The following analysis of the results of operations and financial condition of the company for the period ending May 31, 2008 should be read in conjunction with the company's financial statements, including the notes thereto contained elsewhere in this form 10-KSB. Our consolidated financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Discussion of Operations & Financial Condition

During the twelve months ended May 31, 2008 the Company recorded an operating loss of $327,828 as compared to an operating loss of $404,058 for the twelve months ended May 31, 2007, and recorded a net loss after other items of $376,307 as compared to a net loss of $97,937 for the twelve months ended May 31, 2007. This is a decrease in operating loss of $76,230 and an increase in the net loss of $278,370. The net loss represents $0.0182 per common share. The Company incurred $327,828 in operating expenses which consist mainly of: mineral property costs of $150,504 (2007 - $109,020), management and consulting fees of $72,000 (2007 - $113,746), investor relations of $21,918 (2007 - $68,137), commissions of $15,000 (2007 - $18,057) and professional fees of $31,332 (2007 - $41,482). The Company also recorded other items totaling $45,183 for the year ending May 31, 2008, which includes $47,655 in interest and bank charges and a gain on disposal of assets of $2,472. Conversely, the Company recorded other items in the year ending May 31, 2007 which reduced the net loss by $306,121. This included $82,161 in interest and bank charges less $388,282 for the writedown of old and invalid liabilities. The Company has not yet generated any revenues from its Mineral Exploration Program. Our ability to emerge from the exploration stage and conduct mining operations is dependent, in large part, upon our raising additional equity financing

Selected annual information
                                             May 31, 2008     May 31, 2007
                                             ------------     ------------
Revenues                                     Nil              Nil
Net Loss                                     $376,307         $97,937
Loss per share-basic and diluted             $0.02            $0.0052
Total Assets                                 $439,279         $174,319
Total Liabilities                            $630,888         $573,237
Cash dividends declared per share            Nil              Nil

As of May 31, 2008, Gemco had total liabilities of $630,888 consisting of $38,322 in accounts payable and accrued liabilities, $66,429 due to shareholders, $205,771 in notes payable and $320,365 due to related parties.. Liabilities increased approximately $57,651 from 2007 due primarily to the following: an increase in amounts due to related parties of $101,907 from a combination of amounts loaned to the Company as well as wages and expenses accrued less $86,547 of debt converted to 432,737 common shares at $0.20 per share; less $38,496 decrease in accounts payable and a decrease of $32,108 in shareholder loans.

Gemco's current assets at May 31, 2008, consisted of $3,277 in cash which decreased by $11,476 from $14,753 as of May 31, 2007. Total assets as of May 31, 2008 were $439,279 with Mineral claims recorded at $111,886, equipment recorded at $49,116 net of depreciation and investments recorded at $275,000 for a mortgage held on commercial property, as disclosed in note 3 of the financial statements.

Revenues
No revenue was generated by the Company's operations during the years ended May 31, 2008 and May 31, 2007.

Net Loss
The Company's expenses are reflected in the Consolidated Statements of Operations under the category of Operating Expenses. To meet the criteria of United States generally accepted accounting principles ("GAAP"), all exploration and general and administrative costs related to projects are charged to operations in the year incurred.

The significant components of expense that have contributed to the loss of $376,307 consists of mineral property costs, management and consulting fees, investor relations, commissions, professional fees and accrued interest on short term notes as mentioned above. These expenses were recorded primarily as accrued expenses as well as a combination of cash payments and an issuance of shares as disclosed in the Statement of Cashflows.

Plan of Operation

The Company's ability to emerge from the exploration stage to conduct mining operations on its mineral properties, and to develop and market its industrial abrasive products, are dependent in large part, upon our raising additional equity financing

The Company is determined in its mandate to exploit its assets and will continue to pursue raising capital as outlined in its SB2 prospectus filing. The use the proceeds from the prospectus offering will primarily finance the drilling program for Burns Mtn and provide the necessary working capital to expedite our works program on the Mexican properties and develop and market its industrial abrasives.

Burns Mountain Mining Property

We are continuing our exploration program on the Burns Mountain Project. The objective of this geological exploration program is to determine and define gold deposits in order to provide a basis for the assessment of the feasibility of future additional exploration activities, including test mining activities, at the Burns Mountain Project. We plan to conduct further exploration of the Perkins Gulch and Fosters Ledge within the Burns Mountain Project.

Our planned geological exploration program is described further in the section of this Annual Report on Form 10-KSB entitled Description of Properties - Burns Mountain Project. The actual amount that we spend on exploration will depend on the actual amount of funds that we have available for exploration. We are presently seeking the sufficient financing to enable us to proceed with these plans and will require additional financing if we are able to proceed with further exploration plans.

Mexican Operation

Gemco is continuing its initial phase of geological works and testing to confirm the quantity and attributes of the Ilmenite and magnetite minerals. Such works described will be completed within the next quarter upon which Gemco will engage one or more independent qualified persons to prepare an in depth geological report to support project financing. The objective is to bring one placer project into production in commencing in the latter part of 2009. The Company's Mexican subsidiary is coordinating all applicable licensing, permitting and other regulatory requirements necessary to commence such operations while assessing alternative processing facilities and transportation logistics.

Our plan of operations for these projects will be continually evaluated and modified as exploration and testing results become available. Modifications to our plans will be based on many factors, including: results of exploration and testing, assessment of data, weather conditions, exploration and testing costs, the price of precious metals and industrial minerals and available capital. Further, the extent of our exploration programs that we undertake will be dependent upon the amount of financing available to us. We do not have any commercially viable reserves on any of our properties.

Other Mining Properties

Secondary to the Burn's hard rock property, the Company will also focus on establishing an exploration program on its newly acquired gold and silver property, "Snowflake", in Oliver, BC. The Company acquired a 66.6% controlling interest in the property last year, and has initiated a reconnaissance program at this time. Gemco will not undertake exploration of its Hawk and Joytown placer properties in British Columbia in the immediate timeframe, as the Company has committed to focus on its other main projects at this time.

Wholly Owned Subsidiary

Our wholly owned subsidiary, "Firstline Recovery Systems Inc." (Firstline) continues in the business development for its magnetite natural mineral product trade named "Eco-Blast", an environmentally safe product used in the industrial abrasive industry as outlined in Item 1. Firstline recently entered into an Exclusive Supply Agreement with Teichert and Son Inc., a California corporation doing business as Teichert Aggregates (Teichert). This contract pertains to the exclusive distribution rights of the minerals known as Ilmenite and Magnetite. Teichert produces Ilmenite and Magnetite as a by-product from its aggregate mining operations, and currently has an estimated 25,000 tons stored on-site in Central California.

These rights allow Firstline to distribute and sell this product as a blast medium in the industrial abrasive industry in both Western U.S. and Canada. The Term of the Agreement is for a period of 5 years with an option for an additional 5 years, if agreeable by both parties. As part of the Agreement, Firstline has agreed to purchase a minimum tonnage per contract year in order to maintain fixed pricing terms. The effective commencement date of production is dependent on Firstline first obtaining California Air Regulation Board approval for the use of these products as a blast medium and then establishing a drying, screening and bagging plant at a nearby location. In conjunction with Teichert, Firstline has initiated the CARB test and Firstline management is negotiating with a U.S. company for a site on which to locate the drying and bagging facility.

Liquidity and Capital Resources

Cash and Working Capital

The Company's had a cash position of $3,277 as of May 31, 2008, compared to cash of $17,753 as of May 31, 2007, with a working capital deficiency of $627,611 as of May 31, 2008, compared to a working capital deficiency of $558,484 as of May 31, 2007.

The Company's assets are recorded at the lower of cost or market value. The total assets at May 31, 2008 were $439,279 net of amortization. The majority of our assets are long-term in nature and thus considered to be of lower liquidity. However, the Company is pursuing means to liquidate the mortgage held on commercial property at its earliest reasonable opportunity. The Company's cash inflow has been generated mainly from shareholder loans, short-term loans and issuance of common stock with minimal revenues and government incentive programs since inception.

Management continually reviews its overall capital and funding needs to ensure that the capital base can support the estimated needs of the business. These reviews take into account current business needs as well as the Company's future capital requirements. Based upon these reviews, to take advantage of strong market conditions and to fully implement our expansion strategy, management believes that the Company will continue to increase our net capital through the proceeds from sales of our securities. The Company currently maintains minimal cash balances and is funded by management and shareholder loans to satisfy monthly cash requirements in the interim of raising external funding.

The Company will require additional financing during the current fiscal year due to our current working capital deficiency, our plan of operations for the Burns Mountain Project, our planned exploration activities and our plan to continue to pursue financing. We presently do not have sufficient financing to enable us to proceed with these plans and will require additional financing if we are able to proceed with our exploration plans. Our actual expenditures on these activities will depend on the actual amount of funds that we have available as a result of our financing efforts. There is no assurance that we will be able to raise the necessary financing. See Risk Factors. It is the intent of management and controlling shareholders to provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. Management plans to address the company's net capital deficiency through the combination of raising equity capital and loans with shareholders and third parties, as well as optioning some of the company's mineral claims to other exploration companies.

Cash Used in Operating Activities

Cash provided in operating activities during 2008 was $247,419, compared to cash used in operating activities of $107,114 for 2007. The cash provided in operating activities was generated primarily through share issuances utilized in exchange for services, settlement of debt and investments.

Investing Activities

The Company recorded investments of $287,614 during the year ended May 31, 2008. Investing activities were comprised of $12,614 for the acquisition of two thirds of EKG Minerals Inc. and $275,000 for the mortgage on commercial property accepted in consideration for the subscription of 750,000 restricted common shares.

The Company anticipates continuing to rely on equity sales of common shares in order to continue to fund its business operations, in addition to the potential liquidation of the mortgage investment.. Issuances of additional shares will result in dilution to existing shareholders. The Company does not have any arrangements in place for further sales of our equity securities.

Minority Interest

The Company recorded a non-controlling interest of $908 on the balance sheet which represents the one third book value portion of its subsidiary, EKG Minerals Inc. which is owned by an arms length party. An amount of $3,296 is also recorded on the Statement of Operations, which represents the minority interest's portion of mineral property expenses incurred in EKG Minerals.

Going Concern

Our financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/ or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.

Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115". This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities" applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, "Fair Value Measurements". The adoption of this statement is not expected to have a material effect on the Company's financial statements.

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and
132(R)". This statement requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The provisions of SFAS No. 158 are effective for employers with publicly traded equity securities as of the end of the fiscal year ending after December 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.

In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Integration No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statements No. 109" (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a two-step method of first evaluating whether a tax position has met a more likely than not recognition threshold and second, measuring that tax position to determine the amount of benefit to be recognized in the financial statements. FIN 48 provides guidance on the presentation of such positions within a classified statement of financial position as well as on de-recognition, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this standard is not expected to have a material effect on the Company's results of operations or financial position.

In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
The FASB has issued SFAS No. 155 "Accounting for Certain Hybrid Financial Instruments" and SFAS No. 156 "Accounting for Servicing of Financial Assets", but they will not have any relationship to the operations of the Company. Therefore a description and its impact for each on the Company's operations and financial position have not been disclosed.

Critical Accounting Policies

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, the reported amount of revenues and expenses during the reporting period and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, particularly those related to the determination of the estimated Canadian exploration tax credit receivable. To the extent actual results differ from those estimates, our future results of operations may be affected.