Plan Category				Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)				Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by shareholders					2,500,000			$0.58 per share			3,215,000
Equity compensation plans not approved by shareholders					0			—			0
TOTAL					2,500,000						3,215,000

Under the Plan, non-qualified stock options and/or grants of our common stock may be issued to key persons. Key persons include officers, directors, employees, consultants and others providing service to us. The Plan was established to advance the interests of our company and our stockholders by affording key persons, upon whose judgment, initiative and efforts we may rely for the successful conduct of our businesses, an opportunity for investment in our company and the incentive advantages inherent in stock ownership in our company. This Plan gives our Board of Directors broad authority to grant options and make stock grants to key persons selected by the Board while considering criteria such as employment position or other relationship with us, duties and responsibilities, ability, productivity, length of service or association, morale, interest in us, recommendations by supervisors, and other matters, and to set the option price, term of option, and other broad authorities. Options may not be granted at less than the fair market value at the date of grant and may not have a term in excess of 10 years.

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Options granted under the Plan do not generally give rise to taxable income to the recipient or any tax consequence to us, since the Plan requires that the options be issued at a price not less than the fair market value of the common stock on the date of grant. However, when an option is exercised, the holder is subject to tax on the difference between the exercise price of the option and the fair market value of the stock on the date of exercise. We receive a corresponding deduction for income tax purposes. Recipients of stock grants are subject to tax on the fair market value of the stock on the date of grant and we receive a corresponding deduction. The foregoing is intended as a summary of the income tax consequences to an individual recipient of an option or stock grant, and should not be construed as tax advice. Holders of stock options or common stock should consult their own tax advisors.

Shares issued upon exercise of options or upon stock grants under the Plan are "restricted securities" as defined under the Securities Act, unless a registration statement covering such shares is effective. Restricted shares cannot be freely sold and must be sold pursuant to an exemption from registration (such as Rule 144) which exemptions typically impose conditions on the sale of the shares.

As of December 31, 2006, options to purchase an aggregate of 3,050,000 shares of our common stock have been granted under the Plan, of which 2,500,000 remain outstanding.

Indemnification and Limitation on Liability of Directors

Our Articles of Incorporation and Bylaws provide that we must indemnify, to the fullest extent permitted by Colorado law, any of our directors, officers, employees or agents made or threatened to be made a party to a proceeding, by reason of the person serving or having served in a capacity as such, against judgments, penalties, fines, settlements and reasonable expenses incurred by the person in connection with the proceeding if certain standards are met. At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

The Colorado Business Corporation Act (the "CBCA") allows indemnification of directors, officers, employees and agents of a company against liabilities incurred in any proceeding in which an individual is made a party because he was a director, officer, employee or agent of the company if such person conducted himself in good faith and reasonably believed his actions were in, or not opposed to, the best interests of the company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. A person must be found to be entitled to indemnification under this statutory standard by procedures designed to assure that disinterested members of the board of directors have approved indemnification or that, absent the ability to obtain sufficient numbers of disinterested directors, independent counsel or shareholders have approved the indemnification based on a finding that the person has met the standard. Indemnification is limited to reasonable expenses.

Our Articles of Incorporation limit the liability of our directors to the fullest extent permitted by the CBCA. Specifically, our directors will not be personally liable for monetary damages for breach of fiduciary duty as directors, except for:

·	any breach of the duty of loyalty to our company or our stockholders;

·	acts or omissions not in good faith or that involved intentional misconduct or a knowing violation of law;

·	dividends or other distributions of corporate assets that are in contravention of certain statutory or contractual restrictions;

·	violations of certain laws; or

·	any transaction from which the director derives an improper personal benefit.

Liability under federal securities law is not limited by the Articles.

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Certain Relationships and Related Transactions

Transactions with Officers and Directors. In 1998 and 1999, we issued a total of 1,900,000 shares of common stock each to William and David Reid, our officers and directors. The shares, commonly called "founders' shares," were issued for a price of $.0005 per share in the form of services rendered in connection with the organization of our company.

During 2001, William and David Reid purchased an additional 100,000 shares each in exchange for the cancellation of debentures purchased by them. The shares issued in those transactions were valued at a total of $50,000, or $0.25 per share.

On January 2, 2005, we issued a total of 1,750,000 shares to William and David Reid and William Pass for services rendered. William Pass was our financial consultant, and the owner of more than five percent of our common stock at that time. Of that amount, 1,000,000 shares were issued to William Reid, 500,000 to David Reid and 250,000 shares to William Pass. The shares were valued at a total of $437,500, or $0.25 per share, based on the contemporaneous sales of our stock to independent third parties. Messrs. William and David Reid were the only members of our Board of Directors participating in the decision to issue the shares in these transactions. However, our Board determined that the transactions were no less favorable than could have been obtained from an unaffiliated third party.

 

Each of our officers advanced money to us to meet short-term working capital requirements. The loans were represented by promissory notes totaling $160,000, which were non-interest bearing and due on demand. We used the proceeds of the IPO to repay the notes.

 

U.S. Gold Corporation. During the period July 1, 2000 through December 31, 2001, we issued a total of 2,560,000 shares to U.S. Gold Corporation in connection with a management agreement executed with that entity. U.S. Gold Corporation was previously the owner of more than five percent of our common stock. Each of the shares issued in those transactions was valued at between $0.14 and $0.17 per share, based on the estimated fair market value of our stock as of the date of the transaction.

Effective January 1, 2002, we executed a new management agreement with U.S. Gold which continued through December 31, 2002. Under the terms of that agreement, we agreed to pay U.S. Gold $30,000 per month, or a total of $360,000. During 2002, we paid a total of $30,000 under that agreement. During 2005, we satisfied the remaining obligation by paying $10,000 in cash and issuing 1,280,000 shares of our common stock at its fair market value of $0.25 per share. Messrs. William and David Reid were officers and directors of our company and of U.S. Gold at the time of these transactions.

Subscription with Heemskirk. During 2005, we issued a total of 2,150,000 shares of our common stock to Heemskirk Consolidated Limited, an Australian corporation. Heemskirk is the owner of more than five percent of our common stock, but had no relationship before it purchased the stock. Heemskirk paid a total of $1,075,000 for its stock, or $0.50 per share.

Under the terms of its agreement with us, Heemskirk also has the first right to acquire all or a part, but not less than 25%, of any securities offered by us in the future and to participate in any debt financing that we propose during the period until August 2008. Heemskirk also holds a first right of refusal to acquire any or all of our interest in mining properties located in Mexico if we receive an offer from a third party and propose to sell our interest pursuant to that offer.

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SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of January 30, 2007, there are a total of 28,139,552 shares of our common stock outstanding, our only class of voting securities currently outstanding. The following table describes the ownership of our voting securities by: (i) each of our officers and directors; (ii) all of our officers and directors as a group; and (iii) each shareholder known to us to own beneficially more than 5% of our common stock. All share amounts have been adjusted to reflect a two-for-one split of our outstanding stock effective February 21, 2005. Unless otherwise stated, the address of each of the individuals is our address, 222 Milwaukee Street, Suite 301, Denver, Colorado 80206. All ownership is direct, unless otherwise stated.

In calculating the percentage ownership for each shareholder, we assumed that any options owned by an individual exercisable within 60 days is exercised, but not the options owned by any other individual.

Name and Address of	Shares Beneficially Owned
Beneficial Owner	Number	Percentage (%)
William W. Reid(1)	5,219,606(5)(6)	18.0%
David C. Reid(1)	4,311,539(7)	15.0%
Bill M. Conrad(2)	600,000(8)	2.1%
Frank Jennings (3)	0	0.0%
Beth Reid	5,219,606(9)	18.0%
25 Downing Street, #1-501
Denver, CO 80218
Heemskirk Consolidated Limited(4)	2,400,000	8.5%
Box 96, Collins Street West
Melbourne, Victoria 8007 Australia
All officers and directors as a group
(4 persons)	10,131,145(5)(6)(7)(8)(9)	33.7%

____________________

(1) Officer and director.

(2) Director.

(3)  Officer.

(4)  Heemskirk Consolidated Limited identified Kevin Robinson as the individual with the authority to vote and dispose of these shares. Mr. Robinson has no affiliation or relationship to our company or our management except as a representative of Heemskirk.

(5) Includes options to purchase 800,000 shares which are currently exercisable.

(6) Includes 2,200,000 shares owned by the reporting person's spouse, of which he disclaims beneficial ownership.

(7) Includes options to purchase 600,000 shares which are currently exercisable.

(8) Includes options to purchase 500,000 shares which are currently exercisable.

(9) Includes 3,019,606 shares owned by the reporting person's spouse, of which she disclaims beneficial ownership.

 

_______________________________

Changes in Control

One of the holders of more than 5% of our common stock, Heemskirk Consolidated Limited, holds the first right to acquire any stock offered by us in the future. While we have no plans to issue any other stock in the future, to the extent we do and this entity exercises its right to acquire all or a portion of that stock, its percentage ownership interest in our company may increase. This may result in a change in control.

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SELLING SHAREHOLDERS

On behalf of certain of our shareholders, we have agreed to file a registration statement with the SEC covering the resale of our common stock as described in the table below. Of the shares offered by the selling shareholders under this prospectus, 4,322,000 shares were sold in a Private Placement and 257,700 were issued as a finder’s fee in connection with the Private Placement. Of the remaining shares offered by the selling shareholders, 280,000 shares were issued as compensation to consultants of our company to whom we granted “piggy-back” registration rights in connection with those shares and 1,000,000 shares are being registered by William Reid, our Chairman and Chief Executive Officer. All of these outstanding shares have been held by our shareholders for less than two years except the shares held by Mr. Reid. We have also agreed to use our best efforts to keep the registration statement effective and update the prospectus until the securities owned by the selling shareholders have been sold or may be sold without registration or prospectus delivery requirements under the Securities Act. We will pay the costs and fees of registering the shares, but the selling shareholders will pay any brokerage commissions, discounts or other expenses relating to the sale of the shares.

The registration statement which we have filed with the SEC, of which this prospectus forms a part, covers the resale of our common stock by the selling shareholders from time to time under Rule 415 of the 1933 Act. Our agreement with the selling shareholders is designed to provide those shareholders some liquidity in their ownership of common stock and to permit secondary public trading of our securities. The selling shareholders may offer our securities covered under this prospectus for resale from time to time. The selling shareholders may also sell, transfer or otherwise dispose of all or a portion of our securities in transactions exempt from the registration requirements of the 1933 Act. (See "PLAN OF DISTRIBUTION").

The table below presents information as of January 30, 2007 regarding the selling shareholders and our common stock that the selling shareholders may offer and sell from time to time under this prospectus. The table is prepared based on information supplied to us by those shareholders. Except as otherwise noted, the individuals listed in the table below have sole voting and investment power over the shares. Although we have assumed, for purposes of the table below, that the selling shareholders will sell all of the securities offered by this prospectus, because they may offer all or some of the securities in transactions covered by this prospectus or in another manner, no assurance can be given as to the actual number of shares that will be resold by the selling shareholders. Information covering the selling shareholders may change from time to time, and changed information will be presented in a supplement to this prospectus if and when required. If there is a change in the selling shareholders, and the new selling shareholders, any pledges, donees or transferees wish to rely upon this prospectus in the resale of their shares, we will file an amendment to the registration statement of which this prospectus is a part. Except as described above, there are no agreements, arrangements or understandings with respect to resale of any of the securities covered by this prospectus.

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					Number of				Number
					Shares Owned				of Shares			Shares Owned
Name of					Prior to the				to be			After Offering (1)
Selling Shareholder					Offering				Offered			Number				Percent
Suzanne Veilleux, IRA
Contributory Account:
9061-1902(2)						23,000				20,000			3,000				*
Stuart G. Gauld						35,000				25,000			10,000				*
Verne P. Collier						77,000				17,000			60,000				*
Semper Gestion SA(3)						350,000				350,000			0				0.0	%
Sequoia Diversified Growth Fund
℅ Semper Gestion SA(4)						400,000				400,000			0				0.0	%
Sequoia Aggressive Growth Fund
℅ Semper Gestion SA(4)						900,000				900,000			0				0.0	%
RIG Fund II
℅ Semper Gestion SA(4)						250,000				250,000			0				0.0	%
Global Gold & Precious
℅ Global Gestion(5)						300,000				300,000			0				0.0	%
Aran Asset Management SA(6)						150,000				150,000			0				0.0	%
Quilvest Banque Privee(7)						135,000				135,000			0				0.0	%
PIM Gestion France SA
℅ UG Agri Croissance(8)						515,000				515,000			0				0.0	%
CBarney Investments, Ltd.(9)						100,000				100,000			0				0.0	%
Stuart G. Gauld IRA Rollover
SEC CORP CTDN(10)						25,000				25,000			0				0.0	%
Lazarus Investment Partners
LLLP(11)						563,000				563,000			0				0.0	%
Phillip M. Barone						15,000				15,000			0				0.0	%
Andrew P. Vander Ploeg, TTEE						150,000				150,000			0				0.0	%
Felix Martinez, Jr., M.D.						20,000				20,000			0				0.0	%
Kenneth D. Wasserman						25,000				25,000			0				0.0	%
Susan K. Huebner						12,500				12,500			0				0.0	%
James B. Jaqua						20,000				20,000			0				0.0	%
Robert M. Nieder						25,000				25,000			0				0.0	%
Lawrence Chimerine						20,000				20,000			0				0.0	%
Steve Plissy						8,000				8,000			0				0.0	%
Kent J. Lund						8,000				8,000			0				0.0	%
Thomas D. Wolf						8,000				8,000			0				0.0	%
Wendell D. Holt						10,000				10,000			0				0.0	%
Elmer F. Molitor						10,000				10,000			0				0.0	%
Jerry D. Barney						25,000				25,000			0				0.0	%
Jeffrey L. Zimmerman						50,000				50,000			0				0.0	%
Gary Blake & Patricia Blake						10,000				10,000			0				0.0	%
Deadbug Partnership (12) (13)						20,000				20,000			0				0.0	%
Michael Donnelly (13)						5,572				5,572			0				0.0	%
Robert J. Richmeier Jr. (13)						8,144				8,144			0				0.0	%
John P. Schmaker (13)						5,450				5,450			0				0.0	%
Vicki Barone(13)						18,780				18,780			0				0.0	%
Margaret M. Bathgate (13)						100,000				100,000			0				0.0	%
Brian Curd (13)						8,653				8,653			0				0.0	%
Marc Bathgate (13)						10,320				10,320			0				0.0	%
David Drennan (13)						1,500				1,500			0				0.0	%
Andrea Bauer (13)						1,500				1,500			0				0.0	%
Steven Bathgate (13)						10,544				10,544			0				0.0	%
Richard Huebner (13)						9,563				9,563			0				0.0	%
Joseph Lavigne (13)						11,574				11,574			0				0.0	%
Wilson Davis & Co.(14)						4,500				4,500			0				0.0	%
Ian J. Cassel						47,100				47,100			0				0.0	%
Tara Capital Ventures(15)						430,000				430,000			0				0.0	%
William W. Reid(16)						5,219,606	(17)(18)			1,000,000			4,219,606	(17)(18)			14.6	%
TOTAL:										5,859,700			4,292,606

 

 

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____________________

* Less than 1%

(1) Assumes that all of the shares offered hereby are sold, of which there is no assurance.

(2) The selling shareholder identified Suzanne Veilleux as the individual who has voting and investment power over these shares.

(3) The selling shareholder identified Henri de Raemy as the individual who has voting and investment power over these shares.

(4) The selling shareholder identified Olivier Couriel as the individual who has voting and investment power over these shares.

(5) The selling shareholder identified Jean Bernard Guyon as the individual who has voting and investment power over these shares.

(6) The selling shareholder identified Michael C. Thalmann as the individual who has voting and investment power over these shares.

(7) The selling shareholder identified Catherine Lamarre as the individual who has voting and investment power over these shares.

(8) The selling shareholder identified Jacques de Pontac as the individual who has voting and investment power over these shares.

(9) The selling shareholder identified Cynthia M. Malloy as the individual who has voting and investment power over these shares.  

(10) The selling shareholder identified Stuart G. Gauld as the individual who has voting and investment power over these shares. 

(11) The selling shareholder identified Justin Borus as the individual who has voting and investment power over these shares.

(12) The selling shareholder identified Joseph A. Lavigne as the individual who has voting and investment power over these shares.

(13) The selling shareholder is associated with a registered United States broker-dealer, Bathgate Capital Partners, LLC. The listed individual has voting and investment power over these shares.

(14) The selling shareholder is a registered United States broker-dealer. The selling shareholder identified Lyle Davis as the individual who has voting and investment power over these shares.

(15) The selling shareholder identified Peter Grut as the individual who has voting and investment power over these shares.

(16) Chairman, President and Chief Executive Officer of our company.

(17) Includes options to purchase 800,000 shares which are currently exercisable.

(18) Includes 2,200,000 shares owned by the reporting person's spouse, of which he disclaims beneficial ownership.

 ___________________________

Except as otherwise noted in the table above and to the best of our knowledge, the selling shareholders are not associated with or affiliates of United States broker-dealers, nor at the time of purchase did any of the selling shareholders have any agreements or understandings, directly or indirectly, with any persons to distribute the securities. Further, except as otherwise stated, none of the selling shareholders have any relationship to our company, except as a shareholder.

 

PLAN OF DISTRIBUTION

The selling shareholders and their pledgees, donees, transferees or other successors in interest may offer the shares of our common stock from time to time after the date of this prospectus and will determine the time, manner and size of each sale in the over the counter market, in privately negotiated transactions or otherwise. The shares may be offered at prices prevailing in the market or at privately negotiated prices. The selling shareholders may negotiate, and may pay, brokers or dealers commissions, discounts or concessions for their services. In effecting sales, brokers or dealers engaged by the selling shareholders may allow other brokers or dealers to participate. However, the selling shareholders and any brokers or dealers involved in the sale or resale of the shares may qualify as "underwriters" within the meaning of Section 2(a)(11) of the Securities Act. In addition, the brokers' or dealers' commissions, discounts or concessions may qualify as underwriters' compensation under the Securities Act.

The methods by which the selling shareholders may sell the shares of our common stock include:

·	A block trade in which a broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block, as principal, in order to facilitate the transaction;

·	Sales to a broker or dealer, as principal, in a market maker capacity or otherwise and resale by the broker or dealer for its account;

·	Ordinary brokerage transactions and transactions in which a broker solicits purchases;

·	Privately negotiated transactions;

·	Short sales;

·	Any combination of these methods of sale; or

·	Any other legal method.

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In addition to selling their shares under this prospectus, the selling shareholders may transfer their shares in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer, or sell their shares under Rule 144 of the Securities Act rather than under this prospectus, if the transaction meets the requirements of Rule 144. Any selling shareholder who uses this prospectus to sell his shares will be subject to the prospectus delivery requirements of the SecuritiesAct.

Regulation M under the Securities Exchange Act of 1934 provides that during the period that any person is engaged in the distribution of our shares of common stock, as defined in Regulation M, such person generally may not purchase our common stock. The selling shareholders are subject to these restrictions, which may limit the timing of purchases and sales of our common stock by the selling shareholders. This may affect the marketability of our common stock.

The selling shareholders may use agents to sell the shares. If this happens, the agents may receive discounts or commissions. The selling shareholders do not expect these discounts and commissions to exceed what is customary for the type of transaction involved. If required, a supplement to his prospectus will set forth the applicable commission or discount, if any, and the names of any underwriters, brokers, dealers or agents involved in the sale of the shares. The selling shareholders and any underwriters, brokers, dealers or agents that participate in the distribution of our common stock offered hereby may be deemed to be "underwriters" within the meaning of the Securities Act, and any profit on the sale of shares by them and any discounts, commissions, concessions or other compensation received by them may be deemed to be underwriting discounts and commissions under the Securities Act. The selling shareholders may agree to indemnify any broker or dealer or agent against certain liabilities relating to the selling of the shares, including liabilities arising under the Securities Act.

Upon notification by the selling shareholders that any material arrangement has been entered into with a broker or dealer for the sale of the shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, we will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, disclosing the material terms of the transaction.

DESCRIPTION OF CAPITAL STOCK

Our authorized capital consists of 60,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 per share. As of January 30, 2007, we had 28,139,552 shares of common stock issued and outstanding, and no shares of preferred stock outstanding.

The following discussion summarizes the rights and privileges of our capital stock. This summary is not complete, and you should refer to our Articles of Incorporation, as amended, which have been incorporated by reference as an exhibit to the registration statement of which this prospectus forms a part.

Common Stock

The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to stockholders, including the election of directors. Cumulative voting for directors is not permitted. Except as provided by special agreement, the holders of common stock are not entitled to any preemptive rights and the shares are not redeemable or convertible. All outstanding common stock is, and all common stock offered hereby will be, when issued and paid for, fully paid and nonassessable. The number of authorized shares of common stock may be increased or decreased (but not below the number of shares then outstanding or otherwise reserved under obligations for issuance by us) by the affirmative vote of a majority of shares cast at a meeting of our shareholders at which a quorum is present.

Our Articles of Incorporation and Bylaws do not include any provision that would delay, defer or prevent a change in control of our company. However, as a matter of Colorado law, certain significant transactions would require the affirmative vote of a majority of the shares eligible to vote at a meeting of shareholders which requirement could result in delays to or greater cost associated with a change in control of the company.

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The holders of our common stock are entitled to dividends if, as and when declared by our Board of Directors from legally available funds, subject to the preferential rights of the holders of any outstanding preferred stock. Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our common stock are entitled to share, on a pro rata basis, all assets remaining after payment to creditors and prior to distribution rights, if any, of any series of outstanding preferred stock.

Preferred Stock

Our Articles of Incorporation vest our Board of Directors with authority to divide the preferred stock into series and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Colorado and our Articles of Incorporation in respect to, among other things, (i) the number of shares to constitute such series and the distinctive designations thereof; (ii) the rate and preference of dividends, if any, the time of payment of dividends, whether dividends are cumulative and the date from which any dividend shall accrue; (iii) whether preferred stock may be redeemed and, if so, the redemption price and the terms and conditions of redemption; (iv) the liquidation preferences payable on preferred stock in the event of involuntary or voluntary liquidation; (v) sinking fund or other provisions, if any, for redemption or purchase of preferred stock; (vi) the terms and conditions by which preferred stock may be converted, if the preferred stock of any series are issued with the privilege of conversion; and (vii) voting rights, if any.

As of the date of this prospectus, we have not designated or authorized any preferred stock for issuance.

Restrictions on Future Sales of Our Common Stock 

Under the terms of an agreement entered into with one holder of our common stock, we are obligated to offer that entity the first right to purchase our common stock in any future offering until August 2008. We do not believe the terms of this arrangement will affect the market for our common stock, or our future operations. However, it provides the holder the ability to preserve or increase its percentage interest in our company.

Transfer Agent

We have appointed Corporate Stock Transfer, Inc. ("CST") in Denver as transfer agent for our common stock. CST is located at 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209 and its telephone number is (303) 282-4800.

Reports to Shareholders

Following the date of this prospectus, we will be required to file periodic reports with the SEC, including quarterly and annual reports containing financial information about our company. In the future, we may register our common stock with the SEC under the Securities Exchange Act of 1934. At that time, we would be required to deliver an annual report to our shareholders in conjunction with each annual meeting of shareholders. Copies of the reports that we file with the SEC can be viewed on the SEC website. (See "WHERE YOU CAN FIND MORE INFORMATION").We may also deliver quarterly or other periodic information to our shareholders.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of common stock (including shares issued upon the exercise of outstanding options) in the public market after this offering could cause the market price of our common stock to decline. Those sales also might make it more difficult for us to sell equity-related securities in the future or reduce the price at which we could sell any equity-related securities.

In May 2006, the SEC declared effective a registration statement covering the resale of approximately 8,900,000 share of common stock by the selling shareholders named in that prospectus, as well as 4,600,000 shares sold by us. Of the outstanding shares which were not registered in the May 2006 registration, all are immediately eligible for sale under Rule 144. As a result, all of our outstanding shares of common stock are currently eligible for sale.

 

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Rule 144

In general, under Rule 144 as currently in effect, a person deemed to be our affiliate, or a person holding restricted shares who beneficially owns shares that were not acquired from us or our affiliate within the previous one year, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

·	1% of the then outstanding shares of our common stock, or

·

the average weekly trading volume of our common stock during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC if our common stock is listed on a national securities exchange or quoted on the automated quotation system of a national securities organization at the time of the proposed sale. Otherwise the volume limitation is limited to 1% of our then-outstanding common stock.

Sales under Rule 144 are subject to requirements relating to manner of sale, notice and availability of current public information about us.

Rule 144(k)

A person who is not deemed to have been our affiliate at any time during the 90 days immediately preceding a sale and who owned shares for at least two years, including the holding period of any prior owner who is not an affiliate, would be entitled to sell restricted shares following this offering under Rule 144(k) without complying with the volume limitations, manner of sale provisions, public information or notice requirements of Rule 144.

WHERE YOU CAN FIND MORE INFORMATION

You may read and copy any document we file at the SEC's Public Reference Rooms at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Rooms. You can also obtain copies of our SEC filings by going to the SEC's website at http://www.sec.gov.

We have filed with the SEC a registration statement on Form SB-2 to register the shares of our common stock. This prospectus is part of that registration statement and, as permitted by the SEC's rules, does not contain all of the information set forth in the registration statement. For further information about us or our common stock, you may refer to the registration statement and to the exhibits filed as part of the registration statement. The description of all agreements or the terms of those agreements contained in this prospectus are specifically qualified by reference to the agreements, filed or incorporated by reference in the registration statement.

We will provide copies of our reports and other information which we file with the SEC without charge to each person who receives a copy of this prospectus. Your request for this information should be directed to our President, William Reid, at our corporate office in Denver, Colorado. You can also review this information at the public reference rooms of the SEC and on the SEC's website as described above.

LEGAL MATTERS

We have been advised on the legality of the shares included in this prospectus by Dufford & Brown, P.C., of Denver, Colorado.

EXPERTS

Our financial statements as of December 31, 2005 and for the two years then ended included in this prospectus have been included in reliance on the report of Stark Winter Schenkein & Co., LLP, our independent registered public accounting firm. These financial statements have been included on the authority of this firm as an expert in auditing and accounting.

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¹

- 38 -

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FINANCIAL STATEMENTS

 

	Page
Index to Financial Statements	F-1
Consolidated Balance Sheet (unaudited) as of September 30, 2006	F-2
Consolidated Statements of Operations (unaudited) for the
three months ended September 30, 2006 and 2005	F-3
Consolidated Statements of Operations (unaudited) for the
nine months ended September 30, 2006 and 2005, and
Inception to September 30, 2006	F-4
Consolidated Statements of Cash Flows (unaudited) for the
nine months ended September 30, 2006 and 2005, and
Inception to September 30, 2006	F-5
Notes to Consolidated Financial Statements (unaudited)	F-6
Years Ended December 31, 2005 and 2004
Report of Independent Registered Public Accounting Firm	F-11
Consolidated Statements of Operations for the years
ended December 31, 2005 and 2004 and the period
August 24, 1998 (Inception) to December 31, 2005	F-12
Consolidated Balance Sheet at December 31, 2005	F-13
Consolidated Statements of Changes in Shareholders' Equity
(Deficit) for the period from Inception (August 24, 1998)
to December 31, 2005	F-14
Consolidated Statements of Cash Flows for the years ended
December 31, 2005 and 2004, and the period
August 24, 1998 (Inception) to December 31, 2005	F-15
Notes to Consolidated Financial Statements	F-16

F-1

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEET
as of September 30, 2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents					$	3,298,609
Total current assets						3,298,609
Investment in mineral properties						-
Fixed assets - net						42,201
Other assets						1,469
Total assets					$	3,342,279
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses					$	15,519
Accrued stock compensation						275,000
Total current liabilities						290,519
Shareholders' equity:
Preferred stock - $0.001 par value, 5,000,000 shares authorized:
No shares issued or outstanding						-
Common stock - $0.001 par value, 60,000,000 shares authorized:
23,044,852 shares issued and outstanding						23,045
Additional paid-in capital						8,702,846
Accumulated (deficit) during the exploration stage						(5,673,478	)
Other comprehensive income:
Currency translation adjustment						(653	)
Total shareholders' equity						3,051,760
Total liabilities and shareholders' equity					$	3,342,279

 

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

F-2

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended September 30, 2006 and 2005
(Unaudited)
		2006			2005
Other Revenues:
Interest income		$	7,113		$	3,248
Costs and Expenses:
General and administrative			316,619			63,005
Stock Based Compensation - general and administrative
Stock awards			275,000			-
Property acquisition			100,000			79,051
Property exploration and evaluation			150,647			321,384
Depreciation			4,050			3,917
Total costs and expenses			846,316			467,357
Net (loss)			(839,203	)		(464,109	)
Other comprehensive income:
Currency translation gain (loss)			197			(81	)
Net comprehensive (loss)		$	(839,006	)	$	(464,190	)
Net (loss) per common share:
Basic and Diluted		$	(0.04	)	$	(0.03	)
Weighted average shares outstanding:
Basic and Diluted			19,597,963			16,547,781

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

F-3

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the nine months ended September 30, 2006 and 2005,
and for the period from Inception (August 24, 1998) to September 30, 2006
(Unaudited)
								Inception
								(August 24, 1998) to
		2006			2005			September 30, 2006
Other Revenues:
Interest income		$	7,954		$	3,311		$	15,913
Costs and Expenses:
General and administrative			781,090			103,142			1,210,396
Stock Based Compensation - general and administrative
Stock awards			375,000			87,500			962,500
Grant of stock options			141,350			-			141,350
Management contract - U. S. Gold, related party			-			-			752,191
Property acquisition			100,000			95,796			458,681
Property exploration and evaluation			361,735			393,783			2,144,875
Depreciation			12,150			3,917			19,398
Total costs and expenses			1,771,325			684,138			5,689,391
Net (loss)			(1,763,371	)		(680,827	)		(5,673,478	)
Other comprehensive income:
Currency translation gain (loss)			(792	)		165			(653	)
Net comprehensive (loss)		$	(1,764,163	)	$	(680,662	)	$	(5,674,131	)
Net (loss) per common share:
Basic and Diluted		$	(0.09	)	$	(0.04	)
Weighted average shares outstanding:
Basic and Diluted			18,794,296			15,425,922

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

 

F-4

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 2006 and 2005,
and for the period from Inception (August 24, 1998) to September 30, 2006
(Unaudited)
								Inception
								(August 24, 1998) to
		2006			2005			September 30, 2006
Cash flows from operating activities:
Net cash (used in) operating activities		$	(1,238,773	)	$	(654,203	)	$	(3,804,782	)
Cash flows from investing activities:
Capital expenditures			-			(39,271	)		(61,732	)
Net cash (used in) investing activities			-			(39,271	)		(61,732	)
Cash flows from financing activities:
Cash proceeds from sale of stock and exercise of options			4,361,200			1,422,500			6,615,123
Proceeds from debentures - founders			-			-			50,000
Proceeds from exploration funding agreement - Canyon Resources			-			-			500,000
Net cash provided by financing activities			4,361,200			1,422,500			7,165,123
Net increase in cash and equivalents			3,122,427			729,026			3,298,609
Cash and equivalents at beginning of period			176,182			9,560			-
Cash and equivalents at end of period		$	3,298,609		$	738,586		$	3,298,609

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

F-5

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2006

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation. The interim consolidated financial statements included herein have been prepared by Gold Resource Corporation (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) pursuant to Item 310 of Regulation S-B. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial position as of September 30, 2006, results of operations for the three months and nine months ended September 30, 2006 and 2005, and cash flows for the nine months ended September 30, 2006 and 2005, as applicable, have been made. The results for these interim periods are not necessarily indicative of the results for the entire year. The accompanying financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s prospectus dated May 15, 2006.

The Company was organized under the laws of the State of Colorado on August 24, 1998. The Company has been engaged in the exploration for precious and base metals, primarily in Mexico, as an exploration stage company. The Company has not generated any revenues from operations. The consolidated financial statements included herein are expressed in United States dollars, the Company's functional currency.

Basis of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned Mexican corporate subsidiaries, Don David Gold S.A. de C.V. and Golden Trump S.A. de C.V. The expenditures of Don David Gold and Golden Trump are generally incurred in Mexican pesos. Significant inter-company accounts and transactions have been eliminated.

Estimates. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. Estimates that are critical to the accompanying consolidated financial statements include the identification and valuation of derivative instruments, and the amortization of discounts on convertible securities arising from warrants and bifurcated derivative instruments. Management bases its estimates and judgements on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Estimates and assumptions are revised periodically and the effects of revisions are reflected in the financial statements in the period it is determined to be necessary.

Per Share Amounts. SFAS 128, “Earnings Per Share,” provides for the calculation of “Basic” and “Diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company, similar to fully diluted earnings per share. Potentially dilutive securities, such as common stock options, are excluded from the calculation when their effect would be anti-dilutive. As of September 30, 2006, options to purchase 2,700,000 shares of common stock would have an anti-dilutive effect and were therefore excluded from the calculation.

F-6

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2006

(Unaudited)

Stock Option Plans. Effective January 1, 2006, the Company implemented SFAS 123(R), “Accounting for Stock-Based Compensation,” requiring the Company to provide compensation costs for the Company's stock option plans determined in accordance with the fair value based method prescribed in SFAS 123(R). The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.

Prior to January 1, 2006, the Company applied APB Opinion 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for all stock option plans. Under APB Opinion 25, no compensation cost was recognized for stock options issued to employees as the exercise price of the stock options granted by the Company equaled or exceeded the market price of the underlying common stock on the date of grant.

Foreign Operations. The Company's present exploration activities are in Mexico. As with all types of international business operations, currency fluctuations, exchange controls, restrictions on foreign investment, changes to tax regimes, political action and political instability could impair the value of the Company's investments.

Foreign Currency Translation. The local currency, the Mexican peso, is the functional currency for the Company's subsidiaries. Assets and liabilities are translated using the exchange rate in effect at the balance sheet date. Income and expenses are translated at the average exchange rate for the year. Translation adjustments are reported as a separate component of shareholders' equity.

2. Going Concern 

The Company's financial statements are prepared on a going concern basis, which contemplates the realization of assets and satisfaction of obligations in the normal course of business. The Company has no source of operating revenue and has financed operations through the sale and exchange of equity. The Company has incurred losses since its inception aggregating $5,673,478.

The Company's ability to continue as a going concern is contingent upon its ability to raise funds through the sale of equity, joint venture or sale of its assets, and attaining profitable operations. The Company sold 4,600,000 shares of common stock in a public offering under a Form SB-2 that was declared effective on May 15, 2006. The Company received cash proceeds of $4,351,200 (net of finders' fees of $248,800). Additional funds will be necessary in the future. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.

3. Mineral Properties

El Aguila. Effective November 1, 2002, the Company, through its subsidiary, Don David Gold S.A. de C.V., leased a prospective gold/silver property located in the State of Oaxaca, Mexico, designated the "El Aguila" property, from Jose Perez Reynoso, a consultant to the Company. The El Aguila property is an exploration stage property and incorporates approximately 4,685 acres. The lease agreement for El Aguila is subject to a 4% net smelter return royalty to the lessor where production is sold in the form of gold/silver ore and 5% for production sold in concentrate form. The Company has made periodic payments, in prior years, required under the lease which aggregated $260,000 through September 30, 2006. The final advance royalty payment of $100,000 was paid in September 2006.

F-7

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2006

(Unaudited)

Through September 30, 2006, the Company has spent or incurred approximately $1,811,000 in acquisition, exploration and related costs for El Aguila of which approximately $462,000 was spent in 2006.

4. Property and Equipment

At September 30, 2006, property and equipment consisted of the following:

Trucks and autos		$	37,998
Office furniture and equipment			23,602
Subtotal			61,600
Less: accumulated depreciation			(19,399	)
Total		$	42,201

5. Income Taxes

The Company and its subsidiaries are subject to income taxes on income arising in, or derived from, the tax jurisdictions in which they operate.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets are comprised mainly of net operating loss carry-forwards.

The reconciliation between the statutory federal tax rate and the effective tax rate as a percentage is as follows:

 

		2006			2005
Statutory federal income tax rate			34	%		34	%
Effect of net operating loss carry-forward			(24	)		(31	)
Effect of stock grants			(10	)		(3	)
Tax provision			-	%		-	%

At September 30, 2006, the Company estimates that its tax loss carry-forwards are approximately $3,808,000. These net operating loss carry-forwards (“NOL”) are available to offset future taxable income, if any, and expire at various dates through 2025. The principal difference between the accumulated deficit for book purposes and the NOL for income tax purposes relates to stock compensation expense which is not deductible for tax purposes.

At this time, the Company is unable to determine if it will be able to utilize the potential benefit of the tax loss carry-forward. Accordingly, the Company has provided a valuation allowance for the entire amount of the deferred tax asset.

6. Shareholders’ Equity

Effective February 21, 2005, the Company declared and effected a 100% forward stock split where one share of common stock, par value $.001, was issued for each share outstanding as of that date. These financial statements reflect the effect of this 100% stock split.

F-8

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2006

(Unaudited)

During the nine months ended September 30, 2006, the Company sold 4,600,000 shares of common stock in a public offering under a Form SB-2 registration statement that was declared effective by the Securities and Exchange Commission ("SEC") on May 15, 2006. The Company received cash proceeds of $4,351,200 (net of finders' fees of $248,800).

In addition to the sale of stock in its public offering, the Company issued shares of common stock in the following transactions during the nine months ended September 30, 2006. Cash proceeds of $10,000 were received pursuant to the exercise of options to purchase 40,000 shares of common stock. The Company also issued 100,000 restricted shares of common stock to a director, valued at $100,000, as partial consideration for his service on the Board of Directors.

During the nine months ended September 30, 2006, the Company agreed to issue 250,000 shares of restricted common stock in exchange for investor relations services. These shares were valued at $1.10 per share and a charge of $275,000 was recorded during the third quarter. These shares were issued subsequent to September 30, 2006.

Stock Options. The Company has a non-qualified stock option and stock grant plan under which stock options and stock grants may be granted to key employees, directors and others (the "Plan"). Options to purchase shares under the Plan must be granted at fair value as of the date of the grant. A total of 6,000,000 shares of common stock have been reserved under the Plan.

Effective January 1, 2006, the Company implemented the rules of SFAS 123(R), “Accounting for Stock-Based Compensation,” which requires the Company to expense as compensation the value of grants and options under the Company's stock option plan as determined in accordance with the fair value based method prescribed in SFAS 123(R). The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.

During the nine months ended September 30, 2006, stock options were granted to purchase 1,100,000 shares of common stock at an exercise price of $1.00. The Company recorded stock option compensation expense of $141,350 based upon the minimum value method using the following assumptions: expected life of 2.75 years, stock price and fair market value on date of grant of $1.00, dividend yield of 0%, and interest rate of 5%.

The following table summarizes information about outstanding stock options at September 30, 2006:

		Number of shares			Weighted average exercise price
Outstanding, beginning of year			1,640,000		$	0.25
Granted			1,100,000		$	1.00
Exercised			(40,000	)	$	0.25
Outstanding, September 30, 2006			2,700,000		$	0.56

F-9

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GOLD RESOURCE CORPORATION AND SUBSIDIARIES

(AN EXPLORATION STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2006

(Unaudited)

7. General and Administrative Expenses

General and administrative expense included the following for the nine months ended September 30, 2006 and 2005:

		2006			2005
Salaries, consulting fees and benefits		$	374,094		$	19,200
Legal and accounting			151,407			28,586
Investor relations			95,001			3,788
Travel related			83,202			15,356
Other			77,386			36,212
		$	781,090		$	103,142

8.  Related Party Transactions

During the nine months ended September 30, 2006, Messrs. William Reid and David Reid each loaned $160,000 to the Company. The loans were non-interest bearing and were due on demand. These loans were paid in full in September, 2006.

9.  Subsequent Events

Subsequent to September 30, 2006, the Company entered into agreements with various consulting firms to provide investor relations services in exchange for a combination of cash and shares of the Company’s common stock. These agreements are for various periods of time up to one year and provide for the issuance of up to 120,000 shares of restricted common stock and the issuance of up to 100,000 options to purchase common stock for an exercise price of $1.00. As of the date that this report was filed, 10,000 of these shares had been issued.

Also subsequent to September 30, 2006, the Company issued 200,000 shares of common stock pursuant to the exercise of stock options, and received cash proceeds of $50,000. The Company also issued 250,000 restricted common shares pursuant to the investor relations services agreement described in footnote 6.

F-10

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F-28

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TABLE OF CONTENTS

You should rely only on the information contained in this document or that we have referred you to. We have not authorized anyone to provide you with information that is different. This prospectus is not an offer to sell common stock and is not soliciting an offer to buy common stock in any state where the offer or sale is not permitted.   Until              , 2007, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.		5,859,700 Shares       GOLD RESOURCE CORPORATION     Common Stock
TABLE OF CONTENTS
Prospectus Summary...........................................1 Risk Factors........................................................3 Business and Properties.......................................9 Market Information............................................20 Management's Discussion and Analysis Or Plan of Operation..........................................21 Management......................................................27 Security Ownership of Certain Beneficial Owners and Management..................32 Selling Shareholders..........................................33 Plan of Distribution............................................35 Description of Capital Stock..............................36 Shares Eligible For Future Sale......................... 37 Where You Can Find More Information........... 38 Legal Matters....................................................38 Experts.............................................................38 Financial Statements.........................................F-1		____________   PROSPECTUS ____________
		_______________, 2007

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers

Included in the prospectus.

Item 25. Other Expenses of Issuance and Distribution.

We will pay all expenses in connection with the issuance and distribution of the securities being registered except selling discounts and commissions of the selling shareholders. The following table sets forth expenses and costs related to this offering (other than underwriting discounts and commissions) expected to be incurred with the issuance and distribution of the securities described in this registration statement. All amounts are estimates except for the Securities and Exchange Commission's registration fee:

SEC registration fee		$	890
Legal fees			20,000
Accounting fees			5,000
Blue Sky filing fees and expenses			1,000
Printing and engraving expenses			1,000
Transfer Agent fees and expenses			0
Miscellaneous			2,110
Total		$	30,000

Item 26. RECENT SALES OF UNREGISTERED SECURITIES.

During the preceding three years, we have issued an aggregate of 19,464,200 shares of our common stock and 1,850,000 options without registering those securities under the Securities Act. The following information describes the transactions in which those securities were issued.

Between June 2003 and February 2005, we sold 1,583,000 shares of common stock to 26 individuals or entities at a price of $0.25 per share, or a total of $395,750. All of these individuals or entities were also friends, relatives or business contacts of the officers and directors of our company. We relied on the exemption from registration provided by Rule 504 of Regulation D of the Securities Act.

On April 4, 2004, we issued 600,000 shares of our common stock to Jose Perez Reynoso for services rendered to the Company valued at $150,000, or $0.25 per share. We relied on the exemption provided by Section 4(2) of the Securities Act.

On April 23, 2004, we issued 600,000 options to acquire our common stock to two employees and 100,000 options to a former consultant. Since March 22, 2005, the former consultant has exercised 250,000 options at a price of $0.25 per share, or a total of $62,500. All of these options and the shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act.

II-1

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On September 1, 2004, we issued 1,200,000 shares of our common stock to Canyon Resources Corporation in connection with an exploration agreement executed with that entity. Canyon was afforded the opportunity to earn up to 50% of our interest in the El Aguila project in exchange for funding $3.5 million of exploration and, if warranted, development costs. After funding a minimum of $500,000, Canyon exercised an option to convert its investment into 1,200,000 shares of our common stock in September 2004. We relied on the exemption provided by Section 4(2) of the Securities Act in connection with this transaction.

On January 2, 2005, we issued 1,750,000 shares of our common stock to our two employees and a financial consultant for total consideration valued at $437,500, or $0.25 per share. We relied on the exemption provided by Section 4(2) of the Securities Act in offering these shares.

On February 21, 2005, our Board of Directors declared a two-for-one split of all outstanding common stock.

On April 18, 2005, we issued 150,000 shares to Heemskirk Consolidated Limited, a natural resource investment fund, for a total of $75,000, or $0.50 per share. On July 15, 2005 and August 2, 2005, we sold an additional 600,000 and 1,400,000 shares of our common stock, respectively, to Heemskirk, also at a price of $0.50 per share. On August 5, 2005, we sold 400,000 shares to a single, accredited investor, for a price of $0.50 per share. We relied on the exemption from registration provided by Regulation 506 of Regulation D in connection with these transactions.

On three separate occasions in 2005, we issued as a finder's fee to Declan Costelloe for services rendered in connection with locating two investors in the placements described in the immediately preceding paragraph. Those issuances equaled 10,500, 42,000 and 126,000 shares. In June 2005, we also issued 30,000 shares to David Wersebe for services rendered in connection with locating an investor. We relied on the exemption from registration provided by Section 4(2) of the Securities Act in connection with these transactions.

 

On June 3, 2005, we issued 1,280,000 shares of common stock to U.S. Gold Corporation in exchange for services rendered in the amount of $320,000, or $0.25 per share. Again, we relied on the exemption from registration provided by Section 4(2) of the Securities Act in connection with this transaction. The officers and directors of our company were also officers of the directors of U.S. Gold, so U.S. Gold was provided the same type of information that would have been included in a registration statement.

On May 30, 2006, we granted 100,000 shares of common stock to a director of our company valued at $100,000, or $1.00 per share. Additionally, we granted a total of 1,100,000 options to acquire common stock to the director and a new employee of the company. All of these options and the shares were issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act.

On October 12, 2006, we issued 250,000 shares of our common stock to Tara Capital Ventures for services rendered to our company valued at $250,000, or $1.00 per share. We also granted options to acquire 50,000 shares of common stock for $1.00 per share to a public relations consultant. We relied on the exemption provided by Section 4(2) of the Securities Act for each of these transactions.

On three occasions in November and December 2006, we issued 10,000 shares of our common stock to Ian J. Cassel for services rendered to our company for an aggregate of 30,000 shares. We relied on the exemption provided by Section 4(2) of the Securities Act.

II-2

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On December 7, 2006, we sold an aggregate of 4,322,000 shares of our common stock to subscribers in a private placement at a price of $1.20 per share, for gross proceeds of $5,186,400. We paid aggregate finder’s fees of $257,700 and 257,700 shares of common stock to certain finders in connection with the private placement. We relied on the exemption from registration provided by Regulation 506 of Regulation D for sales made in the United States and Rule 903 of Regulation S in connection with sales outside the United States. Each U.S. investor was an “accredited investor” within the meaning of Rule 501. Further, we did not engage in any general solicitation or advertising in connection with the offering and exercised reasonable care in to ensure that the purchasers were not underwriters, including the placement of legends restricting transfer on certificates representing the securities. The remainder of the shares were sold to persons who were not in the United States at the time of purchase or who were not “U.S. persons” as defined in Rule 902. We did not engage in any directed selling efforts in the United States in connection with the offering and placed legends on certificates representing the common stock restricting transfer in accordance with Regulation S.

In each transaction where we relied on Rule 504 or 506, we did not engage in any general solicitation or advertising. In each case, the subscriber was provided with a subscription agreement detailing the restrictions on transfer of the shares. Further, stop transfer restrictions were placed on each of the certificates issued in connection with the offering. In each of the offerings conducted pursuant to Rule 504, the offering price for the securities did not exceed $1 million during the twelve months before the start of and during that offering. In the offering conducted pursuant to Rule 506, each purchaser was reasonably believed to be an "accredited investor" under Rule 501 of the Securities Act.

In each case where we relied on the exemption provided by Section 4(2) of the Securities Act, we had a preexisting relationship with the investor and the offering was made to a very limited number of individuals or entities. We also took steps to insure that the investors had available the same type of information that would be included in a registration statement. Finally, each of certificates representing shares issued pursuant to that exemption has been inscribed by the restrictive legend required by Rule 144.

Item 27. EXHIBITS

The following exhibits are filed with, or incorporated by reference in, this registration statement:

3.1	Articles of Incorporation of the Company as filed with the Colorado Secretary of State on August 24, 1998 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.1, File No. 333-129321).

3.1.1

Articles of Amendment to the Articles of Incorporation as filed with the Colorado Secretary of State on September 16, 2005 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.1.1, File No. 333-129321).

3.2	Bylaws of the Company dated August 28, 1998 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.2, File No. 333-129321).

4	Specimen stock certificate (incorporated by reference from our amended registration statement on Form SB-2/A filed on March 27, 2006, Exhibit 4, File No. 333-129321).

5	Opinion on Legality.

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10.1	Exploitation and Exploration Agreement between the Company and Jose Perez Reynoso dated October 14, 2002 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.1, File No. 333-129321).

10.2	Non-Qualified Stock Option and Stock Grant Plan (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.2, File No. 333-129321).

10.3	Form of Stock Option Agreement (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.3, File No. 333-129321).

10.4	Lease Agreement dated September 2005 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.4, File No. 333-129321).

10.5	Agreement dated July 28, 2003 between the Company and Canyon Resources Corporation (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.5, File No. 333-129321).

10.6	Agreement dated August 2, 2005 between the Company and Heemskirk Consolidated Limited (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.6, File No. 333-129321).

10.7	Agreement dated August 15, 2005 by and between the Company and Heemskirk Consolidated Limited (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.7, File No. 333-129321).

10.8	Employment Agreement between the Company and William W. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on March 27, 2006, Exhibit 10.8, File No. 333-129321).

10.9	Employment Agreement between the Company and David C. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on March 27, 2006, Exhibit 10.9, File No. 333-129321).

10.10

Promissory Note in favor of David C. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on May 1, 2006, Exhibit 10.10, File No. 333-129321).

10.11

Promissory Note in favor of William W. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on May 1, 2006, Exhibit 10.11, File No. 333-129321).

10.12

Form of Subscription Agreement between the Company and investors in the November 2006 private placement (incorporated by reference from our report on Form 8-K dated December 7, 2006, Exhibit 10.1, File No. 333-129321).

21	Subsidiaries of the Company (incorporated by reference from our amended registration statement on Form SB-2/A filed on January 20, 2006, Exhibit 21, File No. 333-129321).

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*23.1

Consent of Stark Winter Schenkein & Co., LLP.

23.2	Consent of Dufford & Brown, P.C. (included in Exhibit 5).

24	Power of Attorney (included on signature page).

_______________

* Filed herewith.

________________________________

Item 28. UNDERTAKINGS.

The undersigned registrant hereby undertakes that it will:

1. File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

i.

Include any prospectus required by section 10(a)(3) of the Securities Act;

ii.

Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

iii.

Include any additional or changed material information on the plan of distribution.

2. For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

3. File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

4. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question, whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

5. For determining liability of the undersigned registrant under the Securities Act to any purchaser, the undersigned registrant undertakes:

    i. That each prospectus filed by the undersigned pursuant to Rule 424(b)(3) shall be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

    ii. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

iii. Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorizes this amendment to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Zurich, Switzerland, on this 31^st day of January 2007.

 

 

	GOLD RESOURCE CORPORATION                    (Registrant)
	By:	/s/ William W. Reid
		William W. Reid President and Chief Executive Officer

 

 

In accordance with the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed by the following persons in the capacity and on the dates stated.

/s/ William W. Reid	President,	January 31, 2007
William W. Reid	Chief Executive Officer and
	Chairman of the Board
/s/ William W. Reid, as attorney in fact	Principal Financial and	January 31, 2007
Frank L. Jennings	Accounting Officer
/s/ William W. Reid, as attorney in fact	Director	January 31, 2007
Bill M. Conrad

 

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EXHIBIT INDEX

The following Exhibits are filed or incorporated by reference as part of this registration statement on Form SB-2.

  Item

  No.   Description

3.1	Articles of Incorporation of the Company as filed with the Colorado Secretary of State on August 24, 1998 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.1, File No. 333-129321).

3.1.1

Articles of Amendment to the Articles of Incorporation as filed with the Colorado Secretary of State on September 16, 2005 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.1.1, File No. 333-129321).

3.2	Bylaws of the Company dated August 28, 1998 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 3.2, File No. 333-129321).

4	Specimen stock certificate (incorporated by reference from our amended registration statement on Form SB-2/A filed on March 27, 2006, Exhibit 4, File No. 333-129321).

5	Opinion on Legality.

 

10.1	Exploitation and Exploration Agreement between the Company and Jose Perez Reynoso dated October 14, 2002 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.1, File No. 333-129321).

10.2	Non-Qualified Stock Option and Stock Grant Plan (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.2, File No. 333-129321).

10.3	Form of Stock Option Agreement (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.3, File No. 333-129321).

10.4	Lease Agreement dated September 2005 (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.4, File No. 333-129321).

10.5	Agreement dated July 28, 2003 between the Company and Canyon Resources Corporation (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.5, File No. 333-129321).

10.6	Agreement dated August 2, 2005 between the Company and Heemskirk Consolidated Limited (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.6, File No. 333-129321).

10.7	Agreement dated August 15, 2005 by and between the Company and Heemskirk Consolidated Limited (incorporated by reference from our registration statement on Form SB-2 filed on October 28, 2005, Exhibit 10.7, File No. 333-129321).

 

II-7

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10.8	Employment Agreement between the Company and William W. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on March 27, 2006, Exhibit 10.8, File No. 333-129321).

10.9	Employment Agreement between the Company and David C. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on March 27, 2006, Exhibit 10.9, File No. 333-129321).

10.10

Promissory Note in favor of David C. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on May 1, 2006, Exhibit 10.10, File No. 333-129321).

10.11

Promissory Note in favor of William W. Reid (incorporated by reference from our amended registration statement on Form SB-2/A filed on May 1, 2006, Exhibit 10.11, File No. 333-129321).

10.12

Form of Subscription Agreement between the Company and investors in the November 2006 private placement (incorporated by reference from our report on Form 8-K dated December 7, 2006, Exhibit 10.1, File No. 333-129321).

21	Subsidiaries of the Company (incorporated by reference from our amended registration statement on Form SB-2/A filed on January 20, 2006, Exhibit 21, File No. 333-129321).

*23.1

Consent of Stark Winter Schenkein & Co., LLP.

23.2	Consent of Dufford & Brown, P.C. (included in Exhibit 5).

 

24	Power of Attorney (included on signature page).

___________________

* Filed herewith.

________________________________

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