indicated resources”. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

Tambor: Indicated Resource Estimate
Area	Tonnes	Grade (g/t Au)	Contained Gold (Ounces)
Guapinol South Cliff Zone	336,000	3.910	42,200
Poza del Coyote	120,000	4.024	15,500
Total	456,000	3.940	57,800

Cautionary Note to U.S. Investors concerning estimates of Inferred Resources

This section uses the term “inferred resources”. We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. “Inferred resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

Tambor: Inferred Resource Estimate
Area	Tonnes	Grade (g/t Au)	Contained Gold (Ounces)
Guapinol South Cliff Zone	368,000	5.325	63,000
Poza del Coyote	228,000	4.219	31,000
Laguna North	1,951,000	1.950	122,200
Total	2,547,000	2.641	216,200

There has been no mining surface or underground development conducted at Tambor other than surface exploration trenching of soil anomalies.

Marimba and Holly/Banderas Projects

(a)

Marimba Project

The Marimba Project consists of two exploration concessions located in southeastern Guatemala covering approximately 23,500 hectares. One of the concessions was acquired by the Company by way of a purchase price of $21,986 (US$13,750) and the other three concessions were acquired by way of applications for exploration concessions.

During the year ended December 31, 2002, the Company entered into an option agreement with PilaGold Inc., whereby PilaGold Inc. could earn a 60% interest in the project. As a result of the Amalgamation on July 1, 2004, the terms of the agreement have been deemed satisfied.

No exploration work has been carried out by the Company on these concessions in the last 12 months. During the year ended December 31, 2005, the Company decided, based on its exploration results to date, to do no further exploration on the property, and has written off $1,515,242 in costs to operations.

(b)

Holly/Banderas Project

The Company holds a 100% interest in the Holly/Banderas Project which consists of three exploration concessions covering approximately 25,300 hectares.

During the year ended December 31, 2003, the Company entered into an option agreement with PilaGold, whereby PilaGold could earn a 60% interest in the project. Pursuant to the amalgamation agreement, effective July 1, 2004, the terms of the agreement were deemed satisfied.

During the year ended December 31, 2005, the Company explored additional areas around Holly/Banderas and has written-off $3,993 of these costs to operations.

No Resource or Reserve has been defined within the Holly/Banderas Project. No underground exploration has occurred on the Holly/Banderas Project. No surface equipment or plant exists at the Holly/Banderas Project.

Option Agreement with Glamis Gold Ltd. (“Glamis”)

During the year ended December 31, 2004, the Company entered into an agreement with Glamis, giving Glamis an option to explore and develop the Holly/Banderas and Marimba properties. The agreement gives Glamis the right to acquire a 51% interest in the properties by spending US$4 million over a four-year period. To earn this interest, Glamis must:

Incur US$250,000 in exploration or development expenditures on the properties in the first 12 months following receipt of all governmental permits necessary to carry out the proposed exploration program; and

II)

Spend not less than US$4 million in exploration expenditures within four years from the effective date, including a minimum US$250,000 during each of the second, third and fourth years.

In June 2006, Glamis advised that the Company that it had relinquished its option on the Holly/Banderas and Marimba properties. Management is currently considering how best to advance the Banderas project.

Nicaragua Properties:

Since 2003, the Company has conducted exploration on a number of mineral concessions in Nicaragua. As at June 8, 2006, the Company had been granted title to 12 of the concessions with the remaining 23 applications for title pending.

San Pedro Project

The San Pedro Project lies in east central Nicaragua. Access to San Pedro is via truck from Copalar to San Pedro (2 hrs), boat to La Estrelia (20mins), followed by a 5km horse ride to the camp, 5km. From the camp it is possible to walk to all of the showings in the northwest of the San Pedro project, which cover a 2km by 1.5km area. In the dry season you can drive to about 1km west of the zone.

The San Pedro Project is comprised on one concession, as shown on the following map:

[radiusgold20f2005003.jpg]

Exploration and Development History

The area was initially visited in 2004 by Radius staff who were following-up on local reports of gold. The Company’s geologists have uncovered a number of trenches and adits most of which have collapsed either at the portal or further in. There appears to have been an early phase of exploration and small-scale mining which may date from the 1930s, followed by intensive surface trenching sometime around 1980.

The Company initiated a second round of exploration in the first quarter of 2005 focusing on expanding the limits of the known mineralization and completing detailed mapping and soil and rock geochemistry across key areas of the property. The work included ground geophysics, completion of the soil grid and follow-up of the anomalies, trenching and discovery of new zones at Bella Vista and Dyke Zone.

Geology, Mineral Deposits and Resources

Panning of stream sediments has defined an area of gold in stream sediments over a north-northwest trending area measuring roughly 12km by 3km. Radius’ field crews subsequently discovered gold-mineralized quartz-adularia epithermal veins in three northwest-southeast trending zones within a 5km by 12km area. The PM Zone in the northwest has seen the most exploration, while the Las Minas and Feliz Zones to the southeast are at an earlier stage.

Epithermal gold mineralization occurs as massive quartz to banded quartz-adularia veins and associated quartz vein stockwork. Alteration minerals, vein textural evidence and exposures of silica scinter indicate that the outcropping veins are at a high-level in the mineralizing system. The gold-mineralized structures are hosted by tuffs in a caldera setting cut by regional northwest-southeast trending extensional faults, and intruded by a rhyodacitic dome field. Visible gold can be panned from most streams within the caldera and stream sediment sampling has returned a strong gold anomaly within and beyond the area of known occurrences. Mineralization is open in all directions.

At the PM Zone two parallel veins have been defined over a strike length of 1.8km. Recent reconnaissance trenching has returned higher grade results of 12.9g/t Au over 2.5m in trench PM1-A8, and 14.6g/t Au over 2.5m in trench PM1-B1. Soil sampling in this area has defined a consistent 300m wide +300ppb Au anomaly for 1,000m, open to the north. Pitting and trenching within the anomaly between the known veins has exposed additional 1m wide veins and a strong stockwork zone raising the possibility for bulk mineable target in this area. Follow-up of soil anomalies elsewhere within the PM Zone has led to the discovery of several new veins in the zone. Assay results are pending for recent sampling in the PM zone.

[radiusgold20f2005004.jpg]

Exploration of the Las Minas and Feliz Zones to the south of the PM Zone is at an early stage. Sampling of rocks in float and outcrop have returned gold grades ranging from trace to 38.2g/t Au outlining a 2km long, northwest-southeast trending mineralized structural zone at Las Minas. Trenching of the best results at the northwest end of this zone will start this month. Prospecting at the Feliz Zone has discovered 4 parallel veins in a 700m by 700m area partly ringed by rhyodacite intrusions. A grab sample of vein material from one of these veins assays 30.4g/t Au.

In May 2005, a single fence of holes was drilled across 300m of the northernmost PM Zone. Although stockwork bulk-mineable gold mineralization between the main vein structures was not discovered, the drilling did intersect several narrow but high-grade veins with gold results of 1.5m @ 17.5 g/t Au in hole SPDH-09 and 5.5m @ 5.5 g/t Au in hole SPDH-10. Because of poor core recovery, these results are qualitative and additional drilling using a larger rig is planned on these structures. The mineralized outcrop and gold-in-soil anomaly at the PM zone is roughly 2.5 km long, so most of the zone remains untested. Radius is in the process of obtaining government and community approval for a second phase of drilling. Hand trenching has been done on most of the zones. Highlights of recent trench results include:

Trench	Au g/t	Interval (m)
Buena Vista Zone
BV-1	13.8	8.4
Includes	61.2	1.1
BV-5	3.0	4.0
Includes	7.1	1.0
BV-6	1.1	2.4
and	1.6	2.7
and	1.5	2.8
BV-7	13.4	2.4
BV-8	1.6	9.0
Includes	2.3	4.7
BV-9a	74.8	0.5
BV-9b	16.5	0.3
Las Minas Zone
LM-3	68.9	0.3
Dyke Zone
TRDK-01	3.8	4.0
Includes	6.5	2.0
TRDK-02	4.8	2.4
Felix Zone
TRF-1	4.6	2.8

Exploration within the San Pedro region has discovered several gold mineralized veins associated with rhyolite domes in a 2km by 4km zone at Ubu Norte, 40km to the west. Chip sampling has returned values of 5.8g/t Au over 6m and grab sample values from trace up to 33g/t Au. Only limited exploration has been done here and the zone is open to the northeast.

The Company is seeking a joint venture partner to carry out an extensive drill program at the San Pedro property and continue exploring the region.

Natividad (formerly called El Pavon) Project
Joint Venture Agreement with Meridian Gold Inc. (“Meridian”)

Natividad is located in central Nicaragua, a 5 hour drive from Managua and about 1 hour from the town of Waslala. It outcrops on a main road and access to most parts of the project area is possible by foot or on horse back. It is located in a hilly agricultural region largely given over to cattle grazing. The original forest cover has been cut down over many years by slash and burn farmers. The details of the Natividad property, which consists of five of the Company’s granted concessions and four of the applications, are set out in the below map and table:

[radiusgold20f2005005.jpg]

	Name	Valid	Area (ha)	Details
1	Geminis	25 years	37,326	granted Feb. 11, 2004
2	Natividad	25 years	10,906	granted Feb. 11, 2004
3	Natividad II	25 years	40,525	granted August 20, 2004
4	El Milagro I	25 years	16,484	granted May 7, 2004
5	El Milagro II	25 years	43,131	granted Feb. 11, 2004
6	La Rowena	pending	45,040	applied for August 8, 2003
7	Geminis II	pending	11,824	applied for Oct 6, 2003
8	El Progreso	Pending	29,174	applied for Feb. 6, 2004
9	La Esperanza	pending	48,840	applied for Sept.10, 2003

During the year ended December 31, 2004, the Company entered into a joint venture agreement with Meridian, giving Meridian the option to acquire a 60% interest in the Natividad property. In order to earn the interest, Meridian must:

Spend a minimum of US$3.5 million in exploration expenditures over the first two years of the agreement, and a minimum of US$1 million in each of years three and four;

ii.

Complete a positive feasibility study on the project; and

iii.

Make the cash payments set out below for its earned share of the property’s mineral resources.

Meridian may terminate the option after spending the US$3.5 million by providing 30 days prior written notice to the Company. If Meridian does not meet the US$3.5 million expenditures on or prior to the second anniversary date of the agreement, or Meridian withdraws from or terminates the agreement before making such committed expenditures, Meridian will pay to the Company the difference between the amount spent and the commitment of US$3.5 million in cash.

Upon completion of a positive feasibility study, Meridian will pay to the Company a predetermined price for its earned share of the mineral resources. Once Meridian has purchased 60 percent share of the mineral resources, it will have acquired an undivided 60% interest in the property. The price to be paid by Meridian to the Company for the resources will be:

$40 per ounce of gold if average gold prices during 30 days prior to the fourth anniversary date are less than $400 per ounce;

ii.

$50 per ounce of gold if average gold prices during 30 days prior to the fourth anniversary date are equal to or greater than $400 per ounce but less than $500 per ounce;

iii.

$60 per ounce of gold if average gold prices during 30 days prior to the fourth anniversary are equal to or greater than $500 per ounce; and

iv.

$0.50 per ounce of silver if average recoverable silver grades for the resources exceed 100 grams per tonne.

When Meridian has exercised the option and acquired a 60 percent interest in the property, a joint venture will be established on a 60/40 basis.

Exploration and Development History

The vein system is a new discovery with little or no evidence of old mine workings or artisanal pits. It was discovered by the Company’s prospecting teams in 2003 following up an old report of quartz veins in the area. Following the discovery of Natividad, the Company accumulated a large land position in the area covering what the Company’s geologists believed to be the major controlling geological structures.

The Company’s work at Natividad has defined at least half a dozen major veins or float trends, totaling many kilometers of strike length of potentially mineralized structures. These veins or trends include:

Pavon North
Pavon Central / South
Las Brisas
Manceras
Astrid
Arco Iris
Las Valles

Most work has been completed on the Pavon North and Pavon Central / South veins where a trenching and rock-saw channel sampling program returned excellent results with a best interval of 40.7g/t Au over 8.35m. Selected highlights of the trenching program conducted by Radius are given in the table below.

Trench No.	Sample	Interval (m)	Au g/t
Pavon Central
TRP-2	Original Sample	8.4	21.7
	New Rock Saw Sample	8.4	40.7
	Including	5.7	58.4

TRP-4	Original Sample	12.0	3.8
	New Rock Saw Sample	12.0	3.1
	Including	5.0	4.9

TRP-6	Original Sample	7.6	6.1
	New Rock Saw Sample	8.3	5.4
	Including	4.8	8.5

TRP-7	Original Sample	5.7	2.3
	New Rock Saw Sample	5.0	2.7

TRP-13	Original Sample	17.8	2.0
	New Rock Saw Sample	17.8	0.9
Pavon North
TRN-1	Original Sample	16.0	7.1
	New Rock Saw Sample	16.0	8.1
	including	8.0	14.2

TRN-2	Original Sample	18.6	1.8
	New Rock Saw Sample	18.6	2.3
	including	5.9	5.3

TRN-3	Original Sample	2.0	1.3
	New Rock Saw Sample	2.0	1.7

TRN-4	Original Sample	11.8	1.8
	New Rock Saw Sample	11.8	1.8

TRN-5	Original Sample	7.3	2.4
	New Rock Saw Sample	7.3	2.7
	including	2.0	5.8

TRN-6	Original Sample	10.3	1.8
	New Rock Saw Sample	10.3	2.7
	including	1.8	9.0

TRN-13	Original Sample	3.2	5.4
	New Rock Saw Sample	3.2	8.7

The Company has also identified 2 additional trends named Jinji and Babaska although no significant work has been done on these structures so far. The Jinji vein can be traced in outcrop and float over 2km. It is similar to the Pavon South vein with variable widths from 2m. To the west, the Babaska has been mapped over a 4km strike in float and outcrop exhibiting both fine grained banded and chalcedonic quartz vein material.

In June 2004 Radius drilled several diamond drill holes from five drill sites, all of which cut significant thicknesses of epithermal quartz vein. As part of the permitting process for a major first stage drill program at Natividad, scheduled to start in the first quarter of 2005, the Ministry of the Environment in Nicaragua allowed Radius to drill a small number of geotechnical holes at Natividad on the Central and North veins to determine the general dip of main vein structure(s) to allow proper siting of access roads and drill pads.

All of the drill holes intersected the target veins as planned, showing continuity of the veins both along strike and down dip. In general, the veins have a steep westerly dip ranging from 65º to 77º, but may be locally vertical as in PADH-04. The results include best intersections of 16.8m grading 10.3 g/t Au and 5.8m grading 11.3 g/t Au from holes located 4km apart testing the same mineralized structure. Core recoveries were generally good in the mineralized zone, PADH-3 (49%) and PADH-5 (57%) were the exceptions.

The drill results (see Table below) reflect the overlying trench results with one important exception: PADH-1. This hole - which returned 11.3 g/t Au over 5.8m - was drilled at Pavon South where trench results have returned only modest grades. This demonstrates the potential for robust colloform banded quartz-adularia veins below weakly developed veining at surface, and may confirm that much of the exposed mineralization at Pavon South represents a high level of exposure of the epithermal system. The main implication of PADH-1 is that the entire strike length of the Pavon North and South veins must be systematically drill tested to identify the high grade ore bodies.

Hole Number	From	To	Intersection (m)	Au Grade (g/t)
PADH-1	29.0	40.0	11.0	6.7
*including*	34.2	40.0	5.8	11.3
PADH-2	69.2	70.0	0.8	5.8
PADH-3	43.0	50.6	7.6	1.4
PADH-4	50.0	52.3	2.3	1.1
PADH-5	13.5	29.9	16.4	6.9
*including*	21.6	29.3	7.6	12.5
PADH-5b	7.6	24.4	16.8	10.3
*including*	21.9	24.4	2.5	57.3
PADH-6	52.7	64.3	11.6	2.2
including	57.3	58.3	1.0	7.3
PADH-7	59.4	61.0	1.6	3.2

*Recovery over mineralized interval

Meridian commenced their drill program at the end of March 2005 and completed 43 holes (6,396m) by mid-year. A full table of all significant intersections is given below. Meridian’s work is beginning to outline 2 distinct >5g/t Au “pay shoots” at Natividad. These have been informally named the Pavon Norte and the Ahumada shoots. Ahumada has been outlined by 5 diamond drill holes: NAT013, 017, 018, 020 and PADH-1 (from Radius’s 2004 drilling). At a 1g/t Au cut off, a weighted average intersection of these 5 holes is 23.7 g/t Au over 2.7m. The Pavon Norte shoot is outlined by holes NAT05-025 to 029 and PADH5 and 6. At the same cut off, a weighted average for these holes is 9.6 g/t Au over 1.7m. This zone is presently open to the south with the results from NAT05-033 to 035, which test an additional 750m of strike length, pending. Additional exploration is required to confirm potential strike length, down dip extent and width of these and other zones within the property.

Four holes, totaling 278m, were drilled in Pavon Central. Two reached the target zone (NAT05-009 and 010 which intersected vein/stockwork zones 6.7m and 24.3m thick, respectively). Unfortunately, the wide zone in hole NAT05-010 was drilled with BQ core that returned less than 50% average recovery, with many intervals below 10%. Hole NAT05-008, started with NTW core, was stopped at 68m before the main vein zone was intersected after it cut a wide flow-banded rhyodacite dike 50m above the projected vein intercept. The hole has been re-entered and reamed and larger diameter core drilling has been drilled, and results are pending. Hole NAT05-001 was stopped for environmental reasons before intersecting the vein zone. Three holes drilled on the high grade north end of Pavon Central area awaiting results.

Drilling stopped mid-year to allow collation of the information received up to that point in anticipation of a second phase of drilling at Natividad. Exploration field work focused on identifying drill targets at the La Patriota system 25km to the south of Navidad and on the Navidad II license to the north. Both areas have returned vein-style mineralization from preliminary exploration and will be mapped and prospected in detail to identify future drill targets within the joint venture land package. A high resolution magnetic and radiometric survey recently flown over the Joint Venture land will be interpreted and used to help identify prospective geological, alteration, and structural features to guide further exploration of the area.

In May 2006, Meridian commenced a second phase drill program, consisting of roughly 4,800m of core drilling on priority targets. Drilling is ongoing and will first test targets on the Ahumada, Pavon Norte, Las Brisas, Manceras, Babaska, Pavon Central and Pavon Sur veins. Roughly 3,500m are planned on these veins. An additional 1,300m of coring are planned for new targets within the joint venture concession area.

DRILL HOLE	FROM	TO	INTERVAL (m)	Au g/t*
Pavon Sur vein
NAT05-001	Hole stopped before hitting vein zone
NAT05-002	31.08	32.91	1.83	1.4
NAT05-003	71.97	73.15	1.18	1.5
NAT05-004	88.44	89.75	1.31	4.8
NAT05-005	73.15	74.67	1.52	1.4
NAT05-006	92.96	93.68	0.72	1.7
NAT05-007				NSV
Pavon Central Vein
NAT05-008	Hole abandoned
NAT05-008a	Results pending
NAT05-009	48.76	50.9	2.14	1.2
NAT05-010	69.95	72.37	2.42	1.1
	80.16	82.45	2.29	1.2
El Cielo Vein
NAT05-011				NSV
NAT05-012				NSV
Ahumada Vein
NAT05-013	48.02	57.91	9.89	22.2
including	48.76	50.79	2.03	95.4

NAT05-014				NSV
NAT05-015	3.55	4.11	0.56	1.6
NAT05-016				NSV
NAT05-017	43.22	49.07	5.85	5.4
including	47.55	49.07	1.52	14.5
NAT05-018	31.70	40.60	8.90	1.5
	46.5	53.15	5.08	3.27
NAT05-019				NSV
NAT05-020	72.89	77.48	4.59	6.4
including	75.48	77.48	2.00	11.4
Las Brisas Vein
NAT05-021				NSV
NAT05-022	190.07	191.95	1.88	8.0
	220.31	225.55	5.24	5.1
including	224.02	225.55	1.53	11.7
NAT05-023				NSV
Pavon Norte Vein
NAT05-024				NSV
NAT05-025	98.68	101.6	2.92	2.5
	104.11	105.35	1.24	5.2
	109.42	110.40	0.98	4.5
NAT05-026	44.60	46.00	1.40	1.0
	50.50	55.00	4.50	1.0
	66.00	67.64	1.64	2.5
	70.10	75.90	5.80	3.0
including	73.00	74.50	1.50	6.1
NAT05-027	16.76	21.62	4.86	2.8
	32.76	35.50	2.74	6.7
	36.80	37.60	0.80	2.0
	37.60	38.10	0.50	5.5
NAT05-028	52.96	55.70	1.40	2.5
	59.08	61.88	2.80	5.5
NAT05-029	103.05	111.25	6.96	2.58
NAT05-030				NSV
NAT05-031				NSV
NAT05-032				NSV
NAT05-033				NSV

*NSV = no significant values

Geology, Mineral Deposits and Resources

The Pavón North and Central veins are classic examples of the low-sulphidation epithermal type of gold deposit. It is hosted by two principal rock types, dacite porphyry and moderately welded andesitic ignimbrite flows.

The Pavón North vein trends roughly 160º and can be traced on surface for many hundreds of meters. Towards its southern end, it splits and the 120º trending North Splay branches off to the southeast. Between the North Splay and main North vein is a broad area of stockworking and silicification which constitute a bulk tonnage target.

The vein minerals in Pavon North are dominated by chalcedony, in part displaying crustification. At the highest outcropping part of the vein, the chalcedony and accompanying vein quartz underwent late-stage hydrothermal brecciation resulting in a loose fragmental texture.

In contrast, the Pavón Central vein contains abundant saccharoidal quartz and chalcedony, suggesting that the erosion level may be somewhat deeper. Indeed, Pavón North is 50-100m higher in elevation than Central. Both veins are characterized by colloform kaolinite after adularia bands.

Illite is the main alteration mineral within and proximal to both veins, although a lesser amount of smectite at Pavón North also suggests a shallower-level, lower-temperature position.

Massively silicified rocks marked by abundant drusy, quartz-lined cavities are observed locally in the Pavón North sector, mainly at the highest elevations, and may be the erosionally dissected remnants of a silicified horizon generated at one or more paleo-water tables. Such material is apparently absent at Pavón Central. In common with similar paleo-water table silicification elsewhere, metal contents are reportedly not anomalous. The friable acid-leached zone formed in the steam-heated environment above the paleo-water table appears to have been completely lost to erosion.

The remaining mineralized structures are traceable either as trails of vein boulders or as exposures of vein in creek beds. Initial indications from vein mineralogy are that the veins are exposed at a similar high level to Pavon North and Central. Recent reconnaissance trenching on the Astrid and Brisas veins has returned results of approximately 9m @ 9g/t Au and 6m @ 6g/t Au respectively.

In summary, Natividad is a highly prospective low-sulphidation epithermal vein system with the potential to host economic gold ore shoots. Although poorly exposed, the vein exposures in the Pavón North and Central trenches are robust and several (up to 8) metres wide. The abundance of chalcedony, especially in the North sector, and the remnants of a possible paleo-water table horizon both suggest shallow erosion and, hence, appreciable potential at depth.

Patriota Zone La Patriota is located approximately 25km southeast of the El Pavon Zone, also discovered by the Company. It appears to be related to the same north-south trending structural zone. To date, alteration and gold mineralization has been mapped and sampled along a strike length of over 1,200m. Eighteen reconnaissance chip samples were taken on three zones -- north zone central zone and the south zone. Results include; #53157-1.0m @ 33.0g/t Au and 100g/t Ag, #53158-2.0m @ 8.4g/t Au and 54g/t Ag, #53159-1.0m @ 81.4g/t Au and 86g/t Ag, #53162-2.0m @ 32.5g/t Au and 30g/t Ag, #53164-1.0m @ 14.7g/t Au and 135g/t Ag, #53165-0.5m @ 2.9g/t Au and 44g/t Ag, and #53168-2.5m @ 24.2g/t Au and 33g/t Ag.

No Resource or Reserve has been defined within the Natividad Proprerty. No underground exploration has occurred on the Natividad Property. No surface equipment or plant exists at the Natividad Project.

Nueva Guinea Gold Project

In September 2004, Radius announced the discovery of an epithermal gold system at Nueva Guinea in southeast Nicaragua. Highlights of Radius’s historic work at Nueva Guinea include channel sample TNG-01 which returned a high grade core of 14.3g/t over 4m within an broader interval of 9m grading 7.0g/t Au.

Radius’s field teams discovered two mineralized areas - Jerusalen and Jengibre - which are roughly 20km apart. The Jerusalen area consists of a series of northwest-trending veins occurring in a zone approximately 2.5km x 2.5km and open along strike and to the northeast. A large NW- SE-trending siliceous structure, traceable for over 1200m, cuts across the centre of the Jerusalen area. Reconnaissance panel samples, which represent a 10m by 10m area, have returned up to 3.7g/t Au. Initial soil sampling lines over the area highlighted other anomalies which have yet to be followed-up. In the Jengibre area, several float trails over an area of 1km by 2km returned grab sample results grading up to 5g/t Au.

Additional exploration is planned to identify the potential size of the Nueva Guinea system and to define drill targets.

No Resource or Reserve has been defined within the Nueva Guinea Gold Proprerty. No underground exploration has occurred on the Nueva Guinea Gold Property. No surface equipment or plant exists at the Nueva Guinea Gold Project.

Mexico Properties:

Amatista Project

During the year ended December 31, 2005, the Company acquired the right, subject to regulatory approval, to earn a 100% interest in the Amatista epithermal gold-silver project, a 13,735 hectare mineral exploration property within the historical mining area of San Francisco. In order to earn the intersest, the Company was required to make cash payments and share issuances over a three-year period. As at December 31, 2005, the Company had paid US$50,000. Subsequent to December 31, 2005, the Company decided that no further work was warranted and relinquished its options on this project.

La Fruita and El Mole Concessions

During the year ended December 31, 2005, the Company acquired by staking at a cost of $43,407, the La Fruita and El Mole concessions.

The El Mole concession in central Oaxaca was acquired on the basis of anomalous Au and Ag samples within Mexican government sediment samples. The geology consists of lake sediments with interbedded volcanics and chert horizons, and has not returned any anomalous results from rock sampling to date. The concession will be dropped.

The La Fruta concession covers strongly altered rocks with locally anomalous Au geochemistry. After some initial work, the license has been reduced to cover the core of the alteration and further work will be done to assess the potential. The source of the alteration is still unexplained.

Regional Exploration

In southern and western Mexico, Radius’s teams are actively conducting regional reconnaissance and at the same time pursuing third party properties.

Radius has commissioned a UK-based consultancy to complete a major Landsat remote sensing study (roughly 8 Landsat scenes) covering a large part of central and southern Mexico. The study will involve clay-iron anomaly selection and a structural geological interpretation to highlight potentially favourable target zones. Ground follow-up of the anomalies generated by this study is expected to start in the third quarter of 2006.

No Resource or Reserve has been defined within the La Fruita and El Mole Concessions. No underground exploration has occurred on the La Fruita and El Mole Concessions. No surface equipment or plant exists at the La Fruita and El Mole Concessions.

Item 5.

Operating and Financial Review and Prospects.

Overview

At the date of this Annual Report, the Company has not been able to identify a known body of commercial grade ore on any of its properties, and the ability of the Company to realize the costs it has incurred to date on these properties is dependent upon the Company being able to identify a commercial ore body, to finance its exploration costs and to resolve any environmental, regulatory or other constraints which may hinder the successful development of the property, or being able to realize the costs incurred on a subsequent disposal of the property.

The following discussion and analysis of the financial condition and operating results of the Company for the three years ended December 31, 2005, 2004 and 2003 should be read in conjunction with the Consolidated Financial Statements and related notes to the financial statements which have been prepared in accordance with Canadian GAAP. The discussion and analysis set forth below covers the results measured under Canadian GAAP. Material differences between the application of Canadian GAAP and U.S. GAAP to the Company’s audited financial statements exist as described in Note 16 to the Consolidated Financial Statements.

Strategic Transaction

Radius Explorations Ltd. and PilaGold Inc. amalgamated (the “Amalgamation”) and continued as one company, Radius Gold Inc., pursuant to the provisions of the British Columbia Business Corporations Act. The holders of Radius Explorations shares received one (1) Radius Gold share for every one (1) Radius Explorations share held, and PilaGold shareholders received one (1) Radius Gold share for every two and one-quarter (2.25) PilaGold shares held.

Operating Results.

Critical Accounting Policies

Management has prepared the consolidated financial statements of the Company in accordance with Canadian generally accepted accounting principles which conform, in all material respects, with those generally accepted in the United States of America, except as explained in Note 16. The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. The financial statements have, in management’s opinion, been properly prepared using careful judgement and within the framework of the significant accounting policies summarized below.

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries:

Minerales Sierra Pacifico S.A. and Exploraciones Mineras de Guatemala S.A., companies incorporated under the laws of Guatemala;

ii)

Minerales de Nicaragua S.A. and Desarrollo Geologico Minerao, S.A., companies incorporated under the laws of Nicaragua;

iii)

Recursos Del Cibao, S.A., a company incorporated under the laws of the Dominican Republic;

iv)

Radius Panamá Corporation, Weltern Resources Corp. and Corporación Geológica de Panamá, companies incorporated under the laws of Panamá.

Radius (Cayman) Inc. and Pavon (Cayman) Inc., companies incorporated under the laws of Cayman Island; and

vi)

Geometalos Del Norte-Geonorte, a company incorporated under the laws of Mexico.

All significant inter-company transactions have been eliminated upon consolidation.

During the year ended December 31, 2003, the Company disposed of its 100% interest in Minera Interminus de Mexico S.A. de C.V., a company incorporated under the laws of Mexico, and recorded a loss on disposal of $910.

Cash and Cash Equivalents

Cash and cash equivalents included highly liquid investments with original maturities of three months or less.

Marketable Securities

Marketable securities are recorded at the lower of cost or market value.

Mineral Properties

The Company defers the cost of acquiring, maintaining its interest, exploring and developing mineral properties until such time as the properties are placed into production, abandoned, sold or considered to be impaired in value. Costs of producing properties will be amortized on a unit of production basis and costs of abandoned properties are written-off. Proceeds received on the sale of interests in mineral properties are credited to the carrying value of the mineral properties, with any excess included in operations. Write-downs due to impairment in value are charged to operations.

The Company is in the process of exploring and developing its mineral properties and has not yet determined the amount of reserves available. Management reviews the carrying value of mineral properties on a periodic basis and will recognize impairment in value based upon current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the property or from the sale of the property. Amounts shown for properties represent costs incurred net of write-downs and recoveries, and are not intended to represent present or future values.

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

Property and Equipment and Amortization

Property and equipment are recorded at cost. Equipment is amortized over their estimated useful lives using the following methods:

Leasehold improvements

5 years straight-line

Trucks

5 years straight-line

Computer equipment

30% declining balance

Geophysical equipment

20% declining balance

Furniture and equipment

20% declining balance

Website

30% declining balance

Additions to equipment are amortized at one-half rate during the year of acquisition.

Financial Instruments

The carrying value of the Company’s financial instruments, consisting of cash and cash equivalents, marketable securities, advances and receivables, due from related parties and accounts payable and accrued liabilities approximate their fair value due to the short-term maturity of such instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Basic and Diluted Loss Per Share

Basic loss per share (“LPS”) is calculated by dividing loss applicable to common shareholders by the weighted average number of common shares outstanding for the year. Diluted LPS reflects the potential dilution that could occur if potentially dilutive securities were exercised or converted to common stock. Due to the losses, potentially dilutive securities were excluded from the calculation of diluted LPS, as they were anti-dilutive. Therefore, there is no difference in the calculation of basic and diluted LPS.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, current income taxes are recognized for the estimated income taxes payable for the current period. Future income taxes assets and liabilities are recognized for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes only if it is more likely than not that they can be realized.

Foreign Currency Translation

Monetary items denominated in a foreign currency are translated into Canadian dollars at exchange rates prevailing at the balance sheet date and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred. Foreign currency denominated revenue and expense items are translated at exchange rates prevailing at the transaction date. Gains or losses arising from the translations are included in operations.

Stock-based Compensation

The Company has a stock-based compensation plan as disclosed in Note 7, whereby stock options are granted in accordance with the policies of regulatory authorities. The fair value of all share purchase options are expensed over their vesting period with a corresponding increase to contributed surplus. Upon exercise of share purchase options, the consideration paid by the option holder, together with the amount previously recognized in contributed surplus, is recorded as an increase to share capital.

The Company uses the Black-Scholes option valuation model to calculate the fair value of share purchase options at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate and, therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Company’s share purchase options.

Asset Retirement Obligation

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

SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. At December 31, 2005, the fair value of the mineral properties site restoration costs are not significant.

Impairment of Long-lived Assets

The Company reports the impairment of long-lived assets and certain intangibles in accordance with Statement of Financial Accounting Standards (“FAS”) No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets.” Certain long-lived assets and identifiable intangibles held by the Company are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Accordingly, the impairment loss is recognized in the period it is determined.

Results of Operations

Year Ended December 31, 2005 compared to December 31, 2004

For the fiscal year ended December 31, 2005, the Company had a consolidated net loss of $6,679,398 ($0.13 per share) compared to a net loss of $3,908,339 ($0.09 per share) for the fiscal year ended December 31, 2004. The large increase in overall loss is mostly due to a $5,917,734 write-off of explorations costs in the current year, compared with a $1,350,205 exploration cost write-off in 2004. Offsetting this increased expense, the 2005 non-cash compensation charge was $40,850, compared to $1,173,784 in 2004. Professional fees and shareholder communication costs were significantly less in 2005 than in 2004. Investment income in 2005 was lower than in 2004 due to redemption of bonds and the diversification of the Company’s investment portfolio. During the year ended December 31, 2005, the Company received other income of $72,655 from administration fees paid by Meridian Gold pursuant to the Natividad joint venture, and from shared office costs.

Year Ended December 31, 2004 compared to December 31, 2003

The Company reported a net loss for the fiscal year ended December 31, 2004 of 3,908,339 ($0.09 per share), compared to a loss of $1,722,063 ($0.06 loss per share) for the fiscal year ended December 31, 2003. Interest income for 2004 increased significantly compared to 2003 due to a greater amount of funds invested in cash equivalents. Corporate expenses increased in almost all categories. Public relations costs were much greater in early 2004 as compared to 2003 as a result of printing and distributing marketing materials to at least 500,000 persons. There was a significant increase in professional fees and administrative costs due to the amalgamation transaction, and, since the amalgamation, administrative costs are greater due to the Company’s paying a larger percentage of shared office costs and salaries.

During the fiscal year ended December 31, 2004, the Company recorded a stock-based compensation expense of $1,173,784 ($234,500 in 2003, as adjusted).

Year Ended December 31, 2003 compared to December 31, 2002

The Company reported a net loss for the fiscal year ended December 31, 2003 of $1,722,063 or $0.06 loss per share, compared to a loss of $642,626 or $0.04 loss per share for the fiscal year ended December 31, 2002. The increase in the year ended December 31,2003 was due to an increase in write off of resource property costs (2003 - $446,529; 2002 - $114,895), increased administrative expenses (2003 - $1,282,071; 2002 - $614,290) and increased foreign exchange losses (2003 - $64,702; 2002 – Nil), that were offset by interest income (2003 - $72,149; 2002 - $32,689).

Write-offs of resource property costs for the current year consisted of the Company’s property examination costs relating to Cipres and Golazo concessions and costs on the abandoned Guatemala concessions of $108,332.

Administrative expenses for the fiscal year ended December 31, 2003 were approximately one hundred percent higher than for the fiscal year ended December 31, 2002. The primary reason for the increase was the increased shareholder communications costs of $531,813 compared to $92,521 for the fiscal year ended December 31, 2002. The reason for this increase was large volume mailouts being done to capture better market recognition.

Non-cash compensation charges for the fiscal year ended December 31, 2003 increased to $234,500 compared to nil in the fiscal year ended December 31, 2002 due to consultants being granted options. Professional fees increased in the fiscal year ended December 31, 2003 to $54,427 compared to $31,077 in the fiscal year ended December 31, 2002 due to legal fees on U.S. issues and an increase in auditing fees. Salaries for 2003 were comparable to 2002. Travel costs for the fiscal year ended December 31, 2003 were $90,446 compared to $42,130 for the fiscal year ended December 31, 2002 due to more travelling for investor relations. All other areas of administrative operations decreased due to shared office costs being billed out.

Mineral Properties

Year Ended December 31, 2005

Guatemala - During the fiscal year ended December 31, 2005, $92,652 was spent on exploration of mineral properties in Guatemala. Of that amount, the major expenditure categories include $38,474 for geological and other consulting fees, and $20,696 for legal and accounting. Deferred exploration costs totalling $1,738,478 were written off during the year.

Nicaragua - During the fiscal year ended December 31, 2005, the Company incurred $1,932,109 in exploration costs in Nicaragua. Of that amount, the major expenditure categories include $742,205 for geological and other consulting fees, $236,225 for geochemistry, $181,573 for salaries, and $123,201 for licences and taxes, and $122,956 for travel and accommodation. Deferred exploration costs totalling $3,580,559 were written off during the year.

Mexico - During the fiscal year ended December 31, 2005, the Company spent $231,913 on acquisition of mineral concessions in Mexico and incurred $531,971 on exploration of those properties. The major exploration expenditure categories include $252,783 for geological and other consulting fees, $93,433 for travel and accommodation, and $39,929 for automobile costs.

Argentina - During the fiscal year ended December 31, 2005, the Company spent $29,524 on property investigations in Argentina.

Colombia - During the fiscal year ended December 31, 2005, the Company spent $7,461 on property investigations in Colombia.

Year Ended December 31, 2004

During the fiscal year ended December 31, 2004, $587,089 was spent on exploration of the Company’s mineral properties in Guatemala. Of that amount, the major expenditure categories include $234,986 for geological and other consulting fees, $63,190 for salaries, $55,612 for licenses and taxes, and $48,572 for office rent. $893,643 in property investigation costs spent in Guatemala was written off during the year.

In February 2004, the Company increased its interest in the Tambor property by issuing to Gold Fields 1,300,000 shares at a deemed value of $1.49 per share. This is following Gold Fields’ incurring US$3,500,000 in property development.

During the fiscal year ended December 31, 2004, $2,422,462 was spent in Nicaragua. Of that amount, the major expenditure categories include $833,577 for geological and other consulting fees, $310,181 for geochemistry, $205,998 for drilling, $192,878 for camp food and supplies, $174,726 for salaries, $130,319 for travel, $129,072 for automobile costs, and $118,248 for licenses and taxes. $456,562 in property investigation costs spent in Nicaragua was written off during the year.

During 2004, the Company spent $46,006 in Mexico in connection with the investigation of properties for possible acquisition.

Year Ended December 31, 2003

During the year ended December 31, 2003, approximately $520,000 was spent on the Company’s 100% owned mineral properties in Guatemala. Of that amount, the major expenditure categories include approximately $370,000 for personnel related costs, such as salaries, geological consulting fees and medical expenses, $65,000 for administration and $85,000 for licenses and taxes. Approximately $670,000 was spent in Nicaragua. Of that amount the major expenditure categories include approximately $365,000 for personnel related costs, such as salaries, geological consulting fees and medical expenses, $80,000 for administration costs and $46,000 on licenses and taxes and legal costs.

Per Share Losses

Both the net losses and the losses per share have increased from the year 2003 to 2004 to 2005. These increases are due mainly to a large stock-based compensation charge in 2004 and a large property write-off in 2005. Corporate expenditures were generally the same in each year, except for an increase in 2004 resulting from the costs of the Amalgamation incurred that year.

Outlook

Management expects that the Company will have sufficient working capital to meet its corporate and exploration commitments over the next 24 months. Actual funding requirements may vary from those planned due to a number of factors, including the progress of exploration and development activity. Management believes it will be able to raise equity capital as required in the long term, but recognizes the uncertainty attached thereto. The Company continues to use various strategies to minimize its dependence on equity capital, including the securing of joint venture partners where appropriate.

Liquidity and Capital Resources

Year ended December 31, 2005 compared to December 31, 2004

The Company’s cash and marketable securities decreased from $16.53 million at December 31, 2004 to $13.36 million at December 31, 2005. Working capital at December 31, 2005 was $13.76 million compared to $17.07 million at December 31, 2004.

Year ended December 31, 2004 compared to December 31, 2003

During the 2004 fiscal year, the Company’s cash resources decreased by $10,406,641 compared to an increase of $12,927,332 in 2003. The 2004 decrease is due mainly to the Company having spent a significantly greater amount on deferred exploration and on the purchase of marketable securities than in 2003. During the fiscal year ended December 31, 2004, the Company’s interest income, proceeds on issuance of shares, and acquisition of cash from the Amalgamation provided additional cash of $7,963,522, while the cash component of operating expenses for the year was $1,537,547.

As at December 31, 2004, the Company had working capital of approximately $17.1 million compared to working capital of $14.8 million as at the fiscal year ended December 31, 2003.

The Company’s paid up share capital as at December 31, 2004 was $42,060,982 representing 53,091,188 common shares without par value. The contributed surplus of $2,290,834 plus share capital, together with a deficit of $10,087,313, results in shareholders equity of $34,264,503. Details of share capital issuances are discussed in Note 8 to the Financial Statements. Subsequent to the 2004 fiscal year, the Company received an additional $240,140 from the exercise of stock options and share purchase warrants.

Year ended December 31, 2003 compared to December 31, 2002

During the 2003 fiscal year, the Company’s cash resources increased by $12,927,332 compared to a decrease of $761,493 in 2002. The 2003 increase is a result of the Company receiving $15,386,927 from the sale of shares which includes gross proceeds of $9,817,500 from a private placement of units at $1.50 per unit and $500,000 from a private placement of units at $0.50 per unit. The balance of the increase resulted from the exercise of share purchase warrants and stock options. The Company spent $1,390,452 on its resource properties (2002 - $1,741,541).

As at December 31, 2003 Radius had working capital of approximately $14.80 million compared to working capital of $1.95 million as at the fiscal year ended December 31, 2002. The increase in working capital is a result of the receipt of funds from the sale of shares.

The Company’s paid up share capital as at December 31, 2003 was $27,539,692 representing 38,395,242 common shares without par value. The contributed surplus of $234,500 plus share capital, together with a deficit of $5,168,074, results in shareholders equity of $22,606,118. Details of share capital issuances are discussed in Note 6 to the Financial Statements. Subsequent to the 2003 fiscal year Radius received an additional $180,138 from the exercise of stock options and share purchase warrants.

Research and Development, Patents and Licenses, etc.

Not applicable.

Trend Information.

The Company is an exploration stage natural resource company engaged in the process of exploring and evaluating its mineral properties and projects and has not yet determined whether its properties and projects contain ore reserves that are economically recoverable. Consequently, there is no production, sales, or inventory in the conventional sense. The Company’s financial success will be dependent upon the extent to which it can discover mineralization and the economic viability of developing such properties. Such development may take years to complete and the amount of resulting income, if any, is difficult to determine with any certainty. The sales value of any mineralization discovered by the Company is largely dependent upon factors beyond the Company’s control such as the market value of the commodities produced.

The Company is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon the Company’s net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.

Off-balance Sheet Arrangements

Not applicable.

Tabular Disclosure of Contractual Obligations

The following table lists as of December 31, 2005 information with respect to the Company’s known contractual obligations.

	Payments due by period
Contractual Obligations	Total	1st year	2nd year	3rd year	4^th year	5^th year
Long-Term Debt Obligations	0		0	0	0	0
Capital (Finance) Lease Obligations	0		0	0	0	0
Operating Lease Obligations⁽¹⁾	$645,827	$125,567	$125,927	$129,885	$130,245	$134,203
Purchase Obligations	0		0	0	0	0
Other Long-Term Liabilities Reflected on the Company's Balance Sheet under Canadian GAAP	0		0	0	0	0
Total	$645,827	$125,567	$125,927	$129,885	$130,245	$134,203

(1)

Amount indicated is the office rent lease for the Company’s head office in Vancouver, BC.

Safe harbour

See “Note Regarding Forward-Looking Statements.”

Share Issuance

The following table summarizes share issuances by the Company during the past five years:

Year	Type of Transaction	No. of Shares	Price per Share	Total Consideration

2005	Stock Option Exercises	40,000	$0.90	$36,000
	Stock Option Exercises	50,000	$0.99	$49,500
	Stock Option Exercises	35,000	$1.00	$35,000
	Stock Option Exercises	37,800	$1.30	$49,140
	Warrant Exercises	57,000	$1.50	85,500

2004	Amalgamation	10,284,452	$1.11	$11,415,742
	Stock Option Exercises	35,000	40.60	$21,000
	Stock Option Exercises	117,000	$0.65	$76,050
	Stock Option Exercises	69,000	$0.68	$46,920
	Stock Option Exercises	30,000	$0.90	$27,000
	Stock Option Exercises	55,000	$0.95	$52,250
	Stock Option Exercises	79,444	$0.99	$78,650
	Stock Option Exercises	65,000	$1.10	$71,500
	Warrant Exercises	2,649,800	$0.25	$662,450
	Warrant Exercises	11,250	$0.55	$6,188
	Property Agreements	1,300,000	$1.49	$1,937,000

2003	Private Placement	1,000,000	$0.50	$500,000
	Private Placement	6,545,000	$1.50	$9,817,500
	Stock Option Exercises	275,000	$0.60	$165,000
	Stock Option Exercises	155,000	$0.66	$100,750
	Stock Option Exercises	255,000	$0.68	$173,400
	Stock Option Exercises	30,000	$0.90	$27,000
	Stock Option Exercises	20,000	$0.94	$28,800
	Stock Option Exercises	20,000	$0.95	$19,000
	Stock Option Exercises	130,000	$0.99	$128,700
	Stock Option Exercises	40,000	$1.00	$40,000
	Stock Option Exercises	10,000	$1.01	$10,100
	Stock Option Exercises	50,000	$1.25	$62,500
	Stock Option Exercises	170,000	$1.35	$229,500
	Warrant Exercises	2,145,000	$0.25	$536,250
	Warrant Exercises	738,750	$0.55	$406,313
	Warrant Exercises	1,123,334	$0.74	$831,267
	Warrant Exercises	2,982,262	$1.25	$3,727,828

2002	Private Placement	4,794,800	$0.20	$958,960

2001	Private Placement	1,373,334	$0.60	$824,000
	Private Placement	3,904,762	$1.05	$4,100,000
	Stock Option Exercises	25,000	$0.85	$21,250
	Stock Option Exercises	55,000	$0.60	$33,000
	Stock Option Exercises	105,000	$0.35	$36,750
	Warrant Exercises	1,797,500	$0.80	$1,438,000
	Property Agreements	100,000	$1.00	$100,000

Item 6.

Directors, Senior Management and Employees.

Directors and Senior Management.

The following table lists as of June 8, 2006 the names of the directors and senior management of the Company. The directors and senior management have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting of Shareholders or until a successor is duly elected, unless the office is vacated in accordance with the Company’s Articles.

Name and Municipality of Residence	Position(s) held	Date of First Appointment
Simon Ridgway Vancouver, BC, Canada	Director & President	September 30, 1997
Mario Szotlender, Caracas, Venezuela	Director	December 13, 1999
Harmen Keyser Gibsons, BC, Canada	Director	September 9, 1997
David Farrell Vancouver, BC, Canada	Director	June 15, 2001
Nicholas Glass Vancouver, BC, Canada	Director	January 14, 2003
Ralph Rushton Vancouver, BC, Canada	Director & Vice-President, Corporate Development	May 2, 2003

Bradford Cooke North Vancouver, BC, Canada	Director	July 1, 2004
Craig Bow Beulah, Colorado, USA	Director	January 28, 2006 (previously a director of Radius Explorations Ltd. from July 17, 2001 to July 1, 2004)
Cheryl Messier North Vancouver, BC, Canada	Chief Financial Officer	July 1, 2004
Jock Slater Managua, Nicaragua	Vice-President, Exploration	July 1, 2004
Tim Osler Vancouver, BC, Canada	Corporate Secretary	May 7, 1998

Biographical Information

The following is a brief description of the employment background of the Company’s directors and senior management:

Simon T.P. Ridgway - President and Director

Mr. Simon Ridgway is an exploration financier with 15 years experience financing and managing exploration companies operating in North, Central and South America. Mr. Ridgway began his career prospecting for gold in the Yukon Territory where he learned the value added approach of grass roots exploration. A firm believer in the gold potential of Central America, his practical, low cost approach to exploration management has led to major discoveries in Honduras, El Salvador and Guatemala.

Mario Szotlender - Director

Mr. Mario Szotlender holds a degree in international relations and has successfully directed Latin American affairs for numerous private and public companies over the past fifteen years, specializing in developing new business opportunities and establishing relations within the investment community. Mr. Szotlender has also operated several mineral operations in Venezuela, including the Las Cristinas in the 1980’s. He is currently the President of Mena Resources Inc. and Focus Ventures Ltd., and is a director of several other public companies.

Harmen J. Keyser - Director

Mr. Harmen Keyser has over 20 years exploration experience in North America and abroad. He is registered as a Professional Geologist with the Northwest Territories Association of Professional Engineers, Geologists, and Geophysicists. Since 1991, Mr. Keyser has been self-employed. He is currently a director of the Company and several other public companies.

David Farrell – Director

Mr. David Farrell is Vice President of Endeavour Financial, a private investment banking firm providing advisory services to small and mid-tier global mining companies. At Endeavour, David is responsible for originating and implementing M&A and merchant banking transactions. His experience at Endeavour includes two years in its London office, structuring and closing multi-jurisdictional transactions in London’s mining finance market. Prior to joining Endeavour in 2000, David was a corporate solicitor with Stikeman Elliott specializing in project finance, securities and corporate law and is admitted to the bar in both England and British Columbia.

Nicholas Glass - Director

Mr. Nicholas Glass is a member of the Bar in British Columbia, England and Wales, and currently practises as a mediator and arbitrator in labour relations disputes and civil claims. He has been on the boards of two highly successful public companies, one of which was sold in 2002 for $40 million. Mr. Glass is also a director and officer of two private investment companies, with real estate and securities holdings in Canada, the U.S. and the U.K.

Ralph Rushton – Vice President, Corporate Development and Director

Mr. Ralph Rushton earned a BSc. in Geology from Portsmouth in the UK, an MSc from the University of Alberta, and studied Business Communications at Simon Fraser University in Vancouver. With 14 years’ experience in gold mining and exploration gained mainly with the Anglo American group in Southern Africa, the Middle East and Eastern Europe, Mr. Ruston’s current responsibilities include corporate development work and investor relations, and maintaining the Company’s links with senior mining companies. He is also a director of Northland Resources Inc., a publicly traded resource company.

Bradford Cooke - Director

Mr. Bradford Cooke, M.Sc., P.Geo., is a mining executive and a professional geologist with over 29 years of experience in the mining industry. He earned a B.Sc. (Honours) degree from Queens University in 1976 and a M.Sc. (Geology) degree from the University of British Columbia in 1984. Mr. Cooke began his mineral exploration career in 1976 as a Project Geologist with Noranda Mines, and subsequently worked for Shell Minerals, Chevron Resources and as an independent geologic consultant. In 1987, Mr. Cooke founded Canarc Resource Corp., a junior gold exploration and mining company focused on exploring and developing prospective gold properties throughout North, Central and South America. In 2003, he formed Endeavour Silver Corp. for the purpose of acquiring advanced high-grade silver projects in Mexico.

Craig Bow - Director

Craig Bow is a geologist and has been involved in the mineral exploration industry for over 20 years. He worked extensively in South America, acting as Exploration Manager, South America for Newcrest Resources Ltd., prior to taking a position as Area Manager, North America for Gold Fields Exploration Inc., a subsidiary of Gold Fields of South Africa. In March 2006, Mr. Bow was appointed director and President of Lara Exploration Ltd., a public-traded resource company.

Cheryl Messier – Chief Financial Officer

Ms. Cheryl Messier has over 10 years experience as a financial controller. She worked as CFO for an international computer trading company grossing US$5 million in annual sales. Bringing strong cash flow management experience she joined the Company in June 2003.

Jock Slater – Vice-President, Exploration

Mr. Jock Slater earned a B.Sc. in Geology from the University of British Columbia and an M.Sc. from the University of Alberta. He has 35 years of experience in the mining industry, working for Archer Cathro in the Yukon Territory, Eldorado Nuclear in Northern Saskatchewan, and BP Minerals, RTZ, and Barrick Gold in New Zealand, Indonesia, Turkey, Bulgaria, and China. Since 1999 he has directed the Company’s exploration activity in Guatemala and Nicaragua.

Tim Osler - Secretary

Mr. Tim Osler, B.Sc., owns and operates a mining consulting and retail mining equipment business, and has developed a gold mining placer property in the Yukon Territory which is currently producing. Mr. Osler is currently a director of Mena Resources Inc. and Focus Ventures Ltd.

There are no family relationships among the members of the board of directors or the members of senior management of the Company. There are no arrangements or understanding with major shareholders, customers, suppliers or others, pursuant to which any member of the board of directors or member of senior management was selected.

Compensation.

Executive officers are compensated in a manner consistent with their respective contributions to the overall benefit of the Company. During the fiscal year ended December 31, 2005, the Company paid to its executive officers the following amounts:

Name	Position	Amount

Simon Ridgway	President	$152,400
Ralph Rushton	Vice-President, Corporate Development	$ 80,440
Jock Slater	Vice-President, Exploration	$114,466
Cheryl Messier	Chief Financial Officer	$ 28,907

The Company has no standard arrangement pursuant to which directors are compensated for their services in their capacity as such except for the granting from time to time of incentive stock options. The following table sets out all options in the Company which are held as of June 8, 2006 by the current directors and officers:

Optionees	Number of Shares Subject	Exercise Price ($)	Expiration Date
Simon Ridgway	320,000 280,000 600,000	$0.68 $0.70	January 7, 2008 February 21, 2011
Mario Szotlender	120,000 180,000 300,000	$0.68 $0.70	January 7, 2008 February 21, 2011
Harmen Keyser	100,000	$0.70	February 21, 2011
David Farrell	150,000	$0.70	February 21, 2011
Nicholas Glass	100,000	$0.70	February 21, 2011
Ralph Rushton	250,000	$0.70	February 21, 2011
Bradford Cooke	150,000	$0.70	February 21, 2011
Craig Bow	150,000	$0.70	February 21, 2011
Cheryl Messier	150,000	$0.70	February 21, 2011
Jock Slater	200,000	$0.70	February 21, 2011
Tim Osler	100,000	$0.70	February 21, 2011

Board Practices.

The directors of the Company are elected annually and hold office until the next Annual General Meeting of the members of the Company or until their successors in office are duly elected or appointed. All directors are elected for a one-year term. All officers serve at the pleasure of the board of directors. The next annual general meeting will be held in the fall of 2006.

Currently, there are no directors’ service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment.

Audit Committee

The Audit Committee of the Company is presently comprised of David Farrell, Bradford Cooke and Harmen Keyser, all of whom are “independent” and “financially literate”. The Audit Committee Charter provides that the primary function of the Audit Committee is to assist the Board of Directors of the Company (the “Board”) in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the shareholders and others, the systems of internal controls and management information systems established by management and the Company’s external audit process and monitoring compliance with the Company’s legal and regulatory requirements with respect to its financial statements.

The Audit Committee is accountable to the Board. In the course of fulfilling its specific responsibilities hereunder, the Audit Committee is expected to maintain an open communication between the Company’s external auditors and the Board. The responsibilities of a member of the Audit Committee are in addition to such member’s duties as a member of the Board.

The Audit Committee does not plan or perform audits or warrant the accuracy or completeness of the Company’s financial statements or financial disclosure or compliance with generally accepted accounting procedures as these are the responsibility of management and the external auditors.

Compensation Committee

The Compensation Committee of the Company is presently comprised of David Farrell and Bradford Cooke, both of whom are “unrelated” and “independent”. The Compensation Committee Charter provides that the function of the Compensation Committee is to assist the Board in discharging its oversight responsibilities relating to compensation, including the compensation of key senior management employees of the Company.

The Compensation Committee is to review and make recommendations to the Board on an annual basis with respect to the Company’s stock option plan and make recommendations respecting grants of options. It shall also review and recommend to the Board annually, or more frequently as required, management’s succession plans for the Executive Management, including the specific development plans and career planning for potential successors to occupy these positions.

Employees.

As at December 31, 2005, the Company had 22 employees, 7 in the Vancouver office and 15 in Guatemala, Nicaragua and Mexico. Six employees provide administrative or management services and 16 employees provide geological services. None of the employees is represented by a union.

Share Ownership.

The following table sets forth, as of June 8, 2006, the number of the Company’s Common Shares beneficially owned by (a) the directors and members of senior management of the Company, individually, and as a group, and (b) the percentage ownership of the outstanding Common Shares represented by such shares. The security holders listed below are deemed to be the beneficial owners of Common Shares underlying options and warrants which are exercisable within 60 days from the above date.

Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.

Title of Class	Name and Address of Beneficial Owner	Amount and Nature	Percentage of Class⁽¹⁾
Common	Simon Ridgway Vancouver, BC	3,214,466⁽²⁾	5.95%
Common	Mario Szotlender Caracas, Venezuela	1,365,375⁽³⁾	2.54%
Common	Harmen Keyser Gibsons, BC	203,741⁽⁴⁾	0.38%

Common	David Farrell Vancouver, BC	150,000⁽⁵⁾	0.28%
Common	Nicholas Glass Vancouver, BC	100,000⁽⁶⁾	0.19%
Common	Ralph Rushton Vancouver, BC	291,000⁽⁷⁾	0.54%
Common	Bradford Cooke North Vancouver, BC	150,000⁽⁸⁾	0.28%
Common	Craig Bow Beulah, Colorado, USA	150,000⁽⁹⁾	0.28%
Common	Cheryl Messier North Vancouver, BC	150,000⁽¹⁰⁾	0.28%
Common	Jock Slater Managua, Nicaragua	200,000⁽¹¹⁾	0.37%
Common	Tim Osler Vancouver, BC	545,345⁽¹²⁾	1.02%
Common	All Directors and Senior Management as a group (11 individuals)	6,519,927	11.72%

(1)

Based on 53,385,988 shares outstanding as at June 8, 2006, plus any Common Shares deemed to be beneficially owned by the individual (or, for the last row of the table, by the group) pursuant to options and warrants which are exercisable by the individual (or, for the last row of the table, by the group) within 60 days from the above date.

(2)

600,000 of these shares represent currently exercisable stock options; and 175,000 of these shares are escrow shares which are releasable subject to the terms of the Escrow Agreement dated April 15, 1998. 1,382,255 of the free trading shares are held by Mill Street Services Ltd., a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee. 9,389 of the free trading shares are held by Elvietri Holdings, AVV, a private company owned by Simon Ridgway.

(3)

300,000 of these shares represent currently exercisable stock options; and 25,000 of these shares are escrow shares which are releasable subject to the terms of the Escrow Agreement dated April 15, 1998.

(4)

100,000 of these shares represent currently exercisable stock options; and 25,000 of these shares are escrow shares which are releasable subject to the terms of the Escrow Agreement dated April 15, 1998.

(5)

All of these shares represent currently exercisable stock options.

(6)

All of these shares represent currently exercisable stock options.

(7)

250,000 of these shares represent currently exercisable stock options.

(8)

All of these shares represent currently exercisable stock options.

(9)

All of these shares represent currently exercisable stock options.

(10)

All of these shares represent currently exercisable stock options.

(11)

All of these shares represent currently exercisable stock options.

(12)

100,000 of these shares represent currently exercisable stock options; and 12,500 of these shares are escrow shares which are releasable subject to the terms of the Escrow Agreement dated April 15, 1998.

Stock Option Plan

In May 2003, the Company established a Director and Employee Stock Option Plan, the material terms of which are as follows:

the Plan reserves a rolling maximum of 10% of the issued capital of the Company at the time of granting of each option, with no vesting provisions;

no more than 5% of the issued capital may be reserved for issuance to any one individual in any 12 month period;

no more than 2% of the issued capital may be reserved for issuance to any Consultant (as defined by the TSX Venture Exchange) or to an optionee providing investor relations services in any 12 month period;

the minimum exercise price of an option cannot be less than the Market Price (as defined by the TSX Venture Exchange) of the Company’s shares less any allowable discount;

options will be granted for a period of up to five years, or 10 years if the Company becomes a Tier 1 company on the TSX Venture Exchange;

options are non-assignable and non-transferable; and

there are provisions for adjustment in the number of shares issuable on exercise of options in the event of a share consolidation, split, reclassification or other relevant change in the Company’s corporate structure or capitalization.

As at June 8, 2006, there were 3,475,000 shares reserved for issuance and subject to outstanding options granted under the Plan.

Item 7.

Major Shareholders and Related Party Transactions.

Major Shareholders.

A major shareholder of the Company is a person that beneficially owns, directly or indirectly, more than 5% of the Company’s Common Shares. The following table sets forth to the best of the Company’s knowledge, as of June 8, 2006, the number of the Company’s Common Shares beneficially owned by (a) each major shareholder of the Company, and (b) the percentage ownership of the outstanding Common Shares represented by such shares. The major shareholder listed below is deemed to be the beneficial owners of Common Shares underlying options and warrants which are exercisable within 60 days from the above date. Unless otherwise indicated, to the best of the Company’s knowledge, the shareholder listed possesses sole voting and investment power with respect to the shares shown.

Shareholder Name	Number of Shares	Percentage of Issued Shares⁽¹⁾
Simon Ridgway	3,214,466⁽²⁾	5.95%

(1)

Based on 53,385,988 shares outstanding as at June 8, 2006, plus any Common Shares deemed to be beneficially owned by the shareholder pursuant to options and warrants which are exercisable within 60 days from the above date.

(2)

To the best of the Company’s knowledge, there are no arrangements the operation of which may result in a change in control of the Company.

The Company is a publicly-owned corporation, the shares of which are owned by residents of Canada, the United States, and other countries. The Company is not controlled directly or indirectly by another corporation or any foreign government. As of June 8, 2006, there were 53,385,988 shares of the Company outstanding, of which approximately 3,625 U.S. holders of record or beneficial holders, held a total of 5,870,886 shares (11.0%). The number of beneficial holders was determined based on a review of the number of holders represented by ADP Investor Communications, a U.S. mailing service.

Related Party Transactions.

Effective as at the Amalgamation date of July 1, 2004, the Company and Mill Street entered into an agreement whereby the Company pays $16,000 per month for Mr. Ridgway’s services. Mill Street is a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee. During 2005, a portion of this fee was billed to other companies of which Mr. Ridgway is a director for his services rendered to those companies.

During the fiscal year ended December 31, 2005, the Company paid an aggregate of $178,076 to officers and companies that have common directors with the Company for salaries and consulting and management fees.

The Company and PilaGold Inc. amalgamated and continued as one company pursuant to the provisions of the British Columbia Business Corporations Act on July 1, 2004. Certain of the directors and officers of the Company were directors, officers and/or shareholders of PilaGold Inc.

Interests of Experts and Counsel.

Not Applicable.

Item 8.

Financial Information.

Consolidated Statements and Other Financial Information.

The financial statements as required under Item 17 are attached hereto and found immediately following Item 19 of this Annual Report. An auditors’ report of Amisano Hanson with respect to the fiscal years ended December 31, 2005 and 2004 and the balance sheet as at December 31, 2005 and 2004, are included herein immediately preceding the consolidated financial statements.

There are no legal proceedings currently pending which may have, or have had in the recent past, significant effects on the Company’s financial position or profitability.

The Company has no history of paying dividends and the Company does not contemplate that any dividends will be paid on its shares in the immediate or the foreseeable future. The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.

Significant Changes.

There have been no significant changes in the Company since the date of the Company’s annual financial statements.

Item 9.

The Offer and Listing.

The Company shares were listed and posted for trading on the TSX Venture Exchange (the “TSXV”) (formerly the Canadian Venture Exchange and before that, the Vancouver Stock Exchange) on October 7, 1998 and currently trades on the TSXV. The TSXV trading symbol is RDU.

Effective October 4, 2002, the Company began trading on the Regulated Unofficial Market of the Frankfurt Stock Exchange under the trading symbol RE1. Radius has the German Security ID number of 725224.

Offer and Listing Details.

The following tables set forth the reported high and low closing bid prices (all expressed in Canadian dollars) on the TSXV for (a) the Company’s five most recent fiscal years; (b) each quarterly period for the Company’s past two fiscal years and for the first quarter of the Company’s 2006 fiscal year, and (c) for each of the six months from December 2005 to May 2006.

High and Low Price for the Five Most Recent Fiscal Years
Fiscal Year ended December 31	High	Low
2005	$1.69	$0.51
2004	$1.85	$0.88
2003	$2.03	$0.63
2002	$1.65	$0.63
2001	$1.29	$0.20

High and Low Prices for Each Quarterly Period for the Past Two Fiscal Years and For the First Quarter of Fiscal 2006
Period Ended:	High	Low
March 31, 2006	$0.92	$0.62
December 2005	$0.80	$0.51
September 30, 2005	$1.50	$0.61
June 30, 2005	$1.45	$1.15
March 31, 2005	$1.69	$1.21
December 2004	$1.85	$1.21
September 30, 2004	$1.35	$0.97
June 30, 2004	$1.42	$0.88
March 31, 2004	$1.58	$1.14

High and Low Prices for the Most Recent Six Months
Period:	High	Low
May 2006	$0.94	$0.63
April 2006	$0.83	$0.70
March 2006	$0.92	$0.66
February 2006	$0.75	$0.65
January 2006	$0.84	$0.62
December 2005	$0.66	$0.51

On May 31, 2006, the closing price of the Common Shares on TSXV was $0.70 per Common Share. During the last three years, the Common Shares have not been subject to any trading suspensions.

Plan of Distribution.

Not Applicable

Markets.

The Company’s shares were listed and posted for trading on the TSX Venture Exchange (the “TSXV”) (formerly the Canadian Venture Exchange and before that, the Vancouver Stock Exchange) on October 7, 1998 and currently trades on the TSXV. The TSXV trading symbol is RDU.

Effective October 4, 2002, the Company’s shares began trading on the Regulated Unofficial Market of the Frankfurt Stock Exchange under the trading symbol RE1. Radius has the German Security ID number of 725224.

Effective December 22, 2004, the Company’s shares began trading on the U.S. Over-the-Counter Bulletin Board under the trading symbol RDUFF.

Selling Shareholders.

Not Applicable.

Dilution.

Not Applicable

Expenses of the Issue.

Not Applicable

Item 10.

Additional Information.

Share Capital.

Not Applicable

Articles of Association.

The Company’s Articles do not contain any restrictions on the type of business in which the Company may engage.

Section 17 of the Company’s Articles provides that, “A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act. A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.”

Section 13.5 of the Articles provides that the directors may from time to time determine the remuneration of directors. However, a “disclosable interest” does not include compensation to be paid to a director, and therefore such interest is not required to be disclosed pursuant to Section 17 of the Articles. Management believes that, in the absence of an independent quorum, a director cannot vote compensation to himself or herself.

The borrowing powers of the directors are addressed in Part 8, which states that, “The Company, if authorized by the directors, may:

(1)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

(2)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

(3)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

(4)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.”

There is no provision in the Company’s Articles regarding a mandatory age for retirement of directors. There is no requirement for a director to hold shares of the Company.

All of the authorized shares of common stock of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets. Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders. Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefor.

Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro rata the assets of Company, if any, remaining after payments of all debts and liabilities. No shares have been issued subject to call or assessment. There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds.

Any modification, amendment or variation of such shareholder rights or provisions are governed by the British Columbia Business Corporations Act and must be approved by a vote of at least 2/3 of the votes cast at a shareholders meeting. Unless the British Columbia Business Corporations Act or the Company’s Articles otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution or by a vote of a majority of the shares represented at the shareholders’ meeting.

The conditions governing the manner in which annual general meetings and extraordinary general meetings of shareholders are convoked, including the conditions of admission are described in the Articles of the Company in Section 10 – Meetings of Shareholders.

Section 10.1 states that, “Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors.”

Section 10.4 states that, “The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

(1)

if and for so long as the Company is a public company, 21 days;

(2)

otherwise, 10 days.

The conditions of admission are described in Section 11.5 where it is stated that, “The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.”

There are no limitations on the rights to own securities.

There is no provision of the Company’s Articles, charter or bylaws that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries).

There are no conditions imposed by the Articles governing changes in the capital, where such conditions are more stringent that is required by law.

Material Contracts.

Other than as disclosed elsewhere in this Annual Report, the Company has not entered into any material contracts, other than contracts entered into in the ordinary course of business, during the two year period immediately preceding the filing of this Annual Report, except:

Exchange Controls.

The Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares. There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.

Taxation

Canadian Income Tax Consequences

The summary below is restricted to the case of a holder (a “Holder”) of one or more common shares (“Common Shares”) who for the purposes of the Income Tax Act (Canada) (the “Tax Act”) is a non-resident of Canada, holds his Common Shares as capital property and deals at arm’s length with the Company.

Dividends

A Holder will be subject to Canadian withholding tax (“Part XIII Tax”) equal to 25%, or such lower rate as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on his Common Shares. Under the Canada-US Tax Convention (the “Tax Convention”), the rate of Part XIII Tax applicable to a dividend on Common Shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder.

Disposition of Common Shares

A Holder who disposes of Common Shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the Common Share constituted “taxable Canadian property” as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arm’s length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company.

A Holder who is a resident of the United States and realizes a capital gain on disposition of Common Shares that was taxable Canadian property will nevertheless, by virtue of the Tax Convention, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the Common Shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the Common Shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the Common Shares when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of Common Shares must include one-half of the capital gain (“taxable capital gain”) in computing his taxable income earned in Canada. The Holder may, subject to certain limitations, deduct one-half, two-thirds or three-quarters of any capital loss (depending upon the date on which the loss was realized) arising from disposition of taxable Canadian property from capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.

United States Federal Income Tax Consequences

The following is a summary of the anticipated material U.S. federal income tax consequences to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares of the Company (“Common Shares”).

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax consequences that may apply to a U.S. Holder as a result of the acquisition, ownership, and disposition of Common Shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder. Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the U.S. federal, U.S. state and local, and foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.

Scope of this Disclosure

Authorities

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative pronouncements of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable as of the date of this Annual Report. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive basis. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive basis.

U.S. Holders

For purposes of this summary, a “U.S. Holder” is a beneficial owner of Common Shares that, for U.S. federal income tax purposes, is (a) an individual who is a citizen or resident of the U.S., (b) a corporation, or other entity classified as a domestic corporation for U.S. federal income tax purposes, that is created or organized in or under the laws of the U.S. or any state in the U.S., including the District of Columbia, (c) an estate if the income of such estate is subject to U.S. federal income tax regardless of the source of such income, or (d) a trust if (i) such trust has validly elected to be treated as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust.

Non-U.S. Holders

A “non-U.S. Holder” is a beneficial owner of Common Shares other than a U.S. Holder. This summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares to non-U.S. Holders. Accordingly, a non-U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the U.S. federal, U.S. state and local, and foreign tax consequences (including the potential application of and operation of any tax treaties) of the acquisition, ownership, and disposition of Common Shares.

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares to U.S. Holders that are subject to special provisions under the Code, including the following U.S. Holders: (a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, insurance companies, real estate investment trusts, or regulated investment companies or that are broker-dealers or dealers in securities; (c) U.S. Holders that have a “functional currency” other than the U.S. dollar; (d) U.S. Holders that are subject to the alternative minimum tax provisions of the Code; (e) U.S. Holders that own Common Shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquired Common Shares in connection with the exercise of employee stock options or otherwise as compensation for services; (g) partners of partnerships that hold Common Shares or owners of other entities classified as partnerships or “pass-through” entities for U.S. federal income tax purposes that hold Common Shares, (h) U.S. Holders that hold Common Shares other than as a capital asset within the meaning of Section 1221 of the Code. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own financial advisor, legal counsel or accountant regarding the U.S. federal, U.S. state and local, and foreign tax consequences of the acquisition, ownership, and disposition of Common Shares.

Tax Consequences Other than U.S. Federal Income Tax Consequences Not Addressed

This summary does not address the U.S. state and local or foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Common Shares. Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the U.S. state and local and foreign tax consequences of the acquisition, ownership, and disposition of Common Shares. (See “[Taxation—Canadian Federal Income Tax Consequences]” above).

Treaty Application to Certain Individual U.S. Holders

An individual U.S. Holders who does not maintain a substantial presence, permanent home, or habitual abode in the U.S., or whose personal and economic relations are not closer to the U.S. than to any other country may be unable to benefit from the provisions of the Canada-U.S. Tax Convention. An individual U.S. Holder described immediately above should consult its own financial advisor, legal counsel, or accountant regarding the availability of benefits under the Canada-U.S. Tax Convention.

U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Common Shares

Distributions on Common Shares

General Taxation of Distributions

A U.S. Holder that receives a distribution, including, in certain circumstances, a constructive distribution, with respect to the Common Shares will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the Company. To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated as a non-dividend distribution (a) first, as a tax-free return of capital to the extent of a U.S. Holder’s tax basis in the Common Shares and, (b) thereafter, as gain from the sale or exchange of such Common Shares. (See more detailed discussion at “Disposition of Common Shares” below).

Reduced Tax Rates for Certain Dividends

For taxable years beginning after May 6, 2003 and before January 1, 2009, a dividend paid by the Company generally will be taxed at the preferential tax rates applicable to long-term capital gains if (a) the Company is a “qualified foreign corporation” (as defined below), (b) the U.S. Holder receiving such dividend is an individual, estate, or trust, and (c) such dividend is paid on Common Shares that have been held by such U.S. Holder for at least 61 days during the 121-day period beginning 60 days before the “ex-dividend date” (i.e., the first date that a purchaser of such Common Shares will not be entitled to receive such dividend).

The Company generally will be a “qualified foreign corporation” under Section 1(h)(11) of the Code (a “QFC”) if (a) the Company is incorporated in a possession of the U.S., (b) the Company is eligible for the benefits of the Canada-U.S. Tax Convention, or (c) the Common Shares are readily tradable on an established securities market in the U.S. However, even if the Company satisfies one or more of such requirements, the Company will not be treated as a QFC if the Company is a “foreign personal holding company,” a “foreign investment company,” or a “passive foreign investment company” (each as defined below) for the tax year during which the Company pays a dividend or for the immediately preceding tax year.

As discussed below, the Company believes that it will be a “passive foreign investment company” (See more detailed discussion at “Additional Rules that May Apply to U.S. Holders—Passive Foreign Investment Company” below). Accordingly, the Company does not believe that it will be a QFC.

If the Company is not a QFC, a dividend paid by the Company to a U.S. Holder, including a U.S. Holder that is an individual, estate, or trust, generally will be taxed at ordinary income tax rates (and not at the preferential tax rates applicable to long-term capital gains). The dividend rules are complex and each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the dividend rules.

Distributions Paid in Foreign Currency

The amount of a distribution paid to a U.S. Holder in foreign currency generally will be equal to the U.S. dollar value of such distribution based on the exchange rate applicable on the date of receipt. A U.S. Holder that does not convert foreign currency received as a distribution into U.S. dollars on the date of receipt generally will have a tax basis in such foreign currency equal to the U.S. dollar value of such foreign currency on the date of receipt. Such a U.S. Holder generally will recognize ordinary income or loss on the subsequent sale or other taxable disposition of such foreign currency (including an exchange for U.S. dollars). However, an individual U.S. Holder whose realized gain upon such subsequent sale or other taxable disposition of such foreign currency does not exceed U.S.$200 will not recognize such gain to the extent that the gain arises from a personal transaction, and there are no expenses associated with the transaction that meet the requirements for deductibility as a trade or business expense or as an expense for the production of income. Similarly, such foreign currency loss that does not exceed U.S. $200 will be non-deductible.

Dividends Received Deduction

Dividends paid on the Common Shares generally will not be eligible for the “dividends received deduction.” The availability of the dividends received deduction is subject to complex limitations that are beyond the scope of this discussion, and a U.S. Holder that is a corporation should consult its own financial advisor, legal counsel, or accountant regarding the dividends received deduction.

Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other taxable disposition of Common Shares in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax basis in the Common Shares sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if the Common Shares are held for more than one year.

Preferential tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses and net capital losses are subject to complex limitations. For a U.S. Holder that is an individual, estate, or trust, capital losses may be used to offset capital gains and up to U.S.$3,000 of ordinary income. An unused capital loss of a U.S. Holder that is an individual, estate, or trust generally may be carried forward to subsequent taxable years, until such net capital loss is exhausted. For a U.S. Holder that is a corporation, capital losses may be used to offset capital gains, and an unused capital loss generally may be carried back three years and carried forward five years from the year in which such net capital loss is recognized.

Foreign Tax Credit

A U.S. Holder who pays (whether directly or through withholding) Canadian income tax with respect to the Common Shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.” In addition, this limitation is calculated separately with respect to specific categories of income (including “passive income,” “high withholding tax interest,” “financial services income,” “shipping income,” and certain other categories of income). Dividends paid by the Company generally will constitute “foreign source” income and generally will be classified as “passive income” or, in the case of certain U.S. Holders, “financial services income.” In addition, a U.S. Holder that is a corporation and that owns 10% or more of the voting stock of the Company may, subject to complex limitations, be entitled to an “indirect” foreign tax credit under Section 902 of the Code with respect to dividends paid by the Company. The foreign tax credit rules are complex, and each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the foreign tax credit rules.

Information Reporting; Backup Withholding Tax

Payments made within the U.S. of dividends on, and proceeds arising from certain sales or other taxable dispositions of, Common Shares generally will be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax. However, U.S. Holders that are corporations generally are excluded from these information reporting and backup withholding tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS. Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the information reporting and backup withholding tax rules.

Additional Rules that May Apply to U.S. Holders

If the Company is a “foreign personal holding company,” a “foreign investment company,” a “controlled foreign corporation,” or a “passive foreign investment company” (each as defined below), the preceding sections of this summary may not describe the U.S. federal income tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Common Shares.

Foreign Personal Holding Company

The Company generally will be a “foreign personal holding company” under Section 552 of the Code (a “FPHC”) if (a) at any time during a taxable year, more than 50% of the total voting power or the total value of the outstanding shares of the Company is owned, directly or indirectly, by five or fewer individuals who are citizens or residents of the U.S. and (b) 60% (or 50% in certain cases) or more of the gross income of the Company for such taxable year is foreign personal holding company income. “Foreign personal holding company income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.

If the Company is a FPHC, a U.S. Holder generally will be required to include in gross income such U.S. Holder’s allocable portion of the “undistributed foreign personal holding company income” (as defined in Section 556 of the Code) of the Company without regard to whether the income is distributed by the FPHC to its shareholders in the taxable year the income is earned. The Company does not believe that it has previously been, or currently is, a FPHC. However, there can be no assurance that the Company will not be a FPHC for the current or any future taxable year.

Foreign Investment Company

The Company generally will be a “foreign investment company” under Section 1246 of the Code (a “FIC”) if (a) 50% or more of the total voting power or the total value of the outstanding shares of the Company is owned, directly or indirectly, by citizens or residents of the U.S., domestic partnerships, domestic corporations, domestic estates, or domestic trusts (each as defined in Section 7701(a)(30) of the Code) and (b) the Company is (i) registered under the U.S. Investment Company Act of 1940, as amended, as a “management company” or a “unit investment trust” or (ii) engaged primarily in the business of investing, reinvesting, or trading in securities, commodities, or any interest in securities or commodities.

If the Company is a FIC, all or part of any gain recognized by a U.S. Holder on the sale or other taxable disposition of Common Shares will be treated as ordinary income (rather than as capital gain). The Company does not believe that it has previously been, or currently is, a FIC. However, there can be no assurance that the Company will not be a FIC for the current or any future taxable year.

Controlled Foreign Corporation

The Company generally will be a “controlled foreign corporation” under Section 957 of the Code (a “CFC”) if more than 50% of the total voting power or the total value of the outstanding shares of the Company is owned, directly or indirectly, by citizens or residents of the U.S., domestic partnerships, domestic corporations, domestic estates, or domestic trusts (each as defined in Section 7701(a)(30) of the Code), each of which own, directly or indirectly, 10% or more of the total voting power of the outstanding shares of the Company (a “10% Shareholder”).

If the Company is a CFC, a 10% Shareholder generally will be subject to current U.S. federal income tax with respect to (a) such 10% Shareholder’s pro rata share of the “subpart F income” (as defined in Section 952 of the Code) of the Company and (b) such 10% Shareholder’s pro rata share of the earnings of the Company invested in “United States property” (as defined in Section 956 of the Code). In addition, under Section 1248 of the Code, any gain recognized on the sale or other taxable disposition of Common Shares by a U.S. Holder that was a 10% Shareholder at any time during the five-year period ending with such sale or other taxable disposition generally will be treated as a dividend to the extent of the “earnings and profits” of the Company that are attributable to such Common Shares. If the Company is both a CFC and a “passive foreign investment company” (as defined below), the Company generally will be treated as a CFC (and not as a “passive foreign investment company”) with respect to any 10% Shareholder.

The Company does not believe that it has previously been, or currently is, a CFC. However, there can be no assurance that the Company will not be a CFC for the current or any future taxable year.

Passive Foreign Investment Company

The Company generally will be a “passive foreign investment company” under Section 1297 of the Code (a “PFIC”) if, for a taxable year, (a) 75% or more of the gross income of the Company for such taxable year is passive income or (b) 50% or more of the assets held by the Company either produce passive income or are held for the production of passive income, based on the fair market value of such assets (or on the adjusted tax basis of such assets, if the Company is not publicly traded and either is a “controlled foreign corporation” or makes an election). “Passive income” includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions. However, gains arising from the sale of commodities generally are excluded from passive income if (a) a foreign corporation holds the commodities directly (and not through an agent or independent contractor) as inventory or similar property or as dealer property, (b) such foreign corporation incurs substantial expenses related to the production, processing, transportation, handling, or storage of the commodities, and (c) gross receipts from sales of commodities that satisfy the requirements of clauses (a) and (b) constitute at least 85% of the total gross receipts of such foreign corporation.

For purposes of the PFIC income test and assets test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another foreign corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other foreign corporation and (b) received directly a proportionate share of the income of such other foreign corporation. In addition, for purposes of the PFIC income test and asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by the Company from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.

The Company believes that it was a PFIC for the taxable year ended December 31, 2003 and that it will be a PFIC for the taxable year ending December 31, 2004. There can be no assurance, however, that the IRS will not challenge the determination made by the Company concerning its PFIC status.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of Common Shares will depend on whether such U.S. Holder makes an election to treat the Company as a “qualified electing fund” or “QEF” under Section 1295 of the Code (a “QEF Election”) or a mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”). A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a “Non-Electing U.S. Holder.”

A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of Common Shares and (b) any excess distribution paid on the Common Shares. A distribution generally will be an “excess distribution” to the extent that such distribution (together with all other distributions received in the current taxable year) exceeds 125% of the average distributions received during the three preceding taxable years (or during a U.S. Holder’s holding period for the Common Shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of Common Shares, and any excess distribution paid on the Common Shares, must be ratably allocated to each day in a Non-Electing U.S. Holder’s holding period for the Common Shares. The amount of any such gain or excess distribution allocated to prior years of such Non-Electing U.S. Holder’s holding period for the Class Common Shares (other than years prior to the first taxable year of the Company during such Non-Electing U.S. Holder’s holding period and beginning after January 1, 1987 for which the Company was a PFIC) will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such prior year. A Non-Electing U.S. Holder will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year. Such a Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as “personal interest,” which is not deductible. The amount of any such gain or excess distribution allocated to the current year of such Non-Electing U.S. Holder’s holding period for the Common Shares will be treated as ordinary income in the current year, and no interest charge will be incurred with respect to the resulting tax liability for the current year.

If the Company is a PFIC for any taxable year during which a Non-Electing U.S. Holder holds Common Shares, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent years. A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such Common Shares were sold on the last day of the last taxable year for which the Company was a PFIC.

QEF Election

A U.S. Holder that makes a QEF Election generally will not be subject to the rules of Section 1291 of the Code discussed above. However, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s pro rata share of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) and the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. Holder. Generally, “net capital gain” is the excess of (a) net long-term capital gain over (b) net short-term capital gain, and “ordinary earnings” are the excess of (a) “earnings and profits” over (b) net capital gain. A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts for each taxable year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the Company. However, a U.S. Holder that makes a QEF Election may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal interest,” which is not deductible.

A U.S. Holder that makes a QEF Election generally also (a) may receive a tax-free distribution from the Company to the extent that such distribution represents “earnings and profits” of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in the Common Shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election. In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of Common Shares.

The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely. A QEF Election will be treated as “timely” if such QEF Election is made for the first year in the U.S. Holder’s holding period for the Common Shares in which the Company was a PFIC. A U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such first year. However, if the Company was a PFIC in a prior year, then in addition to filing the QEF Election documents, a U.S. Holder must elect to recognize (a) gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if the Common Shares were sold on the qualification date or (b) if the Company was also a CFC, such U.S. Holder’s pro rata share of the post-1986 “earnings and profits” of the Company as of the qualification date. The “qualification date” is the first day of the first taxable year in which the Company was a QEF with respect to such U.S. Holder. The election to recognize such gain or “earnings and profits” can only be made if such U.S. Holder’s holding period for the Common Shares includes the qualification date. By electing to recognize such gain or “earnings and profits,” such U.S. Holder will be deemed to have made a timely QEF Election. In addition, under very limited circumstances, a U.S. Holder may make a retroactive QEF Election if such U.S. Holder failed to file the QEF Election documents in a timely manner.

A QEF Election will apply to the taxable year for which such QEF Election is made and to all subsequent taxable years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election. If a U.S. Holder makes a QEF Election and, in a subsequent taxable year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those taxable years in which the Company is not a PFIC. Accordingly, if the Company becomes a PFIC in another subsequent taxable year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any such subsequent taxable year in which the Company qualifies as a PFIC. In addition, the QEF Election will remain in effect (although it will not be applicable) with respect to a U.S. Holder even after such U.S. Holder disposes of all of such U.S. Holder’s direct and indirect interest in the Common Shares. Accordingly, if such U.S. Holder reacquires an interest in the Company, such U.S. Holder will be subject to the QEF rules described above for each taxable year in which the Company is a PFIC.

Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the availability of, and procedure for making, a QEF Election. U.S. Holders should be aware that there can be no assurance that the Company will satisfy record keeping requirements that apply to a QEF, or that the Company will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in event that the Company is a PFIC and a U.S. Holder wishes to make a QEF Election.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the Common Shares are marketable stock. The Common Shares generally will be “marketable stock” if the Common Shares are regularly traded on (a) a national securities exchange that is registered with the Securities and Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and other requirements and the laws of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks.

A U.S. Holder that makes a Mark-to-Market Election generally will not be subject to the rules of Section 1291 of the Code discussed above. However, if a U.S. Holder makes a Mark-to-Market Election after the beginning of such U.S. Holder’s holding period for the Common Shares and such U.S. Holder has not made a timely Mark-to-Market Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the Common Shares.

A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each taxable year in which the Company is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the Common Shares as of the close of such taxable year over (b) such U.S. Holder’s tax basis in such Common Shares. A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the lesser of (a) the excess, if any, of (i) such U.S. Holder’s adjusted tax basis in the Common Shares over (ii) the fair market value of such Common Shares as of the close of such taxable year or (b) the excess, if any, of (i) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (ii) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years.

A U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder’s tax basis in the Common Shares to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election. In addition, upon a sale or other taxable disposition of Common Shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior taxable years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior taxable years).

A Mark-to-Market Election applies to the taxable year in which such Mark-to-Market Election is made and to each subsequent taxable year, unless the Common Shares cease to be “marketable stock” or the IRS consents to revocation of such election. Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the availability of, and procedure for making, a Mark-to-Market Election.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of Common Shares that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations). However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which Common Shares are transferred.

Certain additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a QEF Election. For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses Common Shares as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such Common Shares.

The PFIC rules are complex, and each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Common Shares.

Dividends and Paying Agents.

Not Applicable

Statement by Experts.

Not Applicable

Documents on Display.

The documents concerning the Company which are referred to in this Annual Report may be inspected at the Company’s executive offices, located at Suite 830, 355 Burrard Street, Vancouver, BC.

Subsidiary Information.

Not Applicable

Item 11.

Quantitative and Qualitative Disclosures About Market Risk.

There are no market risks which can be expected to materially affect the Company’s business.

Mineral Prices

Even if the Company’s exploration programs are successful, factors beyond the control of the Company may affect the marketability of any minerals discovered. Metal prices have historically fluctuated widely and are affected by numerous factors, including international, economic and political trends, expectations for inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and worldwide production levels. The effect of these factors cannot be accurately predicted.

Foreign Currency Translation

Item 12.

Description of Securities Other than Equity Securities.

Not Applicable

PART II

Item 13.

Defaults, Dividend Arrearages and Delinquencies.

None.

Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds.

None.

Item 15.

Controls and Procedures

Disclosure Controls and Procedures

The Company’s management, including the President, has reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures as of a date within 90 days before the filing of this annual report. Based on that review and evaluation, the President has concluded that the Company’s disclosure controls and procedures are effective in providing management with all material information required to be disclosed in this annual report on a timely basis.

Changes in Internal Controls Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over the financial reporting of the Company. The management of the Company, including the President, has reviewed whether or not there have been significant changes in internal controls or in other factors that could significantly affect the internal controls of the Company subsequent to the date of their most recent evaluation. Based on that review, the President has concluded that there have been no such significant changes.

Item 16.

[Reserved]

Item 16A.

Audit Committee Financial Expert

The Board of Directors of the Company has determined that there is one “audit committee financial expert” (as defined by the SEC) on the Company’s audit committee, namely David Farrell, a Director of the Company. Mr. Farrell has gained the attributes of an audit committee financial expert through his experience overseeing and assessing the performance of the public accountants who have audited the Company’s financial statements;

Item 16B.

Code of Ethics

The Company has not adopted a formal written code of ethics given its relatively small size. Directors and officers of the Company are subject to the laws of the Province of British Columbia, Canada, whereby they are required to act honestly, in good faith and in the best interests of the Company. Also, the Board of Directors of the Company is comprised of two lawyers who are available to the management of the Company to provide a high standard of care in the activities of the Company and to provide guidance when needed.

Item 16C.

Principal Accountant Fees and Services

Amisano Hanson, Chartered Accountants, has served as the Company’s principal accountant since January 9, 2004. Davidson & Company, Chartered Accountants, served as the Company’s principal accountant from March 28, 2001 through January 9, 2004. The charts below sets forth the total amount billed the Company by Amisano Hanson for services performed for the Company’s fiscal years ended December 31, 2005 and 2004, and breaks down these amounts by category of service:

	Years ended December 31
	2005	2004
Audit:	$42,750	$54,400
Audit Related:	0	0
Tax	$5,000 (estimated)	$2,300 $4,000 (estimated)
All Other Fees	0	0
Total	$47,750	$60,700

“Audit Fees” are the aggregate fees billed for the audit of the Company’s consolidated annual financial statements in connection with statutory and regulatory filings or engagements.

Audit Committee's pre-approval policies and procedures

The Audit Committee nominates and engages the independent auditors to audit the financial statements, and approves all audit, audit-related services, tax services and other services provided by the Company’s outside auditors. Any services provided by the auditors that are not specifically included within the scope of the audit must be pre-approved by the audit committee prior to any engagement. The audit committee is permitted to approve certain fees for audit-related services, tax services and other services pursuant to a de minimus exception before the completion of the engagement. In 2005, none of the fees paid to the auditors were approved pursuant to the de minimus exception.

Item 16D.

Exemptions from the Listing Standards for Audit Committees.

Not Applicable

Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

None

PART III

Item 17.

Financial Statements.

The Company’s Consolidated Financial Statements are stated in Canadian Dollars and are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the periods presented with U.S. GAAP, except as discussed in Note 16 to the Consolidated Financial Statements of the Company.

The Consolidated Financial Statements of the Company as required under Item 16 of Form 20-F attached hereto are individually listed under Item 19, and are found immediately following the text of this Annual Report. The audit report of Amisano Hanson, Chartered Accountants, and the comments by auditors for U.S. readers on Canada – U.S. reporting difference, are included herein immediately preceding the Consolidated Financial Statements.

Item 18.

Financial Statements.

Not Applicable

Item 19.

Exhibits.

Financial Statements

The Consolidated Financial Statements of the Corporation and exhibits listed below are filed with this Annual Report on Form 20-F in the United States.

The following financial statements are attached to and form part of this Annual Report:

Consolidated Financial Statements of the Company

Report of Independent Registered Public Accounting Firm of Amisano Hanson, Chartered Accountants

Consolidated Balance Sheets as at December 31, 2005 and 2004

Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2005, 2004 and 2003

Consolidated Schedule of Mineral Properties for the year ended December 31, 2005

Consolidated Schedule of Mineral Properties for the year ended December 31, 2004

Notes to the Consolidated Financial Statements of the Company

Exhibits

The following exhibits are attached to and form part of this Annual Report:

Exhibit No.	Description
1 ⁽¹⁾	Certificate of Amalgamation and Articles of the Company dated July 1, 2004.
2 ⁽²⁾	Escrow Agreement dated April 14, 1998 among the Company, Pacific Corporate Trust Company, as escrow agent, and certain shareholders of the Company named therein
4.1 ⁽³⁾	Management Agreement dated April 30, 2004 and effective July 1, 2004 between the Company and Mill Street Services Ltd.
4.2 ⁽¹⁾	Option Agreement dated September 22, 2004 between the Company and Meridian Gold Inc.
8 ⁽⁴⁾	List of Subsidiaries
31.1	Section 302 Certification of the President, C.E.O. and C.F.O.
32.1	Section 906 Certification of the President, C.E.O. and C.F.O.

(1)

Incorporated by reference to the Company’s Form 20-F Registration Statement dated July 13, 2005.

(2)

Incorporated by reference to the Company’s Form 20-F Registration Statement dated November 15, 2000.

(3)

Incorporated by reference to the Company’s Form 20-F Annual Report dated June 30, 2004.

(4)

See Item 4, Organizational Structure, herein.

SIGNATURE PAGE

Pursuant to the requirements of Section 12g of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: June 28, 2006

By: /s/ Simon Ridgway

Simon Ridgway,

President and Chief Executive Officer

RADIUS GOLD INC.

(An Exploration Stage Company)

REPORT AND CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 and 2004

(Stated in Canadian dollars)

A PARTNERSHIP OF INCORPORATED PROFESSIONALS

AMISANO HANSON

CHARTERED ACCOUNTANTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders,

Radius Gold Inc.

(An Exploration Stage Company)

We have audited the consolidated balance sheets of Radius Gold Inc. as at December 31, 2005 and 2004 and the consolidated statements of operations, cash flows and shareholders' equity for each of the years in the three year period ended December 31, 2005. 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 of America). 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 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 cash flows for each of the years in the three year period ended December 31, 2005, in accordance with Canadian generally accepted accounting principles.

Vancouver, Canada	*“AMISANO HANSON”*
April 11, 2006	Chartered Accountants

750 WEST PENDER STREET, SUITE 604

TELEPHONE: 604-689-0188

VANCOUVER CANADA

FACSIMILE: 604-689-9773

V6C 2T7

E-MAIL: amishan@telus.net

RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

December 31, 2005 and 2004

(Stated in Canadian Dollars)

	2005	2004
ASSETS
Current
Cash and cash equivalents	$ 1,423,554	$ 4,377,846
Marketable securities – Note 4	11,936,277	12,156,140
Advances and receivables – Notes 5 and 9	305,864	701,032
GST receivable	26,052	30,993
Due from related parties – Note 9	256,649	80,840
Prepaid expenses and deposits	102,641	71,496

	14,051,037	17,418,347

Property and equipment – Note 6	384,720	373,952
Mineral properties – Notes 5, 9 and Schedule 1	13,731,865	16,819,598

	$ 28,167,622	$ 34,611,897

LIABILITIES
Current
Accounts payable and accrued liabilities – Note 9	$ 286,527	$ 347,394

SHAREHOLDERS’ EQUITY

Capital stock – Notes 7 and 13	42,402,819	42,060,982
Authorized:
Unlimited common shares without par value
Issued:
53,310,988 shares (2004: 53,091,188)
Contributed surplus	2,244,987	2,290,834

	44,647,806	44,351,816
Deficit	(16,766,711)	(10,087,313)

	27,881,095	34,264,503

	$ 28,167,622	$ 34,611,897

Commitments – Notes 5, 7 and 11

Subsequent Events – Notes 7 and 13

ON BEHALF OF THE BOARD:


“Simon Ridgway”	Director	“Mario Szotlender”	Director
Simon Ridgway		Mario Szotlender

SEE ACCOMPANYING NOTES

RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

for the years ended December 31, 2005, 2004 and 2003

(Stated in Canadian Dollars)

	2005	2004	2003

Expenses
Amortization	$ 50,096	$ 55,379	$ 29,036
Consulting fees – Note 9	38,710	69,870	33,061
Donations	25,360	-	-
Management fees – Note 9	60,000	45,000	30,000
Non-cash stock compensation charge – Note 7	40,850	1,173,784	234,500
Office and miscellaneous – Note 2	46,888	33,521	28,854
Professional fees	158,705	291,233	54,427
Property investigations	11,790	-	-
Rent and utilities	37,102	37,454	26,773
Repairs and maintenance	17,220	13,194	6,602
Salaries and benefits	178,014	178,766	182,203
Shareholder communication	222,073	703,715	531,813
Telephone	14,908	15,222	7,433
Transfer agent and regulatory fees	24,262	51,058	27,833
Travel and accommodation	100,580	98,513	90,446
Write-off of mineral properties – Note 5	5,917,734	1,350,205	446,529

	(6,944,292)	(4,116,914)	(1,729,510)

Other income (expenses)
Foreign exchange	(76,231)	(256,135)	(64,702)
Investment income	268,470	431,676	72,149
Other income	72,655	6,234	-
Gain on settlement of debt	-	26,800	-

	264,894	208,575	7,447

Net loss for the year	$ (6,679,398)	$ (3,908,339)	$ (1,722,063)

Basic and diluted loss per common share	$ (0.13)	$ (0.09)	$ (0.06)

Weighted average number of common shares outstanding	52,898,829	44,916,963	28,446,194

RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended December 31, 2005, 2004 and 2003

(Stated in Canadian Dollars)

	2005	2004	2003

Operating Activities
Net loss for the year	$ (6,679,398)	$ (3,908,339)	$ (1,722,063)
Items not affecting cash:
Amortization	50,096	55,379	29,036
Loss on disposal of subsidiary	-	-	910
Non-cash stock compensation charge	40,850	1,173,784	234,500
Write-off of mineral properties	5,917,734	1,350,205	446,529
Changes in non-cash working capital items:
Advances and receivables	395,168	(482,081)	28,100
GST receivable	4,941	7,359	(24,333)
Prepaid expenses	(31,145)	(12,710)	(729)
Accounts payable and accrued liabilities	(60,867)	(257,763)	141,848

Net cash used in operating activities	(362,621)	(2,074,166)	(866,202)

Investing Activities
Acquisition of equipment	(60,864)	(253,876)	(141,309)
Due from related parties	(175,809)	126,355	(302,617)
Marketable securities	219,863	(12,156,140)	-
Mineral property acquisition costs	(231,913)	(210,692)	(205,831)
Deferred exploration costs	(2,598,088)	(3,094,156)	(1,184,621)
Due to related parties	-	(275,812)	240,985
Net cash acquired on amalgamation	-	6,491,647	-

Net cash used in investing activities	(2,846,811)	(9,372,674)	(1,593,393)

Financing Activity
Net proceeds from issuance of capital stock	255,140	1,040,199	15,386,927

Net cash provided by financing activities	255,140	1,040,199	15,386,927

Increase (decrease) in cash and cash equivalents during the year	(2,954,292)	(10,406,641)	12,927,332

Decrease in cash from disposal of subsidiary	-	-	(1,468)

Cash and cash equivalents, beginning of year	4,377,846	14,784,487	1,858,623

Cash and cash equivalents, end of year	$ 1,423,554	$ 4,377,846	$ 14,784,487

…/cont’d

RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

for the years ended December 31, 2005, 2004 and 2003

(Stated in Canadian Dollars)

	2005	2004	2003

Supplementary disclosure of cash flow information:
Cash paid for interest	$ -	$ -	$ -

Cash paid for income taxes	$ -	$ -	$ -


Cash and cash equivalents is comprised of:
Cash	$ 1,173,554	$ 836,337	$ 1,722,492
Term deposit	250,000	3,541,509	13,011,995

	$ 1,423,554	$ 4,377,846	$14,784,487

Non-cash Transactions – Note 8

RADIUS GOLD INC.

(An Exploration Stage Company)

STATEMENT OF SHAREHOLDERS' EQUITY

for the years ended December 31, 2005, 2004 and 2003

(Stated in Canadian Dollars)

					Deficit
					Accumulated
	Common Stock				during the
	Issued		Share	Contributed	Exploration
	Shares	Amount	Subscriptions	Surplus	Stage	Total

Balance, December 31, 2002	22,705,896	$ 11,652,765	$ 500,000	$ -	$ (3,446,011)	$ 8,706,754
Share subscriptions utilized	-	-	(500,000)	-	-	(500,000)
Issued for cash pursuant to a private placement – at $0.50	1,000,000	500,000	-	-	-	500,000
– at $1.50	6,545,000	9,817,500	-	-	-	9,817,500
Less: issue costs	-	(906,981)	-	-	-	(906,981)
Issued for cash pursuant to the exercise of share purchase options – at $0.60	275,000	165,000	-	-	-	165,000
– at $0.66	155,000	100,750	-	-	-	100,750
– at $0.68	255,000	173,400	-	-	-	173,400
– at $0.90	30,000	27,000	-	-	-	27,000
– at $0.94	20,000	18,800	-	-	-	18,800
– at $0.95	20,000	19,000	-	-	-	19,000
– at $0.99	130,000	128,700	-	-	-	128,700
– at $1.00	40,000	40,000	-	-	-	40,000
– at $1.01	10,000	10,100	-	-	-	10,100
– at $1.25	50,000	62,500	-	-	-	62,500
– at $1.35	170,000	229,500	-	-	-	229,500
Issued for cash pursuant to the exercise of share purchase warrants – at $0.25	2,145,000	536,250	-	-	-	536,250
– at $0.55	738,750	406,313	-	-	-	406,313
– at $0.74	1,123,334	831,267	-	-	-	831,267
– at $1.25	2,982,262	3,727,828	-	-	-	3,727,828
Non-cash compensation charge	-	-	-	234,500	-	234,500
Net loss for the year	-	-	-	-	(1,722,063)	(1,722,063)

Balance, December 31, 2003	38,395,242	27,539,692	-	234,500	(5,168,074)	22,606,118

…/Cont’d

RADIUS GOLD INC.

(An Exploration Stage Company)

STATEMENT OF SHAREHOLDERS' EQUITY

for the years ended December 31, 2005, 2004 and 2003

(Stated in Canadian Dollars)

					Deficit
					Accumulated
	Common Stock				during the
	Issued		Share	Contributed	Exploration
	Shares	Amount	Subscriptions	Surplus	Stage	Total

Accounting change for stock-based compensation – Note 3	-	-	-	1,010,900	(1,010,900)	-
Amalgamation – Note 4 – at $1.11	10,284,452	11,415,742	-	-	-	11,415,742
Pursuant to property acquisition agreement – at $1.49	1,300,000	1,937,000	-	-	-	1,937,000
Issued for cash pursuant to the exercise of share purchase options
– at $0.60	35,000	21,000	-	-	-	21,000
– at $0.65	117,000	76,050	-	-	-	76,050
– at $0.68	69,000	46,920	-	-	-	46,920
– at $0.90	30,000	27,000	-	-	-	27,000
– at $0.95	55,000	52,250	-	-	-	52,250
– at $0.99	79,444	78,650	-	-	-	78,650
– at $1.10	65,000	71,500	-	-	-	71,500
Issued for cash pursuant to the exercise of share purchase warrants
– at $0.25	2,649,800	662,450	-	-	-	662,450
– at $0.55	11,250	6,188	-	-	-	6,188
Non-cash compensation charge	-	-	-	1,173,784	-	1,173,784
Transfer of contributed surplus on exercise of options	-	128,350	-	(128,350)	-	-
Less: issue costs	-	(1,810)	-	-	-	(1,810)
Net loss for the year	-	-	-	-	(3,908,339)	(3,908,339)

Balance, December 31, 2004	53,091,188	42,060,982	-	2,290,834	(10,087,313)	34,264,503

…/cont’d

RADIUS GOLD INC.

(An Exploration Stage Company)

STATEMENT OF SHAREHOLDERS' EQUITY

for the years ended December 31, 2005, 2004 and 2003

(Stated in Canadian Dollars)

									Deficit
									Accumulated
	Common Stock								during the
	Issued				Share		Contributed		Exploration
	Shares		Amount		Subscriptions		Surplus		Stage		Total

Issued for cash pursuant to the exercise of share purchase options
– at $0.90		40,000		36,000		-		-		-		36,000
– at $0.99		50,000		49,500		-		-		-		49,500
– at $1.00		35,000		35,000		-		-		-		35,000
– at $1.30		37,800		49,140		-		-		-		49,140
Issued for cash pursuant to the exercise of share purchase warrants
– at $1.50		57,000		85,500		-		-		-		85,500
Non-cash compensation charge		-		-		-		40,850		-		40,850
Transfer of contributed surplus on exercise of options		-		86,697		-		(86,697)		-		-
Net loss for the year		-		-		-		-		(6,679,398)		(6,679,398)

Balance, December 31, 2005		53,310,988		$ 42,402,819		$ -		$ 2,244,987		$ (16,766,711)		$ 27,881,095

Schedule I

RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED SCHEDULE OF MINERAL PROPERTIES

for the year ended December 31, 2005

(Stated in Canadian Dollars)

									Dominican
	Guatemala		Nicaragua		Mexico		Argentina	Colombia	Republic	Year ended
	General	Mineral	General	Mineral	General	Mineral	General	General		December 31,
	Exploration	Concessions	Exploration	Concessions	Exploration	Concessions	Exploration	Exploration	Camila	2005
Acquisition Costs
Balance, beginning of year	$ -	$ 5,267,670	$ 185,478	$ 2,572,232	$ -	$ -	$ -	$ -	$ 366,191	$ 8,391,571

Cash	-	-	-	-	-	231,913	-	-	-	231,913

Balance, end of year	-	5,267,670	185,478	2,572,232	-	231,913	-	-	366,191	8,623,484

Deferred Exploration Costs
Balance, beginning of year	-	5,712,900	574,907	2,081,035	46,006	-	-	-	13,179	8,428,027

Automobile	1,139	232	46,572	50,803	32,917	7,012	391	25	-	139,091
Camp, food and supplies	2,118	-	37,064	41,305	10,005	3,249	-	-	-	93,741
Drafting, maps and printing	54	-	2,351	212	941	389	157	-	-	4,104
Drilling	-	-	-	113,474	-	-	-	-	-	113,474
Exploration administration	3,614	4	19,235	5,264	3,352	1,930	-	-	-	33,399
Environment	-	-	-	6,601	-	-	-	-	-	6,601
Geochemistry	321	-	66,524	169,701	5,592	14,834	-	-	-	256,972
Geological consulting – Note 9	23,722	1,328	296,744	401,378	97,481	155,302	16,545	4,648	-	997,148
Other consulting	13,424	-	21,062	23,021	4,269	2,064	-	-	-	63,840
Legal and accounting	20,696	-	22,603	6,088	12,283	4,616	-	-	4,370	70,656
Licences, rights and taxes	3,526	-	33,930	89,271	1,217	23,273	-	-	-	151,217
Materials (recovery)	(610)	20	5,603	29,399	4,333	231	-	-	-	38,976
Maintenance	17	51	3,738	5,649	123	-	-	-	-	9,578
Miscellaneous	1,085	2,587	5,836	1,751	300	18	-	-	-	11,577
Medical expenses	2,687	-	11,221	11,554	2,338	6,461	469	207	-	34,937
Property investigation	-	-	381	1,549	-	11,750	-	-	-	13,680
Rent and utilities	4,247	922	20,781	20,107	3,385	1,005	-	-	-	50,447
Rental equipment	-	-	-	-	-	4,826	-	-	-	4,826
Salaries and wages	8,155	1,169	85,243	96,330	15,325	2,405	-	-	-	208,627
Shipping	1,183	476	7,896	6,060	537	212	41	-	-	16,405
Telephone and communications	108	12	18,806	24,046	3,418	1,145	16	16	-	47,567
Travel and accommodation	365	-	72,570	50,386	63,508	29,925	11,905	2,565	-	231,224

	85,851	6,801	778,160	1,153,949	261,324	270,647	29,524	7,461	4,370	2,598,087

…/cont’d

Schedule 1 – (cont’d)

RADIUS GOLD INC.

(An Exploration Stage Company)

CONSOLIDATED SCHEDULE OF MINERAL PROPERTIES

for the year ended December 31, 2005

(Stated in Canadian Dollars)

									Dominican
	Guatemala		Nicaragua		Mexico		Argentina	Colombia	Republic	Year ended
	General	Mineral	General	Mineral	General	Mineral	General	General		December 31,
	Exploration	Concessions	Exploration	Concessions	Exploration	Concessions	Exploration	Exploration	Camila	2005

Balance, end of year	85,851	5,719,701	1,353,067	3,234,984	307,330	270,647	29,524	7,461	17,549	11,026,114

	85,851	10,987,371	1,538,545	5,807,216	307,330	502,560	29,524	7,461	383,740	19,649,598

Less: write-offs	(85,851)	(1,652,627)	(640,877)	(2,939,682)	-	(214,957)	-	-	(383,740)	(5,917,734)

Totals	$ -	$ 9,334,744	$ 897,668	$ 2,867,534	$ 307,330	$ 287,603	$ 29,524	$ 7,461	$ -	$ 13,731,864

Schedule 1

RADIUS GOLD INC.

(An Exploration Stage Company)

SCHEDULE OF MINERAL PROPERTIES

for the year ended December 31, 2004

(Stated in Canadian Dollars)

				Dominican	Total
	Guatemala	Nicaragua	Mexico	Republic	2004

Acquisition Costs
Balance, beginning of year	$ 1,077,504	$ -	$ -	$ -	$ 1,077,504

Shares	1,937,000	-	-	-	1,937,000
Cash	196,797	19,314	-	-	216,111
Acquisition through amalgamation – Note 4	2,165,405	2,738,396	-	366,191	5,269,992

	4,299,202	2,757,710	-	366,191	7,423,103

Balance, end of year	5,376,706	2,757,710	-	366,191	8,500,607

Deferred Exploration Costs
Balance, beginning of year	5,910,418	670,041	-	-	6,580,459

Automobile	21,941	129,072	-	-	151,013
Camp, food and supplies	22,863	192,878	-	-	215,741
Drafting, maps and printing	466	13,490	31,717	-	45,673
Drilling	21,051	205,998	-	-	227,049
Exploration administration	4,453	38,902	-	-	43,355
Geochemistry	9,460	310,181	-	-	319,641
Geological consulting – Note 9	162,570	801,354	13,924	-	977,848
Other consulting	72,416	32,223	-	5,665	110,304
Legal and accounting	17,455	57,591	-	-	75,046
Licenses, rights and taxes	55,612	118,248	-	-	173,860
Materials (recovery)	11,232	40,857	-	-	52,089
Maintenance	473	6,677	-	-	7,150
Miscellaneous	2,715	11,833	-	-	14,548
Medical expenses	5,975	33,391	365	-	39,731
Property investigation	25,821	46,309	-	-	72,130
Rent and utilities	48,572	45,480	-	-	94,052
Rental equipment	6,938	85	-	-	7,023
Salaries and wages	63,190	174,726	-	-	237,916
Shipping	3,055	9,454	-	-	12,509
Telephone and communications	11,686	43,395	-	-	55,081
Travel and accommodation	19,145	130,319	-	7,514	156,978

	587,089	2,442,463	46,006	13,179	3,088,737

	6,497,507	3,112,504	46,006	13,179	9,669,196

	11,874,213	5,870,214	46,006	379,370	18,169,803

Less: write-offs	(893,643)	(456,562)	-	-	(1,350,205)

Totals	$ 10,980,570	$ 5,413,652	$ 46,006	$ 379,370	$ 16,819,598

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

RADIUS GOLD INC.

(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005, 2004 and 2003

(Stated in Canadian Dollars)

Note 1

Nature of Operations

Radius Gold Inc. (The Company) was formed by the amalgamation of Radius Explorations Ltd. (Radius) (formerly RDU – TSXV) and PilaGold Inc. (PilaGold) (formerly PRI – TSXV), which became effective on July 1, 2004.

The Company is engaged in the acquisition and exploration of mineral properties in Guatemala, Nicaragua, Mexico, Argentina and Colombia. The Company is in the process of exploring its mineral properties and has not yet determined whether the properties contain reserves that are economically recoverable. Accordingly, the recoverability of these capitalized costs is dependant upon the existence of economically recoverable reserves, continuation of the Company’s interest in the underlying mineral claims, the ability of the Company to obtain the necessary financing to complete their development and upon future profitable production or disposition thereof.

Note 2

Significant Accounting Policies

Principles of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries:

Minerales Sierra Pacifico S.A. and Exploraciones Mineras de Guatemala S.A., companies incorporated under the laws of Guatemala;

ii)

Minerales de Nicaragua S.A. and Desarrollo Geologico Minerao, S.A., companies incorporated under the laws of Nicaragua;

iii)

Recursos Del Cibao, S.A., a company incorporated under the laws of the Dominican Republic;

iv)

Radius Panamá Corporation, Weltern Resources Corp. and Corporación Geológica de Panamá, companies incorporated under the laws of Panamá.

Radius (Cayman) Inc. and Pavon (Cayman) Inc., companies incorporated under the laws of Cayman Island; and

vi)

Geometalos Del Norte-Geonorte, a company incorporated under the laws of Mexico.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 2

Significant Accounting Policies – (cont’d)

Principles of Consolidation – (cont’d)

All significant inter-company transactions have been eliminated upon consolidation.

Cash and Cash Equivalents

Cash and cash equivalents included highly liquid investments with original maturities of three months or less.

Marketable Securities

Marketable securities are recorded at the lower of cost or market value.

Mineral Properties

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 2

Significant Accounting Policies – (cont’d)

Property and Equipment and Amortization

Property and equipment are recorded at cost. Equipment is amortized over their estimated useful lives using the following methods:

Leasehold improvements

5 years straight-line

Trucks

5 years straight-line

Computer equipment

30% declining balance

Geophysical equipment

20% declining balance

Furniture and equipment

20% declining balance

Website

30% declining balance

Additions to equipment are amortized at one-half rate during the year of acquisition.

Financial Instruments

Basic and Diluted Loss Per Share

Basic loss per share (“LPS”) is calculated by dividing loss applicable to common shareholders by the weighted average number of common shares outstanding for the year. Diluted LPS reflects the potential dilution that could occur if potentially dilutive securities ere exercised or converted to common stock. Due to the losses, potentially dilutive securities were excluded form the calculation of diluted LPS, as they were anti-dilutive. Therefore, there is no difference in the calculation of basic and diluted LPS.

Income Taxes

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 2

Significant Accounting Policies – (cont’d)

Foreign Currency Translation

Stock-based Compensation

Asset Retirement Obligation

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 2

Significant Accounting Policies – (cont’d)

Impairment of Long-lived Assets

Note 3

Amalgamation

On July 1, 2004, Radius and PilaGold shareholders exchanged their shares for shares of the Company. Under the terms of the amalgamation, Radius shareholders received 1 Radius Gold Inc. share for every 1 Radius share held and PilaGold shareholders received 1 Radius Gold Inc. share for every 2.25 PilaGold shares held. PilaGold had 23,140,016 issued shares outstanding at July 1, 2004, which were exchanged for 10,284,452 Radius Gold Inc. shares. Radius’s issued shares at July 1, 2004, totalled 40,306,492 which were exchanged for 40,306,492 Radius Gold Inc. shares. The transaction resulted in the shareholders of Radius acquiring the majority of the outstanding shares of the Company and has been accounted for using the purchase method with Radius being identified as the acquirer. Accordingly all comparative figures presented are of Radius. The consolidated statement of operations include the consolidated operations of Radius from January 1, 2004 to June 30, 2004 and the consolidated operations of the Company from July 1, 2004 to December 31, 2004 and do not include the consolidated operations of PilaGold from its most recent fiscal year end (March 31, 2004) to June 30, 2004.

The fair value of the acquired net identifiable assets of PilaGold were as follows:

Cash and short-term deposits	$ 6,491,647
Advances and other receivables	25,297
Prepaid expenses and deposits	28,708
Due from related parties	16,117
Equipment	22,553
Advances for exploration	134,393
Deferred exploration	5,269,992
Accounts payable and accrued liabilities	(378,983)
Due to related parties	(193,983)

	$ 11,415,741

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 3

Amalgamation – (cont’d)

As described above, the consolidated statement of operations for the year ended December 31, 2004 does not include the results of consolidated operations of PilaGold from its last fiscal year (March 31, 2004) to June 30, 2004 as follows:

		Three months
		ended June 30,
		2004
	Revenue
	Interest income	$ 21,154

	Expenses
	Amortization	1,023
	Bank charges and interest	623
	Consulting	2,603
	Foreign currency exchange	(17,268)
	Legal and accounting fees	24,073
	Management fees	7,500
	Office and miscellaneous	8,531
	Promotion and travel	108,371
	Regulatory and stock exchange fees	176
	Rent and utilities	8,540
	Salaries and wages	28,635
	Shareholder communication	18,076
	Telephone and fax	1,207
	Transfer agent fees	6,536

		198,626

	Loss before other item	(177,472)
	Other item:
	Write-off of exploration costs	(6,361)

	Net loss for the period	$ (183,833)

	Loss per share	$ (0.01)

Note 4

Marketable Securities

The carrying value of marketable securities totalling $11,936,277 approximates market value at December 31, 2005.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties are in good standing. The properties in which the Company has committed to earn an interest are located in Guatemala, Nicaragua and Mexico and the Company is therefore relying on title opinions by legal counsel who are basing such opinions on the laws of Guatemala, Nicaragua and Mexico, respectively.

Guatemala

El Tambor

The El Tambor Property consists of 12 exploration concessions located in south-central Guatemala.

Unidad Tipo, Santa Margarita, Tizate, El Injerto and Carlos Antonio

In 2004, the Company acquired a 100% interest (subject to a 2.5% net smelter returns royalty) in the Unidad Tipo, the Santa Margarita, Tizate, El Injerto and Carlos Antonio concessions.

Progreso II to VII Concessions

The Company acquired the right to a 100% interest (subject to a 4% net smelter returns royalty) in the Progreso II to VII Concessions under an exploration lease and option to purchase agreement dated May 7, 2002, and amended October 14, 2004, with Entre Mares De Guatemala, S.A. The Company has incurred the minimum aggregate exploration costs required to be made by May 6, 2006 of US$800,000, and has the right until May 7, 2006 to elect to purchase the Progreso Concessions for US$250,000. One-half of the 4% royalty may be purchased by the Company for US$2.0 million.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Guatemala – (cont’d)

El Tambor – (cont’d)

Option Agreement with Fortuna Ventures Inc. (“Fortuna”)

During the year ended December 31, 2004, the Company granted an option to Fortuna to earn a 60% interest in the El Tambor project in consideration of Fortuna incurring exploration expenditures totalling US$4 million over four years. During the year ended December 31, 2005, this agreement was terminated by Fortuna.

During the year ended December 31, 2004, the Company explored additional areas around El Tambor. During the year ended December 31, 2005, the Company decided to discontinue further exploration on these additional areas of the project, based on its exploration results to date, and has written off $133,393 in costs.

ii)

Marimba and Holly/Banderas

Marimba

The Company holds a 100% interest in the Marimba Project, which consists of two exploration concessions, located in southeastern Guatemala covering approximately 23,500 hectares.

During the year ended December 31, 2002, the Company entered into an option agreement with PilaGold, whereby PilaGold could earn a 60% interest in the project. Pursuant to the amalgamation agreement, effective July 1, 2004, the terms of the agreement were deemed satisfied.

During the year ended December 31, 2005, the Company decided, based on its exploration results to date, to do no further exploration on the property, and has written off $1,515,242 in costs to operations.

Holly/Banderas

The Company holds a 100% interest in the Holly/Banderas Project which consists of three exploration concessions covering approximately 25,300 hectares.

During the year ended December 31, 2005, the Company explored additional areas around Holly/Banderas and has written-off $3,993 of these costs to operations.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Guatemala – (cont’d)

ii)

Marimba and Holly/Banderas – (cont’d)

Option Agreement with Glamis Gold Ltd. (“Glamis”)

II)

Spend not less than US$4 million in exploration expenditures within four years from the effective date, including a minimum US$250,000 during each of the second, third and fourth years.

Glamis may earn an additional 24% interest in the property for a total of 75%, by financing and completing a positive feasibility study for the development and construction of a mine at Banderas within five years from the effective date. After the feasibility study has been completed, each party shall finance its share of future expenditures, including the construction and development of a mine on the property, in proportion to its respective interest in the property, or have its interest in the property diluted on a straight-line basis.

If Glamis fails to proceed with a feasibility study within five years from the effective date, the Company has an option to earn back to a 75% interest in the property by financing and completing a positive feasibility study for the development and construction of a mine at Banderas within seven years from the effective date.

iii)

Regional Exploration

During the year ended December 31, 2005, deferred exploration costs incurred by the Company on various properties in Guatemala totalling $85,851 (2004: $893,643) were written off to operations, as management is not planning any further work on those properties.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Nicaragua

Nicaragua Concessions

Since 2003, the Company has conducted exploration on a number of mineral concessions in Nicaragua. As at December 31, 2005, the Company had been granted title to 10 of the concessions with the remaining 19 applications for title pending.

El Pavon

Joint Venture Agreement with Meridian Gold Inc. (“Meridian”)

The Company entered into a joint venture agreement with Meridian on September 22, 2004, with an effective date of May 25, 2005, giving Meridian the option to acquire a 60% interest in El Pavon which consists of 5 of the Company’s granted concessions and 4 of the applications. In order to earn the interest, Meridian must:

Spend a minimum of US$3.5 million in exploration expenditures over the first two years of the agreement, and a minimum of US$1 million in each of years three and four;

II)

Complete a positive feasibility study on the project; and

III)

Make the cash payments set out below for its earned share of the property’s mineral resources.

$40 per ounce of gold if average gold prices during 30 days prior to the fourth anniversary date are less than $400 per ounce;

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Nicaragua – (cont’d)

Nicaragua Concessions – (cont’d)

II)

$50 per ounce of gold if average gold prices during 30 days prior to the fourth anniversary date are equal to or greater than $400 per ounce but less than $500 per ounce;

III)

$60 per ounce of gold if average gold prices during 30 days prior to the fourth anniversary are equal to or greater than $500 per ounce; and

IV)

$0.50 per ounce of silver if average recoverable silver grades for the resources exceed 100 grams per tonne.

When Meridian has exercised the option and acquired a 60 percent interest in the property, a joint venture will be established on a 60/40 basis.

Advances and receivables as at December 31, 2005 includes $182,119 (2004: $425,463) spent by the Company on behalf of Meridian for exploration costs incurred under this agreement.

ii)

Kuikuinita Project

In 2002, the Company acquired an option to earn a 70% interest in the Kuikuinita project. The Kuikuinita project consists of three exploration concessions located in northeastern Nicaragua.

In order to earn the interest the Company was required to:

Make the following cash payments:

US$10,000 on signing of the agreement (paid);

II)

US$15,000 upon transfer of the Kuikuinita concessions to a holding company, Goldstone Mining S.A. (paid);

III)

US$40,000 six months later (paid); and

IV)

upon completion of the exploration work, a final payment of US$250,000.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Nicaragua – (cont’d)

ii)

Kuikuinita Project – (cont’d)

Incur the following aggregate exploration expenditures:

US$200,000 on or before November 22, 2003 (incurred);

II)

US$700,000 on or before November 22, 2004 (incurred); and

III)

US$1,100,000 on or before November 22, 2005.

During the year ended December 31, 2005, the Company decided, based on its exploration results to date, to do no further exploration on the property, and has written off $1,681,592 in costs to operations.

iii)

Mena Properties

In 2003, the Company was granted an option to earn a 70% interest in a series of mineral concessions in Nicaragua. During 2005, three groups of concessions remained subject to this option, namely, Kisilala, Columbus and San Ramon. In order to earn the interest, the Company was required to:

Make the following cash payments:

US$50,000 upon signing the agreement with the optionor (paid);

II)

US$150,000 (US$131,250 paid) upon transfer of the concessions into a newly incorporated Nicaraguan subsidiary “Newco”; and

III)

six months after the transfer of the concessions into Newco, US$25,000 for each concession the Company wished to continue holding, with a minimum payment of US$100,000 (paid) if the Company wishes to continue the option on at least one of the mineral concessions;

upon completion of the exploration work, a final payment of $US250,000.

Incur over a three-year period a total of US$2.0 million in exploration expenditures for each concession for which the Company wishes to earn its 70% interest.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Nicaragua – (cont’d)

iii)

Mena Properties – (cont’d)

Option Agreement with Coastport Capital Inc. (“Coastport”)

By agreement dated July 20, 2004 and amended February 20, 2005, Coastport was granted an option to acquire a 50% interest in the San Ramon concessions from the Company. In order to exercise the option, Coastport was required to incur exploration expenditures of $200,000 by December 1, 2004 (incurred), a total of US$1 million by December 31, 2005, and a total of US $2 million by July 1, 2006.

As at December 31, 2005, Coastport had determined that it would not continue with their option on the San Ramon concession.

Advances and receivables as at December 31, 2005, include $44,343 (2004: $59,469) spent by the Company on behalf of Coastport for exploration costs incurred under this agreement.

During the year ended December 31, 2005, the Company decided, based on its exploration results to date, to do no further exploration on the Kisilala, Columbus and San Ramon properties and has written off $1,258,510 in costs to operations.

iv)

Regional Exploration

During the year ended December 31, 2005, the Company incurred and wrote-off costs on various properties in Nicaragua totalling $640,877 (2004: $456,562) as management is not planning any further work on these properties.

Dominican Republic

The Company has staked two concessions covering approximately 19,165 hectares known as the Camila project located in southern Dominican Republic. Application for these concessions has been made with grants pending approval by the Department of Zoning.

During the year ended December 31, 2005, the Company decided, based on its exploration results to date, to do no further exploration on the property, and has written off $383,740 in costs to operations.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Mexico

Amatista Project

Making the following payments:

US$50,000 upon signing of the agreement (paid);

II)

US$25,000 plus 25,000 common shares, six months after the date of the agreement;

US$50,000 plus 25,000 common shares, twelve months after the date of the agreement;

IV)

US$100,000 plus 50,000 common shares, twenty-four months after the date of the agreement; and

US$200,000 plus 100,000 common shares, thirty-six months after the date of the agreement.

Incur the following aggregate exploration expenditures:

US$250,000 on or before twelve months from the date of the agreement;

II)

US$500,000 on or before twenty-four months from the date of the agreement; and

III)

US$1,000,000 on or before thirty-six months from the date of the agreement.

The owner will retain a 2% net smelter return royalty, which may be purchased for US$2,000,000.

ii)

La Fruita and El Mole Concessions

During the year ended December 31, 2005, the Company acquired by staking at a cost of $43,407, the La Fruita and El Mole concessions.

iii)

Regional Exploration

Since late 2004, the Company has explored various other properties in Mexico. As at December 31, 2005, $188,329 in costs were written-off to operations as management is not planning any further work on these properties.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 5

Mineral Properties – (cont’d)

Argentina

During the year ended December 31, 2005, the Company incurred data acquisition and geological consulting costs in connection with property investigations in Argentina.

Colombia

During the year ended December 31, 2005, the Company incurred data acquisition and geological consulting costs in connection with property investigations in Colombia.

Note 6

Property and Equipment

	2005
	Cost	Accumulated Amortization	Net

Land	$ 103,077	$ -	$ 103,077
Leasehold improvements	15,322	10,353	4,969
Trucks	195,765	94,554	101,211
Computer equipment	78,818	37,331	41,487
Furniture and equipment	170,511	69,551	100,960
Geophysical equipment	36,445	5,160	31,285
Website	4,800	3,069	1,731

	$ 604,738	$ 220,018	$ 384,720

	2005
	Cost	Accumulated Amortization	Net

Land	$ 103,077	$ -	$ 103,077
Leasehold improvements	15,322	7,288	8,034
Trucks	166,040	72,730	93,310
Computer equipment	66,643	23,388	43,255
Furniture and equipment	169,800	45,887	123,913
Geophysical equipment	-	-	-
Website	4,800	2,436	2,364

	$ 525,682	$ 151,729	$ 373,953

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 7

Capital Stock – Note 13

Commitments

Escrow

As at December 31, 2005, there are 375,000 (2004: 750,000) common shares held in escrow, the release of which is subject to regulatory approval.

Stock-based Compensation Plan

The Company has established a formal stock option plan in accordance with the policies of the TSX-V under which it is authorized to grant options up to 10% of its outstanding shares. The exercise price of each option equals the market price of the Company’s stock as calculated on the date of the grant. The options are for a maximum term of five years.

A summary of the status of the stock option plan as of December 31, 2005, 2004 and 2003 and changes during the years ending on those dates is presented below:

	2005
		Weighted
		Average
	Number of	Exercise
	Options	Price

Outstanding, beginning of year	3,691,219	$ 1.05
Granted	95,000	0.68
Exercised	(162,800)	1.04
Expired/cancelled	(1,065,087)	1.20

Outstanding, end of year	2,558,332	$ 0.97

	2004
		Weighted
		Average
	Number of	Exercise
	Options	Price

Outstanding, beginning of year	2,220,000	$ 0.91
Amalgamation with PilaGold	486,663	1.41
Granted	1,855,000	1.13
Exercised	(450,444)	0.83
Expired/cancelled	(420,000)	1.31

Outstanding, end of year	3,691,219	$ 1.05

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 7

Capital Stock – Note 13 – (cont’d)

Commitments – (cont’d)

Stock-based Compensation Plan – (cont’d)

	2003
		Weighted
		Average
	Number of	Exercise
	Options	Price

Outstanding, beginning of year	1,530,000	$ 0.90
Granted	1,845,000	0.85
Exercised	(1,155,000)	0.84

Outstanding, end of year	2,220,000	$ 0.91

At December 31, 2005, there were 2,558,332 stock options outstanding entitling the holders thereof the right to purchase one common share for each purchase option held:

Number of Shares	Exercise Price	Expiry Date

125,000	$ 0.85	January 24, 2006
140,000	1.00	July 10, 2006
17,778	0.99	September 24, 2007
670,000	0.68	January 7, 2008
100,000	0.90	January 15, 2008
40,000	0.99	January 27, 2008
128,888	1.46	January 29, 2008
22,222	2.03	April 22, 2008
225,000	1.10	August 7, 2008
44,444	1.37	August 13, 2008
150,000	1.32	February 26, 2009
100,000	1.00	September 2, 2009
650,000	1.00	September 6, 2009
50,000	1.50	October 17, 2009
95,000	0.68	September 29, 2010

2,558,332

Subsequent to December 31, 2005, 125,000 stock options exercisable at $0.85 per share, and 50,000 stock options exercisable at $1.00 per share, lapsed unexercised.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 7

Capital Stock – Note 13 – (cont’d)

Commitments – (cont’d)

Stock-based Compensation Plan – (cont’d)

The weighted fair value of share purchase options granted during the year ended December 31, 2005 of $0.43 per option is estimated on the grant date using the Black-Scholes option pricing model. The assumptions used in calculating fair value for the years ended December 31 are as follows:

	2005	2004	2003

Expected dividend yield	0.0%	0.0%	0.0%
Expected volatility	75.56%	61-68%	68.3%
Risk-free interest rate	3.92%	2.25-4.11%	2.80-3.48%
Expected term in years	5 years	1-5 years	5 years

Note 8

Non-cash Transactions

Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flow as follows:

During the year ended December 31, 2004, the Company issued 1,300,000 common shares with a value of $1,937,000 as payment on the El Tambor Gold Project (Note 5).

During the year ended December 31, 2003, the Company issued 1,000,000 common shares at $0.50 per share pursuant to a private placement. The proceeds ($500,000) were received during the year ended December 31, 2002 and were included in share subscriptions.

Note 9

Related Party Transactions

The Company incurred the following expenditures charged by officers and companies with common directors with the Company:

	Years ended December 31,
	2005	2004	2003
Expenses
Consulting fees	$ 25,676	$ 15,215	$ 9,660
Management fees	60,000	45,000	30,000
Mineral property costs:
Consulting fees	92,400	99,000	66,000

	$ 178,076	$ 159,215	$ 105,660

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 9

Related Party Transactions

These expenditures were measured by the exchange amount which is the amount agreed upon by the transacting parties.

Included in advances and receivables is $20,193 (2004: $49,312) due from directors and officers of the Company in respect to expense advances.

Amounts due from related parties represent expenses paid on behalf of companies with common directors, are unsecured, non-interest bearing and management expects repayment in full within the next fiscal year.

Included in accounts payable and accrued liabilities is $7,524 (2004: $21,898) owing to directors of the Company and a company with common directors.

Note 10

Income Taxes

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

	2005	2004		2003

Future income tax assets:
Non-capital losses carried forward	$ 1,912,304	$ 2,701,631	$ 1,386,174
Valuation allowance	(1,912,304)	(2,701,631)	(1,386,174)

	$ -	$ -	$ -

The Company has available for deduction against future taxable income non-capital losses totalling approximately $5,500,000. These losses begin expiring in 2006. Subject to certain restrictions, the Company also has resource expenditures available to reduce taxable income in future years. Future tax benefits which may arise as a result of these non-capital losses and resource deductions have not been recognized in these consolidated financial statements.

Note 11

Commitment

The Company has entered into operating lease agreements for its office premises. The Company also sub leases rental space to other companies which are netted against rental expense. The annual lease commitment under the lease is as follows:

2006	$ 125,567
2007	125,927
2008	129,885
2009	130,245
2010	134,203

	$ 645,827

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 12

Segmented Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by management, in deciding how to allocate resources and in assessing performance. All of the Company’s operations are within the mining sector relating to gold exploration. Due to the geographic and political diversity, the Company’s exploration operations are decentralized whereby exploration managers are responsible for business results and regional corporate offices provide support to the exploration programs in addressing local and regional issues. The Company’s principal operations are therefore segmented on a district basis. The Company’s resource properties are located in Guatemala, Nicaragua and Mexico.

The segments’ accounting policies are the same as those described in the summary of significant accounting policies except that expenses and other items are not allocated to the individual operating segments when determining profit or loss, but are rather attributed to the corporate office.

Details of identifiable assets by geographic segments are as follows:

					Deferred
	Total		Property and	Resource	Exploration
	Assets		Equipment	Properties	Costs

December 31, 2005
Canada	$ 13,059,538		$ 49,934	$ -	$ -
Caymans	761,493		-	-	-
Argentina	29,524		-	-	29,524
Colombia	7,461		-	-	7,461
Guatemala	9,451,121		72,529	3,864,669	5,470,075
Nicaragua	4,055,501		232,617	19,315	3,745,887
Dominican Republic	1,789		-	-	-
Panama	120,908		-	-	-
Mexico	680,287		29,640	102,289	492,645

	$ 28,167,622		$ 384,720	$ 3,986,273	$ 9,745,592

December 31, 2004
Canada	$ 16,605,483	$ 45,462		$ -	$ -
Guatemala	11,056,843	100,932		5,376,704	5,603,866
Nicaragua	6,398,808	227,558		2,757,712	2,655,941
Dominican Republic	381,642	-		366,191	13,178
Panama	123,115	-		-	-
Mexico	46,006	-		-	46,006

	$ 34,611,897	$ 373,952		$ 8,500,607	$ 8,318,991

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 13

Subsequent Events – Note 7

Subsequent to December 31, 2005:

–

the Company granted 2,735,000 stock options exercisable for five years at a price of $0.70 per share to certain directors and officers of the Company.

–

the Company issued 75,000 common shares pursuant to the exercise of stock options for proceeds of $51,000.

Note 14

Financial Instruments

Credit risk:

For advances and receivables, the Company estimates, on a continuing basis, the probable losses and provides a provision for losses based on the estimated realizable value.

Foreign currency risk:

The Company is exposed to fluctuations in foreign currencies through its operations in foreign countries. The Company monitors this exposure, but has no hedge positions. As at December 31, 2005, cash totalling $980,603 (2004: $155,956) was held in US dollars, $10,854 (2004: $59,597) in Nicaragua Cordoba, $6,233 (2004: $272,265) in Guatemala Quetzal and $7,789 (2004: $Nil) in Mexican Pesos.

Note 15

Comparative Figures

Certain of the comparative figures have been reclassified to conform with the current year’s presentation.

Note 16

Reconciliation to United States of America Generally Accepted Accounting Principles

Accounting practices under Canadian (“CDN GAAP”) and United States of America generally accepted accounting principles (“US GAAP”), as they affect the Company, are substantially the same, except for the following:

Marketable Securities

Under CDN GAAP marketable securities are recorded at lower of cost or market. Under US GAAP the Company classifies its marketable securities as “available–for–sale” and they are carried in the financial statements at their fair value equal to their quoted market price at year end. Marketable securities are classified as long-term if management does not intend to dispose of them within the subsequent year. Realized gains and losses are reported in earnings for the year while unrealized holding gains and losses are excluded from income and reported as a separate component of stockholders’ equity. As at December 31, 2005, there are no unrealized gains or losses.

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 16

Reconciliation to United States of America Generally Accepted Accounting Principles

– (cont’d)

Mineral Properties

Under Canadian GAAP mineral property acquisition costs and exploration costs may be deferred and amortized to the extent they meet certain criteria. Under US GAAP, mineral costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of a final feasibility study establishing proven and probable reserves, costs incurred prospectively to develop the property are capitalized as incurred and are amortized using the units of production method over the estimated life of the ore body based on estimated recoverable ounces mined from proven and probable reserves. Therefore, additional expenses are required under US GAAP for the years ended December 31, 2005, 2004 and 2003.

Comprehensive Loss

US GAAP requires disclosure of comprehensive loss which, for the Company, is net loss under US GAAP plus the change in cumulative translation adjustment under US GAAP. The concept of comprehensive loss does not come into effect under fiscal years beginning on or after October 1, 2006 for Canadian GAAP.

New Accounting Standards

Management does not believe that any recently issued, but not yet effective accounting standards if currently adopted could have a material effect on the accompanying financial statements.

Reconciliation of net loss determined in accordance with CDN GAAP to net loss determined under US GAAP are as follows:

	Years ended December 31,
	2005			2004		2003

Net loss for the year as reported using CDN GAAP		$ (6,679,398)	$ (3,908,339)		$ (1,722,063)
Foreign currency translation		104,276	100,481		64,702
Write-off exploration cost		5,917,734	1,350,205		446,529
Adjustments to mineral properties		(2,830,001)	(10,511,840)		(1,390,452)

Net loss for the year per US GAAP		(3,487,389)	(12,969,493)		(2,601,284)
Foreign currency translation		(104,276)	(100,481)		(64,702)
Comprehensive loss for the year per US GAAP		$ (3,591,665)	$(13,069,974)		$ (2,665,986)

Basic loss per share per US GAAP		$ (0.07)	$ (0.29)		$ (0.09)

Weighted average number of shares outstanding per US GAAP		52,898,829	44,916,963		28,446,194

Radius Gold Inc.

(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2005, 2004 and 2003
(Stated in Canadian Dollars)

Note 16

Reconciliation to United States of America Generally Accepted Accounting Principles

– (cont’d)

The effects of the differences in accounting under CDN GAAP and US GAAP on the balance sheets and statements of cash flows are as follows:

	December 31,
Balance Sheets	2005	2004

Total assets per CDN GAAP	$ 28,167,622	$ 34,611,897
Adjustments for mineral properties	(13,731,865)	(16,819,598)

Total assets per US GAAP	14,435,757	17,792,299
Total liabilities per CDN and US GAAP	(286,527)	(347,394)

	$ 14,149,230	$ 17,444,905

Deficit, per CDN GAAP	$(16,766,711)	$(10,087,313)
Adjustments to mineral properties	(13,731,865)	(16,819,598)

Deficit, per US GAAP	(30,498,576)	(26,906,911)
Contributed surplus per CDN and US GAAP	2,244,987	2,290,834
Share capital per Canadian and US GAAP	42,402,819	42,060,982

	$ 14,149,230	$ 17,444,905

Years ended December 31,

2005

2004

2003

Statements of Cash Flows

Cash flows used in operating

activities per CDN GAAP

$ (362,621)

$(2,074,166)

$ (866,202)

Adjustments for mineral

properties

(2,830,001)

(3,304,848)

(1,390,452)

Cash flows used in operating

activities per US GAAP

(3,192,622)

(5,379,014)

(2,256,654)

Cash flows used in investing

activities per CDN GAAP

(15,002,951)

2,783,466

(1,593,393)

Adjustments for resource

properties

2,830,001

3,304,848

1,390,452

Cash flows used in investing

activities per US GAAP

(12,172,950)

6,088,314

(202,941)

Cash flows from financing activities

per Canadian and US GAAP

255,140

1,040,199

15,386,927

Increase (decrease) in cash per

US GAAP

$(15,110,432)

$(1,749,499)

$12,927,332