Liquidity and Capital Resources

The Company has financed its operations to date primarily through the issuance of common shares, exercise of stock options and loans from related parties. The Company continues to seek capital through various means including the issuance of equity and/or debt.

No private placements were completed during the period.

Net cash used in operating activities during the three month period ended October 31, 2008 was $251,354 compared to $161,816 during the three month period ended October 31, 2007.

There was no cash used in investing activities during the three month period ended October 31, 2008 or 2007.

Financing activities provided net cash of $304,701 during the three month period ended October 31, 2008 compared to $173,841 during the three month period ended October 31, 2007. Cash provided during the period consisted of advances from related parties.

Outstanding Share Data

The authorized share capital of the Company consists of an unlimited number of preferred shares without par value (issuable in series) and an unlimited number of common shares without par value.

As at December 29, 2008, the Company had outstanding 316,682,019 common shares and 10,090,000 stock options with a weighted average exercise price of $0.14 per share.

Subsequent Event

On November 20, 2008, the Company announced that Vale International SA (“Vale”), a wholly-owned subsidiary of Companhia Vale do Rio Doce (NYSE: RIO, Vale), had signed a letter agreement for the Company’s Suwar, Wadi Qutabah nickel, copper, cobalt and platinum group element projects in Yemen.

Performance Summary

The following is a summary of significant events and transactions:

Northwest Yemen

On November 20, 2008, the Company announced that Vale International SA (“Vale”), a wholly-owned subsidiary of Companhia Vale do Rio Doce (NYSE: RIO, Vale), had signed a letter agreement for the Company’s Suwar, Wadi Qutabah nickel, copper, cobalt and platinum group element projects in Yemen (TSX Venture Exchange approval received December 2, 2008).

Vale’s minimum exploration commitment under the agreement is US $2 million to be spent prior to August 31, 2009. Vale has the right to acquire up to a 60% interest in the mineral exploration licenses for Suwar and Wadi Qutabah through a series of progressive expenditure and activity thresholds.

Vale may earn a 40% participating interest in the Suwar project if a prefeasibility study is completed on or before July 31, 2010, US $3 million is spent on the Suwar project and a US $1 million option payment is made to Cantex. An additional 11% can be earned by completing a feasibility study and a further 9% interest can be earned by financing mine development and achieving commercial production. If Cantex’s share of mine development costs are carried through to production by Vale, they are recovered by Vale as a development loan from 80% of Cantex’s share of profits.

The agreement also allows Vale to enter into a joint venture with Cantex on any other nickel, copper or cobalt bearing property, including the Company’s Al Masna’a deposit, in Yemen. The obligations are similar for each individual property.

Suwar Nickel, Copper, Cobalt, Platinum Project

The Suwar nickel, copper, cobalt, platinum project is located in the southern part of a layered basic igneous complex some 32 km in length and 8 km in width. The complex is dominated by gabbroic rocks and is thought to be of mid Proterozoic age. The city of Sana'a lies some 50 km to the east-southeast.

Mineralization at surface occurs as a discontinuous series of gossan outcrops, often containing malachite, which occur along a northeast trending zone nearly 3 km long. At least 1.1 km of this zone exhibits an UTEM response.

It has been determined from earlier drilling results that the mineralized zones are dominated by pyrrhotite with nickel being contained mainly in pyrrhotite-pentlandite intergrowths and copper within chalcopyrite. The sulphides occur both as disseminations and as massive bands. While only traces of platinum group metals have been found, only a small part of the mineralized complex has been tested and there remains a possibility for discovery of significant PGE values. There is insufficient drilling to calculate a resource but, based on the drill results and geology, the 2.7 km long discontinuously mineralized zone is up to 140 metres wide and up to 30 metres thick. There is adequate room within this zone to contain a world-class ore body. The mineralized zone is open in all directions.

An additional drilling program commenced August 14, 2007. Seventeen holes totalling 1,920 meters are planned to provide additional detail at Suwar Hill and also to test for mineralization along the previously untested extension of the Suwar massive sulphides. Four holes were complete as of January 20th 2008 and drilling of the remaining holes is currently underway. This drilling is part of the work being conducted towards completing a pre-feasibility study on Suwar by July 31, 2010.

Wadi Qutabah Nickel, Copper, Cobalt, Platinum Project

The Wadi Qutabah nickel, copper, cobalt, platinum project is located in the northern part of the same-layered mafic complex that hosts the Suwar nickel deposit (described above). It lies some 23 km north of Suwar and 60 km northwest of Sana'a.

At Wadi Qutabah, five iron sulphide horizons have been found within layered gabbroic rocks. These iron sulphide horizons are conformable with the primary layering of the gabbroic rocks and occur over an area of 23 km2. The best exposed horizon is the middle horizon and this can be traced in outcrop for more than 19 km. It is likely that the two lower horizons are of similar dimensions but these are largely concealed. The two upper horizons are significantly eroded and are of limited lateral extent.

Based on assay results for composite chip samples taken from the exposed horizon, only traces of platinum group elements were found in these samples but as strongly anomalous platinum occurs within drainage concentrates, there is a possibility that the platinum rich part of the deposit has yet to be discovered. As platinum group metals and nickel can partition during the intrusion of layered mafic complexes a drill program testing the vertically layered mafic complex to locate possible platinum horizons was undertaken.

To test the continuity of the flat lying sulphide horizons five vertical holes totaling 685.84 meters were drilled. These five holes intersected a total of 323.80 meters of weak (<10%) disseminated sulphides, 20.08 meters of moderate (10-50%) sulphide mineralization and 6.80 meters of semi massive to massive sulphide mineralization. These mineralized sections will be analyzed for nickel-copper-cobalt and platinum group elements. Cantex geologists are pleased with the extent and continuity of the sulphide mineralization.

Six additional holes were drilled to identify the source of the high platinum group element values found in three heavy mineral stream samples. The highly anomalous samples were from three adjacent streams draining a restricted portion of the Wadi Qutabah area. The six holes were designed to test the stratigraphy of the watershed of the anomalous streams. Several sulphide rich zones were intersected and these will be analyzed to identify anomalous platinum group element horizons.

Al Masna Nickel, Copper, Cobalt Project

The Al Masna’a nickel, copper, cobalt project is located in the Saadah region some 205 km north-northwest of the capital city, Sana'a, and 25 km south of the border with Saudi Arabia.

Anomalous nickel and copper values have been found in heavy mineral concentrates in a number of heavy mineral samples collected in the region while variably anomalous results for cobalt and platinum occur in follow up drainage, soil and rock samples. Most of the anomalous values occur in an area underlain by layered gabbroic rocks. Soil surveying around a mineralized drill hole at Al Masna’a identified several anomalous zones of copper, nickel, cobalt, platinum, palladium and rhodium.

The evidence to date strongly suggests that the high nickel values discovered in the Al Masna drill hole are not an isolated occurrence and that there is good probability of discovering extensions to this mineralized zone, as well as new zones of nickel mineralization.

The results of the sampling to date identify one or more zones of mineralization with a strike length of at least 4.5 kilometers. The zone(s) is (are) open to the north.

Drilling is planned to test the IP, TEM and nickel soil geochemical anomalous zones in the Al Masna'a area with the objective of determining the grade and distribution of nickel and copper in the iron sulphide horizons.

Al Hariqah Gold Deposit

The Al Hariqah gold deposit is located some 130 km northwest of Sana'a. It was discovered during follow up of anomalous gold values found in heavy mineral concentrates.

Mapping and soil geochemistry have shown that gold mineralization occurs for a distance of nearly 4 km in two close, parallel, north northwest trending zones. These zones are up to 50 metres wide.

Twenty eight reverse circulation drill holes, totalling 4,053 meters, were drilled into the northern 1,100 metres length of the deposit. These holes show that the mineralization extends to at least 150 metres depth with several deep holes bottoming in mineralization. The drilling suggests potential for a gold resource within the drilled area of 16 million tonnes at an average grade of 1.65 g/t to 100 metres depth. Extrapolation of these data to the area covered by the mapping suggests potential for a resource of 40 million tonnes at similar grades. However the deposit is open along strike, across strike and at depth so there is potential to increase the tonnage available.

A drill program of 45 holes using the Company’s specialized core / percussion drill was conducted in late 2005 and 2006. These holes were located to test the extension of the mineralization defined by the previous drill program as well as to test the continuity of mineralization between holes. Results for these holes, as determined by fire assay at ALS Chemex, an ISO 9001:2000 accredited laboratory in Vancouver, were consistent with those of the previous drill program. The Company is most encouraged with the consistent results as they demonstrate the continuity of gold values within the Al Hariqah deposit. The gold grades recovered are typical of those found in open pit mines.

Based on encouraging assay results of the work to date, the Company is committed to completing a pre-feasibility study at Al Hariqah prior to July 31, 2010.

Naqub West Uranium Project

On February 28, 2007, the Company reported that it has acquired a new prospecting permit in Yemen containing numerous indications of uranium. The new permit covers 3,876 km2 (1,514 square miles) in the Naqub West region, 195 km south southeast of the capital, Sana’a. The area is well accessed by paved road.

The area was covered by an airborne radiometric survey flown by Geo-survey in 1985. This survey found a total of 133 uranium anomalies within the permit area. A uranium anomaly was defined as being greater than 6 standard deviations above the background. Many of these anomalies have coincident thorium and/or potassium anomalies.

The Company intends to conduct an exploration program to test these uranium anomalies.

Nevada Project

Cantex has a 100% interest in seven mineral properties in Nevada. A summary of the seven Nevada properties follows:

Baxter Springs

The Baxter Springs property comprises 16 claims covering 134 hectares. The property was once staked by the Dia Met – Goldtex JV after the area was initially identified by a regional stream sediment sampling program. In 2004, two geochemically anomalous zones in soils and rocks were defined. A gold-antimony-bismuth anomaly overlies a CSAMT fault bounded resistivity high. As well, underlying a stratigraphically or structurally controlled arsenic-antimony-mercury soil and rock anomaly, are two vertical, moderately resistive zones at depth. The target deposit type is structurally or stratigraphically controlled gold, similar to the Midway deposit to the south. Permitting has been approved to drill four RC holes [June 5, 2005].

Bruner

The Bruner property consists of 25 claims covering 209 hectares. The property was once staked by the Dia Met – Goldtex JV to cover an area initially identified by a regional stream sediment sampling program. In 2004, a gold-mercury anomaly in soils and rocks was delineated. The targeted deposit type is Tertiary volcanic hosted gold similar to that found in the district.

Carico Lake

The Carico Lake property comprises 42 claims covering 351 hectares. The claims were originally staked by the Dia Met – Goldtex JV to cover an area anomalous in gold. The JV conducted a stream sediment sampling, soil and rock sampling, and geological mapping program over the claim area. In 2004, the extent of a large arsenic anomaly in rocks and soils was delineated. The target is a sediment-hosted gold deposit similar to that found in the Cortez Mining District to the east.

Gold Basin

The Gold Basin property comprises 20 claims covering 167 hectares. The claims were staked to cover an area anomalous in gold in soils and rocks initially identified by a regional stream sediment sampling program. The Dia Met – Goldtex JV had conducted stream sediment sampling, soil and rock sampling, and geological mapping within the present claim area. The claims cover a felsic volcanic breccia which hosts the mineralization. The targeted deposit type is volcanic hosted disseminated gold.

Leonard Creek

The Leonard Creek property comprises 127 claims covering 1,062 hectares. The property was once staked by the Dia Met – Goldtex JV after the area was initially identified by a regional stream sediment sampling program. A subsequent program of rock sampling, soil sampling and geological mapping identified a structural setting favourable for the deposition of gold. In 2004, a CSAMT survey identified several targets, including buried structurally controlled resistivity highs and vertical structurally controlled conductive zones. On other areas of the property, mapping has identified additional drill targets, including areas of siliceous sinter and alteration. Permitting has been approved for 12 RC holes [May 20, 2005]. The targeted deposit is gold in Tertiary volcanic rocks, similar to the Crowfoot deposit to the south.

North Fork

The North Fork property comprises 6 claims covering 50 hectares. The property was once staked by the Dia Met – Goldtex JV. The area was initially identified by a regional stream sediment sampling program. Subsequent work included rock and soil sampling, trenching, road construction, geological mapping and reverse circulation drilling. In 2004, a gold-arsenic-antimony-silver-mercury anomaly in rocks and soils, at least 200 meters long, was discovered. The target deposit is a structurally and/or stratigraphically controlled gold deposit.

Weepah South

The Weepah South property comprises 31 claims covering 260 hectares. The property was once staked by the Dia Met – Goldtex JV when the area was initially identified by a regional stream sediment sampling program. An induced polarization geophysical survey carried out by the JV shows an anomaly which may reflect mineralization in Paleozoic rocks at depth. The targeted deposit is a vein-like gold deposit up to 25 meters in width occupying a north to northeast trending shear zone, similar to the Weepah Mine three kilometers to the north. Permitting and bonding are in place to drill four RC holes [Permitting – October 26, 2004, Bonding – January 19, 2005].