UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

5160 Yonge Street, Suite 803
Toronto, Ontario, M2N 6L9
(416) 223-8500
(Address and telephone number of principal executive office and principal place of business)

Marc Hazout
5160 Yonge Street, Suite 803
Toronto, Ontario, M2N 6L9
(416) 223-8500
(Name, address, and telephone number of agent for service)

Copy to:

Gil I. Cornblum
Dorsey & Whitney LLP
161 Bay Street, Suite 4310
Toronto, Ontario
(416) 367-7370
___________________

Approximate Date of Proposed Sale to the Public: From time to time after this Registration Statement has become effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  □

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. □

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. □

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. □

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these shares, and the selling shareholders are not soliciting an offer to buy these shares in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED AUGUST 15, 2007

We will not receive any proceeds from the sale or distribution of the common stock by the selling shareholders.

Our common stock is quoted on the National Association of Securities Dealers ("NASD") Over-the-Counter Bulletin Board ("OTCBB") under the symbol "SDRG". On August 14, 2007, the closing sale price for our common stock was $0.98 on the OTCBB.

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors, other information included in this prospectus and information in our periodic reports filed with the SEC. If any of the following risks actually occur, our business, financial condition or results of operations could be materially and adversely affected, and you may lose some or all of your investment. We are an exploration stage company because we have yet to achieve significant revenues. Our business faces many risks arising from direct and indirect influences and factors. The risks and uncertainties described below are not the only risks facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business's financial condition or results of operations.

None of the properties in which we have an interest or the right to earn an interest has any reserves. To date, we have engaged in only limited preliminary exploration activities on the properties. Accordingly, in which we do not have sufficient information upon which to assess the ultimate success of our exploration efforts. If we do not establish reserves, we may be required to curtail or suspend our operations, in which case the market value of our common stock may decline, and you may lose all or a portion of your investment.

We will need significant additional funds to continue operations, which we may not be able to obtain. We estimate that we must raise approximately $12 million over the next 12 months to fund our anticipated capital requirements and our obligations under the agreements for the concessions in Cerro las Minitas, Mexico, the agreement with Sino-Top, and the agreement with Hubei Silver. Our agreement with Jaime Muguiro Pena required us to make a $100,000 payment on closing, with further payments totaling $350,000 made during 2006, along with 450,000 restricted common shares. Our agreement with Ramon Tomas Davila Flores required us to make a payment of closing at $245,000 along with 110,000 restricted common shares. Our agreement with Minera Real Victoria, S.A. de C.V. required us to make a $100,000 payment on closing along with 2,000,000 restricted common shares; a further payment of $100,000 was paid on September 11, 2006, and we must make payments totaling $200,000 over the next 2 years. We estimate that we will need to raise approximately $5,300,000 to meet our obligations under the Cerro las Minitas agreements, as well as to continue with the exploration and mining of the properties throughout 2007. Our agreement with Silvia Villasenor Haro, the owner of Puro Corazon, required us to make payments of $50,000 at closing. In addition, we will require an additional $2,000,000 should we choose to exercise the option to purchase the mining concession from Silvia Villasenor Haro within 3 years or $3,000,000 within 5 years. We currently do not have arrangements in place to raise the capital to fund these obligations. All payments in Mexico were and are subject to Value Added Tax (V.A.T.) for which we are entitled to be refunded as a non-Mexican entity.

We invested approximately $893,630 into Sino-Top in 2006, $537,000 into Sino-Top in 2007 to date and intend to invest approximately $3,000,000 into Sino-Top in the remainder of 2007 towards exploration and property maintenance on the nine properties in the portfolio, with emphasis on bringing the Erbaohuo silver mine into production in 2007, and conducting advanced stage exploration on two properties (Zuanxinhu and Saihanaobao).We currently do not have arrangements in place to raise the capital to fund these obligations.

We have entered into a letter of intent to acquire a 60% equity interest in Hubei Silver in Hubei Province, China. The agreement will require us to pay approximately $2,400,000 in cash and issue restricted shares of our common stock valued at $1,600,000 for acquiring this interest on closing. We currently do not have arrangements in place to raise the capital to fund these obligations.

We have historically satisfied our working capital requirements through the private issuances of equity securities and from our chief executive officer. We will continue to seek additional funds through such channels and from collaboration and other arrangements with corporate partners. However, we may not be able to obtain adequate funds when needed or funding that is on terms acceptable to us. If we fail to obtain sufficient funds, we may need to delay, scale back or terminate some or all of our mining exploration programs.

6

We are an exploration stage company, and based on our negative cash flows from operating activities there is uncertainty as to our ability to continue as a going concern.

From inception, we have generated limited revenues and have experienced negative cash flows from operating losses. We anticipate continuing to incur such operating losses and negative cash flows for the foreseeable future, and to accumulate increasing deficits as we increase our expenditures for exploration and mining of minerals, infrastructure, research and development and general corporate purposes. Any increases in our operating expenses will require us to achieve significant revenue before we can attain profitability. Our history of operating losses and negative cash flows from operating activities will result in our continued dependence on external financing arrangements. In the event that we are unable to achieve or sustain profitability or are otherwise unable to secure additional external financing, we may not be able to meet our obligations as they come due, raising substantial doubts as to our ability to continue as a going concern. Any such inability to continue as a going concern may result in our security holders losing their entire investment. There is no guaranty that we will generate revenues or secure additional external financing. Our financial statements, which have been prepared in accordance with the United States GAAP, contemplate that we will continue as a going concern and do not contain any adjustments that might result if we were unable to continue as a going concern. Changes in our operating plans, our existing and anticipated working capital needs, the acceleration or modification of our expansion plans, lower than anticipated revenues, increased expenses, potential acquisitions or other events will all affect our ability to continue as a going concern. See "Management's Plan of Operations".

The reports of independent auditors of our consolidated financial statements included in the previously filed 10-KSB/A annual report contain explanatory paragraphs which note our recurring operating losses since inception, our lack of capital and lack of long term contracts related to our business plans, and that these conditions give rise to substantial doubt about our ability to continue as a going concern. In the event that we are unable to successfully achieve future profitable operations and obtain additional sources of financing to sustain our operations, we may be unable to continue as a going concern. See "Management's Plan of Operation" and our consolidated financial statements and notes thereto included in this annual report.

We have a history of operating losses and we anticipate future losses.

Since we changed our business focus to silver exploration, we have generated no revenues. We incurred losses of approximately $8,236,169 and $4,589,678 respectively, for the fiscal year ended December 31, 2006 and the six month period ending June 30, 2007. We have accumulated losses since inception of approximately $16,108,843.  We anticipate that losses will continue until such time when revenue from operations is sufficient to offset our operating costs, if ever. If we are unable to increase our revenues or to increase them significantly enough to cover our costs, our financial condition will worsen and you could lose some or all of your investment.

Because our management does not have technical training or experience in exploring for, starting and operating an exploration program, we will have to hire personnel to conduct these efforts. If we can not effectively supervise or retain such personnel, we may have to suspend or cease operations, which will result in the loss of your investment.

Because our management is inexperienced with exploring for, starting and operating an exploration program, we hired new employees and contractors to perform surveying, exploration and excavation of mineral claims that we may acquire. Our management has no direct training or experience in these areas and as a result may not be fully aware of many of the specific requirements related to working within the industry. Management must rely on the personnel it has hired or retained to assist them in making critical engineering and business decisions. Consequently, our operations, earnings and ultimate financial success could suffer irreparable harm due to management's lack of experience in this industry if our management is unable to supervise and retain qualified personnel to carry out these tasks. As a result we may have to suspend or cease operations, which will result in the loss of your investment.

7

Our success also depends on our ability to hire and retain skilled operating, marketing, technical, financial and management personnel. In the mining sector, competition in connection with hiring and retaining skilled, dependable personnel is intense. We may not offer salaries or benefits that are competitive with those offered by our competitors, who may have significantly more resources when compared to us. As such, even if we were to succeed in hiring skilled personnel, we may not succeed in retaining them.

Because we do not have much capital, we may have to limit our exploration activity, which may result in a loss of your investment.

Because we are small and do not have much capital, we must limit our exploration activity. As such, we may not be able to complete an exploration program that is as thorough as the one that we currently anticipate on conducting. In that event, an existing ore body may go undiscovered. Without an ore body, we cannot generate revenues, in which case, you will lose your investment.

If our sole officer who also serves as our sole director resigns or dies without having found replacements, our operations will be suspended or cease altogether. If that should occur, you could lose your investment.

We have one individual who serves as our sole officer and sole director. We are entirely dependent upon him to conduct our operations. If he should resign or die, there will be no immediately available replacements. If that should occur our operations may be suspended or cease entirely until we find other persons, and our business and the results of operations would suffer.

Because we have only one individual serving as our sole officer and director who is responsible for our managerial and organizational structure, we do not have effective disclosure and accounting controls to comply with applicable laws and regulations, which could result in fines, penalties and assessments against us.

One individual serves as both our sole officer and director. He is responsible for our managerial and organizational structure, which includes preparation of disclosure and accounting controls under the Sarbanes-Oxley Act of 2002. Our officer and director is responsible for the administration of the controls. Because he serves as the sole director and officer, he is incapable of creating and implementing the controls, which may subject us to sanctions and fines by the Securities and Exchange Commission, which ultimately could cause us to lose money and possibly to go out of business.

Pursuant to Section 404 Of The Sarbanes-Oxley Act Of 2002 ("Section 404"), we will be required, beginning with our annual report on Form 10-KSB for the fiscal year ending December 31, 2007, to include in our annual reports on Form 10-KSB, our management's report on internal control over financial reporting and for the fiscal year ending December 31, 2008, the registered public accounting firm's attestation report on our management's assessment of our internal control over financial reporting.

We have not prepared an internal plan of action for compliance with the requirements of Section 404. As a result, we cannot guarantee that we will not have any "significant deficiencies" or "material weaknesses" reported by our independent registered public accounting firm. Compliance with the requirements of Section 404 is expected to be expensive and time-consuming. If we fail to complete this evaluation in a timely manner, or if our independent registered public accounting firm cannot timely attest to our evaluation, we could be subject to regulatory scrutiny and a loss of public confidence in our internal control over financial reporting. In addition, any failure to establish an effective system of disclosure controls and procedures could cause our current and potential shareholders and customers to lose confidence in our financial reporting and disclosure required under the Securities and Exchange Act of 1934, which could adversely affect our business.

8

We expect that a portion of our revenues, if any, may be derived from sales of our products in foreign markets. Accordingly, we will be subject to all risks associated with foreign trade. These risks include:

·         shipping delays,

·         increased credit risks,

·         trade restrictions,

·         export duties and tariffs,

·         fluctuations in foreign currency, and

·         uncertainties in international, political, regulatory and economic developments.

In addition, we anticipate that our foreign operations will require us to devote significant resources to system installation, training and service, areas in which we have limited experience.

It is possible that third parties will challenge our title for the properties in which we have an interest.

We have not obtained title insurance for our properties. It is possible that the title to the properties in which we have our interest will be challenged or impugned. If such claims are successful, we may lose our interest in such properties.

Because all of our assets, our officer and our director are located outside the United States of America, it may be difficult for an investor to enforce within the United States any judgments obtained against us, our officer or our director.

All of our assets are located outside of the United States, the individual serving as both our sole officer and sole director is a national and/or resident of a country or countries other than the United States, and all or a substantial portion of such person's assets are located outside the United States. As a result, it may be difficult for an investor to effect service of process or enforce within the United States any judgments obtained against us or our officer and director, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether the courts of Canada and other jurisdictions would recognize or enforce such judgments rendered by the courts of the United States. There is also uncertainty as to whether the courts of Canada or other jurisdictions would be competent to hear original actions brought in Canada or other jurisdictions against us or our officer and director predicated upon the securities laws of the United States or any state thereof.

Our President - Chief Executive Officer controls a significant percentage of our common stock.

9

Planned exploration, and if warranted, development and mining activities involve a high degree of risk.

We cannot assure you of the success of our planned operations. Exploration costs are not fixed, and resources cannot be reliably identified until substantial development has taken place, which entails high exploration and development costs. The costs of mining, processing, development and exploitation activities are subject to numerous variables which could result in substantial cost overruns. Mining for silver and other base or precious metals may involve unprofitable efforts, not only from dry properties, but from properties that are productive but do not produce sufficient net revenues to return a profit after accounting for mining, operating and other costs.

Our mining operations may be curtailed, delayed or cancelled as a result of numerous factors, many of which are beyond our control, including economic conditions, mechanical problems, title problems, weather conditions, compliance with governmental requirements and shortages or delays of equipment and services. If our drilling activities are not successful, we will experience a material adverse effect on our future results of operations and financial condition.

Our common stock is considered to be a "penny stock," which may make it more difficult for investors to sell their shares.

Our common stock is considered to be a "penny stock." The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on NASDAQ, provided that current price and volume information with respect to transactions in these securities is provided by the exchange or system). Prior to a transaction in a penny stock, a broker-dealer is required to:

·         deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market;

·         provide the customer with current bid and offer quotations for the penny stock;

·         explain the compensation of the broker-dealer and its salesperson in the transaction;

·         provide monthly account statements showing the market value of each penny stock held in the customer's account; and

·         make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.

These requirements may have the effect of reducing the level of trading activity in the secondary market for our stock, and investors may find it more difficult to sell their shares.

Silver Mining Business in Mexico

Cerro las Minitas Project

Cerros las Minitas is comprised of 16 concessions covering 1,423 Hectares. It is located 68 kilometers northeast of the City of Durango, Mexico, and comprises the Cerro las Minitas mining district, part of the prolific silver belt of the Sierra Madre Occidental. An initial NI 43-101 report has been completed and concluded that the exploration done by Silver Dragon Mexico during 2006 indicates that the potential resources inferred there justify the cost of further exploration and development.

Our mineral exploration programs are subject to the regulations of various Chinese and Mexican authorities.

Regulatory Obligations in Mexico

In Mexico, our mining activities are governed by the General Mining Law and the regulations promulgated thereunder.

We obtained initial authorizations and the relevant permits for the exploration of Cerro Las Minitas from the Ministry of Natural Resources (SEMARNAT). The initial authorization from SERMARNAT authorizing us to initiate the excavation of the soil on Cerro Las Minitas was issued in 2006. The excavation of soil must be carried out using digger machines, which are registered and authorized by SEMARNAT. Our machines are duly registered and authorized by SEMARNAT.

After the exploration stage, mining activities in Mexico are carried out in accordance with the permit issued by the General Direction of Mining Ministry of Economy under the plan of operations for mining activity submitted by an applicant. Since our current activities in Mexico are in the exploration stage, we have not yet submitted a plan of operations. After receiving confirmation of the existence of minerals, we are required to file an application with the General Direction of Mining of the Ministry of Economy to obtain concession titles for the exploitation of the minerals. As of today, we have obtained sixteen (16) Concession Titles for the Exploitation of Minerals in Cerro Las Minitas, which titles were granted according to the applicable provisions of the General Mining Law. We are further required to obtain additional permits commonly referred to as the Sole Environmental License from SEMARNAT and the National Water Commission (NWC). After we successfully obtain concession titles, we are required to submit annual reports in May of each year, detailing the work performed during the designated year on the properties specified by such concession titles.

Once mining activities commence, we must obtain additional permits and authorizations from the Ministry of Labor to operate special machineries used for the exploration of the Mining Field. Such special machineries include but are not limited to pressured containers, boilers and other machineries designated for mining that are regulated by various National Official Norms (NOM). We are also required to file reports on safety, hygiene and minimum wage of our workers to the registry of the Labor Commissions as provided under Mexican Federal Labor Law.

Regulatory Obligations in China

Exploration for and exploitation of mineral resources in China is governed by the Mineral Resources Law of the PRC of 1986, amended effective January 1, 1997, and the Implementation Rules for the Mineral Resources Law of the PRC, effective March 26, 1994. In order to further implement these laws, on February 12, 1998 the State Council issued three sets of regulations: (i) Regulation for Registering to Explore Mineral Resources Using the Block System, (ii) Regulation for Registering to Mine Mineral Resources, and (iii) Regulation for Transferring Exploration and Mining Rights (together with the mineral resources law and implementation rules being referred to herein as "Mineral Resources Law").

Under Mineral Resources Law, the Ministry of Land and Resources and its local authorities (the "MLR") is in charge of the supervision of mineral resource exploration and development. The mineral resources administration authorities of provinces, autonomous regions and municipalities, under the jurisdiction of the State, are in charge of the supervision of mineral resource exploration and development in their respective administration areas. The people's governments of provinces, autonomous regions and municipalities, under the jurisdiction of the State, are in charge of coordinating the supervision by the mineral resources administration authorities on the same level.

You should read the following management's plan of operation together with our financial statements and related notes appearing elsewhere in this prospectus. This management's plan of operation contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under "Risk Factors" and elsewhere in this prospectus.

Results of Operations for the Year Ended December 31, 2006 and 2005

Revenues and Losses

During the years ended December 31, 2006 and 2005, we did not have any revenues.

During the years ended December 31, 2006 and 2005, we incurred operating expenses of  $ 7,923,679  and $ 585,658 respectively.  Increases were in all areas including:

Professional fees (legal and audit) were due to increased disclosure requirements and filings, and negotiation and acquisitions of properties in Mexico and China.

The Company retained consulting services for strategic planning in Mexico and China.

Advertising and promotion expenses as the company invested in brand awareness of the Company name and strategy in the public marketplace.

General expenses as the Company set up offices in Mexico and China to manage the acquisitions.

Management fees reflecting the Chief Executive Officier's new employment contract with higher salary and performance bonus for acquiring the Mexican properties, in addition to a bonus for negotiating the Chinese property acquisition.

During the years ended December 31, 2006 and 2005, we incurred net other income of $6,776 and $779, respectively, which relates to interest income and dividends received.  In addition, in 2006 we incurred losses of $389,365 on the sale of marketable securities and abandoned the Linear Gold project in Mexico, and incurred losses of $302,755.

During the years ended December 31, 2006 and 2005, we reported a net loss of $8,396,760 and $584,879 respectively. The reason for the increase in 2006 is due to factors discussed above.

Liquidity and Capital Resources

As of December 31, 2006, we had $2,920,592 in cash and cash equivalents and $398,323 in other receivables (which represented VAT refunds receivable and employee loans). In addition, we had $37,771 in related party advances, and accounts payable and accrued liabilities totaling of $660,212 for a working capital surplus of $3,340,057 compare to a working capital deficit of ($195,655) in 2005. During 2006, we have been dependent on the issuance of common stock to satisfy expenses.

We will need additional capital in order to finance the acquisition from Hubei Silver, our obligations to Sino-Top, and the acquired properties in Cerro Las Minitas, Mexico, as well as to continue our attempt to acquire viable businesses and properties and to finance the administrative costs including but not limited to legal and accounting fees. Our management is seeking additional capital. However, there is no assurance that this needed capital can be raised on terms acceptable to us.

Going Concern

Our financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As shown in the accompanying financial statements, we incurred a large net operating loss in the year ended December 31, 2006, and had significant unpaid accounts payable and accrued liabilities. These factors create an uncertainty about our ability to continue as a going concern. Our management has provided operating capital to us and has developed a plan to raise additional capital. Our ability to continue as a going concern is dependent on the success of this plan. The financial statements do not include any adjustments that might be necessary if we were unable to continue as a going concern.

As of December 31, 2006, we had an accumulated deficit of $11,519,165. Our continuation as a going concern is uncertain and dependent on successfully achieving future profitable operations and obtaining additional sources of financing to sustain our operations. In the event we cannot obtain the necessary funds, it will be necessary to delay, curtail or cancel the further development of our products and services. We plan to pursue additional financing; however there can be no assurance that we will be able to secure financing when needed or obtain such on terms satisfactory to us, if at all.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our possible inability to continue as a going concern.

Revenues and Losses

Net sales were $0 for both the six month periods ended June 30, 2007 and June 30, 2006 for the reasons stated above.

Total operating expenses for the Company were $4,595,670 (June 2006: $5,908,711). The decrease was due to lower management and director's fees and lower consulting fees. This was partially offset by increases in expenditures in exploration, General and Administrative expenses and salary and wages reflecting the costs required to run the head office, increases in professional fees in both legal and audit reflecting costs in maintaining regulatory requirements, and increases in Advertising and Promotion as the company continues to develop and execute its strategic plan and raise its Corporate visibility in the market place. In addition there was a provision set up in the second quarter for doubtful accounts for the VAT refund in Mexico.

 Net loss for the six months ended June 30, 2007 was $4,589,678 compared to a net loss of $5,908,711 for the similar period in 2006. The principal reason for this is the impact of the factors discussed above.

Erbaohuo

Prior to the commencement of ground disturbing exploration activities such as drilling or trenching a "Preventative Report" (Informe Preventivo) must be prepared and submitted to the Mexican Government Environmental Agency (SEMARNAT). The report must detail the type of work to be conducted and the amount of disturbance, the location, vegetation encountered and proposed mitigation. One such report has been submitted to SEMARNAT to cover operations to date and another is in preparation to cover planned operations.

There is no access to Interstate Highway 40 at Cerro Las Minitas, although the Highway bisects the property. A small overpass affords access between the north and southern portions of the property.

Figure 7.1 View to the Southeast from above the Puro Corazón Mine at Cerro Las Minitas with the town of Ignacio Ramirez in the distance.

Regional Geology

1.     A major N-NW fault zone marking the boundary between the Parral and Sierra Madre Occidental terranes.

2.     Major W-NW faults representing the Mojave-Sonora Megashear.

3.     Transverse faults bearing NE to E-NE that cross the district and are associated closely with known deposits and prospects.

1.     Skarnoid. The skarnoid alteration assemblage is a contact metasomatic phenomenon that is of lower metamorphic grade than is seen in true skarn development. At Cerro Las Minitas, high-grade skarn minerals are very rarely seen and then in only very small quantities. The most prominent assemblage seen in field and underground exposures is a conversion of carbonate rocks to a garnet-wollastonite-epidote assemblage, with minor accessory minerals. In many places it is evident that the garnetized rocks contained a primary quartz-sand component, but in others it appears that silica was introduced during metasomatism.

2.     Marmorization. It is clear that much recrystallization of carbonate rocks occurred during the intrusion of the central intrusive complex at Cerro Las Minitas. However, there are numerous field exposures of recrystallized carbonate rocks at considerable distance from intrusive contacts and it is not clear that the recrystallization seen there is associated with the primary metasomatic event. Marmorization has therefore been recognized as a distinct form of alteration at Cerro Las Minitas. Two types of marmorization have been recognized.

a.     Non-selective marmorization. This is seen as a widespread recrystallization of carbonate rocks which shows little or no preference for individual strata. It is a bulk recrystallization most closely associated with the primary metasomatic event.

b.     Selective marmorization. This is a visually distinct form of marmorization that is commonly seen to be very bed-selective. Even though it may be confined to thin beds within carbonate rocks that have been only very weakly recrystallized, it is a very strong form of recrystallization that may produce very large grain sizes. When this form of marmorization is well-advanced, a central core of dark brown recrystallized calcite is often seen in the middle of the affected bed. This form of marmorization has now been recognized to be present lateral to Ag-Pb-Zn manto mineralization discovered on the property. The photo below shows an example of selective marmorization.

3.     Late Stage Alteration. This is a form of alteration that is as yet poorly defined at Cerro Las Minitas. It has been seen only in few drill intersections and in poor field exposures. It has been distinguished from other forms of alteration there because it features strong silicification, sericitization of feldspars and pyritization. Little study of late-stage alteration has been made yet, but it appears to represent a later stage of alteration that occurred in a very near-surface environment. It is currently unknown if this form of alteration is associated with mineralization of interest.

2.     Chimney. Pipe-like bodies of massive to semi-massive Zn, Cu and Pb sulfides, often with high Ag values, that have been found in and near faults that cross-cut the skarnoid zone. These produced the richer ores in the Santo Niño-Puro Corazón area. Mineralogically, these deposits show characteristics of both the skarnoid and manto styles of mineralization and are believed to have been formed by multiple mineralizing events. The ores consisted principally of massive to semi-massive aggregates of pyrite, sphalerite, galena, chalcopyrite and bornite replacing recrystallized calcite or filling open spaces. Typical grades in the chimneys were 200 – 400g/ton Ag, 2-10% Zn, 2-6% Pb and 0.5 – 1.5% Cu.

DRILLING

The Consejo de Recursos Minerales (CRM) has offered some support to district miners since 1977. In 1979 and 1980, the CRM drilled seven diamond drill holes for 834.5 meters in the Mina Piña - La Bocona area, which was then controlled by Sr. Santiago Valdez. Drill logs and assay data, as well as some geologic sketch maps, were presented to Sr. Valdez without interpretation. No records of interpretation or follow up of the intercepts of mineralization made in that drilling have been found to date. Silver Dragon geologists are currently compiling and analyzing that data.

A summary of the results of the CRM drilling is presented in Table 13.1 and the locations of the drill holes are shown in Figure 13.1. The results of CRM drilling have not been verified because the original drilling samples are not available, and thus the samples cannot be retested for verification. The length of drill hole intercepts is reported as down-hole length only. True thicknesses of intercepts have not been calculated. True thicknesses of intercepts have not been calculated because the original drill logs are not available for analysis.

From 1999 to 2000, Minerales Noranda, SA de CV (Noranda) optioned the properties and completed a drilling program consisting of seven widely-spaced diamond drill holes, for 3,886 meters, within the Cerro Las Minitas Dome. Results were encouraging but not up to Noranda's expectations and they abandoned the property. Unfortunately, the original Noranda data has not been found and all that has been located is summary data presented in a report by Proyectos Minerales y Topografia, S.A. de C.V. (2001).

Most of the core from Noranda's drilling has been located and a partial re-examination of that core has been made to confirm data used in estimating the inferred mineral resource reported herein. Continued re-examination of that core is ongoing, as Noranda's drill logs have not been recovered. A summary of the results of Noranda's drilling are presented in Table 13.3 and the location of Noranda's drill holes is shown in Figure 13.2. The results of Minerales Noranda drilling have not been verified because the original drilling samples are not available, and thus the samples cannot be retested for verification. The length of drill hole intercepts is reported as down-hole length only. True thicknesses of intercepts have not been calculated because the original drill logs are not available for analysis.

Silver Dragon Mining de Mexico, S.A. de C.V. began an exploratory drilling program at Cerro Las Minitas in May 2006, shortly after acquiring rights to the property. Concurrently, geologists began compiling and analyzing existing data for the property. Examination of that data showed that it was inadequate to guide further exploration operations and a program of rehabilitation, mapping and sampling existing workings on the property began. That program is still in progress, but much of the work in the Puro Corazón - Santo Niño workings is near completion.

A summary of Silver Dragon's drill results is presented in Table 13.4 and the location of those drill holes is shown in Figure 13.2. The results of selected portions of Silver Dragon's drilling has been verified, and is discussed in Item16 Data Verification. The length of drill hole intercepts is reported as down-hole length only. True thicknesses of intercepts have not been calculated. Nine of the eleven holes drilled have been logged, sampled and assayed. Analysis of the two remaining holes is pending availability of qualified geotechnical personnel. On the basis of interpretation of data in hand, the Company has planned an aggressive exploration and development program for 2007.

SAMPLING METHOD AND APPROACH

Sampling Overview: All surface sampling, underground sampling, and drill hole sampling is presumed to have been conducted by previous workers in conformance with the professional standards of the mining industry. No data are available that describe sampling methods and approach. Verification sampling has been conducted by Vector for the purpose of this report and is described in Item 16.

Vector collected 10 representative mineralized rock samples from various locations on the Cerro Las Minitas property as indicated below:

• Pura Corazon                2 samples

• Guadalupe Ramp          2 samples

• La Pina Ore                    4 samples

• Bocona                          2 samples

Lab Accreditation: Vector's 10 verification samples were delivered to ALS Chemex Laboratories in Vancouver, B.C., Canada which is ISO 9002 and ISO 9001:2000 certified. The coarse rejects from Chemex Vancouver were submitted to American Assay Laboratories in Reno, Nevada which is under the direction of a Certified Arizona Assayer. A set of 13 pulps from previous drill sample analysis was delivered to Vector and submitted to Florin Analytical Services in Reno, Nevada, which is a Nevada accredited laboratory.

Sample Preparation: Initial sample preparation was conducted by ALS Chemex Laboratories. Chemex returned the coarse rejects to Vector, which were then submitted to American Assay Laboratories in Sparks, Nevada for verification testing. No aspect of sample preparation was conducted by an employee, officer, director or associate of Silver Dragon. Samples were logged in by the lab, assigned a bar code for tracking, dried, crushed, and pulverized for analysis. Samples were crushed using a jaw and/or roll crusher and then split with a riffle splitter to provide a homogeneous sub-sample, fully representative of the original field sample. The split was then pulverized to -200 mesh.

Multi-Element Analyses: ALS Chemex conducted 34-element analysis (Lab code ME-ICP41) on the 10 Vector samples by aqua-regia acid digestion and ICP-AES analysis (plasma mass spectrometry). Silver, lead, and zinc analysis was conducted on all samples by atomic absorption using Lab code AA46. American Assay conducted 69-element analysis (Lab code ICP-2A) on the ALS Chemex coarse rejects from the 10 Vector samples by aqua-regia acid digestion and ICP analysis. Results for selected elements are presented in this report.

Quality Control: Barren wash material is used to ensure that no contaminants are present between sample preparation batches. All batches routinely contain reference material (standards), duplicate samples, and blanks for analysis. Subsequent analytical data are monitored and audited by the laboratory for internal control and to ensure precision and accuracy. No independent standards or blanks were submitted by Vector.

Security: All 10 verification samples were collected by Vector and assigned an individual sample number (1001 through 1010), and the individual sample bags were tied secure. The samples were then transported by vehicle in Vector's presence to Guadalupe Victoria, where they were shipped directly to ALS Chemex in Guadalajara and then to ALS Chemex in Vancouver, B.C., Canada. No security seals were compromised in the presence of Vector.

Statement of Adequacy: It is Vector's opinion that the sampling, sample preparation, analytical procedures, and security of the 10 samples collected by Craig L. Parkinson, P.Geo are acceptable and of professional quality.

Conditions & Limitations: Vector spent two days inspecting relevant data in the office of Silver Dragon in Guadalupe Victoria and conducting a site inspection of the Cerro Las Minitas property. Geologic maps, land maps, and sampling data were provided to Vector by Douglas R. Wood, P.Geo and Silver Dragon personnel. Vector spent two days inspecting and sampling the property, and access to all mineralized areas was by foot and vehicle. No underground sampling was conducted owing to safety considerations.

• Literature review

• Inspection and discussion of data with Silver Dragon representatives (2 days)

• Site Visit (2 days)

• Sampling of Pura Corazon

• Sampling of Guadalupe Ramp

• Sampling of La Pina Ore

• Sampling of Bocona

• Discussions with Mexican geologists on site and in the office

• Analysis of samples by ALS Chemex in Vancouver, Canada

• Analysis of samples by American Assay in Sparks, Nevada

• Analysis of drill pulps by Florin Analytical Services in Reno Nevada

• Compilation of assay data

• Review of all data

Verification Statement: It is the author's opinion that the basic data package on the Cerro Las Minitas property is reliable and represents professional-level work. The presence of significant silver, lead, zinc, and copper mineralization of economic interest is confirmed.

Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol "SDRG." The following table shows the quarterly high and low trade prices on the Over-the-Counter Bulletin Board. The prices reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not represent actual transactions.

The first trades of our shares on the Over-The-Counter Bulletin Board started January 1, 2001, and trading has been very limited since then; there can be no assurance that a viable and active trading market will develop. There can be no assurance that even if a market were developed for our shares, there will be a sufficient market so that holders of common stock will be able to sell their shares, or with respect to any price at which holders may be able to sell their shares. Future trading prices of our common stock will depend on many factors, including, among others, our operating results and the market for similar securities.

The following sets forth information relating to the trading of our common stock on the Over-The-Counter Bulletin Board.

On August 14, 2007, the closing trade price of our common stock as reported on the Bulletin Board was $0.98 per share. On that date, there were approximately 65,571,488 shareholders of record of our common stock.

We have never paid and do not intend to pay any cash dividends on our common stock for the foreseeable future. We currently intend to retain any future earnings for reinvestment in our business. Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements and other relevant factors.

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The following sets forth information concerning our current directors, executive officers and significant employees. Each director has been elected to serve until our next annual meeting of shareholders and until his successor has been elected and qualified. Each executive officer serves at the discretion of our board of directors

Marc M. Hazout has been our President, Chief Executive Officer and a director since June 1, 2002. From 1985 to 1987, Mr. Hazout was the Canadian licensee and franchisee for a multinational clothing manufacturer and retailer. From 1987 to 1991, Mr. Hazout established a private label apparel manufacturing and retailing company. From 1991 to 1998, Mr. Hazout developed, owned and operated entertainment complexes in Toronto. Mr. Hazout attended The Canadian Securities Institute from 1998-2000 and in 1999 worked as an equity trader for Swift Trade Securities Inc. in Toronto. Mr. Hazout studied International Relations and Economics at York University in Toronto from 1983 to 1985. Mr. Hazout completed the Real Estate Licensing Course at Humber College in Toronto in 1984.

Since 1998, Mr. Hazout has been President and Chief Executive Officer of Travellers International Inc., an investment and merchant banking firm headquartered in Toronto. Mr. Hazout has served as sole director of Travellers International, Inc. since June 25, 1998. As of August 15, 2007, Mr. Hazout beneficially owned 100% of the shares of the capital stock of Travellers International, Inc.

No director or officer has been involved in legal proceedings.

Currently, we have only limited business operations and only one director and one officer and, therefore, we believe a code of ethics would have limited utility. We intend to adopt a code of ethics as our business operations expand and we have more directors, officers and employees.

We have only one director and therefore do not have an audit committee financial expert.

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The following table sets forth information concerning the compensation for services in all capacities for the fiscal years ended December 31, 2006, 2005 and 2004 of the person who was, at August 15, 2007 the chief executive officer (the "named officer").

SUMMARY COMPENSATION TABLE

 *Travellers International Inc. ("TII") received 1,000,000 restricted common shares valued at $0.6478/share, being Marc Hazout’s signing bonus with respect to his Employment Agreement.  TII received another 1,000,000 restricted common shares valued at $0.6551/share in consideration for Marc Hazout successfully completed the transaction in Cerro las Minitas, Mexico.  Marc Hazout is the sole director, officer and shareholder of TII.

We awarded no stock purchase options, or any other rights to any of our directors or officers in fiscal years ended December 31, 2006 and December 31, 2005. We do not have a Long-Term Incentive Plan.

The Company had no equity compensation plan in 2006.

On March 31, 2005, the Company issued 3,254,018 restricted shares to Mr. Hazout in consideration for accrued salary and expenses owing to Mr. Hazout pursuant to his previous Employment Agreement which expired in July 2005.

On November 15, 2005, the Company entered into an Employment Agreement with Marc Hazout. The Employment Agreement provides that Mr. Hazout shall be employed by the Company for a term of five years, and is entitled to a base salary of $288,000 per year. Mr. Hazout is also entitled to a commission on sales generated by him consistent with the Company’s commission policy for all sales personnel.   Further, he is entitled to 8 weeks paid holiday and 14 personal days, sick leave, medical and group insurance, participation in pension or profit sharing plans of the Company, and a car allowance of up to $3,000 per month. In the event of a termination of the Employment Agreement without cause by the Company, he will be entitled to severance equal to 100% of his remaining base salary under the Employment Agreement, plus an amount equal to 75% of the base salary plus full medical coverage for 12 months following the termination date. The Employment Agreement contains provisions prohibiting him from competing with the Company or soliciting customers or employees from the Company for a period of one year following the termination of his employment.

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Directors are reimbursed for any reasonable expenses incurred in the connection with attendance at board or committee meetings or any expenses generated in connection with the performance of services on the behalf of the us. We currently have one director who is also our president and chief executive officer.

On May 15, 2006, the Company entered into a trust arrangement with TII, an investment and merchant banking firm, for the deposit by the Company of $1,000,000 (the "Funds") for the purpose of investing the Funds on behalf of the Company. The trust arrangement was evidenced by a Declaration of Trust dated August 16, 2006. The Company had received proceeds of an equity financing to be used towards the Company's obligations in Mexico and China over the next several months. In the meantime, the Company decided to invest a portion of the financing proceeds for the purpose of obtaining a return on the proceeds invested.

Marc Hazout has served as Chief Executive Officer and President of the Company since June 1, 2002. Mr. Hazout has served as a director of the Company since June 1, 2002, and has served as the sole director of the Company since September 21, 2002. As of August 15, 2007, Mr. Hazout beneficially owned 26% of the shares of the common stock of the Company ("Company Shares").

Mr. Hazout has served as the Chief Executive Officer and President of TII since June 25, 1998. Mr. Hazout has served as sole director of TII since June 25, 1998. As of March 30, 2007, Mr. Hazout beneficially owned 100% of the shares of the capital stock of TII.

Mr. Hazout directed the investment by TII of the Funds in (i) 35,000 shares of common stock of Qualcomm at an aggregate purchase price of $1,636,814.10 on May 26, 2006, and (ii) 2,500 shares of the iShares Silver Trust exchange-traded fund ("ETF") at an aggregate purchase price of $303,635 on June 6, 2006. For purposes of convenience, TII's brokerage account at Union Securities Ltd. was used.

Over the course of the next few months, Mr. Hazout directed TII to purchase and sell shares of Qualcomm as detailed below. Mr. Hazout directed the purchase by TII of the following Qualcomm shares on the following dates:

(i) 35,000 shares on May 26, 2006 at an aggregate purchase price of $1,636,814.10;
(ii) 5,000 shares on August 21 2006 at an aggregate purchase price of $183,084.74;
(iii) 3,000 shares on September 7, 2006 at an aggregate purchase price of $115,774.11;
(iv) 2,000 shares on September 11, 2006 at an aggregate purchase price of $77,355.00;
(v) 2,500 shares on October 17, 2006 at an aggregate purchase price of $97,480.00;
(vi) 2,500 shares on October 18, 2006 at an aggregate purchase price of $98,330.00;
(vii) 1,500 shares on November 11, 2006 at an aggregate purchase price of $54,139.95

In addition, Mr. Hazout directed the sale by TII of the following Qualcomm shares on the following dates:

(i) 8,000 shares on July 25, 2006 for aggregate proceeds of $288,596.60;
(ii) 2,000 shares on August 2, 2006 for aggregate proceeds of $71,149.00;
(iii) 2,500 shares on September 15, 2006 for aggregate proceeds of $93,730.00;
(iv) 6,000 shares on September 20, 2006 for aggregate proceeds of $222,959.33;
(v) 1,500 shares on September 25, 2006 for aggregate proceeds of $56,350.00;
(vi) 2,500 shares on September 26, 2006 for aggregate proceeds of $97,185.00;
(vii) 2,500 shares on October 4, 2006 for aggregate proceeds of $91,250.25;
(viii) 5,000 shares on October 27, 2006 for aggregate proceeds of $184,060.21;
(ix) 1,500 shares on November 3, 2006 for aggregate proceeds of $54,274.00;
(x) 10,000 shares on November 14, 2006 for aggregate proceeds of $349,186.00;
(xi) 10,000 shares on November 24, 2006 for aggregate proceeds of $369,763.59

Mr. Hazout subsequently directed the sale by TII of all of the ETF shares at an aggregate sale price of $308,378.52 on August 16, and 21, 2006.

Mr. Hazout directed the investment by TII in a total of 50,000 shares of First Majestic Resource Corp. on November 15, 2006, at an aggregate purchase price of $160,562 from the cash proceeds of the aforementioned sales. Mr. Hazout subsequently directed the sale by TII of all of the First Majestic shares on November 23, 2006 at an aggregate sale price of $154,525.

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Mr. Hazout directed the investment by TII in a total of 276,545 Company Shares using $392,830 from the cash proceeds from the aforementioned sales as more particularly described below:

Mr. Hazout directed the purchase by TII of the following Company Shares on the following dates:

(i) 50,000 Company Shares on August 8, 2006 at an aggregate purchase price of $50,190.00;
(ii) 50,000 Company Shares on August 17, 2006 at an aggregate purchase price of $63,402.50;
(iii) 45,000 Company Shares on September 15, 2006 at an aggregate purchase price of $55,654.01;
(iv) 20,000 Company Shares on September 20, 2006 at an aggregate purchase price of $24,270.00; and
(v) 35,000 Company Shares on September 21, 2006 at an aggregate purchase price of $41,400.00.

The first of the three foregoing purchases on Form 4s were filed for Mr. Hazout with the Securities and Exchange Commission ("SEC") on August 10, 2006, August 21, 2006 and September 19, 2006, respectively. Mr. Hazout reported the last two of the foregoing purchases on a Form 4 filed with the SEC on September 22, 2006.

In course of working on the Form 10-QSB for the third quarter of the Company, SF Partnership, the independent auditors of the Company, notified the Company on November 8, 2006 that above-mentioned transactions may be determined to be in violation of the Sarbanes-Oxley Act of 2002, namely, Section 402 of this Act.

On November 20, 2006, Mr. Hazout directed TII to liquidate all the remaining shares of Qualcomm and First Majestic as detailed above, in order to return the proceeds in TII's account, which constituted all of the proceeds of disposition in the Company's account with TII less the margin amount and interest, to the Company. In addition, Mr. Hazout directed TII to order a stock certificate for the 200,000 Company Shares. Mr. Hazout received the certificate for the 200,000 Company Shares on January 23, 2007 and immediately effectuated its transfer to the Company's treasury for cancellation.  Mr. Hazout reported this on a Form 4 filed with the SEC on February 8, 2007.

Of the $1 Million which TII had been provided in trust, approximately $187,000 has been return to the Company. Neither Mr. Hazout, nor TII received any fees or commissions as a result of TII's trusteeship as described herein.

The Company is taking actions to prevent the recurrence of events of this nature in the future, including hiring an Acting Chief Accounting Officer to oversee the financial operations of the Company, as well as to appoint additional members to the Board of Directors. Under the supervision and with the participation of our management, including our Chief Executive Office and acting Chief Accounting Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act) as of March 31. 2007 (the "Evaluation Date"). Based upon that evaluation, the Chief Executive Officer and acting Chief Accounting Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were ineffective in timely alerting them to material information relating to us required to be included in our periodic SEC filings, on the basis of our delay in filing this quarterly report and for our acquisition of assets in Mexico and China for which we were ill equipped to deal with the disclosure required on a timely basis.

Except as discussed above, there has been no change in the Company's internal  control over  financial  reporting  during the  Company's first fiscal quarter covered by this report that  has  materially  affected,  or is  reasonably  likely  to materially affect, the Company's internal control over financial reporting.

The following table sets forth the common stock beneficially owned by (1) our directors and named executive officers, (2) persons known by us to beneficially own, individually, or as a group, more than 5% of our outstanding common stock as of August 15, 2007 and (3) all of our current directors and executive officers as a group. For the purposes of the information provided below, beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, and, for each person, includes shares that person has the right to acquire within 60 days following August 15, 2007 subject to options, warrants, or similar instruments. Except as indicated in the footnotes to this table, and as affected by applicable community property laws, all persons listed have sole voting and investment power for all shares shown as beneficially owned by them.

(1) Based on 65,571,488 shares issued and outstanding as of August 15, 2007.

(2) Owned by Travellers International, Inc. solely owned by Mr. Hazout. Mr. Hazout is the President and CEO of Travellers.

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The securities covered by this prospectus are shares of our common stock that have been issued and shares of our common stock that may be issued upon the exercise of warrants to purchase shares of our common stock. Because the selling shareholders may sell all or a portion of their shares at any time and from time to time after the date hereof, no estimate can be made of the number of shares of common stock that each selling security holder may retain upon the completion of the Offering. The number of shares of common stock that may be actually sold by the selling shareholders will be determined by these shareholders. We are registering for the selling shareholders named herein an aggregate of 2,535,000 shares of common stock. The shares of common stock to which this prospectus relates consist of the following:

None of the selling shareholders has, or within the past three years has had, any material relationship, position or office with us or our predecessors or affiliates.

The following table sets forth, as of August 15, 2007, (1) the name of each selling security holder, (2) the number of shares of our common stock beneficially owned by each selling security holder, including the number of shares purchasable upon exercise of warrants, and (3) the maximum number of shares of common stock which the selling shareholders can sell pursuant to this prospectus. Because all of the selling shareholders are registering all of the shares held by them, they would own no shares of common stock if they sold all of the shares registered by this prospectus.

Except as otherwise noted below, the number of shares of our common stock registered for sale hereunder for a selling security holder consists of shares of our common stock either beneficially owned or issuable upon exercise of the warrants described above.

Except as otherwise noted below, to our knowledge, none of the selling shareholders is a holder of 10% or more of our shares, or a broker-dealer or an affiliate of a broker-dealer. We believe that the selling shareholders have sole voting and investment powers over their ordinarily shares. The information provided below with respect to each selling shareholder has been obtained from such selling shareholder.

* Designates a percentage of ownership of less than 1%.

(1) All percentages are based on 65,571,488 shares of common stock issued and outstanding on August 15, 2007 . Beneficial ownership is calculated by the number of shares of common stock that each selling security holder owns or controls or has the right to acquire within 60 days of August 15, 2007 .

(2) This table assumes that each shareholder will sell all of its shares available for sale during the effectiveness of the registration statement that includes this prospectus. Selling shareholders are not required to sell their shares.

(3) Assumes that all shares registered for resale by this prospectus have been issued and sold.

(4) Includes 250,000 shares of common stock and 125,000 shares of common stock issuable upon exercise of Class A common stock purchase warrants and 125,000 shares of common stock issuable upon exercise of Class B common stock purchase warrants. There are no particular person who owns more than 10% of the shares of Heller Capital Investments LLC ("Heller"). Ronald I. Heller may be deemed to have voting control and investment discretion over the common shares beneficially held by Heller.

(5) Includes 500,000 shares of common stock and 250,000 shares of common stock issuable upon exercise of Class A common stock purchase warrants and 250,000 shares of common stock issuable upon exercise of Class B common stock purchase warrants and 1,000,000 shares of common stock issuable upon exercise of Class C common stock purchase warrants. Konrad Ackerman may be deemed to have voting control and investment discretion over the common shares beneficially held by Alpha Capital Anstalt.

We will not receive any of the proceeds from the sale of the shares of common stock offered in this prospectus, other than the exercise price to be received upon exercise, if any, of the warrants. We do not know if or when any or how many of the warrants options may be exercised. We will pay substantially all of the expenses related to the registration of the securities.

The selling shareholders and their successors, which includes their donees, pledges, transferees and successors-in-interest, may sell the shares of common stock offered by this prospectus from time to time in one or more transactions. We will not receive any proceeds from the sale of the shares by the selling shareholders. The selling shareholders may sell the shares at fixed prices that may change, market prices at the time of sale, prices related to market prices at the time of sale, or negotiated prices. The selling shareholders may sell the shares in one or more transactions:

The selling shareholders may sell the shares to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions from the selling shareholders or the purchasers of the securities. These discounts, concessions or commissions may be in excess of those customary in the types of transactions involved. Any broker-dealer may act as a broker-dealer on behalf of a selling shareholder in connection with the offering of the shares.

There can be no assurance that any selling shareholder will sell any or all of the securities pursuant to this prospectus. Further, we cannot assure you that any selling shareholder will not transfer, devise or gift the securities by other means not described in this prospectus. In addition, any securities covered by this prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act of 1933, as amended, (the "Securities Act") may be sold under Rule 144 or Rule 144A rather than under this prospectus. The securities may be sold in some states only through registered or licensed brokers or dealers. In addition, in some states the securities may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification is available and complied with.

The selling shareholders and any underwriters, broker-dealers or agents that participate in the distribution of the securities may be deemed to be "underwriters" within the meaning of the Securities Act. As a result, any profits on the sale of the securities by selling shareholders and any discounts or commissions received by any broker-dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act. Selling shareholders who are "underwriters" within the meaning of the Securities Act will be subject to prospectus delivery requirements of the Securities Act. If the selling shareholders were deemed to be underwriters, the selling shareholders may be subject to statutory liabilities of the Securities Act, and the Securities and Exchange Act of 1934, as amended. If the securities are sold through underwriters, broker-dealers or agents, the selling shareholders will be responsible for underwriting discounts or commissions or agent's commissions.

In connection with the sales of the securities, the selling shareholders may enter into hedging transactions with broker-dealers or other financial institutions that in turn may engage in short sales of the securities in the course of hedging their positions, sell the securities short and deliver the securities to close out short positions, loan or pledge securities to broker-dealers or other financial institutions that in turn may sell the securities, enter into option or other transactions with broker-dealers or other financial institutions that require the delivery to the broker-dealer or other financial institution of the securities, which the broker-dealer or other financial institution may resell pursuant to the prospectus, or enter into transactions in which a broker-dealer makes purchases as a principal for resale for its own account or through other types of transactions.

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The selling shareholders may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by the selling shareholders or borrowed from the selling shareholders or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from the selling shareholders in settlement of those derivatives to close out any related open borrowings of stock. The third party in these sale transactions will be an underwriter and, if not identified in this prospectus, will be identified in the applicable prospectus supplement or a post-effective amendment.

The selling security shareholders and any other person participating in the sale of securities will be subject to the Securities and Exchange Act of 1934, as amended. The rules under the Securities and Exchange Act of 1934, as amended, include, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the securities by the selling shareholders and any other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the particular securities being distributed. This may affect the marketability of the securities and the ability of any person or entity to engage in market-making activities with respect to the securities.

To our knowledge, there are currently no plans, arrangements or understandings between any selling shareholders and any underwriter, broker-dealer or agent regarding the sale of the securities by the selling shareholders. Upon being notified by any selling shareholder that any material arrangement has been entered into with a broker-dealer for the sale of 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, under Rule 424(b) of the Act, disclosing:

- the name of each selling shareholder(s) and of the participating broker-dealer(s);

- the number of shares involved;

- the price at which the shares were sold;

- the commissions paid or discounts or concessions allowed to the broker-dealer(s), where applicable;

- that the broker-dealer(s) did not conduct any investigation to verify information set out or incorporated by reference in this prospectus; and

- other facts material to the transaction.

We will pay substantially all of the expenses incident to this registration of securities other than commissions and discounts of underwriters, brokers, dealers or agents. The selling shareholders may indemnify any broker, dealer, agent or underwriter that participates in transactions involving sales of the securities against some liabilities, including liabilities arising under the Securities Act.

As of August 15, 2007, management is not aware of any legal proceedings in which we are a party, as plaintiff or defendant, or which involve any of our properties.

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Our authorized capital stock consists of 150,000,000 shares of common stock, par value $.0001 per share, of which there are 65,571,488 shares issued and outstanding at August •, 2007 and 20,000,000 shares of preferred stock, par value $.0001 per share. At August •, 2007, there were no shares of preferred stock issued and outstanding.

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the shareholders. Holders of common stock do not have cumulative voting rights. All of the outstanding shares of common stock are fully paid and non-assessable.

Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock.

We are authorized to issue 20,000,000 shares of preferred stock, $.0001 par value, which may be issued in one or more series with such rights and designations as may be determined by the action of the board of directors without any further vote or action by the shareholders.

Each warrant will entitle the holder to purchase a share of our common stock over a period of time at various exercise prices as provided in the chart above.

On May 30, 2006, we issued class A common stock purchase warrants and class B common stock purchase warrants to Heller Capital Investment LLC as part of a private placement. Class A and class B common stock purchase warrants will each entitle the holder to purchase 125,000 common shares at any time over a period of two years from March 23, 2006 at exercise prices of $2.00 and $5.00 per share, respectively.

On November 9, 2006, we also issued class A common stock purchase warrants, class B common stock purchase warrants and class C common stock purchase warrants to Alpha Capital Anstalt as part of a private placement. Class A and class B common stock purchase warrants will each entitle the holder to purchase 250,000 common shares at any time over a period of five years from November 9, 2006 at exercise prices of $2.00 and $5.00 per share, respectively. Class C common stock purchase warrants will entitle the holders to purchase 1,000,000 shares of our common stock at any time over a period of one year after November 9, 2006 at an exercise price of $1.00. With respect to class C warrants, if certain conditions are met, we may force the holder to exercise the warrants in full or in part at the exercise price of $1.00 per share. If the holder fails to timely pay the exercise price, we may cancel a corresponding amount of class C warrants held by such holder.

In connection with the private placement closed on November 9, 2006, we paid our broker, Dragonfly Capital Partners LLC, a cash fee in the amount of $35,000 and issued class A common stock purchase warrants and class B common stock purchase warrants. The class A and class B common stock purchase warrants will each entitle the holder to purchase 17,500 common shares at any time for a period of five years from the date of the closing at an exercise price of $2.00 and $5.00 per share, respectively.

Class A, B and C warrants issued on November 9, 2006 provide that if we fail to deliver the Certificates representing shares of common stock on exercise in a timely manner, we will be liable for buy-ins imposed on the holder. Class A, B and C warrants issued on November 9, 2006 give cashless exercise options to the holders where the registration statement is not available during the time that such registration statement is required to be effective, commencing one year after the issue date of the warrants.

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To the fullest extent that limitations on the liability of directors and officers are permitted by the Delaware General Corporation Law, no director or officer of us shall have any liability to us or our stockholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of us whether or not such person is a director or officer at the time of any proceeding in which liability is asserted.

We shall indemnify and advance expenses to our currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Delaware General Corporation Law. We shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may, through a by-law, resolution or agreement, make further provisions for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Delaware General Corporation Law.

Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to our directors, officers or controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission this indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.

The validity of the issuance of the common stock being offered hereby will be passed upon by Dorsey & Whitney LLP.

Our financial statements at December 31, 2006 and December 31, 2005 for the years then ended appearing in this registration statement and prospectus have been audited by SF Partnership LLP, chartered accountants, as set forth in their report (which contains an explanatory paragraph describing conditions that raise substantial doubt about our ability to continue as a going concern as described in Note 2 to the financial statements) appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

By resolution adopted on January 24, 2006, our board of directors elected to change independent accountants. The independent accounting firm of Moore Stephens Cooper Molyneux LLP notified us on January 24, 2006 that they were terminating their registration with the Public Company Accounting Oversight Board and therefore, were resigning as our accountants. The independent auditors report on the consolidated financial statements for the two years ended December 31, 2003 and December 31, 2004, and the subsequent periods preceding December 31, 2005 contained no adverse opinion, no disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except that each report issued by Moore Stephens Cooper Molyneux LLP for the years ended December 31, 2004 and 2003, and the interim periods ended March 31, 2005, June 30, 2005 and September 30, 2005 respectively raised substantial doubt about our ability to continue as a going concern. In connection with the audits of our consolidated financial statements for each of the two years ended December 31, 2003 and December 31, 2004, and during any subsequent interim periods preceding December 31, 2005, as well as the period up to and including January 24, 2006, there have been no disagreements with Moore Stephens Cooper Molyneux LLP on any matters of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, which if not resolved to the satisfaction of Moore Stephens Cooper Molyneux LLP would have caused Moore Stephens Cooper Molyneux LLP to make reference to the subject matter of the disagreements in connection with their reports.

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On January 24, 2006, our board of directors engaged SF Partnership LLP, 4950 Yonge Street, Suite 400 Toronto, Ontario, M2N 6K1 as our new independent auditors (the "new" accounting firm) to audit our financial statements. We, during the two most recent fiscal years and the subsequent interim periods prior to the engagement of the new accounting firm, did not consult with the new accounting firm with regard to any of the matters listed in Regulation S-B items 304 (a) (2) (i) or (ii).

We are subject to informational filing requirements of the Securities and Exchange Act of 1934, as amended, and its rules and regulations. This means that we will file reports and other information with the Securities and Exchange Commission. The reports and other information that we will file can be read and copied at the public reference facilities maintained by the Commission at One Station Place, 100 F Street, NE, Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for information on the operation of the public reference rooms. Copies of this material can also be obtained from the Commission at prescribed rates through its Public Reference Section at 450 Fifth Street, Northwest, Washington, DC 20549. The Commission maintains a Web site that will contain the reports and other information that we file electronically with the Commission and the address of that Web site is http://www.sec.gov. Statements contained in this prospectus as to the intent of any contract or other document referred to are not necessarily complete, and, in each instance, reference is made to the copy of the particular contract or other document filed as an exhibit to this registration statement, each statement being qualified in all respects by this reference.

This prospectus is part of a registration statement we filed with the Securities and Exchange Commission. You should rely only on the information or representations provided in this prospectus. We have not authorized anyone to provide you with any information other than that provided in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than the date on the front of the document.

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The following consolidated financial statements of us listed below are included with this prospectus. These financial statements have been prepared on the basis of accounting principles generally accepted in the United States and are expressed in U.S. dollars.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2006 and 2005
(Restated)

62

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders' of

Silver Dragon Resources Inc. and Subsidiaries

(Formerly American Entertainment & Animation Corporation)

We have audited the accompanying consolidated balance sheets of Silver Dragon Resources Inc., and Subsidiaries (a Delaware corporation in the exploration stage) as of December 31, 2006 and 2005, and the consolidated statements of operations, stockholders' equity and cash flows for each of the years in the two-year period ended December 31, 2006, and cumulative from inception (June 15, 1996) through to December 31, 2006, except as explained as follows: we did not audit the cumulative data from June 15, 1996 to December 31, 2004. The cumulative data was audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts in the cumulative data through December 31, 2004, is based solely on the report of other auditors. These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Silver Dragon Resources Inc., and Subsidiaries as of December 31, 2006 and 2005, and the results of their operations and its cash flows for each of the years in the two-year period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in note 2 to the consolidated financial statements, the Company has experienced operating losses since inception and has no long term contracts related to its business plans.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans regarding these matters are also described in note 2.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As described in note 16 to the consolidated financial statements, the accompanying consolidated financial statements of the Company as at December 31, 2006 and 2005 and for the years then ended have been restated. We therefore withdraw our previous reports dated March 27, 2006, October 10, 2006 and April 24, 2007 on those financial statements originally filed.

F-1

F-2

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

F-3

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

F-4

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

F-5