The following discussions of the Company's results of operations and financial position should be read in conjunction with the financial statements and notes pertaining to them that appear elsewhere in this Form 10-Q. Please read in conjunction with the section of this Form 10Q entitled "Part II-Item 1A. Risk Factors", and note that this discussion contains forward-looking statements. This discussion focuses on the manner in which the Company will operate in the next year, as well as prospects for the future and the manner in which events and uncertainties known to management would cause reported financial information to not be necessarily indicative of future operating results or of the future financial condition.

Overview

Magnus is a mineral exploration company that specializes in identifying, acquiring and developing precious and base metal properties. Magnus' objective is to develop a balanced global portfolio of early-to-advanced stage projects. Magnus is currently focused on gold projects in Africa, where the Company has a 100% interest in six mineral properties in Uganda, Mubende, Lugazi, Mwerusandu, Mitoma, Rubindi and Kigumba, a right to earn a 60% interest in a seventh property, Mashonga, and a right to earn an 80% interest in an eighth property, Ibanda. The Company also holds rights in the Huidong property in China, although the Company has recently entered into an agreement pursuant to which the Company will sell its interest in the property to a Chinese purchaser.

The Company was incorporated under the laws of the State of Nevada, USA on April 4, 2001 and has a July 31st fiscal year end.

The current addresses, telephone and facsimile numbers of the offices of the Company are:

Canadian Office           China Office                  Uganda Office
1055 West Hastings Street Dushimingyuan Bldg.           Plot 1A
Suite 550                 No. A-2708                    Mugwanya Road
Vancouver, BC             Central Renmin Road           Entebbe, Uganda
Canada                    Kunming City, Yunnan Province
V6E 2E9                   650031                        Tel: +256(0) 7734 63095
                          People's Republic of China
Tel: (604) 694-1432
Fax: (604) 602-1499       Tel: 86--871-3642422
                          Fax: 86- 871- 3642420

The price of the Company's common stock was quoted for trading on the over-the-counter bulletin board ("OTCBB") since March 25, 2003. On November 14, 2007, the Company received notice of the suspension of the quotation of its shares on the OTCBB for one year for late filing of annual and/or quarterly reports, and on December 6, 2007 the Company's shares were removed from quotation on the OTCBB. The Company's shares are now quoted for trading on the Pink Sheets over-the-counter quotation system under the symbol "MGNU".

Property Agreements

Property Agreements - China

The Company currently has an interest in one property in China, the Huidong Property, comprising 83.29 square kilometers in Sichuan Province. The Company previously also held an interest in the Mangshi Property, but this interest has now been divested.

Yunnan Long Teng Mining Ltd. - Huidong Property

On July 6, 2004, the Company signed a formal cooperative joint venture contract (the "Huidong Agreement") with Geology Brigade 209 of the Nuclear Industry of Yunnan Province ("Team 209") to form a new cooperative joint venture company, Yunnan Long Teng Mining Ltd. ("Long Teng Mining"), a Sino-foreign Chinese corporation, to carry out minerals exploration and development in an 83.29 square kilometer area of Huidong County in Sichuan Province. Under the Huidong Agreement, if either Magnus or Team 209 acquires any further mining rights for the area surrounding the exploration license areas then the respective party must, on a first priority basis, transfer such mining rights to Long Teng Mining for a fee permitted by law or at an appropriate price.

The operations of the joint venture company are managed under the control of Magnus. Magnus is to contribute $5,000,000 as an equity investment into Long Teng Mining (although this is expected to be reduced to $3,000,000 based on recent discussions between Magnus' management and representatives of Team 209) and Team 209 is responsible for transferring certain gold and copper exploration permits for the Huidong Property to Long Teng Mining. Upon full capital contributions by Magnus and the transfer of the exploration permits by Team 209, Magnus will own 90% and Team 209 will own 10% of Long Teng Mining.

With respect to the $5,000,000 equity investment into Long Teng Mining by Magnus, Magnus is required to contribute not less than $460,000 within three months after the issuance of the Long Teng Mining business license; $1,000,000 within twenty four (24) months after the issuance of the Long Teng Mining business license; $1,550,000 within thirty-six (36) months after the issuance of the Long Teng Mining business license; and based on the results of the exploration by Long Teng Mining, if required, an additional $1,990,000 within forty-eight (48) months after the issuance of the Long Teng Mining business license (the business license was issued on July 29, 2004; see below). The capital contribution by Magnus is subject to certain conditions precedent being satisfied. If further funding is required for carrying out more exploration and development activities, Magnus will be responsible for providing such funding; however, Team 209 will remain a 10% owner of Long Teng Mining.

On July 29, 2004, the Huidong Agreement was approved by the Chinese Government and a business license for Long Teng Mining was issued. The exploration license for the Huidong property was successfully transferred into Long Teng Mining on July 27, 2005.

As of April 30, 2008 Magnus had made $3,509,969 in capital contributions to Long Teng Mining, and under the terms of the Huidong Agreement Magnus currently holds a 90% interest in the Huidong Property.

On May 12, 2007, the Company entered into an Agreement for Modification of Joint Venture Rights & Interests (the "Modification Agreement") with Team 209. Under the Modification Agreement, which was amended on November 15, 2007 and May 30, 2008, the Company, which currently holds a 90% interest in Long Teng Mining and previously held a 90% interest in Yunnan Western Mining Co., Ltd. ("Western", which holds the mineral rights to the Mangshi Property, described below), has the right to obtain the remaining 10% interest in Long Teng Mining from Team 209 in exchange for transferring the Company's 90% interest in Western to Team 209.

On May 28, 2008, Magnus executed an agreement with Mr. Lai Jinzang ("Jinzang"), a Chinese individual, under which Magnus agreed to sell its interest in the Huidong Property to Jinzang. Under the agreement, Magnus was to receive:
7,000,000 Chinese Renminbi yuan ("RMB") (approximately US$1,000,000) within seven days of the execution of the agreement; a further 7,000,000 RMB within seven days of the successful renewal of the exploration license underlying the Huidong Property; a further 4,900,000 RMB within seven days of the transfer of Magnus' interest to Jinzang; and a further 2,100,000 RMB within seven days of the transfer of Team 209's interest to Mr. Zhu, Kaiming. Furthermore, Magnus retains a 3% NSR on any materials produced from the Huidong Property. To date, Magnus has received the first payment of 7,000,000 RMB from Jinzang. If the exploration license is not renewed, then Magnus will be required to return all payments to Jinzang and the agreement will terminate.

Yunnan Western Mining Co., Ltd. - Mangshi Property

Magnus previously held the right to acquire a 90% interest in the Mangshi Property, a mineral exploration property comprising approximately 113.96 square kilometres in Yunnan Province, under a co-operative joint venture agreement dated August 29, 2003 with Team 209. Pursuant to the Modification Agreement (described above), Magnus has transferred its rights to Western and the Mangshi Property to a third party. Accordingly, the Mangshi Property is no longer material to the Company.

Property Agreements in Africa

In Africa, the Company, through its wholly-owned subsidiary, African Mineral Fields Inc. ("AMF"), has a 100% interest in six mineral properties in Uganda, the Mubende Property, the Lugazi Property, the Mwerusandu Property, the Mitoma Property, the Rubindi Property and the Kigumba Property, has the right to earn a 60% interest in another mineral property, the Mashonga Property, and has the right to earn an 80% interest in another mineral property, the Ibanda Property.

Mwerusandu Property

On November 8, 2007, Magnus entered into a license transfer agreement (the "License Transfer Agreement") with Flemish Investments Limited ("Flemish") under which Flemish agreed to transfer 100% of the right, title and interest to the licenses comprising the Mwerusandu Property (comprised of three mineral exploration licenses covering a total of 57.7 square kilometers of land in Uganda) and the Mitoma Property (described below) to Magnus. The Ugandan Department of Geological Survey and Mines ratified the transfer of the licenses on December 20, 2007, and accordingly Magnus now holds a 100% interest in the Mwerusandu Property. Flemish is entitled to receive from Magnus a net smelter returns royalty on the Mwerusandu Property on a sliding scale between 0.5% (if the gold price is below $250/oz.) and 2.1% (if the gold price is above $1,200/oz.), depending on the price of gold when the NSR is being paid.

In addition to the licenses transferred to Magnus under the License Transfer Agreement, Magnus received an additional exploration license covering 147.63 sq. km. During the quarter three licenses were renewed for a period of two years, each with a 50% reduction in area, so that the Mwerusandu Property is now comprised of four exploration licenses covering 175.43 sq. km.

Mitoma Property

Under the License Transfer Agreement, Flemish also agreed to transfer 100% of the right, title and interest to the licenses comprising the Mitoma Property (comprised of six mineral exploration licenses for a total of 279.0 square kilometers of land in Uganda) to Magnus. The Ugandan Department of Geological Survey and Mines ratified the transfer of the licenses on December 20, 2007, and accordingly Magnus now holds a 100% interest in the Mitoma Property. Flemish is entitled to receive from Magnus a net smelter returns royalty on the Mitoma Property on a sliding scale between 0.5% (if the gold price is below $250/oz.) and 2.1% (if the gold price is above $1,200/oz.), depending on the price of gold when the NSR is being paid.

In addition to the licenses transferred to Magnus under the License Transfer Agreement, Magnus received an additional two exploration licenses covering 159.49 sq. km. During the quarter, four licenses were renewed for a period of two years with a 50% reduction in area and one license was relinquished. The Mitoma Property is now comprised of seven exploration licenses covering 359.49 sq. km.

During the year to date a limited infill soil survey was completed at the Kabira license on the Mitoma Property. Some 43 soil samples were collected to test previous anomalies delineated in previous exploration; results have not yet been received.

Mubende Property

On September 1, 2006, AMF entered into an agreement (the "Mubende Agreement") with Flemish Investments Limited ("Flemish") under which AMF purchased a 100% right, title and interest in and to the mineral exploration licenses respecting 780 square kilometers of land in central Uganda (the "Mubende Property"). The purchase price paid by AMF for the Mubende Property was US$25,000 and the issuance

of 250,000 common shares of AMF (since exchanged for Magnus shares pursuant to the AMF Acquisition Agreement). In addition, under the Mubende Agreement AMF was required to issue an additional AMF common share, to a maximum of 300,000 additional AMF common shares, to Flemish for each economically mineable ounce of gold on the Mubende Property that is proven to be a measured and indicated resource. To date, there is not a measured or indicated resource on the Mubende Property, and accordingly no additional shares have been issued to Flemish.

Since acquiring the Mubende Property, AMF has received an additional exploration license covering 71.20 sq. km., so that the Mubende Property is now comprised of three exploration licenses covering 851.20 sq. km.

During the year to date a total of 1,001 soil samples and 46 rock grab samples were collected on the Mubende Property along regional lines to test the edges of a large granite batholith. The Company believes that the numerous gold and tungsten occurrences on the Property as well as alluvial mining operations to the west of the Property have a source from the edges of this granite body. Results are pending and will be evaluated in the months going forward.

Lugazi Property

AMF also acquired a 100% right, title and interest in and to a mineral exploration license covering 261 square kilometers of land in central Uganda (the "Lugazi Property") on September 1, 2006 under an agreement (the "Lugazi Agreement") with Flemish. The terms of the Lugazi Agreement are the same as those of the Mubende Agreement, and to date there is not a measured or indicated resource on the Lugazi Property and no additional shares have been issued to Flemish. Since acquiring the Lugazi Property, AMF has received four additional exploration licenses covering 1,359.17 sq. km. During the quarter one license was renewed for a period of two years, with a 50% reduction in area, so that the Lugazi Property is now comprised of five exploration licenses covering 1,487.69 sq. km.

A reverse circulation drilling program was completed on the Lugazi Property in the quarter which tested three prominent gold-in-soil geochemical anomalies. The 31 hole, 2,037m program tested these three anomalous zones which were co-incident with magnetic rich horizons along lithological strike. The check and confirmation sample assay values are still pending, and the evaluation of the drill results will be forthcoming once the full data set has been received from the laboratories. On a more regional scale, a total of 1,456 soil samples were collected along regional lines, planned to investigate additional gold, as well as base metal rich horizons. Results are pending and will be evaluated as they become available.

Mashonga Property

On August 30, 2007, AMF entered into a joint venture agreement (the "Mashonga Agreement") with a consortium of Ugandan businessmen respecting two mineral exploration licenses and three location licenses covering 460.87 square kilometers of land partially contiguous to AMF's Mitoma Property in Uganda (the "Mashonga Property"). Under the Mashonga Agreement, Magnus has the right to earn a 60% interest in the Mashonga Property by making aggregate cash payments of US$650,000 to its joint venture partners, making a minimum US$4 million in property exploration expenditures and completing a pre-feasibility study on the property by August 30, 2012. Magnus' joint venture partners have the right to accept common shares of Magnus in lieu of the cash payments. As of April 30, 2008, Magnus had paid US$40,000 to its joint venture partners and had commenced exploration on the Mashonga Property. Once Magnus has earned its 60% interest in the Mashonga Property, the parties may form a new joint venture company to further explore and develop the Property.

During the year to date at the Mashonga Property a preliminary soil sample program was completed over targets with high grade trench and rock sample values from previous exploration activities, as well as from regional soil lines, to investigate additional targets. In total 127 soil samples were collected; results have not yet been received. Following on any positive results received from this survey, the Company will conduct more detailed evaluation. The Company also conducted an alteration mapping survey using PIMA analysis of surface rock samples. The alteration pattern indicated an important transition from acidic to

alkaline regime along a prominent northwest structure. Planned reverse circulation drilling during the next quarter will focus on parts of this transitional zone as well as beneath the historical mine located on the Mashonga Property.

Ibanda Property

On May 1, 2008, AMF (through a wholly-owned subsidiary) entered into an earn-in agreement (the "Ibanda Agreement") with Canmin-Gold Limited, a subsidiary of IBI Corporation, respecting a mineral exploration license covering 332.70 square kilometers of land contiguous in southwest Uganda, northeast of the Mashonga Property (the "Ibanda Property"). Under the Ibanda Agreement, Magnus has the right to earn a 5% interest in the Ibanda Property for each $150,000 of expenditures that it makes and may earn up to an 80% interest by making an aggregate of $2 million in expenditures on the property within five years. Upon Magnus earning an 80% interest in the Property, the parties will form a joint venture under which each party will be required to contribute its proportionate share of further expenditures or have its interest be diluted.

Other Projects

On May 12, 2008, a mineral exploration license covering 363 square kilometers of land in western Uganada (the "Kigumba Property") was granted to the Company. Also on May 12, 2008, a mineral exploration license covering 291 square kilometers of land in southwestern Uganda (the "Rubindi Property") was granted to the Company.

The Company actively investigates other areas in search of additional properties and additional joint venture opportunities.

Employees

As of April 30, 2008, the Company had three full-time employees (over and above its directors, officers and consultants) employed at the Company's office in Vancouver, British Columbia (two in an administrative capacity and one as bookkeeper).

In Uganda, the Company employs two persons, as country manager and senior geologist respectively. The Company's operating subsidiary in Uganda, African Mineral Fields Limited, employs eleven additional persons: one senior geologist, one geologist, one accountant, five technicians, one administrator and two housekeepers.

The Company's Chinese joint venture company with respect to the Huidong Property, Long Teng Mining, employs three persons in China. In addition, contract workers and groups are used by the Company on an ad hoc basis to assist in conducting the exploration programs, and the number used may fluctuate based on the exploration activities going on at any given time.

The Company also uses consultants with specific skills to assist with various aspects of its project evaluation, due diligence, acquisition initiatives, corporate governance and property management.

Transactions with Related Parties / Subsequent Events

On May 1, 2008, AMF (through a wholly-owned subsidiary) entered into the Ibanda Agreement with Canmin-Gold Limited, a subsidiary of IBI Corporation, respecting the Ibanda Property. Under the Ibanda Agreement, Magnus has the right to earn a 5% interest in the Ibanda Property for each $150,000 of expenditures that it makes and may earn up to an 80% interest by making an aggregate of $2 million in expenditures on the property within five years. Upon Magnus earning an 80% interest in the Property, the parties will form a joint venture under which each party will be required to contribute its proportionate share of further expenditures or have its interest be diluted.

On May 12, 2008, the Company was issued two mineral exploration licenses in Uganda. One license, covering 291 sq. km. of land, is contiguous to the Company's Ibanda Property in southwestern Uganda. The other license, the Kigumba Property, covers 363 sq. km. in western Uganda.

On May 28, 2008, Magnus issued 50,000 options to a consultant, each option exercisable at $0.50. The options will vest over three years and will expire on January 31, 2013.

On May 28, 2008, Magnus executed an agreement under which Magnus agreed to sell its interest in the Huidong Property to Jinzang. Under the agreement, Magnus was to receive: 7,000,000 RMB (approximately US$1,000,000) within seven days of the execution of the agreement; a further 7,000,000 RMB within seven days of the successful renewal of the exploration license underlying the Huidong Property; a further 4,900,000 RMB within seven days of the transfer of Magnus' interest to Jinzang; and a further 2,100,000 RMB within seven days of the transfer of Team 209's interest to Jinzang. Furthermore, Magnus retains a 3% NSR on any materials produced from the Huidong Property. To date, Magnus has received the first payment of 7,000,000 RMB from Jinzang. If the exploration license is not renewed, then Magnus will be required to return all payments to Jinzang and the agreement will terminate.

Government Regulation

Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, Canada, Uganda and China, as well as other jurisdictions, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters.

In China, the approval of joint venture agreements, the issuance, transfer and renewal of business licenses for joint venture companies, and the acquisition, transfer and renewal of exploration and mining permits and licenses are all subject to receipt of government approval. Such approval may involve many levels of government (i.e. federal, provincial, county and/or city approval), and the Company cannot guarantee that all such approvals will be successfully obtained even where a joint venture has been successfully established.
Moreover, even where joint venture agreements are approved by the applicable level(s) of government and business licenses are issued, there can be no guarantee that the transfer and/or acquisition of exploration and/or mining permits or licenses will be approved, nor can the Company guarantee that such approvals will be obtained from all levels of government required for such approval. In particular, the Company cannot guarantee that the exploration license for the Huidong Property will be renewed, and if the license is not renewed in a timely manner then Magnus may lose its rights to the Huidong Property, the agreement under which Magnus will sell its interest in the Huidong Property to Jinzang will be terminated and Magnus will be required to repay any cash that it has received under that agreement.

The Company believes that it is and will continue to be in compliance in all material respects with applicable statutes and the regulations passed in China and in Uganda. There are no current orders or directions relating to the Company with respect to the foregoing laws and regulations.

Environmental Regulation

The Company's exploration projects are subject to various federal, state and local laws and regulations governing protection of the environment in North America, Uganda and China. These laws are continually changing and, as a general matter, are becoming more restrictive. The Company's policy is to conduct business in a way that safeguards public health and the environment. The Company believes that its operations are conducted in material compliance with applicable laws and regulations.

Changes to current local, state or federal laws and regulations in the jurisdictions where the Company operates or may operate in the future could require additional capital expenditures and increased operating costs. Although the Company is unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could impact the economics of its projects.

In the preceding year, there were no material environmental incidents or non-compliance with any applicable environmental regulations. The Company estimates that it will not incur material capital expenditures for environmental control facilities during the current fiscal year.

Competition

Magnus is a grassroots mineral exploration company. The mineral exploration industry is competitive, with many companies competing for the limited number of precious and base metals acquisition and exploration opportunities that are economic under current or foreseeable metals prices, as well as for available investment funds. With metal prices at their current levels, activity in the industry has increased dramatically, and competition is also high for the recruitment of qualified personnel and equipment.

The Company believes no single company has sufficient market power to affect the price or supply of gold or other minerals in the world market.

Outlook

Mineral prices rose during the year. At April 30, 2008, the price of gold was $877.20 per ounce compared to $678.00 at April 30, 2007, representing an increase of approximately 29%. Management believes that the price of gold will remain strong, and as a result the properties that are owned and controlled by the Company which contain mineralized material could gain in value. However, there is no assurance that gold prices will remain strong or continue to rise.

The Company does not currently generate operating cash flows. Subject to sustained mineral prices, management expects to generate revenues and cash flows in the future.

The Company had a working capital deficiency of $2,596,304 at April 30, 2008.

Total cash requirements stipulated under the Company's Huidong Agreement with Team 209 of China calls for a $5,000,000 equity investment into Yunnan Long Teng Mining Ltd. by Magnus, although this is expected to be reduced to $3,000,000 based on recent discussions between Magnus' management and representatives of Team 209. Under the Huidong Agreement, Magnus is required to contribute not less than $460,000 within three months after the issuance of the joint venture company business license; $1,000,000 within twenty four (24) months after the issuance of the joint venture company business license; $1,550,000 within thirty-six (36) months after the issuance of the joint venture company business license; and based on the results of the exploration by the joint venture company, if required, an additional $1,990,000 within forty-eight (48) months after the issuance of the joint venture company business license. As of April 30, 2008 the Company had contributed $3,509,969 to the joint venture company.
The business license for the joint venture company was approved and issued on July 29, 2004. Thus, the Company met the contribution obligations required to be made by the third anniversary of the business license issuance.

Total cash requirements stipulated under the Company's Mashonga Agreement is $4,650,000. Under the Mashonga Agreement, Magnus has the right to earn a 60% interest in the Mashonga Property by making aggregate cash payments of US$650,000 to its joint venture partners, making US$4,000,000 in property exploration expenditures and completing a pre-feasibility study on the property by August 30, 2012. Magnus' joint venture partners have the right to accept common shares of Magnus in lieu of the cash payments. As of April 30, 2008, . . .