Item 1.02 Termination of Material Definitive Agreement

On August 4, 2006, Silver Dragon Resources Inc. (the "Company") provided a notice to Linear Gold Corp. to terminate the Joint Venture Agreement (the "Joint Venture Agreement") previously entered into with Linear Gold Corp., Linear Gold Caribe, S.A. and Linear Gold Mexico, S.A. de C.V. (collectively, "Linear Gold") on September 7, 2005, which would have formed a new joint venture company to exploit and explore the property known as the Tierra Blanca Property in Durango, Mexico. The Joint Venture Agreement was filed with the Securities and Exchange Commission by the Company as Exhibit 10 on Form 8-K dated October 31, 2005. Under the Joint Venture Agreement, the Company was granted an option to acquire 55% of the exploration and exploitation rights to the Tierra Blanca Property from Linear Gold Mexico, S.A. de C.V. Following a detailed exploration and evaluation of the property, the Company's geologists recommended that the pursuit of the joint venture with Linear Gold be terminated in order for the Company to focus the resources on its other interests in Mexico and China. The Company never exercised the option to acquire 55% of the rights to explore and exploit the Tierra Blanca Property and did not incur any penalty for terminating the Joint Venture Agreement.

A letter of termination is attached as Exhibit 10.1 hereto and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.1 Letter of Termination dated as of August 4, 2006

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