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298:<BODY lang=EN-US class="cm1">
299:<DIV class=Section1>
300:<P class=MsoNormal class="cm2" align=center>UNITED STATES
301:SECURITIES AND EXCHANGE COMMISSION</P>
302:<P class=MsoNormal class="cm2" align=center>Washington, D.C.<SPAN
303:class="cm3">&nbsp; </SPAN>20549<SPAN
304:class="cm4"><o:p></o:p></SPAN></P>
305:<P class=MsoNormal class="cm2" align=center><SPAN
306:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
307:<P class=MsoNormal class="cm2" align=center><SPAN
308:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
309:<P class=MsoNormal class="cm2" align=center><SPAN
310:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
311:<P class=MsoNormal class="cm2" align=center><B
312:class="cm6"><SPAN
313:class="cm7">FORM
314:20-F<o:p></o:p></SPAN></B></P>
315:<P class=MsoNormal class="cm2" align=center><B
316:class="cm6"><SPAN
317:class="cm7"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
318:<P class=MsoNormal><SPAN
319:class="cm8">(mark
320:one)<o:p></o:p></SPAN></P>
321:<P class=MsoNormal><SPAN
322:class="cm8"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
323:<P class=MsoBodyTextIndent2>___<SPAN class="cm3">&nbsp;
324:</SPAN>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
325:EXCHANGE ACT OF 1934</P>
326:<P
327:class=MsoBodyTextIndent2><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
328:<P class=MsoBodyTextIndent2>OR</P>
329:<P class=MsoNormal class="cm9"><SPAN
330:class="cm8"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
331:<P class=MsoBodyTextIndent2><U><SPAN class="cm6"><SPAN
332:class="cm3">&nbsp; </SPAN>X </SPAN></U><SPAN
333:class="cm6"><SPAN
334:class="cm3">&nbsp;&nbsp;</SPAN>ANNUAL REPORT PURSUANT TO
335:</SPAN>SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
336:<P class=MsoBodyTextIndent2><SPAN
337:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>For
338:the fiscal year ended May 31, 2002</P>
339:<P
340:class=MsoBodyTextIndent2><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
341:<P class=MsoBodyTextIndent2>OR</P>
342:<P
343:class=MsoBodyTextIndent2><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
344:<P class=MsoBodyTextIndent2>___<SPAN class="cm3">&nbsp;
345:</SPAN>TRANSITION REPORT <SPAN class="cm6">PURSUANT TO
346:</SPAN>SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</P>
347:<P class=MsoBodyTextIndent2><SPAN
348:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>For
349:the transition period from __________ to __________</P>
350:<P class=MsoNormal class="cm9"><SPAN
351:class="cm8"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
352:<P class=MsoNormal class="cm2" align=center><B
353:class="cm6"><SPAN
354:class="cma"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
355:<P class=MsoNormal><SPAN
356:class="cm4"><SPAN
357:class="cm3">&nbsp;&nbsp; </SPAN></SPAN><SPAN
358:class="cmb"><o:p></o:p></SPAN></P>
359:<P class=MsoNormal class="cm2" align=center><SPAN
360:class="cmb">Commission file number
361:<U>0-29392</U><o:p></o:p></SPAN></P>
362:<P class=MsoNormal class="cm2" align=center><SPAN
363:class="cmc"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
364:<P class=MsoNormal class="cm2" align=center><SPAN
365:class="cmc"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
366:<P class=MsoNormal class="cm2" align=center><B
367:class="cm6"><U><SPAN
368:class="cm7">CALAIS<SPAN
369:class="cm3">&nbsp; </SPAN>RESOURCES INC.</SPAN></U></B><SPAN
370:class="cmd"><o:p></o:p></SPAN></P>
371:<P class=MsoNormal class="cm2" align=center><SPAN
372:class="cmb">(Exact name of Registrant as specified in its
373:charter)<o:p></o:p></SPAN></P>
374:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
375:<P class=MsoNormal class="cm2" align=center><U><SPAN
376:class="cmb">British Columbia, Canada</SPAN></U><SPAN
377:class="cmb"><o:p></o:p></SPAN></P>
378:<P class=MsoNormal class="cm2" align=center><SPAN
379:class="cmb">(Jurisdiction of incorporation or
380:organization)<o:p></o:p></SPAN></P>
381:<P class=MsoNormal><SPAN class="cmb"><SPAN
382:class="cm3">&nbsp; </SPAN><o:p></o:p></SPAN></P>
383:<P class=MsoNormal class="cm2" align=center><U><SPAN
384:class="cmb">P.O. Box 427, Chilliwack, British Columbia<SPAN
385:class="cm3">&nbsp; </SPAN>V2P 6J7<o:p></o:p></SPAN></U></P>
386:<P class=MsoNormal class="cm2" align=center><SPAN
387:class="cmb">(Address of principal executive
388:offices)<o:p></o:p></SPAN></P>
389:<P class=MsoNormal class="cm2" align=center><SPAN
390:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
391:<P class=MsoNormal class="cm2" align=center><SPAN
392:class="cmb">Securities to be registered pursuant to Section 12(b) of
393:the Act: None<o:p></o:p></SPAN></P>
394:<P class=MsoNormal class="cm2" align=center><SPAN
395:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
396:<P class=MsoNormal class="cm2" align=center><U><SPAN
397:class="cmb">Securities to be registered pursuant to Section 12(g) of
398:the Act:<o:p></o:p></SPAN></U></P>
399:<P class=MsoNormal class="cm2" align=center><U><SPAN
400:class="cmb">Common Shares, without par
401:value<o:p></o:p></SPAN></U></P>
402:<P class=MsoNormal class="cm2" align=center><SPAN
403:class="cmb">(Title of Class)<o:p></o:p></SPAN></P>
404:<P class=MsoNormal class="cm2" align=center><SPAN
405:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
406:<P class=MsoNormal><SPAN class="cmb">Securities for which there is a
407:reporting obligation pursuant to Section 15(d) of the Act:
408:None<o:p></o:p></SPAN></P>
409:<P class=MsoNormal class="cm2" align=center><SPAN
410:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
411:<P class=MsoNormal><SPAN class="cmb">Indicate the number of
412:outstanding shares of each of the issuer's classes of capital or common stock as
413:of the close of the period covered by the annual report.<SPAN
414:class="cm3">&nbsp;&nbsp;&nbsp;
415:</SPAN>10,676,718<o:p></o:p></SPAN></P>
416:<P class=MsoNormal><SPAN
417:class="cm4"><SPAN
418:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
419:</SPAN><o:p></o:p></SPAN></P>
420:<P class=MsoNormal class="cm2" align=center><SPAN
421:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
422:<P class=MsoNormal><SPAN
423:class="cm4">Indicate by check mark
424:whether the registrant (1) has filed all reports required to be filed by Section
425:13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
426:months (or for such shorter period that the registrant was required to file such
427:reports), and (2) has been subject to such filing requirements for the past
428:ninety days.<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
429:</SPAN>Yes <U>XXX</U><SPAN class="cm3">&nbsp;&nbsp; </SPAN>No
430:___<U><SPAN class="cm3">&nbsp;&nbsp;
431:</SPAN></U><o:p></o:p></SPAN></P>
432:<P class=MsoNormal class="cm2" align=center><SPAN
433:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
434:<P class=MsoNormal><SPAN
435:class="cm4">Indicate by check mark which
436:financial statement item the registrant has elected to follow: Item 17
437:<U>XXX</U><SPAN class="cm3">&nbsp;&nbsp; </SPAN>Item 18
438:___<o:p></o:p></SPAN></P><SPAN
439:class="cme"><BR
440:class="cmf"
441:clear=all></SPAN>
442:<P class=MsoHeader class="cmg"><SPAN
443:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
444:<P class=MsoNormal class="cm2" align=center><SPAN
445:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
446:<P class=MsoNormal class="cm2" align=center><SPAN
447:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
448:<P class=MsoNormal class="cm2" align=center><SPAN
449:class="cm4">Index to Exhibits on Page
450:<o:p></o:p></SPAN></P>
451:<P class=MsoNormal class="cm2" align=center><B
452:class="cm6"><SPAN class="cmb">CALAIS
453:RESOURCES INC.<o:p></o:p></SPAN></B></P>
454:<P class=MsoNormal class="cm2" align=center><B
455:class="cm6"><SPAN class="cmb">TABLE OF
456:CONTENTS<o:p></o:p></SPAN></B></P>
457:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
458:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
459:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
460:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
461:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
462:<P class=MsoNormal class="cm2" align=center><B
463:class="cm6"><SPAN class="cmb">PART
464:I<o:p></o:p></SPAN></B></P>
465:<P class=MsoNormal class="cm2" align=center><B
466:class="cm6"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
467:<P class=MsoFootnoteText><SPAN class="cmh">Item<SPAN
468:class="cm3">&nbsp; </SPAN>1.<SPAN
469:class="cm3">&nbsp;&nbsp; </SPAN>Identity of Directors, Senior
470:Management and <o:p></o:p></SPAN></P>
471:<P class=MsoFootnoteText><SPAN class="cmh"><SPAN
472:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
473:</SPAN>Advisers </SPAN>......................................<SPAN
474:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
475:cite="mailto:srreid" datetime="2002-12-03T12:21">n/a</DEL></SPAN><INS
476:cite="mailto:srreid" datetime="2002-12-03T12:21">03</INS><SPAN
477:class="cmh"><o:p></o:p></SPAN></P>
478:<P class=MsoFootnoteText><SPAN class="cmh">Item<SPAN
479:class="cm3">&nbsp; </SPAN>2.<SPAN
480:class="cm3">&nbsp;&nbsp; </SPAN>Offer Statistics and Expected
481:Timetable</SPAN>........<SPAN class="cmh"><SPAN
482:class="cmi">&nbsp; </SPAN><SPAN class=msoDel><DEL
483:cite="mailto:srreid" datetime="2002-12-03T12:21">n/a</DEL></SPAN><INS
484:cite="mailto:srreid" datetime="2002-12-03T12:21">03</INS><o:p></o:p></SPAN></P>
485:<P class=MsoFootnoteText><SPAN class="cmh">Item<SPAN
486:class="cm3">&nbsp; </SPAN>3.<SPAN
487:class="cm3">&nbsp;&nbsp; </SPAN>Key
488:Information..</SPAN>..............................<SPAN
489:class="cmh"> <SPAN class="cmi"></SPAN><SPAN
490:class="cm3">&nbsp;</SPAN>03<o:p></o:p></SPAN></P>
491:<P class=MsoNormal class="cmj"><SPAN
492:class="cmb">Item<SPAN class="cm3">&nbsp;
493:</SPAN>4.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Information on the
494:Company..................... <SPAN class="cmi"></SPAN><SPAN
495:class="cm3">&nbsp;</SPAN><SPAN class=msoDel><DEL
496:cite="mailto:srreid" datetime="2002-12-03T13:58">04</DEL></SPAN><INS
497:cite="mailto:srreid" datetime="2002-12-03T13:58">05</INS><o:p></o:p></SPAN></P>
498:<P class=MsoNormal class="cmj"><SPAN
499:class="cmb">Item<SPAN class="cm3">&nbsp;
500:</SPAN>5.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Operating and
501:Financial Review and Prospects...<SPAN class="cm3">&nbsp;&nbsp;
502:</SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
503:datetime="2002-12-03T13:58">09</DEL></SPAN><INS cite="mailto:srreid"
504:datetime="2002-12-03T13:58">11</INS><o:p></o:p></SPAN></P>
505:<P class=MsoNormal class="cmj"><SPAN
506:class="cmb">Item<SPAN class="cm3">&nbsp;
507:</SPAN>6.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Directors, Senior
508:Management and Employees.....<SPAN class="cm3">&nbsp;&nbsp;
509:</SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
510:datetime="2002-12-03T13:58">13</DEL></SPAN><INS cite="mailto:srreid"
511:datetime="2002-12-03T13:58">1</INS><INS cite="mailto:srreid"
512:datetime="2002-12-03T14:59">4</INS><o:p></o:p></SPAN></P>
513:<P class=MsoFootnoteText>Item<SPAN class="cm3">&nbsp;
514:</SPAN>7.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Major Shareholders
515:&amp; Related Party<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;
516:</SPAN></P>
517:<P class=MsoNormal><SPAN class="cmb"><SPAN
518:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
519:</SPAN>Transactions...................................<SPAN
520:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
521:cite="mailto:srreid" datetime="2002-12-03T13:58">15</DEL></SPAN><INS
522:cite="mailto:srreid" datetime="2002-12-03T13:58">17</INS><o:p></o:p></SPAN></P>
523:<P class=MsoFootnoteText>Item<SPAN class="cm3">&nbsp;
524:</SPAN>8.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Financial
525:Information.......................... <SPAN
526:class="cmi"></SPAN><SPAN
527:class="cm3">&nbsp;</SPAN><SPAN class=msoDel><DEL
528:cite="mailto:srreid" datetime="2002-12-03T13:58">16</DEL></SPAN><INS
529:cite="mailto:srreid" datetime="2002-12-03T13:58">19</INS></P>
530:<P class=MsoNormal class="cmj"><SPAN
531:class="cmb">Item<SPAN class="cm3">&nbsp;
532:</SPAN>9.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>The Offer and
533:Listing..........................<SPAN class="cm3">&nbsp;&nbsp;
534:</SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
535:datetime="2002-12-03T13:58">17</DEL></SPAN><INS cite="mailto:srreid"
536:datetime="2002-12-03T13:59">19</INS><o:p></o:p></SPAN></P>
537:<P class=MsoNormal class="cmj"><SPAN
538:class="cmb">Item<SPAN class="cm3">&nbsp;
539:</SPAN>10.<SPAN class="cm3">&nbsp; </SPAN>Additional
540:Information.........................<SPAN class="cm3">&nbsp;&nbsp;
541:</SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
542:datetime="2002-12-03T13:59">18</DEL></SPAN><INS cite="mailto:srreid"
543:datetime="2002-12-03T13:59">20</INS><o:p></o:p></SPAN></P>
544:<P class=MsoNormal class="cmj"><SPAN
545:class="cmb">Item<SPAN class="cm3">&nbsp;
546:</SPAN>11.<SPAN class="cm3">&nbsp; </SPAN>Quantitative and
547:Qualitative Disclosures <o:p></o:p></SPAN></P>
548:<P class=MsoNormal class="cmj"><SPAN
549:class="cmb"><SPAN
550:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
551:</SPAN>About Market Risk..............................<SPAN
552:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
553:cite="mailto:srreid" datetime="2002-12-03T13:59">23</DEL></SPAN><INS
554:cite="mailto:srreid" datetime="2002-12-03T13:59">27</INS><o:p></o:p></SPAN></P>
555:<P class=MsoNormal class="cmj"><SPAN
556:class="cmb">Item<SPAN class="cm3">&nbsp;
557:</SPAN>12.<SPAN class="cm3">&nbsp; </SPAN>Description of
558:Securities Other than Equity <o:p></o:p></SPAN></P>
559:<P class=MsoNormal class="cmj"><SPAN
560:class="cmb"><SPAN
561:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
562:</SPAN>Securities.....................................<SPAN
563:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
564:cite="mailto:srreid" datetime="2002-12-03T13:59">n/a</DEL></SPAN><INS
565:cite="mailto:srreid" datetime="2002-12-03T13:59">27</INS><o:p></o:p></SPAN></P>
566:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
567:<P class=MsoNormal class="cm2" align=center><B
568:class="cm6"><SPAN class="cmb">PART
569:II<o:p></o:p></SPAN></B></P>
570:<P class=MsoNormal class="cm2" align=center><SPAN
571:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
572:<P class=MsoNormal class="cmj"><SPAN
573:class="cmb">Item 13.<SPAN class="cm3">&nbsp;&nbsp;
574:</SPAN>Defaults, Dividend Arrearages and Delinquencies<SPAN
575:class="cm3">&nbsp; </SPAN><INS cite="mailto:srreid"
576:datetime="2002-12-03T14:58"><SPAN
577:class="cm3">&nbsp;</SPAN></INS><SPAN class=msoDel><DEL
578:cite="mailto:srreid" datetime="2002-12-03T13:59">n/a</DEL></SPAN><INS
579:cite="mailto:srreid" datetime="2002-12-03T13:59">27</INS><SPAN
580:class="cm3">&nbsp; </SPAN><o:p></o:p></SPAN></P>
581:<P class=MsoNormal class="cmj"><SPAN
582:class="cmb">Item 14.<SPAN class="cm3">&nbsp;&nbsp;
583:</SPAN>Material Modifications to <INS cite="mailto:srreid"
584:datetime="2002-12-03T14:41">the </INS>Rights of Security <o:p></o:p></SPAN></P>
585:<P class=MsoNormal class="cmj"><SPAN
586:class="cmb"><SPAN
587:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
588:</SPAN>Holders and Use of Proceeds....................<SPAN
589:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
590:cite="mailto:srreid" datetime="2002-12-03T13:59">24</DEL></SPAN><INS
591:cite="mailto:srreid" datetime="2002-12-03T13:59">27</INS><o:p></o:p></SPAN></P>
592:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
593:<P class=MsoNormal class="cm2" align=center><B
594:class="cm6"><SPAN class="cmb">PART
595:III<o:p></o:p></SPAN></B></P>
596:<P class=MsoNormal class="cm2" align=center><SPAN
597:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
598:<P class=MsoNormal class="cmj"><SPAN
599:class="cmb">Item 17.<SPAN class="cm3">&nbsp;&nbsp;
600:</SPAN>Financial Statements...........................<SPAN
601:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
602:cite="mailto:srreid" datetime="2002-12-03T13:59">25</DEL></SPAN><INS
603:cite="mailto:srreid" datetime="2002-12-03T13:59">2</INS><INS
604:cite="mailto:srreid" datetime="2002-12-03T14:59">7</INS><o:p></o:p></SPAN></P>
605:<P class=MsoNormal class="cmj"><SPAN
606:class="cmb">Item 18.<SPAN class="cm3">&nbsp;&nbsp;
607:</SPAN>Financial Statements...........................<SPAN
608:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
609:cite="mailto:srreid" datetime="2002-12-03T13:59">n/a</DEL></SPAN><INS
610:cite="mailto:srreid" datetime="2002-12-03T13:59">28</INS><o:p></o:p></SPAN></P>
611:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
612:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
613:<P class=MsoNormal class="cmj"><SPAN
614:class="cmb">Item 19.<SPAN class="cm3">&nbsp;&nbsp;
615:</SPAN>Exhibits.......................................<SPAN
616:class="cm3">&nbsp;&nbsp; </SPAN><SPAN class=msoDel><DEL
617:cite="mailto:srreid" datetime="2002-12-03T13:59">25</DEL></SPAN><INS
618:cite="mailto:srreid" datetime="2002-12-03T13:59">28</INS><o:p></o:p></SPAN></P>
619:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
620:<P class=MsoNormal class="cmj"><SPAN
621:class="cmb">Signature
622:Page............................................<SPAN
623:class="cmi">&nbsp; </SPAN><SPAN class=msoDel><DEL
624:cite="mailto:srreid" datetime="2002-12-03T13:59">26</DEL></SPAN><INS
625:cite="mailto:srreid" datetime="2002-12-03T13:59">29</INS><o:p></o:p></SPAN></P>
626:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
627:<P class=MsoNormal class="cmj"><SPAN
628:class="cmb">Certification
629:............................................<SPAN
630:class="cmi">&nbsp; </SPAN><SPAN class=msoDel><DEL
631:cite="mailto:srreid" datetime="2002-12-03T13:59">27</DEL></SPAN><INS
632:cite="mailto:srreid"
633:datetime="2002-12-03T13:59">30</INS><o:p></o:p></SPAN></P><SPAN
634:class="cmk"><BR
635:class="cml" clear=all></SPAN>
636:<P class=MsoNormal class="cmj"><B><U><SPAN
637:class="cmb"><SPAN class="cmm"><INS
638:cite="mailto:pdowad" datetime="2002-12-03T11:29"><U><SPAN
639:class="cmm">ITEM 1.<SPAN
640:class="cm3">&nbsp; </SPAN>IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
641:AND ADVISERS<SPAN
642:class="cmm"><o:p></o:p></SPAN></SPAN></U></INS></SPAN></SPAN></U></B></P>
643:<P class=MsoNormal
644:class="cmn"><SPAN
645:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:29"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
646:<P class=MsoNormal
647:class="cmn"><SPAN
648:class="cmb"><INS cite="mailto:pdowad"
649:datetime="2002-12-03T11:29">Not applicable.<o:p></o:p></INS></SPAN></P>
650:<P class=MsoNormal
651:class="cmo"><SPAN
652:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:29"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
653:<P class=MsoNormal
654:class="cmn"><B><U><SPAN
655:class="cmb"><SPAN class="cmm"><INS
656:cite="mailto:pdowad" datetime="2002-12-03T11:29"><U><SPAN
657:class="cmm">ITEM 2.<SPAN
658:class="cm3">&nbsp; </SPAN>OFFER STATISTICS AND EXPECTED
659:TIMETABLE<SPAN
660:class="cmm"><o:p></o:p></SPAN></SPAN></U></INS></SPAN></SPAN></U></B></P>
661:<P class=MsoNormal
662:class="cmn"><SPAN
663:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:29"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
664:<P class=MsoNormal
665:class="cmn"><SPAN
666:class="cmb"><INS cite="mailto:pdowad"
667:datetime="2002-12-03T11:29">Not applicable</INS><INS cite="mailto:pdowad"
668:datetime="2002-12-03T11:30">.</INS><INS cite="mailto:pdowad"
669:datetime="2002-12-03T11:29"><o:p></o:p></INS></SPAN></P>
670:<P class=MsoNormal
671:class="cmn"><SPAN
672:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:29"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
673:<P class=MsoNormal
674:class="cmn"><B><U><SPAN
675:class="cmb">ITEM 3.<SPAN class="cm3">&nbsp; </SPAN>KEY
676:INFORMATION</SPAN></U></B><SPAN class="cmb"><o:p></o:p></SPAN></P>
677:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
678:<P class=MsoNormal class="cmj"><B><SPAN
679:class="cmb"><SPAN class="cmm"><INS
680:cite="mailto:pdowad" datetime="2002-12-03T11:40"><SPAN
681:class="cmm">A.<SPAN
682:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN></SPAN></INS><SPAN
683:class="cmm"><SPAN
684:class="cmm">Selected historical financial
685:data<SPAN
686:class="cmm"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></SPAN></B></P>
687:<P class=MsoNormal class="cmj"><B><U><SPAN
688:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
689:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
690:selected financial data <INS cite="mailto:pdowad" datetime="2002-12-03T11:31">as
691:</INS>of <INS cite="mailto:pdowad" datetime="2002-12-03T11:32">and for </INS>the
692:Company for Fiscal year ended May 31, 2002 is derived from the financial
693:statements of the Company which have been audited by KPMG </SPAN><SPAN
694:class="cmp">LLP</SPAN><SPAN
695:class="cmb">, Independent Accountants, as indicated in their
696:auditor&#8217;s report which is included elsewhere in this report. <INS
697:cite="mailto:pdowad" datetime="2002-12-03T11:31"><SPAN
698:class="cm3">&nbsp;</SPAN>The selected financial data as at May 31,
699:2001 and for the years ended May 31, 2001</INS><INS cite="mailto:pdowad"
700:datetime="2002-12-03T11:32"> and 2000 have been extracted from the financial
701:statements of the Company included herein, which financial statements were
702:audited by other auditors.<SPAN class="cm3">&nbsp; </SPAN>The
703:selected financial data as of May 31, 2000, 1999 and 1998 and for the years
704:ended May 31, 1999 and 1998 has been extracted from financial statements not
705:included herein.</INS><o:p></o:p></SPAN></P>
706:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
707:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
708:selected financial data should be read in conjunction with the consolidated
709:financial statements and other financial information included elsewhere in this
710:report.<o:p></o:p></SPAN></P>
711:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
712:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
713:Company has not declared any dividends since incorporation and does not
714:anticipate that it will do so in the foreseeable future.<SPAN
715:class="cm3">&nbsp; </SPAN>The present policy of the Company is to
716:retain future earnings for use in its operations and the expansion of its
717:business.<o:p></o:p></SPAN></P>
718:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
719:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
720:following selected financial data is derived from the financial statements of
721:the Company, which have been prepared in accordance with Canadian Generally
722:Accepted Accounting Principles (GAAP), the application of which, in the case of
723:the Company, conforms in all material respects for the periods presented with
724:U.S. GAAP, except as disclosed in footnotes to the financial
725:statements.<o:p></o:p></SPAN></P>
726:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
727:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
728:<P class=MsoNormal class="cm2" align=center><SPAN
729:class="cmb">Selected Financial Data<o:p></o:p></SPAN></P>
730:<P class=MsoNormal class="cm2" align=center><SPAN
731:class="cmb">(CDN$ in 000, except per share
732:data)<o:p></o:p></SPAN></P>
733:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
734:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
735:<TABLE
736:class="cmq"
737:cellSpacing=0 cellPadding=0 width=714 border=0>
738:<TBODY>
739:<TR>
740:<TD
741:class="cmr"
742:vAlign=top width=30>
743:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
744:class="cm4"><o:p></o:p></SPAN></P></TD>
745:<TD
746:class="cms"
747:vAlign=top width=288>
748:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
749:class="cm4"><o:p></o:p></SPAN></P></TD>
750:<TD
751:class="cmt"
752:vAlign=top width=72>
753:<P class=MsoNormal class="cm2" align=center><SPAN
754:class="cm4">Year Ended
755:5/31/02<o:p></o:p></SPAN></P></TD>
756:<TD
757:class="cmu"
758:vAlign=top width=78>
759:<P class=MsoNormal class="cm2" align=center><SPAN
760:class="cm4">Year Ended
761:5/31/01<o:p></o:p></SPAN></P></TD>
762:<TD
763:class="cmv"
764:vAlign=top width=85 colSpan=2>
765:<P class=MsoNormal class="cm2" align=center><SPAN
766:class="cm4">Year Ended
767:5/31/00<o:p></o:p></SPAN></P></TD>
768:<TD
769:class="cmw"
770:vAlign=top width=76>
771:<P class=MsoNormal class="cm2" align=center><SPAN
772:class="cm4">Year Ended
773:5/31/99<o:p></o:p></SPAN></P></TD>
774:<TD
775:class="cmx"
776:vAlign=top width=85 colSpan=2>
777:<P class=MsoNormal class="cm2" align=center><SPAN
778:class="cm4">Year Ended
779:5/31/98<o:p></o:p></SPAN></P></TD></TR>
780:<TR>
781:<TD
782:class="cmr"
783:vAlign=top width=30>
784:<P class=MsoNormal class="cmy"><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
785:class="cm4"><o:p></o:p></SPAN></P></TD>
786:<TD
787:class="cms"
788:vAlign=top width=288>
789:<P class=MsoNormal class="cmy"><SPAN
790:class="cm4"><SPAN
791:class="cm3">&nbsp;</SPAN><B><SPAN
792:class="cmz"><INS cite="mailto:pdowad"
793:datetime="2002-12-03T11:34"><SPAN
794:class="cmz">Canadian GAAP<SPAN
795:class="cmz"><o:p></o:p></SPAN></SPAN></INS></SPAN></B></SPAN></P>
796:<P class=MsoNormal
797:class="cm10"><SPAN
798:class="cm4"><INS
799:cite="mailto:pdowad" datetime="2002-12-03T11:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
800:<P class=MsoNormal
801:class="cm11"><SPAN
802:class="cm4"><INS
803:cite="mailto:pdowad" datetime="2002-12-03T11:34"><SPAN
804:class="cm3">&nbsp;</SPAN></INS>Revenues<o:p></o:p></SPAN></P></TD>
805:<TD
806:class="cmt"
807:vAlign=top width=72>
808:<P class=MsoNormal class="cm12" align=right><SPAN
809:class="cm4">$0
810:<o:p></o:p></SPAN></P></TD>
811:<TD
812:class="cmu"
813:vAlign=top width=78>
814:<P class=MsoNormal class="cm12" align=right><SPAN
815:class="cm4">$0<o:p></o:p></SPAN></P></TD>
816:<TD
817:class="cmv"
818:vAlign=top width=85 colSpan=2>
819:<P class=MsoNormal class="cm12" align=right><SPAN
820:class="cm4">$0<o:p></o:p></SPAN></P></TD>
821:<TD
822:class="cmw"
823:vAlign=top width=76>
824:<P class=MsoNormal class="cm12" align=right><SPAN
825:class="cm4">$0<o:p></o:p></SPAN></P></TD>
826:<TD
827:class="cmx"
828:vAlign=top width=85 colSpan=2>
829:<P class=MsoNormal class="cm12" align=right><SPAN
830:class="cm4">$0<o:p></o:p></SPAN></P></TD></TR>
831:<TR>
832:<TD
833:class="cmr"
834:vAlign=top width=30>
835:<P class=MsoNormal class="cmy"><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
836:class="cm4"><o:p></o:p></SPAN></P></TD>
837:<TD
838:class="cms"
839:vAlign=top width=288>
840:<P class=MsoNormal class="cmy"><SPAN
841:class="cm4"><SPAN
842:class="cm3">&nbsp;</SPAN>Loss for the
843:year<o:p></o:p></SPAN></P></TD>
844:<TD
845:class="cmt"
846:vAlign=top width=72>
847:<P class=MsoNormal class="cm12" align=right><SPAN
848:class="cm4">($551)<o:p></o:p></SPAN></P></TD>
849:<TD
850:class="cmu"
851:vAlign=top width=78>
852:<P class=MsoNormal class="cm12" align=right><SPAN
853:class="cm4">($748)<o:p></o:p></SPAN></P></TD>
854:<TD
855:class="cmv"
856:vAlign=top width=85 colSpan=2>
857:<P class=MsoNormal class="cm12" align=right><SPAN
858:class="cm4">($11,795)<o:p></o:p></SPAN></P></TD>
859:<TD
860:class="cmw"
861:vAlign=top width=76>
862:<P class=MsoNormal class="cm12" align=right><SPAN
863:class="cm4">($619)<o:p></o:p></SPAN></P></TD>
864:<TD
865:class="cmx"
866:vAlign=top width=85 colSpan=2>
867:<P class=MsoNormal class="cm12" align=right><SPAN
868:class="cm4">($856)<o:p></o:p></SPAN></P></TD></TR>
869:<TR>
870:<TD
871:class="cmr"
872:vAlign=top width=30>
873:<P class=MsoNormal class="cm13"><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
874:class="cm4"><o:p></o:p></SPAN></P></TD>
875:<TD
876:class="cms"
877:vAlign=top width=288>
878:<P class=MsoNormal><SPAN
879:class="cm4"><SPAN
880:class="cm3">&nbsp;</SPAN>Loss per
881:Share<o:p></o:p></SPAN></P></TD>
882:<TD
883:class="cmt"
884:vAlign=top width=72>
885:<P class=MsoNormal class="cm12" align=right><SPAN
886:class="cm4">($0.05)<o:p></o:p></SPAN></P></TD>
887:<TD
888:class="cmu"
889:vAlign=top width=78>
890:<P class=MsoNormal class="cm12" align=right><SPAN
891:class="cm4">($0.08)<o:p></o:p></SPAN></P></TD>
892:<TD
893:class="cmv"
894:vAlign=top width=85 colSpan=2>
895:<P class=MsoNormal class="cm12" align=right><SPAN
896:class="cm4">($1.24)<o:p></o:p></SPAN></P></TD>
897:<TD
898:class="cmw"
899:vAlign=top width=76>
900:<P class=MsoNormal class="cm12" align=right><SPAN
901:class="cm4">($0.07)<o:p></o:p></SPAN></P></TD>
902:<TD
903:class="cmx"
904:vAlign=top width=85 colSpan=2>
905:<P class=MsoNormal class="cm12" align=right><SPAN
906:class="cm4">($0.11)<o:p></o:p></SPAN></P></TD></TR>
907:<TR>
908:<TD
909:class="cmr"
910:vAlign=top width=30>
911:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
912:class="cm4"><o:p></o:p></SPAN></P></TD>
913:<TD
914:class="cms"
915:vAlign=top width=288>
916:<P class=MsoNormal><SPAN
917:class="cm4"><SPAN
918:class="cm3">&nbsp;</SPAN>Dividends Per
919:Share<o:p></o:p></SPAN></P></TD>
920:<TD
921:class="cmt"
922:vAlign=top width=72>
923:<P class=MsoNormal class="cm12" align=right><SPAN
924:class="cm4">$0.00<o:p></o:p></SPAN></P></TD>
925:<TD
926:class="cmu"
927:vAlign=top width=78>
928:<P class=MsoNormal class="cm12" align=right><SPAN
929:class="cm4">$0.00<o:p></o:p></SPAN></P></TD>
930:<TD
931:class="cmv"
932:vAlign=top width=85 colSpan=2>
933:<P class=MsoNormal class="cm12" align=right><SPAN
934:class="cm4">$0.00<o:p></o:p></SPAN></P></TD>
935:<TD
936:class="cmw"
937:vAlign=top width=76>
938:<P class=MsoNormal class="cm12" align=right><SPAN
939:class="cm4">$0.00<o:p></o:p></SPAN></P></TD>
940:<TD
941:class="cmx"
942:vAlign=top width=85 colSpan=2>
943:<P class=MsoNormal class="cm12" align=right><SPAN
944:class="cm4">$0.00<o:p></o:p></SPAN></P></TD></TR>
945:<TR>
946:<TD
947:class="cmr"
948:vAlign=top width=30>
949:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
950:class="cm4"><o:p></o:p></SPAN></P></TD>
951:<TD
952:class="cms"
953:vAlign=top width=288>
954:<P class=MsoNormal><SPAN
955:class="cm4"><SPAN
956:class="cm3">&nbsp;</SPAN>Wtg. Avg. Shares
957:(000)<o:p></o:p></SPAN></P></TD>
958:<TD
959:class="cmt"
960:vAlign=top width=72>
961:<P class=MsoNormal class="cm12" align=right><SPAN
962:class="cm4">10,185<o:p></o:p></SPAN></P></TD>
963:<TD
964:class="cmu"
965:vAlign=top width=78>
966:<P class=MsoNormal class="cm12" align=right><SPAN
967:class="cm4">9,618<o:p></o:p></SPAN></P></TD>
968:<TD
969:class="cmv"
970:vAlign=top width=85 colSpan=2>
971:<P class=MsoNormal class="cm12" align=right><SPAN
972:class="cm4">9,505<o:p></o:p></SPAN></P></TD>
973:<TD
974:class="cmw"
975:vAlign=top width=76>
976:<P class=MsoNormal class="cm12" align=right><SPAN
977:class="cm4">9,126<o:p></o:p></SPAN></P></TD>
978:<TD
979:class="cmx"
980:vAlign=top width=85 colSpan=2>
981:<P class=MsoNormal class="cm12" align=right><SPAN
982:class="cm4">7,943<o:p></o:p></SPAN></P></TD></TR>
983:<TR>
984:<TD
985:class="cmr"
986:vAlign=top width=30>
987:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
988:class="cm4"><o:p></o:p></SPAN></P></TD>
989:<TD
990:class="cms"
991:vAlign=top width=288>
992:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
993:class="cm4"><o:p></o:p></SPAN></P></TD>
994:<TD
995:class="cmt"
996:vAlign=top width=72>
997:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
998:class="cm4"><o:p></o:p></SPAN></P></TD>
999:<TD
1000:class="cmu"
1001:vAlign=top width=78>
1002:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1003:class="cm4"><o:p></o:p></SPAN></P></TD>
1004:<TD
1005:class="cmv"
1006:vAlign=top width=85 colSpan=2>
1007:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1008:class="cm4"><o:p></o:p></SPAN></P></TD>
1009:<TD
1010:class="cmw"
1011:vAlign=top width=76>
1012:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1013:class="cm4"><o:p></o:p></SPAN></P></TD>
1014:<TD
1015:class="cmx"
1016:vAlign=top width=85 colSpan=2>
1017:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1018:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1019:<TR>
1020:<TD
1021:class="cmr"
1022:vAlign=top width=30>
1023:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1024:class="cm4"><o:p></o:p></SPAN></P></TD>
1025:<TD
1026:class="cms"
1027:vAlign=top width=288>
1028:<P class=MsoNormal><SPAN
1029:class="cm4"><SPAN
1030:class="cm3">&nbsp;</SPAN>Working Capital
1031:Deficiency<o:p></o:p></SPAN></P></TD>
1032:<TD
1033:class="cmt"
1034:vAlign=top width=72>
1035:<P class=MsoNormal class="cm12" align=right><SPAN
1036:class="cm4">($2,625)<o:p></o:p></SPAN></P></TD>
1037:<TD
1038:class="cmu"
1039:vAlign=top width=78>
1040:<P class=MsoNormal class="cm12" align=right><SPAN
1041:class="cm4">($1,262)<o:p></o:p></SPAN></P></TD>
1042:<TD
1043:class="cmv"
1044:vAlign=top width=85 colSpan=2>
1045:<P class=MsoNormal class="cm12" align=right><SPAN
1046:class="cm4">($5,241)<o:p></o:p></SPAN></P></TD>
1047:<TD
1048:class="cmw"
1049:vAlign=top width=76>
1050:<P class=MsoNormal class="cm12" align=right><SPAN
1051:class="cm4">($5,334)<o:p></o:p></SPAN></P></TD>
1052:<TD
1053:class="cmx"
1054:vAlign=top width=85 colSpan=2>
1055:<P class=MsoNormal class="cm12" align=right><SPAN
1056:class="cm4">($2,567)<o:p></o:p></SPAN></P></TD></TR>
1057:<TR>
1058:<TD
1059:class="cmr"
1060:vAlign=top width=30>
1061:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1062:class="cm4"><o:p></o:p></SPAN></P></TD>
1063:<TD
1064:class="cms"
1065:vAlign=top width=288>
1066:<P class=MsoNormal><SPAN
1067:class="cm4"><SPAN
1068:class="cm3">&nbsp;</SPAN>Long-Term
1069:Debt<o:p></o:p></SPAN></P></TD>
1070:<TD
1071:class="cmt"
1072:vAlign=top width=72>
1073:<P class=MsoNormal class="cm12" align=right><SPAN
1074:class="cm4">$5,097<o:p></o:p></SPAN></P></TD>
1075:<TD
1076:class="cmu"
1077:vAlign=top width=78>
1078:<P class=MsoNormal class="cm12" align=right><SPAN
1079:class="cm4">$5,721<o:p></o:p></SPAN></P></TD>
1080:<TD
1081:class="cmv"
1082:vAlign=top width=85 colSpan=2>
1083:<P class=MsoNormal class="cm12" align=right><SPAN
1084:class="cm4">$0<o:p></o:p></SPAN></P></TD>
1085:<TD
1086:class="cmw"
1087:vAlign=top width=76>
1088:<P class=MsoNormal class="cm12" align=right><SPAN
1089:class="cm4">$0<o:p></o:p></SPAN></P></TD>
1090:<TD
1091:class="cmx"
1092:vAlign=top width=85 colSpan=2>
1093:<P class=MsoNormal class="cm12" align=right><SPAN
1094:class="cm4">$0<o:p></o:p></SPAN></P></TD></TR>
1095:<TR>
1096:<TD
1097:class="cmr"
1098:vAlign=top width=30>
1099:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1100:class="cm4"><o:p></o:p></SPAN></P></TD>
1101:<TD
1102:class="cms"
1103:vAlign=top width=288>
1104:<P class=MsoNormal><SPAN
1105:class="cm4"><SPAN
1106:class="cm3">&nbsp;</SPAN>Mineral
1107:Properties<o:p></o:p></SPAN></P></TD>
1108:<TD
1109:class="cmt"
1110:vAlign=top width=72>
1111:<P class=MsoNormal class="cm12" align=right><SPAN
1112:class="cm4">$12,681<o:p></o:p></SPAN></P></TD>
1113:<TD
1114:class="cmu"
1115:vAlign=top width=78>
1116:<P class=MsoNormal class="cm12" align=right><SPAN
1117:class="cm4">$12,203<o:p></o:p></SPAN></P></TD>
1118:<TD
1119:class="cmv"
1120:vAlign=top width=85 colSpan=2>
1121:<P class=MsoNormal class="cm12" align=right><SPAN
1122:class="cm4">$12,069<o:p></o:p></SPAN></P></TD>
1123:<TD
1124:class="cmw"
1125:vAlign=top width=76>
1126:<P class=MsoNormal class="cm12" align=right><SPAN
1127:class="cm4">$21,589<o:p></o:p></SPAN></P></TD>
1128:<TD
1129:class="cmx"
1130:vAlign=top width=85 colSpan=2>
1131:<P class=MsoNormal class="cm12" align=right><SPAN
1132:class="cm4">$15,050<o:p></o:p></SPAN></P></TD></TR>
1133:<TR>
1134:<TD
1135:class="cmr"
1136:vAlign=top width=30>
1137:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1138:class="cm4"><o:p></o:p></SPAN></P></TD>
1139:<TD
1140:class="cms"
1141:vAlign=top width=288>
1142:<P class=MsoNormal><SPAN
1143:class="cm4"><SPAN
1144:class="cm3">&nbsp;</SPAN>Shareholder&#8217;s
1145:Equity<o:p></o:p></SPAN></P></TD>
1146:<TD
1147:class="cmt"
1148:vAlign=top width=72>
1149:<P class=MsoNormal class="cm12" align=right><SPAN
1150:class="cm4">$5,086<o:p></o:p></SPAN></P></TD>
1151:<TD
1152:class="cmu"
1153:vAlign=top width=78>
1154:<P class=MsoNormal class="cm12" align=right><SPAN
1155:class="cm4">$5,390<o:p></o:p></SPAN></P></TD>
1156:<TD
1157:class="cmv"
1158:vAlign=top width=85 colSpan=2>
1159:<P class=MsoNormal class="cm12" align=right><SPAN
1160:class="cm4">$6,078<o:p></o:p></SPAN></P></TD>
1161:<TD
1162:class="cmw"
1163:vAlign=top width=76>
1164:<P class=MsoNormal class="cm12" align=right><SPAN
1165:class="cm4">$17,873<o:p></o:p></SPAN></P></TD>
1166:<TD
1167:class="cmx"
1168:vAlign=top width=85 colSpan=2>
1169:<P class=MsoNormal class="cm12" align=right><SPAN
1170:class="cm4">$15,147<o:p></o:p></SPAN></P></TD></TR>
1171:<TR>
1172:<TD
1173:class="cmr"
1174:vAlign=top width=30>
1175:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1176:class="cm4"><o:p></o:p></SPAN></P></TD>
1177:<TD
1178:class="cms"
1179:vAlign=top width=288>
1180:<P class=MsoNormal><SPAN
1181:class="cm4"><SPAN
1182:class="cm3">&nbsp;</SPAN>Total
1183:Assets<o:p></o:p></SPAN></P></TD>
1184:<TD
1185:class="cmt"
1186:vAlign=top width=72>
1187:<P class=MsoNormal class="cm12" align=right><SPAN
1188:class="cm4">$13,166<o:p></o:p></SPAN></P></TD>
1189:<TD
1190:class="cmu"
1191:vAlign=top width=78>
1192:<P class=MsoNormal class="cm12" align=right><SPAN
1193:class="cm4">$12,788<o:p></o:p></SPAN></P></TD>
1194:<TD
1195:class="cmv"
1196:vAlign=top width=85 colSpan=2>
1197:<P class=MsoNormal class="cm12" align=right><SPAN
1198:class="cm4">$12,799<o:p></o:p></SPAN></P></TD>
1199:<TD
1200:class="cmw"
1201:vAlign=top width=76>
1202:<P class=MsoNormal class="cm12" align=right><SPAN
1203:class="cm4">$24,306<o:p></o:p></SPAN></P></TD>
1204:<TD
1205:class="cmx"
1206:vAlign=top width=85 colSpan=2>
1207:<P class=MsoNormal class="cm12" align=right><SPAN
1208:class="cm4">$18,865<o:p></o:p></SPAN></P></TD></TR>
1209:<TR>
1210:<TD
1211:class="cmr"
1212:vAlign=top width=30>
1213:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1214:class="cm4"><o:p></o:p></SPAN></P></TD>
1215:<TD
1216:class="cms"
1217:vAlign=top width=288>
1218:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1219:class="cm4"><o:p></o:p></SPAN></P></TD>
1220:<TD
1221:class="cmt"
1222:vAlign=top width=72>
1223:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1224:class="cm4"><o:p></o:p></SPAN></P></TD>
1225:<TD
1226:class="cmu"
1227:vAlign=top width=78>
1228:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1229:class="cm4"><o:p></o:p></SPAN></P></TD>
1230:<TD
1231:class="cmv"
1232:vAlign=top width=85 colSpan=2>
1233:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1234:class="cm4"><o:p></o:p></SPAN></P></TD>
1235:<TD
1236:class="cmw"
1237:vAlign=top width=76>
1238:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1239:class="cm4"><o:p></o:p></SPAN></P></TD>
1240:<TD
1241:class="cmx"
1242:vAlign=top width=85 colSpan=2>
1243:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1244:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1245:<TR>
1246:<TD
1247:class="cmr"
1248:vAlign=top width=30>
1249:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1250:class="cm4"><o:p></o:p></SPAN></P></TD>
1251:<TD
1252:class="cms"
1253:vAlign=top width=288>
1254:<P class=MsoNormal><SPAN
1255:class="cm4"><SPAN
1256:class="cm3">&nbsp;</SPAN><B><SPAN
1257:class="cm14"><SPAN
1258:class="cm14">US GAAP <SPAN
1259:class="cm14"><INS cite="mailto:pdowad"
1260:datetime="2002-12-03T11:34"><SPAN
1261:class="cm14"><o:p></o:p></SPAN></INS></SPAN></SPAN></SPAN></B></SPAN></P>
1262:<P class=MsoNormal
1263:class="cm15"><SPAN
1264:class="cm4"><INS
1265:cite="mailto:pdowad" datetime="2002-12-03T11:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1266:<P class=MsoNormal
1267:class="cm16"><SPAN
1268:class="cm4"><INS
1269:cite="mailto:pdowad" datetime="2002-12-03T11:34"><SPAN
1270:class="cm3">&nbsp;</SPAN></INS>Mineral Properties
1271:(3)<o:p></o:p></SPAN></P></TD>
1272:<TD
1273:class="cmt"
1274:vAlign=top width=72>
1275:<P class=MsoNormal
1276:class="cm17"
1277:align=right><SPAN class="cm4"><INS
1278:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1279:<P class=MsoNormal
1280:class="cm18"
1281:align=right><SPAN class="cm4"><INS
1282:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1283:<P class=MsoNormal class="cm12" align=right><SPAN
1284:class="cm4">$0<o:p></o:p></SPAN></P></TD>
1285:<TD
1286:class="cmu"
1287:vAlign=top width=78>
1288:<P class=MsoNormal
1289:class="cm17"
1290:align=right><SPAN class="cm4"><INS
1291:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1292:<P class=MsoNormal
1293:class="cm18"
1294:align=right><SPAN class="cm4"><INS
1295:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1296:<P class=MsoNormal class="cm12" align=right><SPAN
1297:class="cm4">$0<o:p></o:p></SPAN></P></TD>
1298:<TD
1299:class="cmv"
1300:vAlign=top width=85 colSpan=2>
1301:<P class=MsoNormal
1302:class="cm17"
1303:align=right><SPAN class="cm4"><INS
1304:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1305:<P class=MsoNormal
1306:class="cm18"
1307:align=right><SPAN class="cm4"><INS
1308:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1309:<P class=MsoNormal class="cm12" align=right><SPAN
1310:class="cm4">$0<o:p></o:p></SPAN></P></TD>
1311:<TD
1312:class="cmw"
1313:vAlign=top width=76>
1314:<P class=MsoNormal
1315:class="cm17"
1316:align=right><SPAN class="cm4"><INS
1317:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1318:<P class=MsoNormal
1319:class="cm18"
1320:align=right><SPAN class="cm4"><INS
1321:cite="mailto:srreid" datetime="2002-12-03T12:21"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1322:<P class=MsoNormal class="cm12" align=right><SPAN
1323:class="cm4">$0<o:p></o:p></SPAN></P></TD>
1324:<TD
1325:class="cmx"
1326:vAlign=top width=85 colSpan=2>
1327:<P class=MsoNormal
1328:class="cm19"
1329:align=right><SPAN class="cm4"><INS
1330:cite="mailto:srreid" datetime="2002-12-03T12:22"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1331:<P class=MsoNormal
1332:class="cm1a"
1333:align=right><SPAN class="cm4"><INS
1334:cite="mailto:srreid" datetime="2002-12-03T12:22"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
1335:<P class=MsoNormal class="cm12" align=right><SPAN
1336:class="cm4">$0<o:p></o:p></SPAN></P></TD></TR>
1337:<TR>
1338:<TD
1339:class="cmr"
1340:vAlign=top width=30>
1341:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1342:class="cm4"><o:p></o:p></SPAN></P></TD>
1343:<TD
1344:class="cms"
1345:vAlign=top width=288>
1346:<P class=MsoNormal><SPAN
1347:class="cm4"><SPAN
1348:class="cm3">&nbsp;</SPAN><SPAN class=msoDel><DEL
1349:cite="mailto:pdowad" datetime="2002-12-03T11:35">US GAAP
1350:</DEL></SPAN>Shareholders deficiency<o:p></o:p></SPAN></P></TD>
1351:<TD
1352:class="cmt"
1353:vAlign=top width=72>
1354:<P class=MsoNormal class="cm12" align=right><SPAN
1355:class="cm4">($7,596)<o:p></o:p></SPAN></P></TD>
1356:<TD
1357:class="cmu"
1358:vAlign=top width=78>
1359:<P class=MsoNormal class="cm12" align=right><SPAN
1360:class="cm4">($6,813)<o:p></o:p></SPAN></P></TD>
1361:<TD
1362:class="cmv"
1363:vAlign=top width=85 colSpan=2>
1364:<P class=MsoNormal class="cm12" align=right><SPAN
1365:class="cm4">($5,992)<o:p></o:p></SPAN></P></TD>
1366:<TD
1367:class="cmw"
1368:vAlign=top width=76>
1369:<P class=MsoNormal class="cm12" align=right><SPAN
1370:class="cm4">($3,716)<o:p></o:p></SPAN></P></TD>
1371:<TD
1372:class="cmx"
1373:vAlign=top width=85 colSpan=2>
1374:<P class=MsoNormal class="cm12" align=right><SPAN
1375:class="cm4">$97<o:p></o:p></SPAN></P></TD></TR>
1376:<TR>
1377:<TD
1378:class="cmr"
1379:vAlign=top width=30>
1380:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1381:class="cm4"><o:p></o:p></SPAN></P></TD>
1382:<TD
1383:class="cms"
1384:vAlign=top width=288>
1385:<P class=MsoNormal><SPAN
1386:class="cm4"><SPAN
1387:class="cm3">&nbsp;</SPAN><SPAN class=msoDel><DEL
1388:cite="mailto:pdowad" datetime="2002-12-03T11:35">US GAAP
1389:</DEL></SPAN>Total Assets<o:p></o:p></SPAN></P></TD>
1390:<TD
1391:class="cmt"
1392:vAlign=top width=72>
1393:<P class=MsoNormal class="cm12" align=right><SPAN
1394:class="cm4">$485<o:p></o:p></SPAN></P></TD>
1395:<TD
1396:class="cmu"
1397:vAlign=top width=78>
1398:<P class=MsoNormal class="cm12" align=right><SPAN
1399:class="cm4">$585<o:p></o:p></SPAN></P></TD>
1400:<TD
1401:class="cmv"
1402:vAlign=top width=85 colSpan=2>
1403:<P class=MsoNormal class="cm12" align=right><SPAN
1404:class="cm4">$729<o:p></o:p></SPAN></P></TD>
1405:<TD
1406:class="cmw"
1407:vAlign=top width=76>
1408:<P class=MsoNormal class="cm12" align=right><SPAN
1409:class="cm4">$2,716<o:p></o:p></SPAN></P></TD>
1410:<TD
1411:class="cmx"
1412:vAlign=top width=85 colSpan=2>
1413:<P class=MsoNormal class="cm12" align=right><SPAN
1414:class="cm4">$3,815<o:p></o:p></SPAN></P></TD></TR>
1415:<TR>
1416:<TD
1417:class="cmr"
1418:vAlign=top width=30>
1419:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1420:class="cm4"><o:p></o:p></SPAN></P></TD>
1421:<TD
1422:class="cms"
1423:vAlign=top width=288>
1424:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1425:class="cm4"><o:p></o:p></SPAN></P></TD>
1426:<TD
1427:class="cmt"
1428:vAlign=top width=72>
1429:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1430:class="cm4"><o:p></o:p></SPAN></P></TD>
1431:<TD
1432:class="cmu"
1433:vAlign=top width=78>
1434:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1435:class="cm4"><o:p></o:p></SPAN></P></TD>
1436:<TD
1437:class="cmv"
1438:vAlign=top width=85 colSpan=2>
1439:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1440:class="cm4"><o:p></o:p></SPAN></P></TD>
1441:<TD
1442:class="cmw"
1443:vAlign=top width=76>
1444:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1445:class="cm4"><o:p></o:p></SPAN></P></TD>
1446:<TD
1447:class="cmx"
1448:vAlign=top width=85 colSpan=2>
1449:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1450:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1451:<TR>
1452:<TD
1453:class="cmr"
1454:vAlign=top width=30>
1455:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1456:class="cm4"><o:p></o:p></SPAN></P></TD>
1457:<TD
1458:class="cms"
1459:vAlign=top width=288>
1460:<P class=MsoNormal><SPAN
1461:class="cm4"><SPAN
1462:class="cm3">&nbsp;</SPAN><SPAN class=msoDel><DEL
1463:cite="mailto:pdowad" datetime="2002-12-03T11:35">US GAAP </DEL></SPAN>Net
1464:Loss (1), (2)<o:p></o:p></SPAN></P></TD>
1465:<TD
1466:class="cmt"
1467:vAlign=top width=72>
1468:<P class=MsoNormal class="cm12" align=right><SPAN
1469:class="cm4">($964)<o:p></o:p></SPAN></P></TD>
1470:<TD
1471:class="cmu"
1472:vAlign=top width=78>
1473:<P class=MsoNormal class="cm12" align=right><SPAN
1474:class="cm4">($1,004)<o:p></o:p></SPAN></P></TD>
1475:<TD
1476:class="cmv"
1477:vAlign=top width=85 colSpan=2>
1478:<P class=MsoNormal class="cm12" align=right><SPAN
1479:class="cm4">($2,275)<o:p></o:p></SPAN></P></TD>
1480:<TD
1481:class="cmw"
1482:vAlign=top width=76>
1483:<P class=MsoNormal class="cm12" align=right><SPAN
1484:class="cm4">($7,159)<o:p></o:p></SPAN></P></TD>
1485:<TD
1486:class="cmx"
1487:vAlign=top width=85 colSpan=2>
1488:<P class=MsoNormal class="cm12" align=right><SPAN
1489:class="cm4">($10,744)<o:p></o:p></SPAN></P></TD></TR>
1490:<TR>
1491:<TD
1492:class="cmr"
1493:vAlign=top width=30>
1494:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1495:class="cm4"><o:p></o:p></SPAN></P></TD>
1496:<TD
1497:class="cms"
1498:vAlign=top width=288>
1499:<P class=MsoNormal><SPAN
1500:class="cm4"><SPAN
1501:class="cm3">&nbsp;</SPAN><SPAN class=msoDel><DEL
1502:cite="mailto:pdowad" datetime="2002-12-03T11:35">US GAAP
1503:</DEL></SPAN>EPS<o:p></o:p></SPAN></P></TD>
1504:<TD
1505:class="cmt"
1506:vAlign=top width=72>
1507:<P class=MsoNormal class="cm12" align=right><SPAN
1508:class="cm4">($0.09)<o:p></o:p></SPAN></P></TD>
1509:<TD
1510:class="cmu"
1511:vAlign=top width=78>
1512:<P class=MsoNormal class="cm12" align=right><SPAN
1513:class="cm4">($0.10)<o:p></o:p></SPAN></P></TD>
1514:<TD
1515:class="cmv"
1516:vAlign=top width=85 colSpan=2>
1517:<P class=MsoNormal class="cm12" align=right><SPAN
1518:class="cm4">($0.24)<o:p></o:p></SPAN></P></TD>
1519:<TD
1520:class="cmw"
1521:vAlign=top width=76>
1522:<P class=MsoNormal class="cm12" align=right><SPAN
1523:class="cm4">($0.78)<o:p></o:p></SPAN></P></TD>
1524:<TD
1525:class="cmx"
1526:vAlign=top width=85 colSpan=2>
1527:<P class=MsoNormal class="cm12" align=right><SPAN
1528:class="cm4">($1.35)<o:p></o:p></SPAN></P></TD></TR>
1529:<TR>
1530:<TD
1531:class="cmr"
1532:vAlign=top width=30>
1533:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1534:class="cm4"><o:p></o:p></SPAN></P></TD>
1535:<TD
1536:class="cm1b"
1537:vAlign=top width=684 colSpan=8>
1538:<P class=MsoNormal><SPAN
1539:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
1540:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1541:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1542:<TR>
1543:<TD
1544:class="cmr"
1545:vAlign=top width=30>
1546:<P class=MsoNormal
1547:class="cm1c"><![if !supportLists]><SPAN
1548:class="cm4">(1)<SPAN
1549:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1550:</SPAN></SPAN><![endif]><![if !supportEmptyParas]>&nbsp;<![endif]><SPAN
1551:class="cm4"><o:p></o:p></SPAN></P></TD>
1552:<TD
1553:class="cm1e"
1554:vAlign=top width=438 colSpan=3>
1555:<P class=MsoNormal><SPAN
1556:class="cm4">Cumulative Net Loss
1557:since incorporation is ($29,546).<o:p></o:p></SPAN></P></TD>
1558:<TD
1559:class="cm1f"
1560:vAlign=top width=84>
1561:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1562:class="cm4"><o:p></o:p></SPAN></P></TD>
1563:<TD
1564:class="cm1g"
1565:vAlign=top width=78 colSpan=3>
1566:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1567:class="cm4"><o:p></o:p></SPAN></P></TD>
1568:<TD
1569:class="cm1h"
1570:vAlign=top width=84>
1571:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1572:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1573:<TR>
1574:<TD
1575:class="cmr"
1576:vAlign=top width=30>
1577:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1578:class="cm4"><o:p></o:p></SPAN></P></TD>
1579:<TD
1580:class="cms"
1581:vAlign=top width=288>
1582:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1583:class="cm4"><o:p></o:p></SPAN></P></TD>
1584:<TD
1585:class="cmt"
1586:vAlign=top width=72>
1587:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1588:class="cm4"><o:p></o:p></SPAN></P></TD>
1589:<TD
1590:class="cmu"
1591:vAlign=top width=78>
1592:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1593:class="cm4"><o:p></o:p></SPAN></P></TD>
1594:<TD
1595:class="cm1f"
1596:vAlign=top width=84>
1597:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1598:class="cm4"><o:p></o:p></SPAN></P></TD>
1599:<TD
1600:class="cm1g"
1601:vAlign=top width=78 colSpan=3>
1602:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1603:class="cm4"><o:p></o:p></SPAN></P></TD>
1604:<TD
1605:class="cm1h"
1606:vAlign=top width=84>
1607:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1608:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1609:<TR class="cm1i">
1610:<TD
1611:class="cm1j"
1612:vAlign=top width=30>
1613:<P class=MsoNormal
1614:class="cm1k"><![if !supportLists]><SPAN
1615:class="cm4">(2)<SPAN
1616:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1617:</SPAN></SPAN><![endif]><![if !supportEmptyParas]>&nbsp;<![endif]><SPAN
1618:class="cm4"><o:p></o:p></SPAN></P></TD>
1619:<TD
1620:class="cm1l"
1621:vAlign=top width=522 colSpan=4>
1622:<P class=MsoNormal><SPAN
1623:class="cm4">Canadian GAAP Net Loss
1624:ha<INS cite="mailto:pdowad" datetime="2002-12-03T11:35">s</INS><SPAN
1625:class=msoDel><DEL cite="mailto:pdowad"
1626:datetime="2002-12-03T11:35">ve</DEL></SPAN> been adjusted to US GAAP for
1627:the following:<o:p></o:p></SPAN></P></TD>
1628:<TD
1629:class="cm1m"
1630:vAlign=top width=78 colSpan=3>
1631:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1632:class="cm4"><o:p></o:p></SPAN></P></TD>
1633:<TD
1634:class="cm1n"
1635:vAlign=top width=84>
1636:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1637:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1638:<TR>
1639:<TD
1640:class="cmr"
1641:vAlign=top width=30>
1642:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1643:class="cm4"><o:p></o:p></SPAN></P></TD>
1644:<TD
1645:class="cms"
1646:vAlign=top width=288>
1647:<P class=MsoNormal><SPAN
1648:class="cm4">Canadian GAAP Net
1649:Loss<o:p></o:p></SPAN></P></TD>
1650:<TD
1651:class="cmt"
1652:vAlign=top width=72>
1653:<P class=MsoNormal class="cm12" align=right><SPAN
1654:class="cm4">($551)<o:p></o:p></SPAN></P></TD>
1655:<TD
1656:class="cmu"
1657:vAlign=top width=78>
1658:<P class=MsoNormal class="cm12" align=right><SPAN
1659:class="cm4">($748)<o:p></o:p></SPAN></P></TD>
1660:<TD
1661:class="cmv"
1662:vAlign=top width=85 colSpan=2>
1663:<P class=MsoNormal class="cm12" align=right><SPAN
1664:class="cm4">($11,795)<o:p></o:p></SPAN></P></TD>
1665:<TD
1666:class="cmw"
1667:vAlign=top width=76>
1668:<P class=MsoNormal class="cm12" align=right><SPAN
1669:class="cm4">($619)<o:p></o:p></SPAN></P></TD>
1670:<TD
1671:class="cmx"
1672:vAlign=top width=85 colSpan=2>
1673:<P class=MsoNormal class="cm12" align=right><SPAN
1674:class="cm4">($856)<o:p></o:p></SPAN></P></TD></TR>
1675:<TR>
1676:<TD
1677:class="cmr"
1678:vAlign=top width=30>
1679:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1680:class="cm4"><o:p></o:p></SPAN></P></TD>
1681:<TD
1682:class="cms"
1683:vAlign=top width=288>
1684:<P class=MsoNormal><SPAN
1685:class="cm4">Expensed exploration
1686:costs<o:p></o:p></SPAN></P></TD>
1687:<TD
1688:class="cmt"
1689:vAlign=top width=72>
1690:<P class=MsoNormal class="cm12" align=right><SPAN
1691:class="cm4">(479)<o:p></o:p></SPAN></P></TD>
1692:<TD
1693:class="cmu"
1694:vAlign=top width=78>
1695:<P class=MsoNormal class="cm12" align=right><SPAN
1696:class="cm4">(446)<o:p></o:p></SPAN></P></TD>
1697:<TD
1698:class="cmv"
1699:vAlign=top width=85 colSpan=2>
1700:<P class=MsoNormal class="cm12" align=right><SPAN
1701:class="cm4">(1,879)<o:p></o:p></SPAN></P></TD>
1702:<TD
1703:class="cmw"
1704:vAlign=top width=76>
1705:<P class=MsoNormal class="cm12" align=right><SPAN
1706:class="cm4">(6,540)<o:p></o:p></SPAN></P></TD>
1707:<TD
1708:class="cmx"
1709:vAlign=top width=85 colSpan=2>
1710:<P class=MsoNormal class="cm12" align=right><SPAN
1711:class="cm4">(9,888)<o:p></o:p></SPAN></P></TD></TR>
1712:<TR>
1713:<TD
1714:class="cmr"
1715:vAlign=top width=30>
1716:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1717:class="cm4"><o:p></o:p></SPAN></P></TD>
1718:<TD
1719:class="cms"
1720:vAlign=top width=288>
1721:<P class=MsoNormal><SPAN
1722:class="cm4">Previously expensed
1723:costs under U.S. GAAP written off for Canadian
1724:GAAP<o:p></o:p></SPAN></P></TD>
1725:<TD
1726:class="cmt"
1727:vAlign=top width=72>
1728:<P class=MsoNormal class="cm12" align=right><SPAN
1729:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
1730:<P class=MsoNormal class="cm12" align=right><SPAN
1731:class="cm4">&#8211;
1732:&nbsp;<o:p></o:p></SPAN></P></TD>
1733:<TD
1734:class="cmu"
1735:vAlign=top width=78>
1736:<P class=MsoNormal class="cm12" align=right><SPAN
1737:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
1738:<P class=MsoNormal class="cm12" align=right><SPAN
1739:class="cm4">313<o:p></o:p></SPAN></P></TD>
1740:<TD
1741:class="cmv"
1742:vAlign=top width=85 colSpan=2>
1743:<P class=MsoNormal class="cm12" align=right><SPAN
1744:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
1745:<P class=MsoNormal class="cm12" align=right><SPAN
1746:class="cm4">11,399<o:p></o:p></SPAN></P></TD>
1747:<TD
1748:class="cmw"
1749:vAlign=top width=76>
1750:<P class=MsoNormal class="cm12" align=right><SPAN
1751:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
1752:<P class=MsoNormal class="cm12" align=right><SPAN
1753:class="cm4">&#8211;
1754:&nbsp;<o:p></o:p></SPAN></P></TD>
1755:<TD
1756:class="cmx"
1757:vAlign=top width=85 colSpan=2>
1758:<P class=MsoNormal class="cm12" align=right><SPAN
1759:class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
1760:<P class=MsoNormal class="cm12" align=right><SPAN
1761:class="cm4">&#8211;
1762:&nbsp;<o:p></o:p></SPAN></P></TD></TR>
1763:<TR>
1764:<TD
1765:class="cmr"
1766:vAlign=top width=30>
1767:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1768:class="cm4"><o:p></o:p></SPAN></P></TD>
1769:<TD
1770:class="cms"
1771:vAlign=top width=288>
1772:<P class=MsoNormal><SPAN
1773:class="cm4">Stock-based
1774:compensation <o:p></o:p></SPAN></P></TD>
1775:<TD
1776:class="cmt"
1777:vAlign=top width=72>
1778:<P class=MsoNormal class="cm12" align=right><SPAN
1779:class="cm4">66<o:p></o:p></SPAN></P></TD>
1780:<TD
1781:class="cmu"
1782:vAlign=top width=78>
1783:<P class=MsoNormal class="cm12" align=right><SPAN
1784:class="cm4">(124)<o:p></o:p></SPAN></P></TD>
1785:<TD
1786:class="cmv"
1787:vAlign=top width=85 colSpan=2>
1788:<P class=MsoNormal class="cm12" align=right><SPAN
1789:class="cm4">&#8211;
1790:&nbsp;<o:p></o:p></SPAN></P></TD>
1791:<TD
1792:class="cmw"
1793:vAlign=top width=76>
1794:<P class=MsoNormal class="cm12" align=right><SPAN
1795:class="cm4">&#8211;
1796:&nbsp;<o:p></o:p></SPAN></P></TD>
1797:<TD
1798:class="cmx"
1799:vAlign=top width=85 colSpan=2>
1800:<P class=MsoNormal class="cm12" align=right><SPAN
1801:class="cm4">&#8211;
1802:&nbsp;<o:p></o:p></SPAN></P></TD></TR>
1803:<TR>
1804:<TD
1805:class="cm1o"
1806:vAlign=top width=30>
1807:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1808:class="cm4"><o:p></o:p></SPAN></P></TD>
1809:<TD
1810:class="cm1p"
1811:vAlign=top width=288>
1812:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1813:class="cm4"><o:p></o:p></SPAN></P></TD>
1814:<TD
1815:class="cm1q"
1816:vAlign=top width=72>
1817:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1818:class="cm4"><o:p></o:p></SPAN></P></TD>
1819:<TD
1820:class="cm1r"
1821:vAlign=top width=78>
1822:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1823:class="cm4"><o:p></o:p></SPAN></P></TD>
1824:<TD
1825:class="cm1s"
1826:vAlign=top width=85 colSpan=2>
1827:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1828:class="cm4"><o:p></o:p></SPAN></P></TD>
1829:<TD
1830:class="cm1t"
1831:vAlign=top width=76>
1832:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1833:class="cm4"><o:p></o:p></SPAN></P></TD>
1834:<TD
1835:class="cm1u"
1836:vAlign=top width=85 colSpan=2>
1837:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1838:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1839:<TR>
1840:<TD
1841:class="cmr"
1842:vAlign=top width=30>
1843:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1844:class="cm4"><o:p></o:p></SPAN></P></TD>
1845:<TD
1846:class="cms"
1847:vAlign=top width=288>
1848:<P class=MsoNormal><SPAN
1849:class="cm4"><SPAN
1850:class="cm3">&nbsp; </SPAN>US GAAP Net
1851:Loss<o:p></o:p></SPAN></P></TD>
1852:<TD
1853:class="cmt"
1854:vAlign=top width=72>
1855:<P class=MsoNormal class="cm12" align=right><SPAN
1856:class="cm4">($964)<o:p></o:p></SPAN></P></TD>
1857:<TD
1858:class="cmu"
1859:vAlign=top width=78>
1860:<P class=MsoNormal class="cm12" align=right><SPAN
1861:class="cm4">($1,004)<o:p></o:p></SPAN></P></TD>
1862:<TD
1863:class="cmv"
1864:vAlign=top width=85 colSpan=2>
1865:<P class=MsoNormal class="cm12" align=right><SPAN
1866:class="cm4">($2,275)<o:p></o:p></SPAN></P></TD>
1867:<TD
1868:class="cmw"
1869:vAlign=top width=76>
1870:<P class=MsoNormal class="cm12" align=right><SPAN
1871:class="cm4">($7,159)<o:p></o:p></SPAN></P></TD>
1872:<TD
1873:class="cm1v"
1874:vAlign=top width=85 colSpan=2>
1875:<P class=MsoNormal class="cm12" align=right><SPAN
1876:class="cm4">($10,744)<o:p></o:p></SPAN></P></TD></TR>
1877:<TR>
1878:<TD
1879:class="cmr"
1880:vAlign=top width=30>
1881:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1882:class="cm4"><o:p></o:p></SPAN></P></TD>
1883:<TD
1884:class="cms"
1885:vAlign=top width=288>
1886:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1887:class="cm4"><o:p></o:p></SPAN></P></TD>
1888:<TD
1889:class="cmt"
1890:vAlign=top width=72>
1891:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1892:class="cm4"><o:p></o:p></SPAN></P></TD>
1893:<TD
1894:class="cmu"
1895:vAlign=top width=78>
1896:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1897:class="cm4"><o:p></o:p></SPAN></P></TD>
1898:<TD
1899:class="cmv"
1900:vAlign=top width=85 colSpan=2>
1901:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1902:class="cm4"><o:p></o:p></SPAN></P></TD>
1903:<TD
1904:class="cmw"
1905:vAlign=top width=76>
1906:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1907:class="cm4"><o:p></o:p></SPAN></P></TD>
1908:<TD
1909:class="cmx"
1910:vAlign=top width=85 colSpan=2>
1911:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1912:class="cm4"><o:p></o:p></SPAN></P></TD></TR>
1913:<TR>
1914:<TD
1915:class="cmr"
1916:vAlign=top width=30>
1917:<P class=MsoNormal
1918:class="cm1w"><![if !supportLists]><SPAN
1919:class="cm4">(3)<SPAN
1920:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1921:</SPAN></SPAN><![endif]><![if !supportEmptyParas]>&nbsp;<![endif]><SPAN
1922:class="cm4"><o:p></o:p></SPAN></P></TD>
1923:<TD
1924:class="cm1b"
1925:vAlign=top width=684 colSpan=8>
1926:<P class=MsoNormal><SPAN
1927:class="cm4">Amounts capitalized
1928:under Canadian GAAP have been adjusted to US GAAP as
1929:follows:<o:p></o:p></SPAN></P></TD></TR>
1930:<TR class="cm1x">
1931:<TD
1932:class="cm1y"
1933:vAlign=top width=30>
1934:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
1935:class="cm4"><o:p></o:p></SPAN></P></TD>
1936:<TD
1937:class="cm1z"
1938:vAlign=top width=288>
1939:<P class=MsoNormal><SPAN
1940:class="cm4">Canadian GAAP Mineral
1941:Properties<o:p></o:p></SPAN></P></TD>
1942:<TD
1943:class="cm20"
1944:vAlign=top width=72>
1945:<P class=MsoNormal class="cm12" align=right><SPAN
1946:class="cm4">12,681<o:p></o:p></SPAN></P></TD>
1947:<TD
1948:class="cm21"
1949:vAlign=top width=78>
1950:<P class=MsoNormal class="cm12" align=right><SPAN
1951:class="cm4">12,203<o:p></o:p></SPAN></P></TD>
1952:<TD
1953:class="cm22"
1954:vAlign=top width=85 colSpan=2>
1955:<P class=MsoNormal class="cm12" align=right><SPAN
1956:class="cm4">12,070<o:p></o:p></SPAN></P></TD>
1957:<TD
1958:class="cm23"
1959:vAlign=top width=76>
1960:<P class=MsoNormal class="cm12" align=right><SPAN
1961:class="cm4">21,589<o:p></o:p></SPAN></P></TD>
1962:<TD
1963:class="cm24"
1964:vAlign=top width=85 colSpan=2>
1965:<P class=MsoNormal class="cm12" align=right><SPAN
1966:class="cm4">15,050<o:p></o:p></SPAN></P></TD></TR>
1967:<TR>
1968:<TD
1969:class="cm1o"
1970:vAlign=top width=30>
1971:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<U><SPAN
1972:class="cm4"><o:p></o:p></SPAN></U></P></TD>
1973:<TD
1974:class="cm1p"
1975:vAlign=top width=288>
1976:<P class=MsoNormal><U><SPAN
1977:class="cm4">Cumulative Expensed
1978:exploration costs</SPAN></U><SPAN
1979:class="cm4"><o:p></o:p></SPAN></P></TD>
1980:<TD
1981:class="cm1q"
1982:vAlign=top width=72>
1983:<P class=MsoNormal class="cm12" align=right><SPAN
1984:class="cm4">(12,681)<o:p></o:p></SPAN></P></TD>
1985:<TD
1986:class="cm1r"
1987:vAlign=top width=78>
1988:<P class=MsoNormal class="cm12" align=right><SPAN
1989:class="cm4">(12,203)<o:p></o:p></SPAN></P></TD>
1990:<TD
1991:class="cm1s"
1992:vAlign=top width=85 colSpan=2>
1993:<P class=MsoNormal class="cm12" align=right><SPAN
1994:class="cm4">(12,070)<o:p></o:p></SPAN></P></TD>
1995:<TD
1996:class="cm25"
1997:vAlign=top width=77 colSpan=2>
1998:<P class=MsoNormal class="cm26"
1999:align=right><SPAN
2000:class="cm4">(21,589)<o:p></o:p></SPAN></P></TD>
2001:<TD
2002:class="cm27"
2003:vAlign=top width=84>
2004:<P class=MsoNormal
2005:class="cm28"
2006:align=right><SPAN
2007:class="cm4">(15,050)<o:p></o:p></SPAN></P></TD></TR>
2008:<TR>
2009:<TD
2010:class="cmr"
2011:vAlign=top width=30>
2012:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2013:class="cm4"><o:p></o:p></SPAN></P></TD>
2014:<TD
2015:class="cms"
2016:vAlign=top width=288>
2017:<P class=MsoNormal><SPAN
2018:class="cm4"><SPAN
2019:class="cm3">&nbsp; </SPAN>US GAAP Mineral
2020:Properties<U><o:p></o:p></U></SPAN></P></TD>
2021:<TD
2022:class="cmt"
2023:vAlign=top width=72>
2024:<P class=MsoNormal class="cm12" align=right><SPAN
2025:class="cm4">$0<o:p></o:p></SPAN></P></TD>
2026:<TD
2027:class="cmu"
2028:vAlign=top width=78>
2029:<P class=MsoNormal class="cm12" align=right><SPAN
2030:class="cm4">$0<o:p></o:p></SPAN></P></TD>
2031:<TD
2032:class="cmv"
2033:vAlign=top width=85 colSpan=2>
2034:<P class=MsoNormal class="cm12" align=right><SPAN
2035:class="cm4">$0<o:p></o:p></SPAN></P></TD>
2036:<TD
2037:class="cmw"
2038:vAlign=top width=76>
2039:<P class=MsoNormal class="cm12" align=right><SPAN
2040:class="cm4">$0<o:p></o:p></SPAN></P></TD>
2041:<TD
2042:class="cm1v"
2043:vAlign=top width=85 colSpan=2>
2044:<P class=MsoNormal class="cm12" align=right><SPAN
2045:class="cm4">$0<o:p></o:p></SPAN></P></TD></TR>
2046:<TR class="cm29">
2047:<TD
2048:class="cm2a"
2049:vAlign=top width=30>
2050:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2051:class="cm4"><o:p></o:p></SPAN></P></TD>
2052:<TD
2053:class="cm2b"
2054:vAlign=top width=288>
2055:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2056:class="cm4"><o:p></o:p></SPAN></P></TD>
2057:<TD
2058:class="cm2c"
2059:vAlign=top width=72>
2060:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2061:class="cm4"><o:p></o:p></SPAN></P></TD>
2062:<TD
2063:class="cm2d"
2064:vAlign=top width=78>
2065:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2066:class="cm4"><o:p></o:p></SPAN></P></TD>
2067:<TD
2068:class="cm2e"
2069:vAlign=top width=85 colSpan=2>
2070:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2071:class="cm4"><o:p></o:p></SPAN></P></TD>
2072:<TD
2073:class="cm2f"
2074:vAlign=top width=76>
2075:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2076:class="cm4"><o:p></o:p></SPAN></P></TD>
2077:<TD
2078:class="cm2g"
2079:vAlign=top width=85 colSpan=2>
2080:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
2081:class="cm4"><o:p></o:p></SPAN></P></TD></TR><![if !supportMisalignedColumns]>
2082:<TR height=0>
2083:<TD
2084:class="cm2h"
2085:width=30></TD>
2086:<TD
2087:class="cm2h"
2088:width=288></TD>
2089:<TD
2090:class="cm2h"
2091:width=72></TD>
2092:<TD
2093:class="cm2h"
2094:width=78></TD>
2095:<TD
2096:class="cm2h"
2097:width=84></TD>
2098:<TD
2099:class="cm2h"
2100:width=1></TD>
2101:<TD
2102:class="cm2h"
2103:width=76></TD>
2104:<TD
2105:class="cm2h"
2106:width=1></TD>
2107:<TD
2108:class="cm2h"
2109:width=84></TD></TR><![endif]></TBODY></TABLE>
2110:<P class=MsoNormal class="cmj"><B><U><SPAN
2111:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2112:<P class=MsoNormal class="cmj"><B><U><SPAN
2113:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2114:<P class=MsoNormal class="cmj"><B><SPAN
2115:class="cmb"><SPAN class="cmm"><INS
2116:cite="mailto:pdowad" datetime="2002-12-03T11:40"><SPAN
2117:class="cmm">B.<SPAN
2118:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN></SPAN></INS><SPAN
2119:class="cmm"><SPAN
2120:class="cmm">Exchange Rates<SPAN
2121:class="cmm"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></SPAN></B></P>
2122:<P class=MsoNormal class="cmj"><B><U><SPAN
2123:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2124:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2125:following table sets forth the <INS cite="mailto:pdowad"
2126:datetime="2002-12-03T11:36">high and low </INS>rate of exchange for the Canadian
2127:Dollar <INS cite="mailto:pdowad" datetime="2002-12-03T11:36">to the U.</INS><INS
2128:cite="mailto:pdowad" datetime="2002-12-03T11:37">S.</INS><INS
2129:cite="mailto:pdowad" datetime="2002-12-03T11:36"> dollar </INS>at the end of
2130:each of the five most recent fiscal years ended May 31st, the average rates for
2131:the year, and the range of high and low rates for each <SPAN class=msoDel><DEL
2132:cite="mailto:pdowad" datetime="2002-12-03T11:36">year</DEL></SPAN><INS
2133:cite="mailto:pdowad" datetime="2002-12-03T11:36">month in the last six months
2134:ended October 31, 2002</INS>.<o:p></o:p></SPAN></P>
2135:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2136:<P class=MsoNormal class="cmj"><SPAN class="cmb">For
2137:purposes of this table, the rate of exchange means the noon buying rate in New
2138:York City for cable transfers&nbsp;in foreign currencies as certified for
2139:customs purposes by the&nbsp;Federal Reserve Bank of New York.<SPAN
2140:class="cm3">&nbsp; </SPAN>The table sets forth the number&nbsp;of
2141:Canadian Dollars required under that formula to buy one&nbsp;U.S. Dollar. &nbsp;
2142:The average rate means the average of the exchange rates on the last day of each
2143:month during the period. <o:p></o:p></SPAN></P>
2144:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2145:<P class=MsoNormal class="cm2" align=center><SPAN
2146:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2147:<P class=MsoNormal class="cm2" align=center><SPAN
2148:class="cmb">U.S. Dollar/Canadian Dollar<o:p></o:p></SPAN></P>
2149:<P class=MsoNormal><SPAN class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2150:<P class=MsoNormal><SPAN class="cmb"><SPAN
2151:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2152:</SPAN><SPAN class="cmi">&nbsp;&nbsp; </SPAN><U>Average<SPAN
2153:class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>High<SPAN
2154:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>Low<SPAN
2155:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2156:</SPAN><o:p></o:p></U></SPAN></P>
2157:<P class=MsoNormal><SPAN class="cmb">Month Ended 10/31/02<SPAN
2158:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2159:</SPAN><SPAN
2160:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2161:</SPAN>1.60<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2162:class="cm3">&nbsp; </SPAN>1.56<SPAN
2163:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2164:</SPAN><o:p></o:p></SPAN></P>
2165:<P class=MsoNormal><SPAN class="cmb">Month Ended 09/30/02<SPAN
2166:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2167:</SPAN><SPAN
2168:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2169:</SPAN>1.59<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2170:class="cm3">&nbsp; </SPAN>1.55<o:p></o:p></SPAN></P>
2171:<P class=MsoNormal><SPAN class="cmb">Month Ended 08/31/02<SPAN
2172:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2173:</SPAN><SPAN
2174:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2175:</SPAN>1.60<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2176:class="cm3">&nbsp; </SPAN>1.55<o:p></o:p></SPAN></P>
2177:<P class=MsoNormal><SPAN class="cmb">Month Ended 07/31/02<SPAN
2178:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2179:</SPAN><SPAN
2180:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2181:</SPAN>1.60<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2182:class="cm3">&nbsp; </SPAN>1.51<o:p></o:p></SPAN></P>
2183:<P class=MsoNormal><SPAN class="cmb">Month Ended 06/30/02<SPAN
2184:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2185:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2186:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>1.55<SPAN
2187:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2188:class="cm3">&nbsp; </SPAN>1.50<o:p></o:p></SPAN></P>
2189:<P class=MsoNormal><SPAN class="cmb">Month Ended 05/31/02<SPAN
2190:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2191:</SPAN><SPAN
2192:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2193:</SPAN>1.57<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2194:class="cm3">&nbsp; </SPAN>1.53<o:p></o:p></SPAN></P>
2195:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2196:<P class=MsoNormal><SPAN class="cmb">Fiscal Year Ended 05/31/02<SPAN
2197:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2198:</SPAN>1.57<SPAN class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>1.60<SPAN
2199:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2200:class="cm3">&nbsp; </SPAN>1.52<o:p></o:p></SPAN></P>
2201:<P class=MsoNormal><SPAN class="cmb">Fiscal Year Ended 05/31/01<SPAN
2202:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2203:</SPAN>1.52<SPAN class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>1.58<SPAN
2204:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2205:class="cm3">&nbsp; </SPAN>1.47<o:p></o:p></SPAN></P>
2206:<P class=MsoNormal><SPAN class="cmb">Fiscal Year Ended 05/31/00<SPAN
2207:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2208:</SPAN>1.47<SPAN class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>1.51<SPAN
2209:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2210:class="cm3">&nbsp; </SPAN>1.44<o:p></o:p></SPAN></P>
2211:<P class=MsoNormal><SPAN class="cmb">Fiscal Year Ended 05/31/99<SPAN
2212:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2213:</SPAN>1.51<SPAN class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>1.58<SPAN
2214:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
2215:class="cm3">&nbsp; </SPAN>1.45<o:p></o:p></SPAN></P>
2216:<P class=MsoNormal class="cm2j"><SPAN
2217:class="cmb">Fiscal Year Ended 05/31/98<SPAN
2218:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2219:</SPAN>1.14<SPAN class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>1.46<SPAN
2220:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2221:</SPAN>1.37<o:p></o:p></SPAN></P>
2222:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2223:<P class=MsoNormal><SPAN class="cmb">The current rate of exchange
2224:was 1.58 on October 31, 2002.<o:p></o:p></SPAN></P>
2225:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2226:<P class=MsoNormal
2227:class="cm2k"><B><SPAN
2228:class="cmb"><SPAN class="cmm"><INS
2229:cite="mailto:pdowad" datetime="2002-12-03T11:40"><SPAN
2230:class="cmm">C.<SPAN
2231:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN></SPAN></INS><SPAN
2232:class="cmm"><INS cite="mailto:pdowad"
2233:datetime="2002-12-03T11:38"><SPAN
2234:class="cmm">Capitalization and
2235:indebtedness</SPAN></INS><SPAN
2236:class="cmm"><INS cite="mailto:pdowad"
2237:datetime="2002-12-03T11:37"><SPAN
2238:class="cmm"><o:p></o:p></SPAN></INS></SPAN></SPAN></SPAN></SPAN></B></P>
2239:<P class=MsoNormal
2240:class="cm2k"><SPAN
2241:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:37"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2242:<P class=MsoNormal
2243:class="cm2l"><SPAN
2244:class="cmb"><INS cite="mailto:pdowad"
2245:datetime="2002-12-03T11:38">Not applicable.<o:p></o:p></INS></SPAN></P>
2246:<P class=MsoNormal
2247:class="cm2m"><SPAN
2248:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:38"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2249:<P class=MsoNormal
2250:class="cm2m"><B><SPAN
2251:class="cmb"><SPAN class="cmm"><INS
2252:cite="mailto:pdowad" datetime="2002-12-03T11:40"><SPAN
2253:class="cmm">D.<SPAN
2254:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN></SPAN></INS><SPAN
2255:class="cmm"><INS cite="mailto:pdowad"
2256:datetime="2002-12-03T11:38"><SPAN
2257:class="cmm">Reasons for the offer and use of
2258:proceeds.<SPAN
2259:class="cmm"><o:p></o:p></SPAN></SPAN></INS></SPAN></SPAN></SPAN></B></P>
2260:<P class=MsoNormal
2261:class="cm2m"><SPAN
2262:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:38"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2263:<P class=MsoNormal
2264:class="cm2m"><SPAN
2265:class="cmb"><INS cite="mailto:pdowad"
2266:datetime="2002-12-03T11:38">Not applicable.<o:p></o:p></INS></SPAN></P>
2267:<P class=MsoNormal
2268:class="cm2m"><SPAN
2269:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:38"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2270:<P class=MsoNormal
2271:class="cm2m"><B><SPAN
2272:class="cmb"><SPAN class="cmm"><INS
2273:cite="mailto:pdowad" datetime="2002-12-03T11:40"><SPAN
2274:class="cmm">E.<SPAN
2275:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN></SPAN></INS><SPAN
2276:class="cmm"><INS cite="mailto:pdowad"
2277:datetime="2002-12-03T11:38"><SPAN
2278:class="cmm">Risk factors<SPAN
2279:class="cmm"><o:p></o:p></SPAN></SPAN></INS></SPAN></SPAN></SPAN></B></P>
2280:<P class=MsoNormal
2281:class="cm2n"><SPAN
2282:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:39"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2283:<P class=MsoNormal
2284:class="cm2o"><SPAN
2285:class="cmb"><INS cite="mailto:pdowad"
2286:datetime="2002-12-03T11:39"><SPAN class=msoDel><DEL cite="mailto:srreid"
2287:datetime="2002-12-03T12:28">[S &#8211; THIS WHOLE SECTION IS STILL
2288:MISSING]</DEL></SPAN></INS><INS cite="mailto:srreid"
2289:datetime="2002-12-03T12:28">Investors should carefully consider the risks and
2290:uncertainties described below before making an investment decision. If any of
2291:the following risks actually occur, our business, financial condition or
2292:operating results could be materially harmed. This could cause the trading price
2293:of our common shares to decline, and you may lose all or part of your
2294:investment.<o:p></o:p></INS></SPAN></P>
2295:<P class=MsoNormal
2296:class="cm2o"><SPAN
2297:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2298:<P class=MsoNormal
2299:class="cm2o"><A
2300:name=_Toc500203069></A><A name=_Toc500288338><SPAN
2301:class="cm2p"><I><SPAN class="cmb"><INS
2302:cite="mailto:srreid" datetime="2002-12-03T12:28">Risks Associated With Our
2303:Financial Results</INS></SPAN></I></SPAN></A><I><SPAN
2304:class="cmb"><INS cite="mailto:srreid"
2305:datetime="2002-12-03T12:28">:<o:p></o:p></INS></SPAN></I></P>
2306:<P class=MsoNormal
2307:class="cm2o"><I><SPAN
2308:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></I></P>
2309:<P class=MsoNormal
2310:class="cm2o"><SPAN
2311:class="cmb"><INS cite="mailto:srreid"
2312:datetime="2002-12-03T12:28">Our consolidated financial statements have been
2313:prepared on the going concern basis, which presumes the realization of assets
2314:and the settlement of liabilities in the normal course of operations.<SPAN
2315:class="cm3">&nbsp; </SPAN>The application of the going concern
2316:basis is dependent up the Company achieving profitable operations to generate
2317:sufficient cash flows to fund continued operations, or, in the absence of
2318:adequate cash flows from operations, obtaining additional financing.
2319:<o:p></o:p></INS></SPAN></P>
2320:<P class=MsoNormal
2321:class="cm2o"><SPAN
2322:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2323:<P class=MsoNormal
2324:class="cm2o"><SPAN
2325:class="cmb"><INS cite="mailto:srreid"
2326:datetime="2002-12-03T12:28">The Company has reported losses and negative cash
2327:flows from operations in the last three years.<SPAN
2328:class="cm3">&nbsp; </SPAN>Management has commenced activities to
2329:</INS><INS cite="mailto:srreid" datetime="2002-12-03T12:31">obtain additional
2330:</INS><INS cite="mailto:srreid" datetime="2002-12-03T12:28">financing for its
2331:operations</INS><INS cite="mailto:srreid" datetime="2002-12-03T12:32">, however,
2332:such financing is not assured</INS><INS cite="mailto:srreid"
2333:datetime="2002-12-03T12:28">.<SPAN class="cm3">&nbsp;
2334:</SPAN></INS><INS cite="mailto:srreid"
2335:datetime="2002-12-03T12:32"><o:p></o:p></INS></SPAN></P>
2336:<P class=MsoNormal
2337:class="cm2q"><SPAN
2338:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2339:<P class=MsoNormal
2340:class="cm2r"><A
2341:name=_Toc500203070></A><A name=_Toc500288339><SPAN
2342:class="cm2s"><I><SPAN class="cmb"><INS
2343:cite="mailto:srreid" datetime="2002-12-03T12:28">Risks Associated With Our
2344:Business And Operations</INS></SPAN></I></SPAN></A><I><SPAN
2345:class="cmb"><INS cite="mailto:srreid"
2346:datetime="2002-12-03T12:28"><o:p></o:p></INS></SPAN></I></P>
2347:<P class=MsoNormal
2348:class="cm2o"><B
2349:class="cm6"><SPAN
2350:class="cm2t"><INS cite="mailto:srreid"
2351:datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></B></P>
2352:<P class=MsoNormal
2353:class="cm2o"><B
2354:class="cm6"><SPAN
2355:class="cm2t"><INS cite="mailto:srreid"
2356:datetime="2002-12-03T12:28">We cannot be sure we will be able to locate proven
2357:and probable reserves from our existing properties or future
2358:properties</INS><INS cite="mailto:srreid" datetime="2002-12-03T12:34"> nor can
2359:we determine if, once located, it will be economically feasible to recovery the
2360:minerals</INS><INS cite="mailto:srreid" datetime="2002-12-03T12:28">.
2361:</INS></SPAN></B><SPAN class="cmb"><INS cite="mailto:srreid"
2362:datetime="2002-12-03T12:35">Proven and probable </INS><INS cite="mailto:srreid"
2363:datetime="2002-12-03T12:38">reserves are difficult to determine w</INS><INS
2364:cite="mailto:srreid" datetime="2002-12-03T12:35">ithout further exploration of
2365:our prope</INS><INS cite="mailto:srreid"
2366:datetime="2002-12-03T12:37">rties</INS><INS cite="mailto:srreid"
2367:datetime="2002-12-03T12:38">. This exploration is subject to obtaining
2368:sufficient financing to carry out </INS><INS cite="mailto:srreid"
2369:datetime="2002-12-03T12:39">the exploration program, which financing is not
2370:assured.<SPAN class="cm3">&nbsp; </SPAN>Without, sufficient
2371:financing, additional exploration activities cannot commence.<SPAN
2372:class="cm3">&nbsp; </SPAN>Upon determination of proven and
2373:probable </INS><INS cite="mailto:srreid"
2374:datetime="2002-12-03T12:40">reserves</INS><INS cite="mailto:srreid"
2375:datetime="2002-12-03T12:39">,</INS><INS cite="mailto:srreid"
2376:datetime="2002-12-03T12:40"> there is risk such reserves may not be
2377:significantly large enough or </INS><INS cite="mailto:srreid"
2378:datetime="2002-12-03T12:41">easily </INS><INS cite="mailto:srreid"
2379:datetime="2002-12-03T12:40">accessible </INS><INS cite="mailto:srreid"
2380:datetime="2002-12-03T12:41">to justify the economic cost of recovery of the
2381:reserves.</INS><INS cite="mailto:srreid"
2382:datetime="2002-12-03T12:28"><o:p></o:p></INS></SPAN></P>
2383:<P class=MsoNormal
2384:class="cm2r"><SPAN
2385:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2386:<P class=MsoNormal
2387:class="cm2o"><B
2388:class="cm6"><SPAN
2389:class="cm2t"><INS cite="mailto:srreid"
2390:datetime="2002-12-03T12:43">Title to mineral resources in certain jurisdictions
2391:</INS><INS cite="mailto:srreid" datetime="2002-12-03T12:44">may be</INS><INS
2392:cite="mailto:srreid" datetime="2002-12-03T12:43"> difficult to</INS><INS
2393:cite="mailto:srreid" datetime="2002-12-03T12:44"> </INS><INS
2394:cite="mailto:srreid" datetime="2002-12-03T13:49">assert</INS><INS
2395:cite="mailto:srreid" datetime="2002-12-03T12:44">. </INS><INS
2396:cite="mailto:srreid" datetime="2002-12-03T12:43"><SPAN
2397:class="cm3">&nbsp;&nbsp;</SPAN></INS><INS cite="mailto:srreid"
2398:datetime="2002-12-03T12:28"><SPAN
2399:class="cm3">&nbsp;</SPAN></INS></SPAN></B><SPAN
2400:class="cmb"><INS cite="mailto:srreid"
2401:datetime="2002-12-03T12:44">The Company exercises </INS><INS
2402:cite="mailto:srreid" datetime="2002-12-03T12:28">significant due d</INS><INS
2403:cite="mailto:srreid" datetime="2002-12-03T12:45">i</INS><INS
2404:cite="mailto:srreid" datetime="2002-12-03T12:28">ligence in</INS><INS
2405:cite="mailto:srreid" datetime="2002-12-03T12:45"> researching, assembling and
2406:verifying claims to mineral exploration titles.<SPAN
2407:class="cm3">&nbsp; </SPAN>The company operates in various foreign
2408:jurisdictions in which title cannot </INS><INS cite="mailto:srreid"
2409:datetime="2002-12-03T12:46">always be assured.</INS><INS cite="mailto:srreid"
2410:datetime="2002-12-03T12:28"><o:p></o:p></INS></SPAN></P>
2411:<P class=MsoNormal
2412:class="cm2o"><SPAN
2413:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2414:<P class=MsoNormal
2415:class="cm2o"><B
2416:class="cm6"><SPAN
2417:class="cm2t"><INS cite="mailto:srreid"
2418:datetime="2002-12-03T12:28">Since we </INS><INS cite="mailto:srreid"
2419:datetime="2002-12-03T12:47">operate in several foreign jurisdictions</INS><INS
2420:cite="mailto:srreid" datetime="2002-12-03T12:28">, we face financial risks
2421:associated with currency fluctuations and other risks relating to our
2422:international operations which may adversely impact our business and results of
2423:operations. </INS></SPAN></B><SPAN
2424:class="cm2u"><INS
2425:cite="mailto:srreid" datetime="2002-12-03T12:28">While we expect our
2426:international revenues and expenses to be denominated predominantly in US
2427:dollars, a portion of our international revenues and expenses may be denominated
2428:in </INS><INS cite="mailto:srreid" datetime="2002-12-03T12:48">other </INS><INS
2429:cite="mailto:srreid" datetime="2002-12-03T12:28">foreign currencies in the
2430:future. Accordingly, we could experience the risks of fluctuating currencies and
2431:could choose to engage in currency hedging activities, which may be unsuccessful
2432:and expensive.<o:p></o:p></INS></SPAN></P>
2433:<P class=MsoNormal
2434:class="cm2o"><A
2435:name=_Toc458487911></A><A name=_Toc458566736><SPAN
2436:class="cm2v"><SPAN class="cmb"><INS
2437:cite="mailto:srreid"
2438:datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></SPAN></A></P><SPAN
2439:class="cm2v"></SPAN><SPAN
2440:class="cm2w"></SPAN>
2441:<P class=MsoNormal
2442:class="cm2x"><A
2443:name=_Toc500203071></A><A name=_Toc500288340><SPAN
2444:class="cm2y"><I><SPAN class="cmb"><INS
2445:cite="mailto:srreid" datetime="2002-12-03T12:28">Risks Which May Affect The
2446:Value Of </INS><INS cite="mailto:srreid"
2447:datetime="2002-12-03T12:49">Calais</INS><INS cite="mailto:srreid"
2448:datetime="2002-12-03T12:28"> Shares</INS></SPAN></I></SPAN></A><I><SPAN
2449:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28">
2450:<o:p></o:p></INS></SPAN></I></P>
2451:<P class=MsoNormal
2452:class="cm2x"><SPAN
2453:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2454:<P class=MsoBodyText
2455:class="cm2z"><B
2456:class="cm6"><SPAN
2457:class="cm2t"><INS cite="mailto:srreid"
2458:datetime="2002-12-03T12:28">The exercise of our existing outstanding warrants
2459:and options and the number of shares available for future issuance may
2460:substantially dilute the value of our common shares. </INS></SPAN></B><SPAN
2461:class="cm30"><INS
2462:cite="mailto:srreid" datetime="2002-12-03T12:28">We have </INS><INS
2463:cite="mailto:srreid" datetime="2002-12-03T12:49">10</INS><INS
2464:cite="mailto:srreid" datetime="2002-12-03T12:28">0,000,000 shares of Common
2465:Stock authorized, of which </INS><INS cite="mailto:srreid"
2466:datetime="2002-12-03T12:50">10,676,718</INS><INS cite="mailto:srreid"
2467:datetime="2002-12-03T12:28"> were outstanding at </INS><INS cite="mailto:srreid"
2468:datetime="2002-12-03T12:50">May 31, 2002</INS><INS cite="mailto:srreid"
2469:datetime="2002-12-03T12:28"> and an additional </INS><INS cite="mailto:srreid"
2470:datetime="2002-12-03T12:51">1,574,053</INS><INS cite="mailto:srreid"
2471:datetime="2002-12-03T12:28"> shares have been reserved for issuance upon the
2472:exercise of outstanding options or warrants as of such date. Although our Board
2473:of Directors has no present intention to do so, it has the authority, without
2474:action by the shareholders, to issue authorized and unissued shares of Common
2475:Stock. Any series of Preferred Stock, if and when established and issued, could
2476:also have rights superior to shares of our Common Stock, particularly in regard
2477:to voting,</INS></SPAN><SPAN class="cm31"><INS
2478:cite="mailto:srreid" datetime="2002-12-03T12:30"> </INS></SPAN><SPAN
2479:class="cmb"><INS cite="mailto:srreid"
2480:datetime="2002-12-03T12:30">the payment of dividends and upon liquidation of
2481:</INS><INS cite="mailto:srreid" datetime="2002-12-03T12:52">Calais</INS><INS
2482:cite="mailto:srreid" datetime="2002-12-03T12:30">.<o:p></o:p></INS></SPAN></P>
2483:<P class=MsoNormal
2484:class="cm32"><SPAN
2485:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:37"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
2486:<P class=MsoNormal class="cmj"><SPAN
2487:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
2488:datetime="2002-12-03T13:50"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
2489:class=msoDel><DEL cite="mailto:srreid"
2490:datetime="2002-12-03T13:50"><o:p></o:p></DEL></SPAN></SPAN></P>
2491:<P class=MsoNormal class="cmj"><B
2492:class="cm6"><U><SPAN class="cmb">ITEM
2493:4.<SPAN class="cm3">&nbsp; </SPAN>Information on the
2494:Company<o:p></o:p></SPAN></U></B></P>
2495:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2496:<P class=MsoNormal class="cmj"><B
2497:class="cm6"><U><SPAN class="cmb">A. History
2498:and Development of the Company<o:p></o:p></SPAN></U></B></P>
2499:<P class=MsoNormal class="cmj"><B
2500:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2501:<P class=MsoNormal class="cmj"><SPAN
2502:class="cmb">Calais Resources Inc. (the "Registrant" or the
2503:"Company") is engaged in the exploration and, when warranted, development of
2504:natural resource properties.<SPAN class="cm3">&nbsp; </SPAN>The
2505:Company&#8217;s primary properties are the Manhattan Properties in Nevada, the
2506:Hendricks Claims in Colorado and the north Veraguas District mineral concessions
2507:in the Republic of Panama. <o:p></o:p></SPAN></P>
2508:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2509:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2510:Company's head office is located at 9482 Williams St., Chilliwack, British
2511:Columbia, Canada V2P 5G1; the contact person is Art Daher, Secretary and
2512:Director; the telephone number is (604) 795-3383 and the facsimile number is
2513:(604) 792-3676.<o:p></o:p></SPAN></P>
2514:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2515:Company's common shares trade on the OTCBB under trading symbol "CAAUF".<SPAN
2516:class="cm3">&nbsp; </SPAN>The Company's fiscal year ends May
2517:31st.<o:p></o:p></SPAN></P>
2518:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2519:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2520:Company's consolidated financial statements are stated in Canadian Dollars
2521:(CDN$) and are prepared in accordance with Canadian Generally Accepted
2522:Accounting Principles (GAAP); nevertheless, the consolidated financial
2523:statements conform in all material respects with US GAAP, except as disclosed in
2524:footnotes to the financial statements.<o:p></o:p></SPAN></P>
2525:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2526:<P class=MsoNormal class="cmj"><SPAN
2527:class="cmb">Herein, all references to "$" and "CDN$" refer to
2528:Canadian Dollars and all references to "US$" refer to United States Dollars.
2529:Unless otherwise specified, all dollar amounts are expressed in Canadian Dollars
2530:(CDN$). All references to common shares refer to the Company's Common Shares
2531:without Par Value unless otherwise indicated.<o:p></o:p></SPAN></P>
2532:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2533:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2534:information contained in this Annual Report is current as at October 31,2002,
2535:except where a different date is specified.<o:p></o:p></SPAN></P>
2536:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2537:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2538:Company has no mineral properties, which are producing revenue.<SPAN
2539:class="cm3">&nbsp; </SPAN>The Company&#8217;s operations consist of
2540:searching for commercially viable reserves.<SPAN
2541:class="cm3">&nbsp; </SPAN>The Company has not developed any
2542:mineral properties to date. The Colorado properties do have proven and probable
2543:reserves.<o:p></o:p></SPAN></P>
2544:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2545:<P class=MsoNormal><U><SPAN class="cmb">Incorporation/Name
2546:Change<o:p></o:p></SPAN></U></P>
2547:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2548:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2549:Company was incorporated in British Columbia, Canada, on December 30, 1986 under
2550:the name &#8220;Millennium Resources Inc.&#8221;.<SPAN class="cm3">&nbsp;
2551:</SPAN>Effective March 19, 1992, the name was changed to &#8220;Calais Resources
2552:Inc.&#8221;.<o:p></o:p></SPAN></P>
2553:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2554:<P class=MsoNormal class="cmj"><U><SPAN
2555:class="cmb">Stock Consolidation/Split<o:p></o:p></SPAN></U></P>
2556:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2557:<P class=MsoNormal class="cmj"><SPAN
2558:class="cmb">Effective March 19 1992, the Company consolidated its
2559:common shares on a one-for-five basis.<SPAN class="cm3">&nbsp;
2560:</SPAN>All references to the number of shares or per share data refer to
2561:post-consolidation figures unless otherwise indicated.<o:p></o:p></SPAN></P>
2562:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2563:<P class=MsoNormal class="cmj"><U><SPAN
2564:class="cmb">Fiscal 2002 Natural Resource Property
2565:Acquisition/Exploration <o:p></o:p></SPAN></U></P>
2566:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2567:<P class=MsoNormal class="cmj"><SPAN
2568:class="cmb">During Fiscal 2002, the Company continued to work on
2569:raising capital. A detailed exploration program for each property has been
2570:professionally prepared. The second of four annual payments was made for the
2571:additional ownership in the Nevada Manhattan Agreement of Fiscal 2000. The
2572:Company plans to commence surface mapping and sampling programs, followed by a
2573:surface diamond drill program for its Nevada Manhattan District property in
2574:January 2003, subject to raising additional capital. The Company also has plans
2575:to commence a surface diamond drill program at its Consolidated Caribou Mines
2576:project in April 2003.<SPAN class="cm3">&nbsp; </SPAN>A modest
2577:surface mapping and sampling program is planned for the Panama project, followed
2578:by a diamond drill program.<SPAN class="cm3">&nbsp; </SPAN>All of
2579:these projects will be influenced by the success of financing
2580:efforts.<o:p></o:p></SPAN></P>
2581:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2582:<P class=MsoNormal class="cmj"><U><SPAN
2583:class="cmb">Fiscal 2001 Natural Resource Property
2584:Acquisition/Exploration<o:p></o:p></SPAN></U></P>
2585:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2586:<P class=MsoNormal class="cmj"><SPAN
2587:class="cmb">During Fiscal 2001, the Company continued to work on
2588:raising capital for exploration purposes. A detailed exploration program for
2589:each property has been professionally prepared. The Company had planned to
2590:commence surface mapping and sampling programs, followed by a surface diamond
2591:drill program for its Nevada Manhattan District property in February 2002. This
2592:did not proceed due to lack of capital. The Company had planned to commence a
2593:surface diamond drill program at its Consolidated Caribou Mines project in June
2594:2002. This also did not proceed due to lack of capital. A modest surface mapping
2595:and sampling program was planned for the Panama project, followed by a diamond
2596:drill program. All of these projects were influenced by the lack of success in
2597:financing efforts.<o:p></o:p></SPAN></P>
2598:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2599:<P class=MsoNormal class="cmj"><U><SPAN
2600:class="cmb">Fiscal 2002 Financing<o:p></o:p></SPAN></U></P>
2601:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2602:<P class=MsoNormal class="cmj"><SPAN
2603:class="cmb">During 2002, the Company secured a US $1,200,000 loan
2604:from Peak National Bank which was used to pay shareholder loans, trade accounts
2605:payable, and other long term debts as well as finance 2002
2606:operations.<o:p></o:p></SPAN></P>
2607:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2608:<P class=MsoNormal class="cmj"><U><SPAN
2609:class="cmb">Fiscal 2001 Financing<o:p></o:p></SPAN></U></P>
2610:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2611:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2612:Company relied on personal loans from certain directors and their family members
2613:to help fund monthly overhead. The Company secured a US $200,000 loan from Peak
2614:National Bank of Nederland, Colorado on November 7, 2000. The Company also sold
2615:used RC drill equipment that was determined to be of no use for future
2616:exploration programs.<o:p></o:p></SPAN></P>
2617:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2618:<P class=MsoNormal class="cmj"><SPAN class="cmb">See
2619:Item 4D. &#8220;Property, Plant and Equipment&#8221; regarding significant events in the
2620:development of the Company&#8217;s business and capital expenditures over the last
2621:three years.<o:p></o:p></SPAN></P>
2622:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2623:<P class=MsoNormal class="cmj"><B
2624:class="cm6"><SPAN class="cmb"><SPAN
2625:class="cm33"><SPAN
2626:class="cm33">B. Business Overview<SPAN
2627:class="cm33"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></B></P>
2628:<P class=MsoNormal><B class="cm6"><U><SPAN
2629:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2630:<P class=MsoNormal><B class="cm6"><U><SPAN
2631:class="cmb">2001/2002 Exploration &amp; Development
2632:Programs<o:p></o:p></SPAN></U></B></P>
2633:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2634:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2635:Company is in the business of researching, acquiring, exploring and, when
2636:warranted, developing mineral properties. <o:p></o:p></SPAN></P>
2637:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2638:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2639:corporate philosophy has been to seek out and acquire potential gold mineral
2640:properties in North America.<SPAN class="cm3">&nbsp; </SPAN>The
2641:objective being to acquire an entire district that has 1 million ounces plus
2642:commercial potential and is historically beyond the grass-root level in its
2643:development.<o:p></o:p></SPAN></P>
2644:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2645:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2646:Company then endeavors to acquire the rights to the prospective and surrounding
2647:claims.<SPAN class="cm3">&nbsp; </SPAN>It then proceeds through a
2648:due diligence period to the commencement of a full scientific analysis of the
2649:district, followed by an exploration and development program.<SPAN
2650:class="cm3">&nbsp; </SPAN>Suitable results at each step in the
2651:process are a prerequisite to further development.<SPAN
2652:class="cm3">&nbsp; </SPAN>Upon suitable development of a mineral
2653:deposit and reserve, the Company will then make the decision to either proceed
2654:with the mining thereof, to joint venture with a major mining company, or to
2655:sell outright.<o:p></o:p></SPAN></P>
2656:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2657:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2658:Company now has three projects at various stages of
2659:exploration.<o:p></o:p></SPAN></P>
2660:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2661:<P class=MsoNormal class="cmj"><I
2662:class="cm34"><SPAN class="cmb">Caribou
2663:Consolidated District, Colorado:<o:p></o:p></SPAN></I></P>
2664:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2665:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2666:Caribou Consolidated District, located in Colorado, is a 3.5 square mile
2667:consolidated precious metals district. Historic production in the district dates
2668:back to 1869. Production between 1977 and 1985 totaled $5 million through small
2669:scale exploration development work and old mine dump reclamation. The district
2670:consists of three modern surface plants, roads, power lines and is fully
2671:permitted. 140,000 feet of diamond drilling has been completed to-date with a
2672:modern core library. All data is in the Vulcan/Maptek program and has an
2673:extensive database. The mine has high grade vein widths from 3 feet to 50 feet,
2674:going to significant depths and significant strike lengths. The Caribou district
2675:has recorded production dating back to 1869 of 300,000 oz. Gold and 20,000,000
2676:silver. The next drill program may expand its resources to + 1 million ounces of
2677:gold and 30/40 million ounces of silver. It may also potentially reveal several
2678:new undeveloped targets.<o:p></o:p></SPAN></P>
2679:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2680:<P class=MsoNormal class="cmj"><I
2681:class="cm34"><SPAN class="cmb">Nevada
2682:Manhattan District/Nye County, Nevada:<o:p></o:p></SPAN></I></P>
2683:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2684:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2685:Nevada Manhattan District is a 4 square mile district. Its historic production
2686:dates back to 1860. Several high-grade gold mines consisting of the White Caps,
2687:Bath, Earl, and Union Consolidated mines are located within this district.
2688:Newmont is a very attractive mine, situated immediately to the South of the
2689:Manhattan and Midway projects. The Barrick and Echo Bay mines, including the
2690:Round Mountain site, are large scale production operations directly to the North
2691:of the Manhattan district. The past ten years have been spent consolidating the
2692:district. For the past three years, much energy has been spent developing a
2693:geologic model for a core drilling program that will potentially hit a large
2694:buried intrusive gold ore body. It is a gold feeder zone for the district. An
2695:extensive database is ready for review. Upon receipt of adequate funding, a
2696:drill program will be ready to commence with Q-West Drilling within a two month
2697:period.<o:p></o:p></SPAN></P>
2698:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2699:<P class=MsoNormal class="cmj"><I
2700:class="cm34"><SPAN class="cmb">Faja de Oro
2701:District/Republic of Panama:<o:p></o:p></SPAN></I></P>
2702:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2703:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2704:Faja de Oro district is a 61,000 acre mineral concession. Its historic gold
2705:production dates back to 1200 A D. No one has ever completed a modern day,
2706:professionally run exploration program to find the source of placer gold that is
2707:found throughout the extensive river system and ocean placers. There has been
2708:300,000 ounces of placer gold produced from crude techniques. Calais has
2709:generated a geologic database that will be used for exploration programs that
2710:have an excellent chance in locating high-grade gold veins and possible
2711:stockwork/porphyry type gold deposits. This property is located between the
2712:Teek/Adrian concessions to the east and the Cerro Colorado discoveries to the
2713:west. The Faja de Oro is a major east, west structural
2714:trend.<o:p></o:p></SPAN></P>
2715:<P class=MsoNormal class="cmj"><B
2716:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2717:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2718:<P class=MsoNormal class="cmj"><U><SPAN
2719:class="cmb">Sources of Funds</SPAN><B
2720:class="cm6"><SPAN
2721:class="cm35"><o:p></o:p></SPAN></B></U></P>
2722:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2723:<P class=MsoNormal class="cmj"><SPAN
2724:class="cmb">At&nbsp;10/31/02 the Company had stock options
2725:outstanding entitling the holders to acquire 965,250 shares at an exercise price
2726:of Cdn $0.45 per share and 60,000 shares at an exercise price of Cdn $0.77. The
2727:Company plans to continue in its efforts to secure financing through private
2728:placements and stock options.<o:p></o:p></SPAN></P>
2729:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2730:<P class=MsoNormal class="cmj"><SPAN
2731:class="cm36">The Peak National bank loan
2732:is being renewed on a monthly basis by paying interest and a monthly renewal
2733:fee. Peak National Bank has agreed to renew the loan for one year if the Company
2734:pays ten percent of the principle ($US 120,000) and escrows one year of interest
2735:at 10.5% per annum. Two of the Directors of the Company are providing working
2736:capital until such time a private placement is completed to raise approximately
2737:$US 250,000 in funds required to meet the terms of Peak National
2738:Bank.<o:p></o:p></SPAN></P>
2739:<P class=MsoNormal class="cmj"><SPAN
2740:class="cm36"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2741:<P class=MsoNormal class="cmj"><B
2742:class="cm6"><U><SPAN
2743:class="cmb">Regulations and Government
2744:Rules<o:p></o:p></SPAN></U></B></P>
2745:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2746:<P class=MsoNormal class="cmj"><SPAN
2747:class="cmb">Normal practices to reduce noise, changes to air quality
2748:and water quality are expected to be sufficient.<SPAN
2749:class="cm3">&nbsp; </SPAN>The Company has obtained all necessary
2750:permits in the United States and Canada for exploration/development work
2751:performed to date and anticipates no material problems in obtaining the
2752:necessary permits to proceed with development.<o:p></o:p></SPAN></P>
2753:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2754:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2755:Company is not aware of any proposed or existing Canadian or United States
2756:regulations pertaining to environmental&nbsp;matters which&nbsp;might have a
2757:material impact on the Company's future financial performance<B
2758:class="cm6"><U><o:p></o:p></U></B></SPAN></P>
2759:<P class=MsoNormal class="cmj"><B
2760:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2761:<P class=MsoNormal class="cmj"><B
2762:class="cm6"><U><SPAN
2763:class="cmb">Competition<o:p></o:p></SPAN></U></B></P>
2764:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2765:<P class=MsoNormal class="cmj"><SPAN
2766:class="cmb">There is general competition from other mineral
2767:exploration/development companies with operations similar to that of the
2768:Company's.<SPAN class="cm3">&nbsp; </SPAN>Many of the companies
2769:with which the Company competes have operations and financial strength many<SPAN
2770:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2771:</SPAN>times that of the Company.<o:p></o:p></SPAN></P>
2772:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2773:<P class=MsoNormal class="cmj"><SPAN
2774:class="cmb">Nevertheless, the market for the Company's possible
2775:future production of minerals tends to&nbsp;be commodity oriented, rather than
2776:company oriented.<SPAN class="cm3">&nbsp; </SPAN>Accordingly, the
2777:Company expects to compete by keeping its production costs low through judicious
2778:selection of which&nbsp;portions of the property to&nbsp;develop and by keeping
2779:overhead charges within industry standards.<o:p></o:p></SPAN></P>
2780:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2781:<P class=MsoNormal class="cmj"><B><SPAN
2782:class="cmb"><SPAN
2783:class="cm37"><SPAN
2784:class="cm37">C. Organizational Structure<SPAN
2785:class="cm37"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></B></P>
2786:<P class=MsoNormal class="cmj"><B><U><SPAN
2787:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2788:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2789:Company is the parent company in the corporate group and owns various wholly
2790:owned subsidiaries either directly or indirectly.<SPAN
2791:class="cm3">&nbsp; </SPAN>All material inter-company transactions
2792:and balances have been eliminated in the consolidated financial statements
2793:included in this report.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>The
2794:three active subsidiaries of the Company are Calais Resources Nevada Inc. and
2795:Calais Resources Colorado Inc., both incorporated in the State of Nevada, and
2796:Calais Resources International Inc., incorporated in
2797:Bermuda.<o:p></o:p></SPAN></P>
2798:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2799:<P class=MsoNormal><B><SPAN class="cmb"><SPAN
2800:class="cm37"><SPAN
2801:class="cm37">D. Property, plant and
2802:Equipment<SPAN
2803:class="cm37"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></B></P>
2804:<P class=MsoNormal class="cmj"><B
2805:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2806:<P class=MsoNormal class="cmj"><B
2807:class="cm6"><U><SPAN class="cmb">Executive
2808:Offices<o:p></o:p></SPAN></U></B></P>
2809:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2810:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2811:Company's executive offices are located in premises of approximately 900 square
2812:feet at 9482 Williams St., Chilliwack V2P 5G1.<SPAN
2813:class="cm3">&nbsp; </SPAN>The Company began occupying this
2814:facility in March 1998&nbsp;and considers this facility to be adequate for its
2815:current needs.<o:p></o:p></SPAN></P>
2816:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2817:<P class=MsoNormal class="cmj"><B
2818:class="cm6"><U><SPAN class="cmb">Manhattan
2819:Project<o:p></o:p></SPAN></U></B></P>
2820:<P class=MsoNormal class="cmj"><B
2821:class="cm6"><U><SPAN class="cmb">Nevada,
2822:USA; Gold Exploration<o:p></o:p></SPAN></U></B></P>
2823:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2824:<P class=MsoNormal class="cmj"><U><SPAN
2825:class="cmb">Acquisition Details<o:p></o:p></SPAN></U></P>
2826:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2827:<P class=MsoNormal class="cmj"><SPAN class="cmb">In
2828:December of 1994, the Company acquired a 51% interest in certain patented and
2829:unpatented claims located in Nevada from a company controlled by directors for
2830:$1,176,000 US plus a 5% net smelter royalty. The Company can also acquire a 100%
2831:interest in a further 89 claims in this property under this
2832:agreement.<o:p></o:p></SPAN></P>
2833:<P class=MsoNormal class="cmj"><SPAN
2834:class="cmb"><SPAN
2835:class="cm3">&nbsp;</SPAN><o:p></o:p></SPAN></P>
2836:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2837:Company entered into an agreement and settlement dated September 7, 2000 with
2838:Nevada Manhattan Mining Incorporated to settle and purchase The Manhattan Mining
2839:Incorporated&#8217;s 24.5% interest in the property. The Company agreed to make four
2840:annual payments of US $75,000 each for a total of US $300,000. During the term
2841:of the agreement the Company has agreed to pay Nevada Manhattan Mining
2842:Incorporated a 2% net smelter return royalty. The Company can purchase the
2843:entire Nevada Manhattan Mining Incorporated interest and royalty at anytime over
2844:a thirty year period for US $7.5 million, which would include production
2845:royalties.<o:p></o:p></SPAN></P>
2846:<P class=MsoNormal class="cmj"><SPAN
2847:class="cmb"><SPAN
2848:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2849:</SPAN><o:p></o:p></SPAN></P>
2850:<P class=MsoNormal class="cmj"><SPAN class="cmb">By
2851:staking, the Company also holds a 100% interest in 42 unpatented claims in the
2852:Manhattan Mining district.<o:p></o:p></SPAN></P>
2853:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2854:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
2855:<P class=MsoNormal class="cmj"><U><SPAN
2856:class="cmb">Property
2857:Description/Location/Access/Climate<o:p></o:p></SPAN></U></P>
2858:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2859:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2860:project is located around the old mining town of Manhattan, Nevada, USA.<SPAN
2861:class="cm3">&nbsp; </SPAN>Manhattan is 15 miles southeast of Round
2862:Mountain, Nevada, located on Highway 376, 20 miles from Carvers, Nevada, and 43
2863:miles from Tonopah, Nevada.<SPAN class="cm3">&nbsp; </SPAN>The
2864:project covers approximately 4600 acres of patented and unpatented Bureau of
2865:Land Management (&#8220;BLM&#8221;) and US Forest Service (&#8220;USFS&#8221;)
2866:land.<o:p></o:p></SPAN></P>
2867:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2868:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2869:Manhattan Project is divided into two main areas: i) 1800 acres held by the
2870:Company (75.5%) and Argus Resources (24.5%) in 31 patented claims and 26
2871:unpatented claims; and land held exclusively by the
2872:Company.<o:p></o:p></SPAN></P>
2873:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
2874:<P class=MsoNormal class="cmj"><U><SPAN
2875:class="cmb">Previous Work<o:p></o:p></SPAN></U></P>
2876:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2877:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2878:historic mining in the area extends from 1866 to present with the major activity
2879:taking place in the late 1860&#8217;s, between 1906 and 1921, and from the 1960&#8217;s
2880:until present.<SPAN class="cm3">&nbsp; </SPAN>Placer and lode
2881:mining took place principally in the Reliance, White Caps, Union Amalgamated,
2882:Manhattan Consolidated, Earle, Big Four, and April Fool mines.<SPAN
2883:class="cm3">&nbsp; </SPAN>There has been significant production in
2884:recent years from adjoining property.<o:p></o:p></SPAN></P>
2885:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2886:<P class=MsoNormal class="cmj"><SPAN
2887:class="cmb">Past exploratory drilling focused on delineating an
2888:economic resource in the Cambrian Age limestone rocks around the White Caps and
2889:Manhattan Consolidated Mines.<SPAN class="cm3">&nbsp;
2890:</SPAN>Several exploration companies drilled mainly RC holes to test theories of
2891:mineralization in this rock type.<o:p></o:p></SPAN></P>
2892:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2893:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2894:<P class=MsoNormal class="cmj"><B
2895:class="cm6"><U><SPAN class="cmb">Hendricks
2896:Claims<o:p></o:p></SPAN></U></B></P>
2897:<P class=MsoNormal class="cmj"><B
2898:class="cm6"><U><SPAN class="cmb">Colorado,
2899:USA; Gold/Silver Exploration/Development<o:p></o:p></SPAN></U></B></P>
2900:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2901:<P class=MsoNormal class="cmj"><U><SPAN
2902:class="cmb">Acquisition Details<o:p></o:p></SPAN></U></P>
2903:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2904:<P class=MsoNormal class="cmj"><SPAN
2905:class="cmb">Included in the Colorado properties is a 100% working
2906:interest in the Consolidated Caribou-Cross-Comstock-Panadora district mine area
2907:which the Company acquired in 1997 for US $4,000,000 in stock, cash and final
2908:property payments. After acquisition of 100% working interest the<SPAN
2909:class="cm3">&nbsp; </SPAN>seller retains a 2% net smelter royalty
2910:interest in the property. The Company has the right to buy back half of the net
2911:smelter royalty (1%) for US $750,000. The seller has not sold any of the issued
2912:shares for this acquisition through May 31, 2002. The company continues to have
2913:100% ownership of 10 Patented claims that are continuations of the historic
2914:Boulder County and Cardinal vein systems. The Colorado properties contain a
2915:well<SPAN class=msoDel><DEL cite="mailto:srreid" datetime="2002-12-03T14:40">
2916:</DEL></SPAN>documented mineral resource of 424,500 ounces of gold and
2917:11,725,000 ounces of silver.<U><o:p></o:p></U></SPAN></P>
2918:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2919:<P class=MsoNormal class="cmj"><U><SPAN
2920:class="cmb">Property
2921:Description/Location/Access/Climate<o:p></o:p></SPAN></U></P>
2922:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2923:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2924:property includes the Cross Gold Mine, the Potosi Mine and several other
2925:district properties.<SPAN class="cm3">&nbsp; </SPAN>The property
2926:is on the east flank of the Front Range Mountains, approximately 23 miles west
2927:of Boulder Colorado.<SPAN class="cm3">&nbsp; </SPAN>It is reached
2928:by a five-mile all-weather graded road from the small town of Nederland, which
2929:connects with Boulder via paved State Highway 119.<o:p></o:p></SPAN></P>
2930:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2931:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2932:project area encompasses claims with additional Federal claims on public lands
2933:north and west of the Cross Mine.<o:p></o:p></SPAN></P>
2934:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2935:<P class=MsoNormal class="cmj"><SPAN
2936:class="cmb">Gold and silver mineralization occurs in a broad,
2937:west-northwest trending zone that includes the Cross Mine and extends about
2938:2,500 feet on the property.<o:p></o:p></SPAN></P>
2939:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2940:<P class=MsoNormal class="cmj"><SPAN
2941:class="cmb">Three-phase power, sufficient to service a 500 tpd (tons
2942:per day) mine and mill complex, is installed and active on the property.<SPAN
2943:class="cm3">&nbsp; </SPAN>An 18-gauge rail haulage system and
2944:equipment, hoisting equipment, compressed air, water and ventilation services
2945:are installed and maintained in good working condition in the Cross Mine.<SPAN
2946:class="cm3">&nbsp; </SPAN>Mine water treatment facilities are
2947:currently operating in compliance and were upgraded in recent
2948:years.<o:p></o:p></SPAN></P>
2949:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2950:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2951:Cross Mine is fully permitted through the Colorado State Health Department, the
2952:Colorado Division of Mines, Mine Safety and Health Administration, and the
2953:Colorado Mined Land Reclamation Division.<SPAN class="cm3">&nbsp;
2954:</SPAN>Permitting includes a water discharge permit.<o:p></o:p></SPAN></P>
2955:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2956:<P class=MsoNormal class="cmj"><U><SPAN
2957:class="cmb">Previous Work<o:p></o:p></SPAN></U></P>
2958:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2959:<P class=MsoNormal class="cmj"><SPAN
2960:class="cmb">Silver ore was discovered in the region in 1869.<SPAN
2961:class="cm3">&nbsp; </SPAN>A wagon road was completed in 1870 and
2962:mining developed rapidly over the next few years with the highest production
2963:coming from the Caribou and No-Name veins.<SPAN class="cm3">&nbsp;
2964:</SPAN>The Cross ore deposit was discovered in 1873 and had minor intermittent
2965:production until 1939.<o:p></o:p></SPAN></P>
2966:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2967:<P class=MsoNormal class="cmj"><SPAN
2968:class="cmb">Hendricks Mining Company began the task of reopening the
2969:mine in 1974.<SPAN class="cm3">&nbsp; </SPAN>Between 1977 and
2970:1985, 27,000 short tons of ore was produced from four mine levels.<SPAN
2971:class="cm3">&nbsp; </SPAN>Very little geological data, drilling or
2972:assay information was available to guide this work.<o:p></o:p></SPAN></P>
2973:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2974:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
2975:Hendricks Mining Company extensively explored the property by drifting, drilling
2976:from both the surface and underground and by mapping and sampling.<SPAN
2977:class="cm3">&nbsp; </SPAN>The mine workings in the Cross Mine have
2978:been significantly expanded.<o:p></o:p></SPAN></P>
2979:<P class=MsoNormal class="cmj"><B
2980:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2981:<P class=MsoNormal class="cmj"><B
2982:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2983:<P class=MsoNormal class="cmj"><B
2984:class="cm6"><U><SPAN class="cmb">Panama
2985:Project,<o:p></o:p></SPAN></U></B></P>
2986:<P class=MsoNormal class="cmj"><B
2987:class="cm6"><U><SPAN class="cmb">Republic
2988:of Panama; Gold Exploration<o:p></o:p></SPAN></U></B></P>
2989:<P class=MsoNormal class="cmj"><B
2990:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
2991:<P class=MsoNormal class="cmj"><U><SPAN
2992:class="cmb">Acquisition Details<o:p></o:p></SPAN></U></P>
2993:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
2994:<P class=MsoNormal class="cmj"><SPAN
2995:class="cmb">Pursuant to an agreement dated October 6, 2000, the
2996:Company was granted the option to purchase a 40,000 acres mineral concession in
2997:a historic gold producing district of Panama with Panama Mining of Golden Cycle
2998:of Panama Incorporated.<SPAN class="cm3">&nbsp; </SPAN>The
2999:Company&#8217;s agreement is for the hard rock mineral rights.<o:p></o:p></SPAN></P>
3000:<P class=MsoNormal class="cmj"><B
3001:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3002:<P class=MsoNormal class="cmj"><U><SPAN
3003:class="cmb">Previous Work<o:p></o:p></SPAN></U></P>
3004:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3005:<P class=MsoNormal class="cmj"><SPAN
3006:class="cmb">Gold has been produced by primitive methods from streams
3007:and high-grade veins in the region since the time of Columbus.<SPAN
3008:class="cm3">&nbsp; </SPAN>There has been no modern day systematic
3009:gold exploration to evaluate the resource potential of the veins on the
3010:concession.<o:p></o:p></SPAN></P>
3011:<P class=MsoNormal
3012:class="cm38"><B
3013:class="cm6"><U><SPAN class="cmb"><INS
3014:cite="mailto:srreid"
3015:datetime="2002-12-03T14:48"><U><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></U></INS></SPAN></U></B></P>
3016:<P class=MsoNormal
3017:class="cm38"><SPAN
3018:class="cmb"><INS cite="mailto:srreid"
3019:datetime="2002-12-03T14:48">The Company spent exploration funds as
3020:follows</INS><INS cite="mailto:srreid" datetime="2002-12-03T14:49"> in each of
3021:the last three years</INS><INS cite="mailto:srreid"
3022:datetime="2002-12-03T14:48">:</INS></SPAN><SPAN
3023:class="cm5"><INS cite="mailto:srreid"
3024:datetime="2002-12-03T14:48"><SPAN class="cm3">&nbsp;&nbsp;
3025:</SPAN><o:p></o:p></INS></SPAN></P>
3026:<P class=MsoNormal
3027:class="cm38"><SPAN
3028:class="cmb"><INS cite="mailto:srreid"
3029:datetime="2002-12-03T14:48"><SPAN
3030:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
3031:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN><o:p></o:p></INS></SPAN></P>
3032:<TABLE class="cm39"
3033:cellSpacing=0 cellPadding=0 border=0>
3034:<TBODY>
3035:<TR class="cm3a">
3036:<TD
3037:class="cm3b"
3038:vAlign=top width=163>
3039:<P class=MsoHeader
3040:class="cm3c"
3041:align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
3042:class="cmb"><INS cite="mailto:srreid"
3043:datetime="2002-12-03T14:48"><o:p></o:p></INS></SPAN></P></TD>
3044:<TD
3045:class="cm3d"
3046:vAlign=top width=108>
3047:<P class=MsoNormal
3048:class="cm3e"
3049:align=center><U><SPAN class="cmb"><INS cite="mailto:srreid"
3050:datetime="2002-12-03T14:48"><U>Fiscal<SPAN
3051:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3052:</SPAN>2002<o:p></o:p></U></INS></SPAN></U></P></TD>
3053:<TD
3054:class="cm3d"
3055:vAlign=top width=108>
3056:<P class=MsoNormal
3057:class="cm3e"
3058:align=center><U><SPAN class="cmb"><INS cite="mailto:srreid"
3059:datetime="2002-12-03T14:48"><U>Fiscal <o:p></o:p></U></INS></SPAN></U></P>
3060:<P class=MsoNormal
3061:class="cm3f"
3062:align=center><U><SPAN class="cmb"><INS cite="mailto:srreid"
3063:datetime="2002-12-03T14:48"><U>200</U></INS><INS cite="mailto:srreid"
3064:datetime="2002-12-03T14:49"><U>1</U></INS><INS cite="mailto:srreid"
3065:datetime="2002-12-03T14:48"><U><o:p></o:p></U></INS></SPAN></U></P></TD>
3066:<TD
3067:class="cm3d"
3068:vAlign=top width=108>
3069:<P class=MsoNormal
3070:class="cm3e"
3071:align=center><U><SPAN class="cmb"><INS cite="mailto:srreid"
3072:datetime="2002-12-03T14:50"><U>Fiscal<o:p></o:p></U></INS></SPAN></U></P>
3073:<P class=MsoNormal
3074:class="cm3g"
3075:align=center><U><SPAN class="cmb"><INS cite="mailto:srreid"
3076:datetime="2002-12-03T14:50"><U>2000<o:p></o:p></U></INS></SPAN></U></P></TD></TR>
3077:<TR class="cm3a">
3078:<TD
3079:class="cm3b"
3080:vAlign=top width=163>
3081:<P class=MsoNormal
3082:class="cm3h"><SPAN
3083:class="cmb"><INS cite="mailto:srreid"
3084:datetime="2002-12-03T14:48">Manhattan
3085:Property<o:p></o:p></INS></SPAN></P></TD>
3086:<TD
3087:class="cm3d"
3088:vAlign=top width=108>
3089:<P class=MsoNormal
3090:class="cm3i"
3091:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3092:datetime="2002-12-03T14:48">$</INS><INS cite="mailto:srreid"
3093:datetime="2002-12-03T14:49">292,886</INS><INS cite="mailto:srreid"
3094:datetime="2002-12-03T14:48"><o:p></o:p></INS></SPAN></P></TD>
3095:<TD
3096:class="cm3d"
3097:vAlign=top width=108>
3098:<P class=MsoNormal
3099:class="cm3i"
3100:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3101:datetime="2002-12-03T14:48">$</INS><INS cite="mailto:srreid"
3102:datetime="2002-12-03T14:49">176,175</INS><INS cite="mailto:srreid"
3103:datetime="2002-12-03T14:48"><o:p></o:p></INS></SPAN></P></TD>
3104:<TD
3105:class="cm3d"
3106:vAlign=top width=108>
3107:<P class=MsoNormal
3108:class="cm3i"
3109:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3110:datetime="2002-12-03T14:52">$2,366</INS><INS cite="mailto:srreid"
3111:datetime="2002-12-03T14:50"><o:p></o:p></INS></SPAN></P></TD></TR>
3112:<TR class="cm3a">
3113:<TD
3114:class="cm3b"
3115:vAlign=top width=163>
3116:<P class=MsoNormal
3117:class="cm3h"><SPAN
3118:class="cmb"><INS cite="mailto:srreid"
3119:datetime="2002-12-03T14:48">Colorado
3120:Property<o:p></o:p></INS></SPAN></P></TD>
3121:<TD
3122:class="cm3d"
3123:vAlign=top width=108>
3124:<P class=MsoNormal
3125:class="cm3i"
3126:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3127:datetime="2002-12-03T14:48">$</INS><INS cite="mailto:srreid"
3128:datetime="2002-12-03T14:49">120,601</INS><INS cite="mailto:srreid"
3129:datetime="2002-12-03T14:48"><o:p></o:p></INS></SPAN></P></TD>
3130:<TD
3131:class="cm3d"
3132:vAlign=top width=108>
3133:<P class=MsoNormal
3134:class="cm3i"
3135:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3136:datetime="2002-12-03T14:48">$</INS><INS cite="mailto:srreid"
3137:datetime="2002-12-03T14:50">190,566</INS><INS cite="mailto:srreid"
3138:datetime="2002-12-03T14:48"><o:p></o:p></INS></SPAN></P></TD>
3139:<TD
3140:class="cm3d"
3141:vAlign=top width=108>
3142:<P class=MsoNormal
3143:class="cm3i"
3144:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3145:datetime="2002-12-03T14:53">$185,962</INS><INS cite="mailto:srreid"
3146:datetime="2002-12-03T14:50"><o:p></o:p></INS></SPAN></P></TD></TR>
3147:<TR class="cm3a">
3148:<TD
3149:class="cm3b"
3150:vAlign=top width=163>
3151:<P class=MsoNormal
3152:class="cm3h"><SPAN
3153:class="cmb"><INS cite="mailto:srreid"
3154:datetime="2002-12-03T14:48">Panama Property<o:p></o:p></INS></SPAN></P></TD>
3155:<TD
3156:class="cm3d"
3157:vAlign=top width=108>
3158:<P class=MsoNormal
3159:class="cm3i"
3160:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3161:datetime="2002-12-03T14:48">$</INS><INS cite="mailto:srreid"
3162:datetime="2002-12-03T14:49">65,070</INS><INS cite="mailto:srreid"
3163:datetime="2002-12-03T14:48"><o:p></o:p></INS></SPAN></P></TD>
3164:<TD
3165:class="cm3d"
3166:vAlign=top width=108>
3167:<P class=MsoNormal
3168:class="cm3i"
3169:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3170:datetime="2002-12-03T14:48">$</INS><INS cite="mailto:srreid"
3171:datetime="2002-12-03T14:50">78,988</INS><INS cite="mailto:srreid"
3172:datetime="2002-12-03T14:48"><o:p></o:p></INS></SPAN></P></TD>
3173:<TD
3174:class="cm3d"
3175:vAlign=top width=108>
3176:<P class=MsoNormal
3177:class="cm3i"
3178:align=right><SPAN class="cmb"><INS cite="mailto:srreid"
3179:datetime="2002-12-03T14:53">$ -</INS><INS cite="mailto:srreid"
3180:datetime="2002-12-03T14:50"><o:p></o:p></INS></SPAN></P></TD></TR></TBODY></TABLE>
3181:<P class=MsoNormal class="cmj"><B
3182:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3183:<P class=MsoNormal class="cmj"><B
3184:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3185:<P class=MsoNormal class="cmj"><B
3186:class="cm6"><U><SPAN class="cmb">ITEM
3187:5.<SPAN class="cm3">&nbsp; </SPAN>OPERATING AND FINANCIAL REVIEW
3188:AND PROSPECTS<o:p></o:p></SPAN></U></B></P>
3189:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3190:<P class=MsoNormal class="cmj"><B
3191:class="cm6"><SPAN class="cmb"><SPAN
3192:class="cm37"><SPAN
3193:class="cm37">A. Operating Results<SPAN
3194:class="cm37"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></B></P>
3195:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3196:<P class=MsoNormal class="cmj"><SPAN
3197:class="cmb">The&nbsp;Company is in the business
3198:of&nbsp;acquiring&nbsp;and exploring mineral properties with the aim of
3199:participating in&nbsp;the development of them to a stage where they can be
3200:exploited at a profit.<SPAN class="cm3">&nbsp; </SPAN>At that
3201:stage, the Company's operations would to some extent<INS cite="mailto:pdowad"
3202:datetime="2002-12-03T11:44"> </INS><SPAN class=msoDel><DEL cite="mailto:pdowad"
3203:datetime="2002-12-03T11:44">&nbsp;</DEL></SPAN>be dependent on the world market
3204:prices of any mineral produced. &nbsp; The Company does not have any<INS
3205:cite="mailto:pdowad" datetime="2002-12-03T11:44"> </INS><SPAN class=msoDel><DEL
3206:cite="mailto:pdowad"
3207:datetime="2002-12-03T11:44">&nbsp;</DEL></SPAN>properties<INS
3208:cite="mailto:pdowad" datetime="2002-12-03T11:44"> </INS><SPAN class=msoDel><DEL
3209:cite="mailto:pdowad" datetime="2002-12-03T11:44">&nbsp;</DEL></SPAN>with
3210:material production of minerals, and operations on its properties are
3211:exploratory searches for commercially producible deposits.<o:p></o:p></SPAN></P>
3212:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3213:<P class=MsoNormal class="cmj"><SPAN
3214:class="cmb">Nearly<INS cite="mailto:pdowad"
3215:datetime="2002-12-03T11:45"> </INS><SPAN class=msoDel><DEL cite="mailto:pdowad"
3216:datetime="2002-12-03T11:45">&nbsp;</DEL></SPAN>all<INS cite="mailto:pdowad"
3217:datetime="2002-12-03T11:45"> </INS><SPAN class=msoDel><DEL cite="mailto:pdowad"
3218:datetime="2002-12-03T11:45">&nbsp;</DEL></SPAN>of the Company's activities are
3219:directed<INS cite="mailto:pdowad" datetime="2002-12-03T11:45"> </INS><SPAN
3220:class=msoDel><DEL cite="mailto:pdowad"
3221:datetime="2002-12-03T11:45">&nbsp;</DEL></SPAN>to exploration and development
3222:programs.<SPAN class="cm3">&nbsp; </SPAN>Yearly<INS
3223:cite="mailto:pdowad" datetime="2002-12-03T11:45"> </INS><SPAN class=msoDel><DEL
3224:cite="mailto:pdowad" datetime="2002-12-03T11:45">&nbsp;</DEL></SPAN>variations
3225:in individual property expenditures generally reflect increases or decreases in
3226:specific exploration and development costs based on previous results and the
3227:Company's decisions regarding&nbsp;the allocation of exploration expenditures
3228:between projects.<o:p></o:p></SPAN></P>
3229:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3230:<P class=MsoNormal><SPAN class="cmb"><SPAN
3231:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3232:</SPAN><U>Geographic Segments<o:p></o:p></U></SPAN></P>
3233:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3234:<TABLE
3235:class="cm3j"
3236:cellSpacing=0 cellPadding=0 border=0>
3237:<TBODY>
3238:<TR>
3239:<TD
3240:class="cm3k"
3241:vAlign=top width=120>
3242:<P class=MsoNormal class="cmj"><B
3243:class="cm6"><SPAN class="cmb">Net
3244:Loss/Year:<o:p></o:p></SPAN></B></P></TD>
3245:<TD
3246:class="cm3l"
3247:vAlign=top width=120>
3248:<P class=MsoNormal class="cmj"><B
3249:class="cm6"><U><SPAN
3250:class="cmb">2002</SPAN></U></B><B
3251:class="cm6"><SPAN
3252:class="cmb"><o:p></o:p></SPAN></B></P></TD>
3253:<TD
3254:class="cm3m"
3255:vAlign=top width=105>
3256:<P class=MsoNormal class="cm2" align=center><B
3257:class="cm6"><U><SPAN
3258:class="cmb">2001<o:p></o:p></SPAN></U></B></P></TD>
3259:<TD
3260:class="cm3l"
3261:vAlign=top width=120>
3262:<P class=MsoNormal class="cm2" align=center><B
3263:class="cm6"><U><SPAN
3264:class="cmb">2000<o:p></o:p></SPAN></U></B></P></TD></TR>
3265:<TR>
3266:<TD
3267:class="cm3k"
3268:vAlign=top width=120>
3269:<P class=MsoNormal class="cmj"><SPAN
3270:class="cmb">Canada<o:p></o:p></SPAN></P></TD>
3271:<TD
3272:class="cm3l"
3273:vAlign=top width=120>
3274:<P class=MsoNormal class="cm12" align=right><SPAN
3275:class="cmb">($261,143)<o:p></o:p></SPAN></P></TD>
3276:<TD
3277:class="cm3m"
3278:vAlign=top width=105>
3279:<P class=MsoNormal class="cm12" align=right><SPAN
3280:class="cmb">($487,017)<o:p></o:p></SPAN></P></TD>
3281:<TD
3282:class="cm3l"
3283:vAlign=top width=120>
3284:<P class=MsoNormal class="cm12" align=right><SPAN
3285:class="cmb">($11,730,509)<o:p></o:p></SPAN></P></TD></TR>
3286:<TR>
3287:<TD
3288:class="cm3k"
3289:vAlign=top width=120>
3290:<P class=MsoNormal class="cmj"><SPAN
3291:class="cmb">United States<o:p></o:p></SPAN></P></TD>
3292:<TD
3293:class="cm3l"
3294:vAlign=top width=120>
3295:<P class=MsoNormal class="cm12" align=right><SPAN
3296:class="cmb">($289,866)<o:p></o:p></SPAN></P></TD>
3297:<TD
3298:class="cm3m"
3299:vAlign=top width=105>
3300:<P class=MsoNormal class="cm12" align=right><SPAN
3301:class="cmb">($260,851)<o:p></o:p></SPAN></P></TD>
3302:<TD
3303:class="cm3l"
3304:vAlign=top width=120>
3305:<P class=MsoNormal class="cm12" align=right><SPAN
3306:class="cmb">($64,534)<o:p></o:p></SPAN></P></TD></TR>
3307:<TR>
3308:<TD
3309:class="cm3k"
3310:vAlign=top width=120>
3311:<P class=MsoNormal class="cmj"><B
3312:class="cm6"><SPAN
3313:class="cmb">TOTAL<o:p></o:p></SPAN></B></P></TD>
3314:<TD
3315:class="cm3l"
3316:vAlign=top width=120>
3317:<P class=MsoNormal class="cm12" align=right><B
3318:class="cm6"><SPAN
3319:class="cmb">($551,009)<o:p></o:p></SPAN></B></P></TD>
3320:<TD
3321:class="cm3m"
3322:vAlign=top width=105>
3323:<P class=MsoNormal class="cm12" align=right><B
3324:class="cm6"><SPAN
3325:class="cmb">($747,868)<o:p></o:p></SPAN></B></P></TD>
3326:<TD
3327:class="cm3l"
3328:vAlign=top width=120>
3329:<P class=MsoNormal class="cm12" align=right><B
3330:class="cm6"><SPAN
3331:class="cmb">($11,795,043)<o:p></o:p></SPAN></B></P></TD></TR>
3332:<TR>
3333:<TD
3334:class="cm3n"
3335:vAlign=top width=465 colSpan=4>
3336:<P class=MsoNormal class="cmj"><B
3337:class="cm6"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
3338:<P class=MsoNormal class="cmj"><B
3339:class="cm6"><SPAN
3340:class="cmb">Identifiable Assets at year
3341:end:<o:p></o:p></SPAN></B></P>
3342:<P class=MsoNormal class="cmj"><![if !supportEmptyParas]><![endif]>&nbsp;<B
3343:class="cm6"><SPAN
3344:class="cmb"><o:p></o:p></SPAN></B></P></TD></TR>
3345:<TR>
3346:<TD
3347:class="cm3k"
3348:vAlign=top width=120>
3349:<P class=MsoNormal class="cm12" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<B
3350:class="cm6"><U><SPAN
3351:class="cmb"><o:p></o:p></SPAN></U></B></P></TD>
3352:<TD
3353:class="cm3l"
3354:vAlign=top width=120>
3355:<P class=MsoNormal class="cm2" align=center><B
3356:class="cm6"><U><SPAN
3357:class="cmb">2002<o:p></o:p></SPAN></U></B></P></TD>
3358:<TD
3359:class="cm3m"
3360:vAlign=top width=105>
3361:<P class=MsoNormal class="cm2" align=center><B
3362:class="cm6"><U><SPAN
3363:class="cmb">2001<o:p></o:p></SPAN></U></B></P></TD>
3364:<TD
3365:class="cm3l"
3366:vAlign=top width=120>
3367:<P class=MsoNormal class="cm2" align=center><B
3368:class="cm6"><U><SPAN
3369:class="cmb">2000<o:p></o:p></SPAN></U></B></P></TD></TR>
3370:<TR>
3371:<TD
3372:class="cm3k"
3373:vAlign=top width=120>
3374:<P class=MsoNormal class="cmj"><SPAN
3375:class="cmb">Canada<o:p></o:p></SPAN></P></TD>
3376:<TD
3377:class="cm3l"
3378:vAlign=top width=120>
3379:<P class=MsoNormal class="cm12" align=right><SPAN
3380:class="cmb">$291,993<o:p></o:p></SPAN></P></TD>
3381:<TD
3382:class="cm3m"
3383:vAlign=top width=105>
3384:<P class=MsoNormal class="cm12" align=right><SPAN
3385:class="cmb">$295,978<o:p></o:p></SPAN></P></TD>
3386:<TD
3387:class="cm3l"
3388:vAlign=top width=120>
3389:<P class=MsoNormal class="cm12" align=right><SPAN
3390:class="cmb">$445,728<o:p></o:p></SPAN></P></TD></TR>
3391:<TR>
3392:<TD
3393:class="cm3k"
3394:vAlign=top width=120>
3395:<P class=MsoNormal class="cmj"><SPAN
3396:class="cmb">United States<o:p></o:p></SPAN></P></TD>
3397:<TD
3398:class="cm3l"
3399:vAlign=top width=120>
3400:<P class=MsoNormal class="cm12" align=right><SPAN
3401:class="cmb">$12,874,048<o:p></o:p></SPAN></P></TD>
3402:<TD
3403:class="cm3m"
3404:vAlign=top width=105>
3405:<P class=MsoNormal class="cm12" align=right><SPAN
3406:class="cmb">$12,491,799<o:p></o:p></SPAN></P></TD>
3407:<TD
3408:class="cm3l"
3409:vAlign=top width=120>
3410:<P class=MsoNormal class="cm12" align=right><SPAN
3411:class="cmb">$12,353,217<o:p></o:p></SPAN></P></TD></TR>
3412:<TR>
3413:<TD
3414:class="cm3k"
3415:vAlign=top width=120>
3416:<P class=MsoNormal class="cmj"><B
3417:class="cm6"><SPAN
3418:class="cmb">TOTAL<o:p></o:p></SPAN></B></P></TD>
3419:<TD
3420:class="cm3l"
3421:vAlign=top width=120>
3422:<P class=MsoNormal class="cm12" align=right><B
3423:class="cm6"><SPAN
3424:class="cmb">$13,166,041<o:p></o:p></SPAN></B></P></TD>
3425:<TD
3426:class="cm3m"
3427:vAlign=top width=105>
3428:<P class=MsoNormal class="cm12" align=right><B
3429:class="cm6"><SPAN
3430:class="cmb">$12,787,777<o:p></o:p></SPAN></B></P></TD>
3431:<TD
3432:class="cm3l"
3433:vAlign=top width=120>
3434:<P class=MsoNormal class="cm12" align=right><B
3435:class="cm6"><SPAN
3436:class="cmb">$12,798,945<o:p></o:p></SPAN></B></P></TD></TR></TBODY></TABLE>
3437:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3438:<P class=MsoNormal class="cmj"><SPAN class="cmb">Net
3439:Losses for Fiscal 2002 were<SPAN class="cm3">&nbsp;
3440:</SPAN>($551,009). <o:p></o:p></SPAN></P>
3441:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3442:<P class=MsoNormal class="cmj"><SPAN
3443:class="cmb">Loss Per Share for Fiscal 2002 were
3444:($0.05).<o:p></o:p></SPAN></P>
3445:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3446:<P class=MsoNormal class="cmj"><SPAN
3447:class="cmb">Under US GAAP, Net Loss for 2002, would have been
3448:($963,626). <o:p></o:p></SPAN></P>
3449:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3450:<P class=MsoNormal class="cmj"><SPAN
3451:class="cmb">Under US GAAP Loss Per Share for Fiscal 2002 would have
3452:been ($0.09). <B
3453:class="cm6"><U><o:p></o:p></U></B></SPAN></P>
3454:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3455:<P class=MsoNormal class="cmj"><U><SPAN
3456:class="cmb">Fiscal 2002 compared to Fiscal
3457:2001<o:p></o:p></SPAN></U></P>
3458:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
3459:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3460:Company had no revenues in each of the last three fiscal years.<SPAN
3461:class="cm3">&nbsp;&nbsp; </SPAN>Operating expenditures for fiscal
3462:2002 were $564,221 compared to $436,200 in fiscal 2001.<SPAN
3463:class="cm3">&nbsp; </SPAN>Expenditures increased over 2001 due to
3464:debt service cost increases of $232,061 from $35,288 in fiscal 2001 to $267,349
3465:in fiscal 2002.<SPAN class="cm3">&nbsp; </SPAN>The increase in
3466:debt service costs was a result of the new bank loan of $USD 1,200,000 being
3467:obtain<SPAN class=msoDel><DEL cite="mailto:srreid" datetime="2002-12-03T14:44">
3468:</DEL></SPAN><INS cite="mailto:srreid" datetime="2002-12-03T14:44">ed </INS>from
3469:Peak National Bank in the year.<SPAN class="cm3">&nbsp;
3470:</SPAN>This increase was offset by reductions in foreign exchange adjustments
3471:from $75,207 in fiscal 2001 to $4,699 in fiscal 2002 due to less exposure to
3472:exchange rate fluctuations and a reduction in wages from $58,639 in fiscal 2001
3473:to $nil in fiscal 2002.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>No
3474:wages were paid in 2002 due to limited resources available to the
3475:Company.<o:p></o:p></SPAN></P>
3476:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3477:<P class=MsoNormal class="cmj"><U><SPAN
3478:class="cmb">Fiscal 2001 compared to Fiscal
3479:2000<o:p></o:p></SPAN></U></P>
3480:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
3481:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3482:Company had no revenues in each of the last three fiscal years.<SPAN
3483:class="cm3">&nbsp;&nbsp; </SPAN>Operating expenditures for fiscal
3484:2001 were $436,200 compared to $397,200 in fiscal 2000.<SPAN
3485:class="cm3">&nbsp; </SPAN>Expenditures increased over 2000 due to
3486:consulting fee increases of $71,727 from $nil in fiscal 2000 to $71,727 in
3487:fiscal 2001.<SPAN class="cm3">&nbsp; </SPAN>The increase in
3488:consulting fees, related to related party debt restructuring in fiscal 2001, was
3489:partially offset by reductions in wages of $20,161 from $78,800 in fiscal 2000
3490:to $58,639 in fiscal 2000. <o:p></o:p></SPAN></P>
3491:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3492:<P class=MsoNormal class="cmj"><U><SPAN
3493:class="cmb">Fiscal 2002<o:p></o:p></SPAN></U></P>
3494:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
3495:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3496:Company has made the second of four annual payments for the additional ownership
3497:stated in the Nevada Manhattan agreement of fiscal period
3498:2000.<o:p></o:p></SPAN></P>
3499:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
3500:<P class=MsoNormal class="cmj"><SPAN
3501:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3502:datetime="2002-12-03T14:48">The Company spent exploration funds as
3503:follows:</DEL></SPAN></SPAN><SPAN
3504:class="cm5"><SPAN class=msoDel><DEL
3505:cite="mailto:srreid" datetime="2002-12-03T14:48"><SPAN
3506:class="cm3">&nbsp;&nbsp; </SPAN></DEL></SPAN><SPAN
3507:class=msoDel><DEL cite="mailto:srreid"
3508:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P>
3509:<P class=MsoNormal class="cmj"><SPAN
3510:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3511:datetime="2002-12-03T14:48"><SPAN
3512:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3513:</SPAN></DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
3514:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P>
3515:<TABLE class="cm39"
3516:cellSpacing=0 cellPadding=0 border=0>
3517:<TBODY>
3518:<TR class="cm3o">
3519:<TD
3520:class="cm3b"
3521:vAlign=top width=163>
3522:<P class=MsoHeader class="cm3p" align=right><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
3523:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3524:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD>
3525:<TD
3526:class="cm3d"
3527:vAlign=top width=108>
3528:<P class=MsoNormal class="cm2" align=center><U><SPAN
3529:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3530:datetime="2002-12-03T14:48">Fiscal<SPAN
3531:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3532:</SPAN>2001</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
3533:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></U></P></TD>
3534:<TD
3535:class="cm3d"
3536:vAlign=top width=108>
3537:<P class=MsoNormal class="cm2" align=center><U><SPAN
3538:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3539:datetime="2002-12-03T14:48">Fiscal </DEL></SPAN><SPAN class=msoDel><DEL
3540:cite="mailto:srreid"
3541:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></U></P>
3542:<P class=MsoNormal class="cm2" align=center><U><SPAN
3543:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3544:datetime="2002-12-03T14:48">2002</DEL></SPAN><SPAN class=msoDel><DEL
3545:cite="mailto:srreid"
3546:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></U></P></TD></TR>
3547:<TR class="cm3o">
3548:<TD
3549:class="cm3b"
3550:vAlign=top width=163>
3551:<P class=MsoNormal class="cmj"><SPAN
3552:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3553:datetime="2002-12-03T14:48">Manhattan Property</DEL></SPAN><SPAN
3554:class=msoDel><DEL cite="mailto:srreid"
3555:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD>
3556:<TD
3557:class="cm3d"
3558:vAlign=top width=108>
3559:<P class=MsoNormal class="cm12" align=right><SPAN
3560:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3561:datetime="2002-12-03T14:48">$176,175</DEL></SPAN><SPAN class=msoDel><DEL
3562:cite="mailto:srreid"
3563:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD>
3564:<TD
3565:class="cm3d"
3566:vAlign=top width=108>
3567:<P class=MsoNormal class="cm12" align=right><SPAN
3568:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3569:datetime="2002-12-03T14:48">$292,886</DEL></SPAN><SPAN class=msoDel><DEL
3570:cite="mailto:srreid"
3571:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD></TR>
3572:<TR class="cm3o">
3573:<TD
3574:class="cm3b"
3575:vAlign=top width=163>
3576:<P class=MsoNormal class="cmj"><SPAN
3577:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3578:datetime="2002-12-03T14:48">Colorado Property</DEL></SPAN><SPAN
3579:class=msoDel><DEL cite="mailto:srreid"
3580:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD>
3581:<TD
3582:class="cm3d"
3583:vAlign=top width=108>
3584:<P class=MsoNormal class="cm12" align=right><SPAN
3585:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3586:datetime="2002-12-03T14:48">$190,566</DEL></SPAN><SPAN class=msoDel><DEL
3587:cite="mailto:srreid"
3588:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD>
3589:<TD
3590:class="cm3d"
3591:vAlign=top width=108>
3592:<P class=MsoNormal class="cm12" align=right><SPAN
3593:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3594:datetime="2002-12-03T14:48">$120,601</DEL></SPAN><SPAN class=msoDel><DEL
3595:cite="mailto:srreid"
3596:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD></TR>
3597:<TR class="cm3o">
3598:<TD
3599:class="cm3b"
3600:vAlign=top width=163>
3601:<P class=MsoNormal class="cmj"><SPAN
3602:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3603:datetime="2002-12-03T14:48">Panama Property</DEL></SPAN><SPAN
3604:class=msoDel><DEL cite="mailto:srreid"
3605:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD>
3606:<TD
3607:class="cm3d"
3608:vAlign=top width=108>
3609:<P class=MsoNormal class="cm12" align=right><SPAN
3610:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3611:datetime="2002-12-03T14:48">$78,988</DEL></SPAN><SPAN class=msoDel><DEL
3612:cite="mailto:srreid"
3613:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD>
3614:<TD
3615:class="cm3d"
3616:vAlign=top width=108>
3617:<P class=MsoNormal class="cm12" align=right><SPAN
3618:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3619:datetime="2002-12-03T14:48">$65,070</DEL></SPAN><SPAN class=msoDel><DEL
3620:cite="mailto:srreid"
3621:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P></TD></TR></TBODY></TABLE>
3622:<P class=MsoNormal class="cmj"><SPAN
3623:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
3624:datetime="2002-12-03T14:48"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
3625:class=msoDel><DEL cite="mailto:srreid"
3626:datetime="2002-12-03T14:48"><o:p></o:p></DEL></SPAN></SPAN></P>
3627:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3628:<P class=MsoNormal class="cmj"><SPAN
3629:class="cmb">Other than the above, the Company does not know of any
3630:trends, demands, commitments, events or uncertainties that will result in,<SPAN
3631:class=msoDel><DEL cite="mailto:srreid" datetime="2002-12-03T12:53">
3632:</DEL></SPAN>&nbsp;or that are reasonably likely to result in, its liquidity
3633:either materially increasing <SPAN class=msoDel><DEL cite="mailto:srreid"
3634:datetime="2002-12-03T12:53">&nbsp;</DEL></SPAN>or decreasing <SPAN
3635:class=msoDel><DEL cite="mailto:srreid"
3636:datetime="2002-12-03T12:53">&nbsp;</DEL></SPAN>at present or <SPAN
3637:class=msoDel><DEL cite="mailto:srreid"
3638:datetime="2002-12-03T12:53">&nbsp;</DEL></SPAN>in<SPAN class=msoDel><DEL
3639:cite="mailto:srreid" datetime="2002-12-03T12:53"> </DEL></SPAN>&nbsp;the <SPAN
3640:class=msoDel><DEL cite="mailto:srreid"
3641:datetime="2002-12-03T12:53">&nbsp;</DEL></SPAN>foreseeable future. Material
3642:increases or decreases&nbsp;in the Company's liquidity are substantially
3643:determined by the success or failure of its exploration programs or
3644:the&nbsp;acquisition of projects.<o:p></o:p></SPAN></P>
3645:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3646:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3647:Company intends to raise required additional funds&nbsp;by selling equity or
3648:debt securities, and/or by selling or joint venturing&nbsp;its properties until
3649:it develops a cash flow from operations. &nbsp; While the Company has been
3650:successful in raising the necessary funds in the past, there can be no assurance
3651:it can continue to do so.<SPAN class="cm3">&nbsp; </SPAN>If such
3652:funds cannot be secured, the Company will be forced to curtail its
3653:exploration/development efforts.<o:p></o:p></SPAN></P>
3654:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3655:<P class=MsoNormal class="cmj"><SPAN
3656:class="cm36">The Company believes it will
3657:have adequate access of funds to carry on operations through May 31, 2003,
3658:however, receipt of these funds is not assured. Calais is presently working with
3659:a number of private investors and mineral related companies towards completing a
3660:private placement and/or debt based financing based on management's assessment
3661:of the state of financial markets and the long-term needs of the Company. Two of
3662:the Companies directors are providing working capital until a private placement
3663:is completed. Payments to maintain the integrity of the three gold district
3664:properties have been kept current.<o:p></o:p></SPAN></P>
3665:<P class=MsoNormal class="cmj"><SPAN
3666:class="cm36"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3667:<P class=MsoNormal class="cmj"><B
3668:class="cm6"><SPAN class="cmb"><SPAN
3669:class="cm3q"><SPAN
3670:class="cm3q">B. Liquidity and Capital
3671:Resources<SPAN
3672:class="cm3q"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></B></P>
3673:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3674:<P class=MsoNormal class="cmj"><SPAN class="cmb">In
3675:the early years of the Company<INS cite="mailto:srreid"
3676:datetime="2002-12-03T14:44">&#8217;s</INS> operations, the Company would acquire small
3677:property claims, either individually or in joint venture with another junior
3678:company.<SPAN class="cm3">&nbsp; </SPAN>These properties were
3679:frequently purchased using the issuance of common shares as the Company had
3680:limited liquidity.<SPAN class="cm3">&nbsp; </SPAN>The number of
3681:shares to be issued was determined following negotiation with arms-length
3682:sellers and reflected the price of the common shares at that time.<SPAN
3683:class="cm3">&nbsp; </SPAN>Both the Company and the seller were
3684:aware that Canadian regulatory approval was required prior to stock issuance and
3685:that market values of such shares to be issued could change.<SPAN
3686:class="cm3">&nbsp; </SPAN>Shares were recorded at fair market
3687:value at the time of issuance.<SPAN class="cm3">&nbsp;
3688:</SPAN>Also, these properties were frequently very speculative ventures and
3689:subsequent exploration did not discover commercially viable reserves.<SPAN
3690:class="cm3">&nbsp; </SPAN>The Company wrote-off its investment in
3691:such non-viable properties when such a determination was
3692:made.<o:p></o:p></SPAN></P>
3693:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3694:<P class=MsoNormal class="cmj"><SPAN class="cmb">In
3695:recent years the Company has limited its investment to larger properties where
3696:the Company believed the prospects and opportunities for significant reserves
3697:were better and, if such reserves were discovered, that property development and
3698:production could be financed and/or the property sold or joint ventured with a
3699:major mining company.<SPAN class="cm3">&nbsp;
3700:</SPAN><o:p></o:p></SPAN></P>
3701:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3702:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3703:Company issued a total of 100,000 shares for the Panama properties in January
3704:2001, and a further 100,000 shares for the Panama properties in November of 2001
3705:for a one year option on the Panama placer ground. This option has been extended
3706:for another year.<o:p></o:p></SPAN></P>
3707:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3708:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3709:Company&#8217;s Hendrick&#8217;s property has an engineering report which indicates
3710:mineralization insufficient for the Company to attempt production.<SPAN
3711:class="cm3">&nbsp; </SPAN>The Company is continuing to explore
3712:this property to determine if commercially viable reserves are
3713:present.<o:p></o:p></SPAN></P>
3714:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3715:<P class=MsoNormal class="cm3r"><SPAN
3716:class="cmb">The auditors&#8217; report with respect to our financial
3717:statements for the year ended May 31, 2002 includes an explanatory paragraph
3718:which describes conditions that raise substantial doubt about our ability to
3719:continue as a going concern.<SPAN class="cm3">&nbsp; </SPAN>The
3720:financial statements do not include any adjustment that might result from the
3721:outcome of these uncertainties. The going concern basis of presentation assumes
3722:that the Company will continue in operation for the foreseeable future and be
3723:able to realize its assets and discharge its liabilities and commitments in the
3724:normal course of business. There is significant doubt about the appropriateness
3725:of the use of the going concern assumption because the Company experienced
3726:significant losses in 2002 and 2001 and has experienced significant negative
3727:cash flow from operations over a number of years. In addition, the Company
3728:recently had to seek an extension on repayment of a $1,200,000 US loan.
3729:Subsequent to the year-end, the Company began seeking approximately $2,300,000
3730:US in financing to repay the bank loan, trade creditors and provide operating
3731:funds. The Company is actively pursuing various options with potential lenders
3732:and investors which, if accepted, will in management&#8217;s view, enable the Company
3733:to achieve its business plans. No agreements with potential lenders or investors
3734:have been reached yet and there can be no assurance that such agreements will be
3735:reached. The ability of the Company to continue as a going concern and to
3736:realize the carrying value of its assets and discharge its liabilities when due
3737:is dependent on the successful completion of the actions taken or planned, some
3738:of which are described above, which management believes will mitigate the
3739:adverse conditions and events which raise doubt about the validity of the<SPAN
3740:class="cm3">&nbsp; </SPAN>&#8220;going concern&#8221; assumption used in
3741:preparing these financial statements. There is no certainty that these and other
3742:strategies will be sufficient to permit the Company to continue beyond May 31,
3743:2003. The financial statements do not reflect adjustments that would be
3744:necessary if the &#8220;going concern&#8221; assumption were not appropriate. If the &#8220;going
3745:concern&#8221; basis was not appropriate for these financial statements, then
3746:adjustments would be necessary in the carrying value of assets and liabilities,
3747:the reported revenues and expenses, and the balance sheet classifications
3748:used.<o:p></o:p></SPAN></P>
3749:<P class=MsoNormal class="cmj"><U><SPAN
3750:class="cmb"><SPAN
3751:class="cm3">&nbsp;</SPAN><o:p></o:p></SPAN></U></P>
3752:<P class=MsoNormal class="cmj"><U><SPAN
3753:class="cmb">Material Capital Commitments/Significant
3754:Uncertainties<o:p></o:p></SPAN></U></P>
3755:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3756:<P class=MsoNormal class="cmj"><SPAN
3757:class="cmb">Further resource exploration and development is a
3758:speculative business and involves a high degree of risk.<SPAN
3759:class="cm3">&nbsp; </SPAN>The marketability of minerals, which may
3760:be acquired or discovered by the Company, will be affected by numerous factors
3761:beyond the control of the Company. &nbsp;These factors include
3762:market&nbsp;fluctuations, the proximity and capacity of mineral markets and
3763:processing equipment, government regulations, including regulations
3764:relating&nbsp;to prices, taxes, royalties, land tenure, land use,
3765:importing&nbsp;and exploration of minerals,&nbsp;and&nbsp;environmental
3766:protection. &nbsp;The exact effect of&nbsp;these factors cannot&nbsp;be
3767:accurately predicted, the combination of these factors may result in the Company
3768:not receiving an adequate return on capital.<o:p></o:p></SPAN></P>
3769:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3770:<P class=MsoNormal class="cmj"><SPAN
3771:class="cmb">Mining operations generally involve a high
3772:degree&nbsp;of&nbsp;risk. Hazards such&nbsp;as unusual or
3773:unexpected&nbsp;formations&nbsp;and&nbsp;other conditions&nbsp;are involved. The
3774:Company may become&nbsp;subject&nbsp;to liability for pollution, collapses or
3775:hazards against which it cannot insure or against which it may have a material,
3776:adverse effect on the Company's financial position.<o:p></o:p></SPAN></P>
3777:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3778:<P class=MsoNormal class="cmj"><SPAN
3779:class="cmb">There is no assurance that the Company or its joint
3780:venture partners in the Company's projects will be successful in obtaining the
3781:required financing.<o:p></o:p></SPAN></P>
3782:<P class=MsoNormal class="cmj"><B
3783:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3784:<P class=MsoNormal
3785:class="cm3s"><B
3786:class="cm6"><SPAN class="cmb"><INS
3787:cite="mailto:pdowad" datetime="2002-12-03T11:59">C.<SPAN
3788:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN>Research and develoment,
3789:patents and licenses, etc.<o:p></o:p></INS></SPAN></B></P>
3790:<P class=MsoNormal
3791:class="cm3t"><B
3792:class="cm6"><SPAN class="cmb"><INS
3793:cite="mailto:pdowad"
3794:datetime="2002-12-03T11:59"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></B></P>
3795:<P class=MsoNormal
3796:class="cm3t"><B
3797:class="cm6"><SPAN class="cmb"><INS
3798:cite="mailto:pdowad" datetime="2002-12-03T11:59">Not
3799:applicable.<o:p></o:p></INS></SPAN></B></P>
3800:<P class=MsoNormal
3801:class="cm3u"><B
3802:class="cm6"><SPAN class="cmb"><INS
3803:cite="mailto:pdowad"
3804:datetime="2002-12-03T11:59"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></B></P>
3805:<P class=MsoNormal
3806:class="cm3v"><B
3807:class="cm6"><SPAN class="cmb"><INS
3808:cite="mailto:pdowad" datetime="2002-12-03T12:00">D.<SPAN
3809:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN></INS><INS
3810:cite="mailto:pdowad" datetime="2002-12-03T11:59">Trend
3811:information.<o:p></o:p></INS></SPAN></B></P>
3812:<P class=MsoNormal
3813:class="cm3t"><B
3814:class="cm6"><SPAN class="cmb"><INS
3815:cite="mailto:pdowad"
3816:datetime="2002-12-03T11:59"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></B></P>
3817:<P class=MsoNormal
3818:class="cm3t"><B
3819:class="cm6"><SPAN class="cmb"><INS
3820:cite="mailto:pdowad" datetime="2002-12-03T11:59">Not applicable</INS><SPAN
3821:class="cm3w"><INS cite="mailto:pdowad"
3822:datetime="2002-12-03T11:58"><SPAN
3823:class="cm3w"><o:p></o:p></SPAN></INS></SPAN></SPAN></B></P>
3824:<P class=MsoNormal
3825:class="cm3x"><B
3826:class="cm6"><SPAN class="cmb"><SPAN
3827:class="cm3y"><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
3828:class="cm3y"><o:p></o:p></SPAN></SPAN></SPAN></B></P>
3829:<P class=MsoNormal class="cmj"><B
3830:class="cm6"><U><SPAN class="cmb">Critical
3831:Accounting Policies<o:p></o:p></SPAN></U></B></P>
3832:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3833:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3834:Company&#8217;s discussion and analysis of its financial condition and results of
3835:operations, including the discussion on liquidity and capital resources, are
3836:based on its consolidated financial statements that have been prepared in
3837:accordance with Canadian generally accepted accounting principles. The
3838:preparation of these financial statements requires management to make estimates
3839:and judgments that affect reported amounts of assets, liabilities, revenues and
3840:expenses, and related disclosure of contingent assets and liabilities. On an
3841:ongoing basis, management re-evaluates its estimates and judgments, particularly
3842:those related to the determination of the impairment of long<INS
3843:cite="mailto:pdowad" datetime="2002-12-03T11:46">-</INS><SPAN class=msoDel><DEL
3844:cite="mailto:pdowad" datetime="2002-12-03T11:46"> </DEL></SPAN>lived assets.
3845:Management bases its estimates and judgments on historical experience,
3846:contractual arrangements and commitments and on various other assumptions that
3847:it believes are reasonable in the circumstances. Changes in these estimates and
3848:judgments will impact the amounts recognized in the consolidated financial
3849:statements, and the impact may be material. Management believes the following
3850:critical accounting policies require more significant estimates and judgments in
3851:the preparation of the consolidated financial statements.<o:p></o:p></SPAN></P>
3852:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3853:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3854:consolidated financial statements have been prepared on the going concern basis,
3855:which assumes the realization of assets and liquidation of liabilities in the
3856:normal course of operations. If the Company was not to continue as a going
3857:concern, it would likely not be able to realize on its assets at values
3858:comparable to the carrying value or the fair value estimates reflected in the
3859:balances set out in the preparation of the consolidated financial statements. As
3860:described elsewhere in this report, at May 31, 2002, there are certain
3861:conditions that currently exist which raise substantial doubt about the validity
3862:of this assumption. While the Company anticipates raising additional private
3863:placement funds to remove the substantial doubt, these private placements are
3864:not assured. Failure to raise additional funds may result in the Company
3865:curtailing operations or writing assets and liabilities down to liquidation
3866:values, or both.<INS cite="mailto:pdowad"
3867:datetime="2002-12-03T11:47"><o:p></o:p></INS></SPAN></P>
3868:<P class=MsoNormal
3869:class="cm3z"><SPAN
3870:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T11:47"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
3871:<P class=MsoNormal
3872:class="cm3z"><SPAN
3873:class="cmb"><INS cite="mailto:pdowad"
3874:datetime="2002-12-03T11:47">For Canadian GAAP purposes, the Company capitalizes
3875:exploration costs incurred.<SPAN class="cm3">&nbsp; </SPAN>The
3876:</INS><INS cite="mailto:pdowad" datetime="2002-12-03T11:51">recoverability of
3877:the capitalized costs include</INS><INS cite="mailto:pdowad"
3878:datetime="2002-12-03T11:52">s</INS><INS cite="mailto:pdowad"
3879:datetime="2002-12-03T11:51"> consideration</INS><INS cite="mailto:srreid"
3880:datetime="2002-12-03T12:23">s</INS><INS cite="mailto:pdowad"
3881:datetime="2002-12-03T11:51"> primarily of management</INS><INS
3882:cite="mailto:pdowad" datetime="2002-12-03T11:53">&#8217;s exploration, development and
3883:holding plans and expectations with respect to the property, </INS><INS
3884:cite="mailto:pdowad" datetime="2002-12-03T11:51">potential mineralization, costs
3885:to recovery, commodity prices and </INS><INS cite="mailto:pdowad"
3886:datetime="2002-12-03T11:54">the potential for third party agreements on
3887:development.<SPAN class="cm3">&nbsp; </SPAN>Certain of these
3888:factors are beyond the Company&#8217;s control.<SPAN class="cm3">&nbsp;
3889:</SPAN>Other factors, such as management&#8217;s plans and expectations, while
3890:supporting continued capitalization at this time may change and that change may
3891:be material to the financial statements.</INS><o:p></o:p></SPAN></P>
3892:<P class=MsoNormal class="cmj"><B
3893:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3894:<P class=MsoNormal class="cmj"><U><SPAN
3895:class="cmb">Legal proceedings<SPAN class="cmi">
3896:</SPAN></SPAN><B class="cm6"><SPAN
3897:class="cm35"><o:p></o:p></SPAN></B></U></P>
3898:<P class=MsoNormal class="cmj"><B
3899:class="cm6"><U><SPAN class="cm35"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3900:<P class=MsoNormal class="cmj"><SPAN
3901:class="cmb">Other than discussed below, the Company knows of no
3902:material, active or pending legal proceedings against them.<SPAN
3903:class="cm3">&nbsp; </SPAN>Other than discussed below, the Company
3904:in not involved as a plaintiff in any material proceeding or pending
3905:litigation.<o:p></o:p></SPAN></P>
3906:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3907:<P class=MsoNormal class="cmj"><SPAN
3908:class="cmb">Other than discussed below, the Company knows of no
3909:active or pending proceedings against anyone that might materially adversely
3910:affect an interest of the Company.<o:p></o:p></SPAN></P>
3911:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3912:<P class=MsoNormal class="cmj"><SPAN class="cmb">A
3913:Writ of Summons and Statement of Claim was filed in Supreme Court of British
3914:Columbia on May 21, 2002 re monies owing and payable to Devlin Jensen for
3915:services provided in the amount of $63,368 plus interest and costs incurred
3916:therein.<o:p></o:p></SPAN></P>
3917:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3918:<P class=MsoNormal class="cmj"><SPAN class="cmb">A
3919:Claim made in Alberta by BDO Dunwoody for services provided in the amount of
3920:$48,864 plus interest and costs incurred therein.<o:p></o:p></SPAN></P>
3921:<P class=MsoNormal class="cmj"><B
3922:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3923:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
3924:Company has provided for these claims.<o:p></o:p></SPAN></P>
3925:<P class=MsoNormal class="cmj"><B
3926:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3927:<P class=MsoNormal class="cmj"><B
3928:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
3929:<P class=MsoNormal class="cmj"><B
3930:class="cm6"><U><SPAN class="cmb">ITEM
3931:6.<SPAN class="cm3">&nbsp; </SPAN>DIRECTORS, SENIOR MANAGEMENT AND
3932:EMPLOYEES<o:p></o:p></SPAN></U></B></P>
3933:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3934:<P class=MsoNormal
3935:class="cm40"><![if !supportLists]><SPAN
3936:class="cmb"><INS cite="mailto:pdowad"
3937:datetime="2002-12-03T12:01">A.<SPAN
3938:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3939:</SPAN></INS></SPAN><![endif]><SPAN class="cmb"><INS
3940:cite="mailto:pdowad" datetime="2002-12-03T12:01">Directors and senior
3941:management<o:p></o:p></INS></SPAN></P>
3942:<P class=MsoNormal
3943:class="cm41"><SPAN
3944:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:01"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
3945:<P class=MsoNormal
3946:class="cm41"><SPAN
3947:class="cmb">The following table lists, as of November 29, 2002, the
3948:names of all the Directors of the Registrant.<SPAN
3949:class="cm3">&nbsp; </SPAN>The Directors generally serve in their
3950:respective capacities from their election on the day of the Annual General
3951:Meeting of the Registrant, last held on November 14, 2002 and will serve until
3952:the next Annual General Meeting or until a successor is duly elected, unless the
3953:office is vacated in accordance with the Articles of the
3954:Registrant.<o:p></o:p></SPAN></P>
3955:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3956:<P class=MsoNormal class="cmj"><SPAN
3957:class="cmb">Casual vacancies on the Board of Directors are filled by
3958:the remaining Directors and the persons filling those vacancies hold office
3959:until the next Annual General Meeting at which time they may be re-elected or
3960:replaced.<o:p></o:p></SPAN></P>
3961:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
3962:<P class=MsoNormal class="cm2" align=center><SPAN
3963:class="cmb">Directors<o:p></o:p></SPAN></P>
3964:<P class=MsoNormal class="cmj"><SPAN
3965:class="cmb"><SPAN
3966:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3967:</SPAN>Date First<o:p></o:p></SPAN></P>
3968:<P class=MsoNormal class="cmj"><U><SPAN
3969:class="cmb">Name<SPAN
3970:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
3971:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>Age<SPAN
3972:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>Elected or
3973:Appointed<o:p></o:p></SPAN></U></P>
3974:<P class=MsoNormal class="cm42"><SPAN
3975:class="cmb">Marlowe Harvey<SPAN
3976:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3977:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3978:</SPAN>49<SPAN
3979:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3980:</SPAN>July 1992<o:p></o:p></SPAN></P>
3981:<P class=MsoFootnoteText class="cm43">Melvin W. Martin
3982:(1)<SPAN
3983:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3984:</SPAN><SPAN class="cmi"></SPAN><SPAN
3985:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>62<SPAN
3986:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>October
3987:1992</P>
3988:<P class=MsoNormal class="cm42"><SPAN
3989:class="cmb">Art Daher<SPAN
3990:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3991:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3992:</SPAN>70<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3993:</SPAN>November 1995<o:p></o:p></SPAN></P>
3994:<P class=MsoNormal class="cm42"><SPAN
3995:class="cmb">Tom Hendricks<SPAN
3996:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3997:</SPAN>53<SPAN class="cmi">&nbsp;&nbsp; </SPAN><SPAN
3998:class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>December
3999:1997<o:p></o:p></SPAN></P>
4000:<P class=MsoNormal class="cm42"><SPAN
4001:class="cmb">Robert Akright (1)<SPAN
4002:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4003:</SPAN>78<SPAN class="cmi">&nbsp;&nbsp; </SPAN><SPAN
4004:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>August
4005:1998<o:p></o:p></SPAN></P>
4006:<P class=MsoNormal class="cm42"><SPAN
4007:class="cmb">Tom Patton (1)<SPAN
4008:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4009:</SPAN>59<SPAN class="cmi">&nbsp;&nbsp; </SPAN><SPAN
4010:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>June
4011:2000<o:p></o:p></SPAN></P>
4012:<P class=MsoNormal class="cmj"><SPAN
4013:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4014:<P class=MsoNormal
4015:class="cm44"><![if !supportLists]><SPAN
4016:class="cm4">(1)<SPAN
4017:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4018:</SPAN></SPAN><![endif]><SPAN
4019:class="cm4">Members of the Audit
4020:Committee of the Board of Directors.<o:p></o:p></SPAN></P>
4021:<P class=MsoNormal
4022:class="cm45"><![if !supportLists]><SPAN
4023:class="cm4">(2)<SPAN
4024:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4025:</SPAN></SPAN><![endif]><SPAN
4026:class="cm4">All Directors are residents
4027:and citizens of Canada with the exception of Tom Hendricks and Robert Akright of
4028:Colorado, U.S.A. and Tom Patton of Washington, U.S.A.<o:p></o:p></SPAN></P>
4029:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4030:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4031:following table lists, as of October 31, 2002, the names of all of the Executive
4032:Officers of the Registrant.<SPAN class="cm3">&nbsp;
4033:</SPAN>Executive Officers are appointed by the Board of Directors and hold
4034:office indefinitely&nbsp;at the pleasure of the Board of&nbsp;Directors.<SPAN
4035:class="cm3">&nbsp; </SPAN><o:p></o:p></SPAN></P>
4036:<P class=MsoNormal class="cm2" align=center><SPAN
4037:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4038:<P class=MsoNormal class="cm2" align=center><SPAN
4039:class="cmb">Executive Officers<o:p></o:p></SPAN></P>
4040:<P class=MsoNormal class="cmj"><SPAN
4041:class="cmb"><SPAN
4042:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4043:</SPAN>Date First <o:p></o:p></SPAN></P>
4044:<P class=MsoNormal class="cmj"><U><SPAN
4045:class="cmb">Name<SPAN
4046:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4047:</SPAN>Age<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Title<SPAN
4048:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4049:</SPAN>Appointed to Position<o:p></o:p></SPAN></U></P>
4050:<P class=MsoNormal class="cm46"><SPAN
4051:class="cmb">Tom Hendricks<SPAN
4052:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>53<SPAN
4053:class="cm3">&nbsp;&nbsp; </SPAN>President &amp; CEO<SPAN
4054:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4055:</SPAN><SPAN
4056:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>June
4057:2000<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4058:</SPAN><o:p></o:p></SPAN></P>
4059:<P class=MsoNormal class="cm46"><SPAN
4060:class="cmb">Robert Akright<SPAN
4061:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>78<SPAN
4062:class="cmi">&nbsp;&nbsp; </SPAN>Vice President<SPAN
4063:class="cm47">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4064:</SPAN><SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>June
4065:2000<o:p></o:p></SPAN></P>
4066:<P class=MsoNormal class="cm46"><SPAN
4067:class="cmb">Melvin Martin<SPAN
4068:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>62<SPAN
4069:class="cmi">&nbsp;&nbsp; </SPAN>Chairman of the Board<SPAN
4070:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4071:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4072:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>March
4073:1999<o:p></o:p></SPAN></P>
4074:<P class=MsoNormal class="cm46"><SPAN
4075:class="cmb">Andrew Murray<SPAN
4076:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>52<SPAN
4077:class="cm3">&nbsp;&nbsp; </SPAN>VP Finance/Administration<SPAN
4078:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>October
4079:1992<o:p></o:p></SPAN></P>
4080:<P class=MsoNormal class="cmj"><SPAN class="cmb">Art
4081:Daher<SPAN
4082:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4083:</SPAN>70<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Secretary<SPAN
4084:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4085:</SPAN><SPAN class="cm3">&nbsp;&nbsp;&nbsp;</SPAN>November
4086:1995<o:p></o:p></SPAN></P>
4087:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4088:<P class=MsoNormal class="cmj"><SPAN class="cmb">No
4089:Director and/or Executive Officer has been the subject&nbsp;of any order,
4090:judgment, or decree of any governmental agency&nbsp;or administrator
4091:or&nbsp;of&nbsp;any court&nbsp;or competent jurisdiction, revoking or suspending
4092:for cause any license, permit or other authority of such person or of any
4093:corporation of which he is a Director and/or Executive Officer, to engage in the
4094:securities business or in the sale of a particular security or temporarily or
4095:permanently restraining or enjoining any such person or&nbsp;any corporation of
4096:which he is an officer or director from engaging
4097:in&nbsp;or&nbsp;continuing&nbsp;any conduct, practice,&nbsp;or&nbsp;employment
4098:in connection with the purchase&nbsp;or&nbsp;sale&nbsp;of securities, or
4099:convicting such person of any felony or misdemeanor involving a security
4100:&nbsp;or any aspect of the securities business or of theft or of any
4101:felony.<o:p></o:p></SPAN></P>
4102:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4103:<P class=MsoNormal class="cmj"><SPAN
4104:class="cmb">While the Executive Officers/Directors of the Company
4105:are involved in other business ventures and do not spend full time on the
4106:affairs of the Company, the Company believes that each devotes as much time to
4107:the affairs of the Company as are required to satisfactorily carry out their
4108:duty.<o:p></o:p></SPAN></P>
4109:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4110:<P class=MsoNormal class="cmj"><SPAN
4111:class="cmb">There are no family relationships between any
4112:two&nbsp;or more Directors or Executive Officers.<SPAN
4113:class="cm3">&nbsp; </SPAN>&nbsp;There are no arrangements or
4114:understandings&nbsp;between any two or more Directors or
4115:Executive&nbsp;Officers, pursuant to&nbsp;which he was selected as a Director or
4116:Executive Officer.<o:p></o:p></SPAN></P>
4117:<P class=MsoNormal class="cmj"><B
4118:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
4119:<P class=MsoNormal class="cmj"><SPAN
4120:class="cmb"><SPAN class="cm48"><INS
4121:cite="mailto:pdowad" datetime="2002-12-03T12:02"><SPAN
4122:class="cm48">B.<SPAN
4123:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN></SPAN></INS><SPAN
4124:class="cm48"><SPAN
4125:class="cm48">Compensation<SPAN
4126:class="cm48"><SPAN class=msoDel><DEL
4127:cite="mailto:pdowad" datetime="2002-12-03T12:02"><SPAN
4128:class="cm48"> of Officers and
4129:Directors</SPAN></DEL></SPAN><SPAN
4130:class="cm48"><SPAN
4131:class="cm48"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></SPAN></SPAN></SPAN></P>
4132:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4133:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4134:Company has no formal plan for compensating its Directors for their service in
4135:their capacity as Directors. &nbsp; Directors are entitled to reimbursement for
4136:reasonable travel and other out-of-pocket expenses incurred in connection with
4137:attendance at meetings of the Board of Directors.<SPAN
4138:class="cm3">&nbsp; </SPAN>The Board of Directors may award special
4139:remuneration to any Director undertaking any special services on behalf of the
4140:Company other than services ordinarily required of a Director.<SPAN
4141:class="cm3">&nbsp; </SPAN>Other than indicated below no Director
4142:received any compensation for his services as a Director, including committee
4143:participation and/or special assignments.<o:p></o:p></SPAN></P>
4144:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4145:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4146:Company grants&nbsp;stock&nbsp;options to Directors, Executive Officers and
4147:employees; refer to "Options to Purchase Securities from Registrant or
4148:Subsidiaries", below.<o:p></o:p></SPAN></P>
4149:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4150:<P class=MsoNormal class="cmj"><SPAN
4151:class="cmb">Other than described below, no funds were set aside or
4152:accrued by the Company during Fiscal 2002 to provide pension, retirement or
4153:similar benefits for Directors or Executive Officers.<o:p></o:p></SPAN></P>
4154:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4155:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4156:Company&nbsp;has&nbsp;no&nbsp;plans or&nbsp;arrangements in&nbsp;respect&nbsp;of
4157:remuneration received&nbsp;or that may be received by Executive Officers
4158:of&nbsp;the&nbsp;Company in Fiscal 2003 to compensate <SPAN class=msoDel><DEL
4159:cite="mailto:pdowad" datetime="2002-12-03T11:55">&nbsp;</DEL></SPAN>such
4160:officers in the event of termination of employment (as a result of resignation,
4161:retirement, change of control) or a change of responsibilities following a
4162:change of control, where the value of such compensation exceeds US $60,000 per
4163:Executive Officer.<o:p></o:p></SPAN></P>
4164:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4165:<P class=MsoNormal class="cmj"><SPAN class="cmb">No
4166:Executive Officer/Director received other compensation in excess of the lesser
4167:of US $25,000 or 10% of such officer's cash compensation, and all Executive
4168:Officers/Directors as a group did not receive other compensation which exceeded
4169:US $25,000 times the number of persons in the group or 10% of the
4170:compensation.<o:p></o:p></SPAN></P>
4171:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4172:<P class=MsoNormal class="cmj"><SPAN
4173:class="cmb">Except for the stock option program discussed below,
4174:<SPAN class=msoDel><DEL cite="mailto:srreid"
4175:datetime="2002-12-03T13:08">&nbsp;</DEL></SPAN>the Company has no material bonus
4176:or profit sharing plans <SPAN class=msoDel><DEL cite="mailto:srreid"
4177:datetime="2002-12-03T13:08">&nbsp;</DEL></SPAN>pursuant to which cash or
4178:non-cash compensation is or may be paid to the Company's Directors or Executive
4179:Officers.<INS cite="mailto:pdowad"
4180:datetime="2002-12-03T12:03"><o:p></o:p></INS></SPAN></P>
4181:<P class=MsoNormal
4182:class="cm49"><SPAN
4183:class="cmb"><INS cite="mailto:pdowad"
4184:datetime="2002-12-03T12:03"><SPAN class=msoDel><DEL cite="mailto:srreid"
4185:datetime="2002-12-03T13:51"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></DEL></SPAN></INS></SPAN></P>
4186:<P class=MsoNormal
4187:class="cm4a"><SPAN
4188:class="cmb"><INS cite="mailto:pdowad"
4189:datetime="2002-12-03T12:03"><SPAN class=msoDel><DEL cite="mailto:srreid"
4190:datetime="2002-12-03T12:56">[WHERE IS THE INFORMATION REQUIRED BY ITEM 6C AND
4191:D]</DEL></SPAN></INS><INS cite="mailto:srreid"
4192:datetime="2002-12-03T13:03"><o:p></o:p></INS></SPAN></P>
4193:<P class=MsoNormal
4194:class="cm4b"><SPAN
4195:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:03"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4196:<P class=MsoNormal
4197:class="cm4c"><![if !supportLists]><SPAN
4198:class="cmb"><INS cite="mailto:srreid"
4199:datetime="2002-12-03T13:03">C.<SPAN
4200:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4201:</SPAN></INS></SPAN><![endif]><SPAN class="cmb"><INS
4202:cite="mailto:srreid" datetime="2002-12-03T13:03"><SPAN
4203:class="cm3">&nbsp;</SPAN>Board
4204:Practices<o:p></o:p></INS></SPAN></P>
4205:<P class=MsoNormal
4206:class="cm4d"><SPAN
4207:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:56"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4208:<P class=MsoNormal
4209:class="cm4e"><SPAN
4210:class="cmb"><INS cite="mailto:srreid"
4211:datetime="2002-12-03T13:06">The Directors generally serve in their respective
4212:capacities from their election on the day of the Annual General Meeting of the
4213:Registrant, last held on November 14, 2002 and will serve until the next Annual
4214:General Meeting or until a successor is duly elected, unless the office is
4215:vacated in accordance with the Articles of the
4216:Registrant.<o:p></o:p></INS></SPAN></P>
4217:<P class=MsoNormal
4218:class="cm4e"><SPAN
4219:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:06"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4220:<P class=MsoNormal
4221:class="cm4f"><SPAN
4222:class="cmb"><INS cite="mailto:srreid"
4223:datetime="2002-12-03T13:06">Casual vacancies on the Board of Directors are
4224:filled by the remaining Directors and the persons filling those vacancies hold
4225:office until the next Annual General Meeting at which time they may be
4226:re-elected or replaced.<o:p></o:p></INS></SPAN></P>
4227:<P class=MsoNormal
4228:class="cm4e"><SPAN
4229:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:06"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4230:<P class=MsoNormal
4231:class="cm4e"><SPAN
4232:class="cmb"><INS cite="mailto:srreid"
4233:datetime="2002-12-03T13:06">The Company does not have any formal service
4234:contracts with Directors.<o:p></o:p></INS></SPAN></P>
4235:<P class=MsoNormal
4236:class="cm4g"><SPAN
4237:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:07"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4238:<P class=MsoNormal
4239:class="cm4g"><SPAN
4240:class="cmb"><INS cite="mailto:srreid"
4241:datetime="2002-12-03T13:07">The members of the audit committee are listed under
4242:Item 6A. </INS><INS cite="mailto:srreid" datetime="2002-12-03T13:12"><SPAN
4243:class="cm3">&nbsp;</SPAN>There are no formal terms of reference
4244:for this committee.<SPAN class="cm3">&nbsp; </SPAN></INS><INS
4245:cite="mailto:srreid" datetime="2002-12-03T13:03"><o:p></o:p></INS></SPAN></P>
4246:<P class=MsoNormal
4247:class="cm4h"><SPAN
4248:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:56"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4249:<P class=MsoNormal
4250:class="cm4i"><![if !supportLists]><SPAN
4251:class="cmb"><INS cite="mailto:srreid"
4252:datetime="2002-12-03T13:02">D.<SPAN
4253:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4254:</SPAN></INS></SPAN><![endif]><SPAN class="cmb"><INS
4255:cite="mailto:srreid" datetime="2002-12-03T13:02"><SPAN
4256:class="cm3">&nbsp;</SPAN></INS><INS cite="mailto:srreid"
4257:datetime="2002-12-03T12:56">Employees<o:p></o:p></INS></SPAN></P>
4258:<P class=MsoNormal
4259:class="cm4j"><SPAN
4260:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:57"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4261:<P class=MsoNormal
4262:class="cm4j"><SPAN
4263:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T12:58">As
4264:of May 31, 2002, the company had no employees.<o:p></o:p></INS></SPAN></P>
4265:<P class=MsoNormal
4266:class="cm4k"><SPAN
4267:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4268:<P class=MsoNormal class="cmj"><B
4269:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
4270:<P class=MsoNormal class="cmj"><U><SPAN
4271:class="cmb">Options to purchase securities from registrant or
4272:subsidiaries</SPAN></U><SPAN class="cmb"><o:p></o:p></SPAN></P>
4273:<P class=MsoNormal class="cmj"><SPAN
4274:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4275:<P class=MsoNormal class="cmj"><SPAN
4276:class="cmb">Stock Options to purchase securities from Registrant can
4277:be granted to Directors and Employees of the Company on terms and conditions
4278:acceptable to the regulatory authorities in Canada, notably the Canadian Venture
4279:Exchange and the British Columbia Securities Commission.<SPAN
4280:class="cm3">&nbsp; </SPAN>The Registrant has no formal written
4281:stock option plan.<o:p></o:p></SPAN></P>
4282:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4283:<P class=MsoNormal class="cmj"><SPAN
4284:class="cmb">Under the stock option program, stock options for up to
4285:10% &nbsp;of the number of issued and outstanding common shares may be granted
4286:from time to time, provided that stock options in favor of any one individual
4287:may not exceed 5% of the issued and outstanding common shares.<SPAN
4288:class="cm3">&nbsp; </SPAN>No stock option granted under the stock
4289:option program is transferable by the optionee other than by will or the laws of
4290:descent/distribution and each stock option is exercisable during the lifetime of
4291:the optionee only by such optionee.<o:p></o:p></SPAN></P>
4292:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4293:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4294:exercise price of all stock options granted under the stock option program must
4295:be at least equal to the fair market value (subject to regulated discounts) of
4296:such common shares on the date of grant, and the maximum term of each stock
4297:option may not exceed five years.<o:p></o:p></SPAN></P>
4298:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4299:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4300:exercise prices for stock options&nbsp;are&nbsp;determined&nbsp;in accordance
4301:with OTC Bulletin Board ("OTCBB") guidelines and reflect the average closing
4302:price of the Registrant's common shares for the ten trading days on the OTCBB
4303:immediately preceding the day on which the Directors grant and publicly announce
4304:the stock options (subject to a regulatory-acceptable discount<SPAN
4305:class="cmh">)</SPAN><B
4306:class="cm6">,<SPAN class="cm35"> </SPAN></B><SPAN
4307:class="cmh">and/or at a price no lower than $0.45
4308:exercise price per share. <o:p></o:p></SPAN></SPAN></P>
4309:<P class=MsoNormal class="cmj"><B
4310:class="cm6"><SPAN class="cm35"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
4311:<P class=MsoNormal class="cmj"><B
4312:class="cm6"><SPAN class="cm35"><SPAN
4313:class="cm3">&nbsp; </SPAN></SPAN></B><B
4314:class="cm6"><U><SPAN
4315:class="cmb"><o:p></o:p></SPAN></U></B></P>
4316:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4317:names and titles of Directors and Executive Officers of the Registrant to whom
4318:outstanding stock options have been granted and the number of common shares
4319:subject to such options are set forth below as of 10/31/02, as well as the
4320:number of options granted to Directors and all employees as a
4321:group.<o:p></o:p></SPAN></P>
4322:<P class=MsoNormal class="cm2" align=center><SPAN
4323:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4324:<P class=MsoNormal class="cm2" align=center><SPAN
4325:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4326:<P class=MsoNormal class="cm2" align=center><SPAN
4327:class="cmb">Stock Options Outstanding<o:p></o:p></SPAN></P>
4328:<P class=MsoNormal class="cmj"><SPAN
4329:class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4330:<P class=MsoNormal class="cmj"><SPAN
4331:class="cmb"><SPAN
4332:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4333:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>Number of
4334:Shares of<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;
4335:</SPAN>CDN$<o:p></o:p></SPAN></P>
4336:<P class=MsoNormal><SPAN class="cmb"><SPAN
4337:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4338:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp; </SPAN>Common<SPAN
4339:class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>Exercise<SPAN
4340:class="cm3">&nbsp;&nbsp; </SPAN>Expiration<o:p></o:p></SPAN></P>
4341:<P class=MsoNormal><U><SPAN class="cmb">Name<SPAN
4342:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4343:class="cm47">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4344:</SPAN><SPAN
4345:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>Stock<SPAN
4346:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>Price<SPAN
4347:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4348:</SPAN>Date<o:p></o:p></SPAN></U></P>
4349:<P class=MsoNormal><SPAN class="cmb">Andrew Murray<SPAN
4350:class="cm4l">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4351:</SPAN>89,000<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4352:</SPAN>0.45<SPAN class="cmi">&nbsp; </SPAN><SPAN
4353:class="cm3">&nbsp;&nbsp; </SPAN>10/26/2003<o:p></o:p></SPAN></P>
4354:<P class=MsoNormal><SPAN class="cmb">Art Daher<SPAN
4355:class="cm4m">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4356:</SPAN>50,000<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4357:</SPAN>0.45<SPAN class="cmi">&nbsp; </SPAN><SPAN
4358:class="cm3">&nbsp;&nbsp; </SPAN>10/26/2003<o:p></o:p></SPAN></P>
4359:<P class=MsoNormal><SPAN class="cmb">Art Daher<SPAN
4360:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4361:</SPAN><SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4362:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>50,000<SPAN
4363:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>0.45<SPAN
4364:class="cmi">&nbsp; </SPAN><SPAN
4365:class="cm3">&nbsp;&nbsp; </SPAN>08/11/2005<o:p></o:p></SPAN></P>
4366:<P class=MsoFootnoteText>Robert Akright<SPAN
4367:class="cm4l">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4368:</SPAN>100,000<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;
4369:</SPAN>0.45<SPAN class="cmi">&nbsp; </SPAN><SPAN
4370:class="cm3">&nbsp;&nbsp; </SPAN>10/26/2003</P>
4371:<P class=MsoNormal class="cmj"><SPAN class="cmb">Tom
4372:Hendricks<SPAN
4373:class="cm4l">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4374:</SPAN>100,000<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;
4375:</SPAN>0.45<SPAN class="cmi">&nbsp; </SPAN><SPAN
4376:class="cm3">&nbsp;&nbsp; </SPAN>10/26/2003<o:p></o:p></SPAN></P>
4377:<P class=MsoNormal class="cmj"><SPAN
4378:class="cmb">Melvin Martin<SPAN
4379:class="cm4l">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4380:</SPAN>75,000<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4381:</SPAN>0.45<SPAN class="cmi">&nbsp; </SPAN><SPAN
4382:class="cm3">&nbsp;&nbsp; </SPAN>10/26/2003<o:p></o:p></SPAN></P>
4383:<P class=MsoNormal class="cmj"><SPAN class="cmb">Tom
4384:Patton<SPAN
4385:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4386:</SPAN><SPAN
4387:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4388:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp; </SPAN>100,000<SPAN
4389:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>0.45<SPAN
4390:class="cmi">&nbsp; </SPAN><SPAN
4391:class="cm3">&nbsp;&nbsp; </SPAN>08/11/2005<o:p></o:p></SPAN></P>
4392:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4393:<P class=MsoNormal class="cmj"><SPAN
4394:class="cmb">Total Officers/Directors (6 persons) <SPAN
4395:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;
4396:</SPAN>650,250<o:p></o:p></SPAN></P>
4397:<P class=MsoNormal class="cmj"><SPAN
4398:class="cmb">Total Employees (9 persons)<SPAN
4399:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4400:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;
4401:</SPAN><U>375,000</U><o:p></o:p></SPAN></P>
4402:<P class=MsoNormal class="cmj"><B
4403:class="cm6"><SPAN class="cmb">Total
4404:Officers/Directors/Employees<SPAN
4405:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4406:</SPAN>1,025,250<o:p></o:p></SPAN></B></P>
4407:<P class=MsoNormal class="cmj"><B
4408:class="cm6"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
4409:<P class=MsoNormal class="cmj"><B
4410:class="cm6"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
4411:<P class=MsoNormal class="cmj"><U><SPAN
4412:class="cmb">Warrants<o:p></o:p></SPAN></U></P>
4413:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
4414:<P class=MsoNormal class="cm2" align=center><SPAN
4415:class="cmb">Warrants Outstanding <o:p></o:p></SPAN></P>
4416:<P class=MsoNormal class="cm2" align=center><SPAN
4417:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4418:<P class=MsoNormal
4419:class="cm4o"
4420:align=center><SPAN class="cmb"><SPAN
4421:class="cm3">&nbsp;</SPAN><SPAN
4422:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4423:</SPAN>US $<o:p></o:p></SPAN></P>
4424:<P class=MsoNormal><SPAN class="cmb"><SPAN
4425:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4426:</SPAN>Number of shares<SPAN class="cm3">&nbsp;&nbsp;&nbsp;
4427:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;
4428:</SPAN>Exercise<SPAN class="cm3">&nbsp;&nbsp;
4429:</SPAN>Expiration<o:p></o:p></SPAN></P>
4430:<P class=MsoNormal><U><SPAN class="cmb">Name<SPAN
4431:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4432:class="cm47">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4433:</SPAN><SPAN
4434:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>of
4435:common stock<SPAN
4436:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4437:</SPAN>Price<SPAN
4438:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4439:</SPAN>Date<o:p></o:p></SPAN></U></P>
4440:<P class=MsoNormal><SPAN class="cmb">Joyce &amp; Ron Guiel<SPAN
4441:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4442:</SPAN><SPAN class="cm3">&nbsp; </SPAN>62,500<SPAN
4443:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4444:</SPAN>0.80<SPAN class="cmi">&nbsp; </SPAN><SPAN
4445:class="cm3">&nbsp;&nbsp; </SPAN>09/12/2003<o:p></o:p></SPAN></P>
4446:<P class=MsoNormal><SPAN class="cmb">National Capital<SPAN
4447:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4448:</SPAN>486,303 <SPAN
4449:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4450:</SPAN>0.81<SPAN class="cmi">&nbsp; </SPAN><SPAN
4451:class="cm3">&nbsp;&nbsp; </SPAN>10/23/2004<o:p></o:p></SPAN></P>
4452:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4453:<P class=MsoNormal class="cmj"><SPAN
4454:class="cm36">All warrants were issued
4455:subsequent to the Company&#8217;s May 31, 2002 fiscal year end.<o:p></o:p></SPAN></P>
4456:<P class=MsoNormal class="cmj"><B
4457:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
4458:<P class=MsoNormal class="cmj"><B
4459:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
4460:<P class=MsoNormal class="cmj"><B
4461:class="cm6"><U><SPAN class="cmb">ITEM
4462:7.<SPAN class="cm3">&nbsp; </SPAN>MAJOR SHAREHOLDERS AND RELATED
4463:PARTY TRANSACTIONS </SPAN></U></B><SPAN
4464:class="cmb"><o:p></o:p></SPAN></P>
4465:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4466:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4467:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4468:Registrant is a publicly owned corporation, the shares of which are owned by
4469:Canadian&nbsp;and US&nbsp;residents, and residents of other countries. The
4470:Registrant is not owned or controlled directly or indirectly by another
4471:corporation or any foreign government, other than disclosed
4472:below.<o:p></o:p></SPAN></P>
4473:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4474:<P class=MsoNormal
4475:class="cm4p"><![if !supportLists]><SPAN
4476:class="cmb"><INS cite="mailto:pdowad"
4477:datetime="2002-12-03T12:04">A.<SPAN
4478:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4479:</SPAN></INS></SPAN><![endif]><SPAN class="cmb"><INS
4480:cite="mailto:pdowad" datetime="2002-12-03T12:04">Major
4481:shareholders<o:p></o:p></INS></SPAN></P>
4482:<P class=MsoNormal
4483:class="cm4q"><SPAN
4484:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:04"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4485:<P class=MsoNormal
4486:class="cm4q"><SPAN
4487:class="cmb">The only persons known to the Registrant to be holding,
4488:as of 10/31/02, 10% or more beneficial interest in the Registrant&#8217;s outstanding
4489:stock was Marlowe Harvey, as described below.<o:p></o:p></SPAN></P>
4490:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4491:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4492:following table lists, as of 10/31/02, all Directors and Executive Officers who
4493:beneficially own the Registrant's voting securities and the amount of the
4494:Registrant's voting securities owned by the Directors and Executive Officers as
4495:a group.<o:p></o:p></SPAN></P>
4496:<P class=MsoNormal class="cmj"><SPAN
4497:class="cmb"><SPAN
4498:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4499:</SPAN><o:p></o:p></SPAN></P>
4500:<P class=MsoNormal class="cmj"><SPAN
4501:class="cmb"><SPAN
4502:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4503:</SPAN>Shareholdings of Directors and Executive Officers<o:p></o:p></SPAN></P>
4504:<P class=MsoNormal><SPAN class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4505:<P class=MsoNormal><SPAN class="cmb">Title<SPAN
4506:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4507:</SPAN>Amount and Nature<SPAN class="cm3">&nbsp;&nbsp;
4508:</SPAN>Percent<o:p></o:p></SPAN></P>
4509:<P class=MsoNormal><SPAN class="cmb"><SPAN
4510:class="cm3">&nbsp; </SPAN>of<SPAN
4511:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4512:</SPAN>of Beneficial<SPAN
4513:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4514:</SPAN>of<o:p></o:p></SPAN></P>
4515:<P class=MsoNormal><U><SPAN class="cmb">Class<SPAN
4516:class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>Name of Beneficial
4517:Owner<SPAN
4518:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4519:</SPAN>Ownership<SPAN class="cm3">&nbsp;&nbsp; </SPAN>Class
4520:#<o:p></o:p></SPAN></U></P>
4521:<P class=MsoNormal class="cm4r"><SPAN
4522:class="cmb">Common<SPAN class="cm3">&nbsp;&nbsp;
4523:</SPAN>Marlowe Harvey (1)<SPAN
4524:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4525:</SPAN>1,881,500<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;
4526:</SPAN>17.5%<o:p></o:p></SPAN></P>
4527:<P class=MsoNormal><SPAN class="cmb">Common<SPAN
4528:class="cm3">&nbsp;&nbsp; </SPAN>Tom Hendricks (3)<SPAN
4529:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4530:</SPAN>804,364<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4531:</SPAN>7.5%<o:p></o:p></SPAN></P>
4532:<P class=MsoNormal><SPAN class="cmb">Common<SPAN
4533:class="cm3">&nbsp;&nbsp; </SPAN>Melvin Martin (2)<SPAN
4534:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4535:</SPAN>524,500<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4536:</SPAN>4.9%<o:p></o:p></SPAN></P>
4537:<P class=MsoNormal><SPAN class="cmb">Common<SPAN
4538:class="cm3">&nbsp;&nbsp; </SPAN>Andrew Murray (4)<SPAN
4539:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4540:</SPAN>140,900<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4541:</SPAN>1.3%<o:p></o:p></SPAN></P>
4542:<P class=MsoNormal><SPAN class="cmb">Common<SPAN
4543:class="cm3">&nbsp;&nbsp; </SPAN>Art Daher (5)<SPAN
4544:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4545:</SPAN>256,160<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4546:</SPAN>2.4%<o:p></o:p></SPAN></P>
4547:<P class=MsoNormal><SPAN class="cmb">Common<SPAN
4548:class="cm3">&nbsp;&nbsp; </SPAN>Robert Akright (6)<SPAN
4549:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4550:</SPAN>100,000<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;
4551:</SPAN>0.9%<o:p></o:p></SPAN></P>
4552:<P class=MsoNormal><SPAN class="cmb">Common<SPAN
4553:class="cm3">&nbsp;&nbsp; </SPAN>Tom Patton<SPAN
4554:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>(7)<SPAN
4555:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4556:</SPAN>100,000<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;
4557:</SPAN>0.9%<o:p></o:p></SPAN></P>
4558:<P class=MsoNormal><B class="cm6"><SPAN
4559:class="cmb"><SPAN
4560:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4561:</SPAN>Total Directors/Officers<SPAN
4562:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4563:</SPAN>3,807,424<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;
4564:</SPAN>35.4%<o:p></o:p></SPAN></B></P>
4565:<P class=MsoNormal><SPAN class="cm5"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4566:<P class=MsoNormal class="cm4s"><SPAN
4567:class="cm4">(1)<SPAN
4568:class="cm3">&nbsp; </SPAN>150,000 shares are escrowed where resale
4569:is controlled by<o:p></o:p></SPAN></P>
4570:<P class=MsoNormal><SPAN
4571:class="cm4"><SPAN
4572:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>Canadian regulatory
4573:authorities.<o:p></o:p></SPAN></P>
4574:<P class=MsoNormal><SPAN
4575:class="cm4"><SPAN
4576:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>Excludes 132,000 stock
4577:options held by members of Mr. Harvey&#8217;s<o:p></o:p></SPAN></P>
4578:<P class=MsoNormal class="cm4t"><SPAN
4579:class="cm4"><SPAN
4580:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>family, where he
4581:disclaims beneficial ownership and does not<o:p></o:p></SPAN></P>
4582:<P class=MsoNormal><SPAN
4583:class="cm4"><SPAN
4584:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN>exercise voting
4585:control.<o:p></o:p></SPAN></P>
4586:<P class=MsoNormal><SPAN
4587:class="cm4">(2)<SPAN
4588:class="cm3">&nbsp; </SPAN>75,000 represent currently exercisable
4589:stock options.<o:p></o:p></SPAN></P>
4590:<P class=MsoNormal><SPAN
4591:class="cm4">(3)<SPAN
4592:class="cm3">&nbsp; </SPAN>100,000 represent currently exercisable
4593:stock options.<o:p></o:p></SPAN></P>
4594:<P class=MsoNormal><SPAN
4595:class="cm4">(4)<SPAN
4596:class="cm3">&nbsp; </SPAN>89,000 represent currently exercisable
4597:stock options.<o:p></o:p></SPAN></P>
4598:<P class=MsoNormal><SPAN
4599:class="cm4">(5)<SPAN
4600:class="cm3">&nbsp; </SPAN>100,000 represent currently exercisable
4601:stock options.<o:p></o:p></SPAN></P>
4602:<P class=MsoNormal
4603:class="cm4u"><![if !supportLists]><SPAN
4604:class="cm4">(6)<SPAN
4605:class="cm1d">&nbsp; </SPAN></SPAN><![endif]><SPAN
4606:class="cm4"><SPAN
4607:class="cm3">&nbsp;&nbsp;</SPAN>100,000 represent currently
4608:exercisable stock options.<o:p></o:p></SPAN></P>
4609:<P class=MsoNormal
4610:class="cm4v"><![if !supportLists]><SPAN
4611:class="cm4">(7)<SPAN
4612:class="cm1d">&nbsp; </SPAN></SPAN><![endif]><SPAN
4613:class="cm4"><SPAN
4614:class="cm3">&nbsp;&nbsp;</SPAN>100,000 represent currently
4615:exercisable stock options.<o:p></o:p></SPAN></P>
4616:<P class=MsoNormal><SPAN class="cm4"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4617:<P class=MsoNormal><SPAN class="cm4">#
4618:&nbsp;Based on 10,744,218 shares outstanding as of 10/31/02 and
4619:share<o:p></o:p></SPAN></P>
4620:<P class=MsoNormal><SPAN
4621:class="cm4"><SPAN
4622:class="cm3">&nbsp;&nbsp; </SPAN>purchase warrants and stock
4623:options held by each&nbsp;beneficial holder<o:p></o:p></SPAN></P>
4624:<P class=MsoNormal><SPAN
4625:class="cm4"><SPAN
4626:class="cm3">&nbsp;&nbsp; </SPAN>exercisable within sixty
4627:days.<o:p></o:p></SPAN></P>
4628:<P class=MsoNormal class="cmj"><B
4629:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
4630:<P class=MsoNormal class="cmj"><U><SPAN
4631:class="cmb">Interest of Management in certain transactions
4632:<o:p></o:p></SPAN></U></P>
4633:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
4634:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4635:following are the only transactions since June 01, 2001, or proposed
4636:transactions, which have materially affected or will materially affect the
4637:Company in which any director, executive officer, or beneficial holder of more
4638:that 10% of the outstanding common shares, or any of their respective relatives,
4639:spouses, associates or affiliates has had or &nbsp;will &nbsp;have &nbsp;any
4640:direct or material indirect interest.<SPAN class="cm3">&nbsp;
4641:</SPAN>Management believes the transactions referenced below were on terms at
4642:least as favorable to the Company as the Company could have obtained from
4643:unaffiliated parties.<o:p></o:p></SPAN></P>
4644:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4645:<P class=MsoNormal class="cmj"><U><SPAN
4646:class="cmb">Purchases of Common Shares by
4647:Officers/Directors<o:p></o:p></SPAN></U></P>
4648:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4649:<P class=MsoNormal class="cmj"><SPAN
4650:class="cmb">During Fiscal 2002, the Company issued 721,000 common
4651:shares for services provided valued at $216,300 to directors or to companies
4652:controlled by directors of the Company.<INS cite="mailto:pdowad"
4653:datetime="2002-12-03T12:04"><o:p></o:p></INS></SPAN></P>
4654:<P class=MsoNormal
4655:class="cm4q"><SPAN
4656:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:04"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4657:<P class=MsoNormal
4658:class="cm4q"><SPAN
4659:class="cmb"><INS cite="mailto:pdowad"
4660:datetime="2002-12-03T12:04"><SPAN class=msoDel><DEL cite="mailto:srreid"
4661:datetime="2002-12-03T13:20">[WHERE ARE ITEMS 7B AND C </DEL></SPAN><INS
4662:datetime="2002-12-03T12:05"><SPAN class=msoDel><DEL cite="mailto:srreid"
4663:datetime="2002-12-03T13:20">&#8211;</DEL></SPAN><INS datetime="2002-12-03T12:04"><SPAN
4664:class=msoDel><DEL cite="mailto:srreid" datetime="2002-12-03T13:20"> C
4665:</DEL></SPAN><INS datetime="2002-12-03T12:05"><SPAN class=msoDel><DEL
4666:cite="mailto:srreid" datetime="2002-12-03T13:20">IS
4667:N/A]</DEL></SPAN></INS></INS></INS></INS><INS cite="mailto:srreid"
4668:datetime="2002-12-03T13:20"><o:p></o:p></INS></SPAN></P>
4669:<P class=MsoNormal
4670:class="cm4w"><![if !supportLists]><SPAN
4671:class="cmb"><INS cite="mailto:srreid"
4672:datetime="2002-12-03T13:21">B.<SPAN
4673:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4674:</SPAN></INS></SPAN><![endif]><SPAN class="cmb"><INS
4675:cite="mailto:srreid" datetime="2002-12-03T13:20">Related Party
4676:Transactions</INS><INS cite="mailto:srreid"
4677:datetime="2002-12-03T13:21"><o:p></o:p></INS></SPAN></P>
4678:<P class=MsoNormal
4679:class="cm4x"><SPAN
4680:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:20"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4681:<P class=MsoNormal
4682:class="cm4y"><SPAN
4683:class="cmb"><INS cite="mailto:srreid"
4684:datetime="2002-12-03T13:26">Directors</INS><INS cite="mailto:srreid"
4685:datetime="2002-12-03T13:27">, their</INS><INS cite="mailto:srreid"
4686:datetime="2002-12-03T13:26"> family members</INS><INS cite="mailto:srreid"
4687:datetime="2002-12-03T13:27">, or companies controlled by the directors</INS><INS
4688:cite="mailto:srreid" datetime="2002-12-03T13:26"> of the Company, have lent the
4689:company funds on various terms and conditions over the last three years as
4690:follows:<o:p></o:p></INS></SPAN></P>
4691:<P class=MsoNormal
4692:class="cm4z"><SPAN
4693:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:28"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4694:<P class=MsoNormal
4695:class="cm50"><SPAN
4696:class="cmb"><INS cite="mailto:srreid"
4697:datetime="2002-12-03T13:30"><SPAN
4698:class="cm3">&nbsp;</SPAN><o:p></o:p></INS></SPAN></P>
4699:<TABLE
4700:class="cm51"
4701:cellSpacing=0 cellPadding=0 width=673 border=1>
4702:<TBODY>
4703:<TR class="cm52">
4704:<TD
4705:class="cm53"
4706:vAlign=top width=331>
4707:<P class=MsoNormal class="cmj"><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
4708:class="cmb"><INS cite="mailto:srreid"
4709:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD>
4710:<TD
4711:class="cm54"
4712:vAlign=top width=114>
4713:<P class=MsoNormal class="cmj"><SPAN
4714:class="cmb"><INS cite="mailto:srreid"
4715:datetime="2002-12-03T13:31">May 31, 2002</INS><INS cite="mailto:srreid"
4716:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD>
4717:<TD
4718:class="cm54"
4719:vAlign=top width=114>
4720:<P class=MsoNormal class="cmj"><SPAN
4721:class="cmb"><INS cite="mailto:srreid"
4722:datetime="2002-12-03T13:31">May 31, 2001</INS><INS cite="mailto:srreid"
4723:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD>
4724:<TD
4725:class="cm54"
4726:vAlign=top width=114>
4727:<P class=MsoNormal class="cmj"><SPAN
4728:class="cmb"><INS cite="mailto:srreid"
4729:datetime="2002-12-03T13:31">May 31, 2000</INS><INS cite="mailto:srreid"
4730:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD></TR>
4731:<TR class="cm52">
4732:<TD
4733:class="cm55"
4734:vAlign=top width=331>
4735:<P class=MsoNormal class="cmj"><SPAN
4736:class="cmb"><INS cite="mailto:srreid"
4737:datetime="2002-12-03T13:31">Debentures payable, without interest, due
4738:May</INS><INS cite="mailto:srreid" datetime="2002-12-03T13:33"> </INS><INS
4739:cite="mailto:srreid" datetime="2002-12-03T13:31">11, 2011, convertible to
4740:common shares at an exercise price</INS><INS cite="mailto:srreid"
4741:datetime="2002-12-03T13:33"> of $1.23 at holders discretion;
4742:unsecured</INS><INS cite="mailto:srreid"
4743:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD>
4744:<TD
4745:class="cm56"
4746:vAlign=top width=114>
4747:<P class=MsoNormal
4748:class="cm57"><SPAN
4749:class="cmb"><INS cite="mailto:srreid"
4750:datetime="2002-12-03T13:33"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4751:<P class=MsoNormal
4752:class="cm58"><SPAN
4753:class="cmb"><INS cite="mailto:srreid"
4754:datetime="2002-12-03T13:33"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4755:<P class=MsoNormal
4756:class="cm58"><SPAN
4757:class="cmb"><INS cite="mailto:srreid"
4758:datetime="2002-12-03T13:33"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4759:<P class=MsoNormal class="cmj"><SPAN
4760:class="cmb"><INS cite="mailto:srreid"
4761:datetime="2002-12-03T13:33">$5,097,105</INS><INS cite="mailto:srreid"
4762:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD>
4763:<TD
4764:class="cm56"
4765:vAlign=top width=114>
4766:<P class=MsoNormal
4767:class="cm59"><SPAN
4768:class="cmb"><INS cite="mailto:srreid"
4769:datetime="2002-12-03T13:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4770:<P class=MsoNormal
4771:class="cm5a"><SPAN
4772:class="cmb"><INS cite="mailto:srreid"
4773:datetime="2002-12-03T13:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4774:<P class=MsoNormal
4775:class="cm5a"><SPAN
4776:class="cmb"><INS cite="mailto:srreid"
4777:datetime="2002-12-03T13:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4778:<P class=MsoNormal class="cmj"><SPAN
4779:class="cmb"><INS cite="mailto:srreid"
4780:datetime="2002-12-03T13:34">$5,442,018</INS><INS cite="mailto:srreid"
4781:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD>
4782:<TD
4783:class="cm56"
4784:vAlign=top width=114>
4785:<P class=MsoNormal
4786:class="cm59"><SPAN
4787:class="cmb"><INS cite="mailto:srreid"
4788:datetime="2002-12-03T13:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4789:<P class=MsoNormal
4790:class="cm5a"><SPAN
4791:class="cmb"><INS cite="mailto:srreid"
4792:datetime="2002-12-03T13:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4793:<P class=MsoNormal
4794:class="cm5a"><SPAN
4795:class="cmb"><INS cite="mailto:srreid"
4796:datetime="2002-12-03T13:34"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4797:<P class=MsoNormal class="cmj"><SPAN
4798:class="cmb"><INS cite="mailto:srreid"
4799:datetime="2002-12-03T13:34">$<SPAN
4800:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN></INS><INS
4801:cite="mailto:srreid" datetime="2002-12-03T13:37"><SPAN
4802:class="cm3">&nbsp;&nbsp;</SPAN></INS><INS
4803:cite="mailto:srreid" datetime="2002-12-03T13:34">-<SPAN
4804:class="cm3">&nbsp;&nbsp;&nbsp; </SPAN></INS><INS
4805:cite="mailto:srreid"
4806:datetime="2002-12-03T13:30"><o:p></o:p></INS></SPAN></P></TD></TR>
4807:<TR class="cm5b">
4808:<TD
4809:class="cm55"
4810:vAlign=top width=331>
4811:<P class=MsoNormal class="cmj"><SPAN
4812:class="cmb"><INS cite="mailto:srreid"
4813:datetime="2002-12-03T13:34">Shareholder loans, </INS><INS
4814:cite="mailto:srreid" datetime="2002-12-03T13:35">without interest or
4815:</INS><INS cite="mailto:srreid" datetime="2002-12-03T13:34">fixed terms
4816:</INS><INS cite="mailto:srreid" datetime="2002-12-03T13:35">of repayment;
4817:unsecured</INS><INS cite="mailto:srreid"
4818:datetime="2002-12-03T13:34"><o:p></o:p></INS></SPAN></P></TD>
4819:<TD
4820:class="cm56"
4821:vAlign=top width=114>
4822:<P class=MsoNormal
4823:class="cm5c"><SPAN
4824:class="cmb"><INS cite="mailto:srreid"
4825:datetime="2002-12-03T13:35"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4826:<P class=MsoNormal
4827:class="cm58"><SPAN
4828:class="cmb"><INS cite="mailto:srreid"
4829:datetime="2002-12-03T13:35">$<SPAN class="cm3">&nbsp;
4830:</SPAN>546,138</INS><INS cite="mailto:srreid"
4831:datetime="2002-12-03T13:34"><o:p></o:p></INS></SPAN></P></TD>
4832:<TD
4833:class="cm56"
4834:vAlign=top width=114>
4835:<P class=MsoNormal
4836:class="cm5d"><SPAN
4837:class="cmb"><INS cite="mailto:srreid"
4838:datetime="2002-12-03T13:36"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4839:<P class=MsoNormal
4840:class="cm5a"><SPAN
4841:class="cmb"><INS cite="mailto:srreid"
4842:datetime="2002-12-03T13:36">$<SPAN class="cm3">&nbsp;
4843:</SPAN>895,893</INS><INS cite="mailto:srreid"
4844:datetime="2002-12-03T13:34"><o:p></o:p></INS></SPAN></P></TD>
4845:<TD
4846:class="cm56"
4847:vAlign=top width=114>
4848:<P class=MsoNormal
4849:class="cm5d"><SPAN
4850:class="cmb"><INS cite="mailto:srreid"
4851:datetime="2002-12-03T13:36"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4852:<P class=MsoNormal
4853:class="cm5a"><SPAN
4854:class="cmb"><INS cite="mailto:srreid"
4855:datetime="2002-12-03T13:36">$6,007,629</INS><INS cite="mailto:srreid"
4856:datetime="2002-12-03T13:34"><o:p></o:p></INS></SPAN></P></TD></TR></TBODY></TABLE>
4857:<P class=MsoNormal
4858:class="cm5e"><SPAN
4859:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:38"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4860:<P class=MsoNormal
4861:class="cm5f"><SPAN
4862:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:38"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4863:<P class=MsoNormal
4864:class="cm5g"><![if !supportLists]><SPAN
4865:class="cmb"><INS cite="mailto:srreid"
4866:datetime="2002-12-03T13:38">C.<SPAN
4867:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4868:</SPAN></INS></SPAN><![endif]><SPAN class="cmb"><INS
4869:cite="mailto:srreid" datetime="2002-12-03T13:38">Interests of experts and
4870:counsel<o:p></o:p></INS></SPAN></P>
4871:<P class=MsoNormal
4872:class="cm5h"><SPAN
4873:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:38"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
4874:<P class=MsoNormal
4875:class="cm5i"><SPAN
4876:class="cmb"><INS cite="mailto:srreid"
4877:datetime="2002-12-03T13:38">Not applicable</INS><o:p></o:p></SPAN></P>
4878:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
4879:<P class=MsoNormal class="cmj"><B><U><SPAN
4880:class="cmb">ITEM 8. FINANCIAL INFORMATION</SPAN></U></B><SPAN
4881:class="cmb"><o:p></o:p></SPAN></P>
4882:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4883:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4884:Company's&nbsp;financial statements are&nbsp;stated in Canadian Dollars (CDN$)
4885:and are prepared in accordance with Canadian Generally Accepted Accounting
4886:Principles (GAAP), the application of which, in the case of the Company,
4887:conforms in all material respects for the periods presented with US GAAP, except
4888:as disclosed in footnotes to the financial statements.<o:p></o:p></SPAN></P>
4889:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4890:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4891:audited financial statements for the year ended May 31, 2002 as required under
4892:ITEM #17 are included hereto immediately following the text of this annual
4893:report. The audit report of KPMG LLP, Independent Auditors, are included herein
4894:immediately preceding the financial statements.<o:p></o:p></SPAN></P>
4895:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
4896:<P class=MsoNormal class="cmj"><B
4897:class="cm6"><U><SPAN class="cmb">ITEM 9.
4898:THE OFFER AND LISTING<o:p></o:p></SPAN></U></B></P>
4899:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4900:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4901:Company's common shares were approved for trading on the NASD OTC Bulletin Board
4902:in the United States, under the symbol "CAAUF" on February 1, 1999.<SPAN
4903:class="cm3">&nbsp; </SPAN>The Company voluntarily de-listed from
4904:trading on the Vancouver Stock Exchange, now known as the Canadian Venture
4905:Exchange, effective March 15, 1999.<SPAN class="cm3">&nbsp;
4906:</SPAN>The initial public offering was effective, only in Canada, on the
4907:Vancouver Stock Exchange under the auspices of the British Columbia Securities
4908:Commission in February 1988 under a former name, &#8220;Millennium Resources
4909:Inc.".<o:p></o:p></SPAN></P>
4910:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4911:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
4912:high and low sales prices on the OTC Bulletin Board for actual trades of the
4913:Company's common shares from date of listing is as follows:<SPAN
4914:class="cm3">&nbsp; </SPAN><o:p></o:p></SPAN></P>
4915:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4916:<P class=MsoNormal class="cm2" align=center><SPAN
4917:class="cmb">OTC Bulletin Board - Common Shares Trading
4918:Activity<o:p></o:p></SPAN></P>
4919:<P class=MsoNormal><SPAN class="cmb"><SPAN
4920:class="cm3">&nbsp;</SPAN><SPAN
4921:class="cm5j">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4922:</SPAN><SPAN class="cm3">&nbsp;</SPAN><o:p></o:p></SPAN></P>
4923:<P class=MsoNormal><SPAN class="cmb"><SPAN
4924:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4925:class="cm3">&nbsp;</SPAN><SPAN
4926:class="cm4m">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4927:</SPAN><SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4928:class="cm3">&nbsp;&nbsp;&nbsp;</SPAN>U.S.
4929:Dollars<o:p></o:p></SPAN></P>
4930:<P class=MsoNormal><U><SPAN class="cmb"><SPAN
4931:class="cm3">&nbsp;</SPAN>Period<SPAN
4932:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4933:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
4934:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>High<SPAN
4935:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4936:</SPAN>Low<o:p></o:p></SPAN></U></P>
4937:<P class=MsoNormal class="cm5k"><SPAN
4938:class="cmb">Month ended 10/31/02<SPAN
4939:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4940:</SPAN>$0.60<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4941:</SPAN>$0.28<o:p></o:p></SPAN></P>
4942:<P class=MsoNormal class="cm5k"><SPAN
4943:class="cmb">Month ended 09/30/02<SPAN
4944:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4945:</SPAN>$0.80<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4946:</SPAN>$0.26<o:p></o:p></SPAN></P>
4947:<P class=MsoNormal class="cm5k"><SPAN
4948:class="cmb">Month ended 08/31/02<SPAN
4949:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4950:</SPAN>$0.75<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4951:</SPAN>$0.26<o:p></o:p></SPAN></P>
4952:<P class=MsoNormal class="cm5k"><SPAN
4953:class="cmb">Month ended 07/31/02<SPAN
4954:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4955:</SPAN>$0.50<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4956:</SPAN>$0.20<o:p></o:p></SPAN></P>
4957:<P class=MsoNormal class="cm5k"><SPAN
4958:class="cmb">Month ended 06/30/02<SPAN
4959:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4960:</SPAN>$0.51<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4961:</SPAN>$0.20<o:p></o:p></SPAN></P>
4962:<P class=MsoNormal class="cm5k"><SPAN
4963:class="cmb">Month ended 05/31/02<SPAN
4964:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4965:</SPAN>$0.34<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4966:</SPAN>$0.32<o:p></o:p></SPAN></P>
4967:<P class=MsoNormal class="cm5k"><SPAN
4968:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
4969:<P class=MsoNormal class="cm5k"><SPAN
4970:class="cmb">Three months ended 08/31/02<SPAN
4971:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4972:</SPAN>$0.75<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4973:</SPAN>$0.20<o:p></o:p></SPAN></P>
4974:<P class=MsoNormal class="cm5k"><SPAN
4975:class="cmb">Three months ended 05/31/02<SPAN
4976:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4977:</SPAN>$0.34<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4978:</SPAN>$0.07<o:p></o:p></SPAN></P>
4979:<P class=MsoNormal class="cm5k"><SPAN
4980:class="cmb">Three months ended 02/28/02<SPAN
4981:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4982:</SPAN>$0.13<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4983:</SPAN>$0.05<o:p></o:p></SPAN></P>
4984:<P class=MsoNormal class="cm5k"><SPAN
4985:class="cmb">Three months ended 11/30/01<SPAN
4986:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4987:</SPAN>$0.22<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4988:</SPAN>$0.12<o:p></o:p></SPAN></P>
4989:<P class=MsoNormal class="cm5k"><SPAN
4990:class="cmb">Three months ended 08/31/01<SPAN
4991:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4992:</SPAN>$0.38<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4993:</SPAN>$0.28<o:p></o:p></SPAN></P>
4994:<P class=MsoNormal class="cm5k"><SPAN
4995:class="cmb">Three months ended 05/31/01<SPAN
4996:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4997:</SPAN>$0.33<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4998:</SPAN>$0.20<o:p></o:p></SPAN></P>
4999:<P class=MsoNormal class="cm5k"><SPAN
5000:class="cmb">Three months ended 02/28/01<SPAN
5001:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5002:</SPAN>$0.16<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5003:</SPAN>$0.06<o:p></o:p></SPAN></P>
5004:<P class=MsoNormal class="cm5k"><SPAN
5005:class="cmb">Three months ended 11/30/00<SPAN
5006:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5007:</SPAN>$0.44<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5008:</SPAN>$0.09<o:p></o:p></SPAN></P>
5009:<P class=MsoNormal class="cm5k"><SPAN
5010:class="cmb">Three months ended 08/31/00<SPAN
5011:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5012:</SPAN>$0.25<SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5013:</SPAN>$0.09<o:p></o:p></SPAN></P>
5014:<P class=MsoNormal class="cm5k"><SPAN
5015:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5016:<P class=MsoNormal class="cm5l"><SPAN class="cmb">Year
5017:ended 05/31/02<SPAN
5018:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5019:</SPAN>$0.38<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5020:</SPAN>$0.05 <o:p></o:p></SPAN></P>
5021:<P class=MsoNormal class="cm5l"><SPAN class="cmb">Year
5022:ended 05/31/01<SPAN
5023:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5024:</SPAN>$0.44<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5025:</SPAN>$0.06 <o:p></o:p></SPAN></P>
5026:<P class=MsoNormal class="cm5l"><SPAN class="cmb">Year
5027:ended 05/31/00<SPAN
5028:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
5029:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>$0.44<SPAN
5030:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5031:</SPAN>$0.05<o:p></o:p></SPAN></P>
5032:<P class=MsoNormal class="cm5l"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5033:<P class=MsoNormal class="cm2" align=center><SPAN
5034:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5035:<P class=MsoNormal class="cm2" align=center><SPAN
5036:class="cmb">Canadian Venture Exchange - Common Shares Trading
5037:Activity<o:p></o:p></SPAN></P>
5038:<P class=MsoNormal><SPAN class="cmb"><SPAN
5039:class="cm3">&nbsp;</SPAN><SPAN
5040:class="cm5j">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5041:</SPAN><SPAN class="cm3">&nbsp;</SPAN><o:p></o:p></SPAN></P>
5042:<P class=MsoNormal><SPAN class="cmb"><SPAN
5043:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
5044:class="cm3">&nbsp;</SPAN><SPAN
5045:class="cm4m">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5046:</SPAN><SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5047:</SPAN>Canadian Dollars<o:p></o:p></SPAN></P>
5048:<P class=MsoNormal><U><SPAN class="cmb"><SPAN
5049:class="cm3">&nbsp;</SPAN>Period<SPAN
5050:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5051:</SPAN><SPAN class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
5052:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</SPAN>High<SPAN
5053:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5054:</SPAN>Low<o:p></o:p></SPAN></U></P>
5055:<P class=MsoNormal class="cm5l"><SPAN class="cmb">Year
5056:ended 05/31/99<SPAN
5057:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5058:</SPAN>$2.50<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5059:</SPAN>$0.71 <o:p></o:p></SPAN></P>
5060:<P class=MsoNormal class="cm5l"><SPAN class="cmb">Year
5061:ended 05/31/98<SPAN
5062:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5063:</SPAN>$9.00<SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5064:</SPAN>$2.00<o:p></o:p></SPAN></P>
5065:<P class=MsoNormal class="cm5l"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5066:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5067:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5068:Company's common shares are issued in registered form and the following
5069:information is taken from the records of CIBC Mellon Trust Company, located in
5070:Vancouver, British Columbia, Canada, the registrar and transfer agent for the
5071:common shares.<o:p></o:p></SPAN></P>
5072:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5073:<P class=MsoNormal class="cmj"><SPAN class="cmb">On
5074:10/31/02, the shareholders' list for the Company's common shares showed 341
5075:registered shareholders and 10,744,218 common shares outstanding. 38 of these
5076:shareholders were U.S. residents, holding&nbsp;1,958,967 shares representing
5077:18.2% of the issued and outstanding common shares.<o:p></o:p></SPAN></P>
5078:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5079:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5080:Company has researched the indirect holding by depository institutions and
5081:estimates that there are 38 "holders of record" resident in the United States,
5082:holding the aforementioned 1,958,967 common shares.<o:p></o:p></SPAN></P>
5083:<P class=MsoNormal class="cmj"><SPAN
5084:class="cmb">Based on this research and other research into the
5085:indirect holdings of other financial institutions, the Company believes that it
5086:has in excess of 750 beneficial owners of its common
5087:shares.<o:p></o:p></SPAN></P>
5088:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5089:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5090:Company's common shares are not registered to trade in the United States in the
5091:form of American Depository Receipts (ADR's) or similar
5092:certificates.<o:p></o:p></SPAN></P>
5093:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5094:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5095:Company is unaware of any active market in the United States for its common
5096:shares.<o:p></o:p></SPAN></P>
5097:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5098:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5099:Company has not declared any dividends for the&nbsp;last&nbsp;five fiscal years
5100:and does not plan to declare dividends in the foreseeable
5101:future.<o:p></o:p></SPAN></P>
5102:<P class=MsoNormal class="cmj"><B
5103:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5104:<P class=MsoNormal class="cmj"><B
5105:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5106:<P class=MsoNormal class="cmj"><B
5107:class="cm6"><U><SPAN class="cmb">ITEM 10.
5108:ADDITIONAL INFORMATION<INS cite="mailto:srreid"
5109:datetime="2002-12-03T13:40"><U><o:p></o:p></U></INS></SPAN></U></B></P>
5110:<P class=MsoNormal
5111:class="cm5m"><B
5112:class="cm6"><U><SPAN class="cmb"><INS
5113:cite="mailto:srreid"
5114:datetime="2002-12-03T13:40"><U><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></U></INS></SPAN></U></B></P>
5115:<P class=MsoNormal
5116:class="cm5n"><![if !supportLists]><B
5117:class="cm6"><SPAN class="cmb"><INS
5118:cite="mailto:srreid" datetime="2002-12-03T13:40">A.<SPAN
5119:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5120:</SPAN></INS></SPAN></B><![endif]><B
5121:class="cm6"><U><SPAN class="cmb"><INS
5122:cite="mailto:srreid" datetime="2002-12-03T13:40"><U>Share
5123:Capital<o:p></o:p></U></INS></SPAN></U></B></P>
5124:<P class=MsoNormal
5125:class="cm5o"><B
5126:class="cm6"><U><SPAN class="cmb"><INS
5127:cite="mailto:srreid"
5128:datetime="2002-12-03T13:40"><U><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></U></INS></SPAN></U></B></P>
5129:<P class=MsoNormal
5130:class="cm5o"><SPAN
5131:class="cmb"><INS cite="mailto:srreid"
5132:datetime="2002-12-03T13:40">The authorized capital of the Registrant is
5133:100,000,000 common shares without par value of which 10,744,218 were issued and
5134:outstanding at 10/31/02.<o:p></o:p></INS></SPAN></P>
5135:<P class=MsoNormal
5136:class="cm5o"><SPAN
5137:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
5138:<P class=MsoNormal
5139:class="cm5o"><SPAN
5140:class="cmb"><INS cite="mailto:srreid"
5141:datetime="2002-12-03T13:40">All of the authorized common shares of the
5142:Registrant are of the same class and, once issued, rank equally as to dividends,
5143:voting powers, and participation in assets.<SPAN
5144:class="cm3">&nbsp; </SPAN>Holders of common shares are entitled to
5145:one vote for each share held of record in all matters to be acted upon by the
5146:shareholders.<SPAN class="cm3">&nbsp; </SPAN>&nbsp;Holders of
5147:common shares are entitled to receive such dividends as may be declared from
5148:time to time by the Board of Directors, in its discretion, out of funds legally
5149:available therefore.<o:p></o:p></INS></SPAN></P>
5150:<P class=MsoNormal
5151:class="cm5o"><SPAN
5152:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
5153:<P class=MsoNormal
5154:class="cm5o"><SPAN
5155:class="cmb"><INS cite="mailto:srreid"
5156:datetime="2002-12-03T13:40">Upon liquidation, dissolution or winding up of the
5157:Registrant, holders of common shares are entitled to receive pro rata the assets
5158:of the Registrant, if any, remaining after payments of all debts and
5159:liabilities.<SPAN class="cm3">&nbsp; </SPAN>No shares have been
5160:issued subject to call or assessment.<SPAN class="cm3">&nbsp;
5161:</SPAN>There are no pre-emptive or conversion rights and no provisions for
5162:redemption or purchase for cancellation, surrender, or sinking or purchase
5163:funds.<o:p></o:p></INS></SPAN></P>
5164:<P class=MsoNormal
5165:class="cm5o"><SPAN
5166:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
5167:<P class=MsoNormal
5168:class="cm5o"><SPAN
5169:class="cmb"><INS cite="mailto:srreid"
5170:datetime="2002-12-03T13:40">The Company is not aware of any Restrictions or
5171:limitations on the rights of non-resident or foreign owners to hold, vote, or
5172:receive remittance on the Registrant's securities, other than those discussed in
5173:"Exchange Controls and Other Limitations Affecting Security
5174:Holders".<o:p></o:p></INS></SPAN></P>
5175:<P class=MsoNormal
5176:class="cm5o"><SPAN
5177:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
5178:<P class=MsoNormal
5179:class="cm5o"><SPAN
5180:class="cmb"><INS cite="mailto:srreid"
5181:datetime="2002-12-03T13:40">There are no restrictions on the repurchase or
5182:redemption of common shares of the Registrant while there is any arrearage in
5183:the payment of dividends or sinking fund
5184:installments.<o:p></o:p></INS></SPAN></P>
5185:<P class=MsoNormal
5186:class="cm5o"><SPAN
5187:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
5188:<P class=MsoNormal
5189:class="cm5o"><SPAN
5190:class="cmb"><INS cite="mailto:srreid"
5191:datetime="2002-12-03T13:40">Provisions as to the modification, amendment or
5192:variation of such shareholder rights or provisions are contained in the <I
5193:class="cm34">Company Act</I> of British Columbia.<SPAN
5194:class="cm3">&nbsp; </SPAN>Unless the <I
5195:class="cm34">Company Act</I> or the Registrant's Articles
5196:or memorandum otherwise provide, any action to be taken by a resolution of the
5197:members may be taken by an ordinary resolution or by a vote of a majority or
5198:more of the shares represented at the shareholders'
5199:meeting.<o:p></o:p></INS></SPAN></P>
5200:<P class=MsoNormal
5201:class="cm5m"><SPAN
5202:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
5203:<P class=MsoNormal
5204:class="cm5o"><SPAN
5205:class="cmb"><INS cite="mailto:srreid"
5206:datetime="2002-12-03T13:40">The Registrant's Articles and the <I
5207:class="cm34">B.C. Company Act </I>contain provisions,
5208:which require a "special resolution" for effecting certain corporate
5209:actions.<SPAN class="cm3">&nbsp; </SPAN>Such a "special
5210:resolution" requires a three-quarters vote of shareholders rather than a simple
5211:majority for passage.<SPAN class="cm3">&nbsp; </SPAN>The principle
5212:corporate actions that require a "special resolution"
5213:include:<o:p></o:p></INS></SPAN></P>
5214:<P class=MsoNormal
5215:class="cm5o"><SPAN
5216:class="cmb"><INS cite="mailto:srreid" datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
5217:<P class=MsoNormal
5218:class="cm5o"><SPAN
5219:class="cmb"><INS cite="mailto:srreid"
5220:datetime="2002-12-03T13:40">a.<SPAN class="cm3">&nbsp;
5221:</SPAN>Transferring Company's jurisdiction from British
5222:Columbia<o:p></o:p></INS></SPAN></P>
5223:<P class=MsoNormal
5224:class="cm5o"><SPAN
5225:class="cmb"><INS cite="mailto:srreid"
5226:datetime="2002-12-03T13:40">&nbsp;&nbsp;&nbsp;&nbsp;to another
5227:jurisdiction;<o:p></o:p></INS></SPAN></P>
5228:<P class=MsoNormal
5229:class="cm5m"><SPAN
5230:class="cmb"><INS cite="mailto:srreid"
5231:datetime="2002-12-03T13:40">b.<SPAN class="cm3">&nbsp;
5232:</SPAN>Giving material financial assistance to executive
5233:officers<o:p></o:p></INS></SPAN></P>
5234:<P class=MsoNormal
5235:class="cm5o"><SPAN
5236:class="cmb"><INS cite="mailto:srreid"
5237:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
5238:</SPAN>and/or directors;<o:p></o:p></INS></SPAN></P>
5239:<P class=MsoNormal
5240:class="cm5o"><SPAN
5241:class="cmb"><INS cite="mailto:srreid"
5242:datetime="2002-12-03T13:40">c.<SPAN class="cm3">&nbsp;
5243:</SPAN>Material conflicts of interest by Directors;<o:p></o:p></INS></SPAN></P>
5244:<P class=MsoNormal
5245:class="cm5o"><SPAN
5246:class="cmb"><INS cite="mailto:srreid"
5247:datetime="2002-12-03T13:40">d.<SPAN class="cm3">&nbsp;
5248:</SPAN>Disposing of all or substantially all of the
5249:Company's<o:p></o:p></INS></SPAN></P>
5250:<P class=MsoNormal
5251:class="cm5o"><SPAN
5252:class="cmb"><INS cite="mailto:srreid"
5253:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
5254:</SPAN>undertakings;<o:p></o:p></INS></SPAN></P>
5255:<P class=MsoNormal
5256:class="cm5m"><SPAN
5257:class="cmb"><INS cite="mailto:srreid"
5258:datetime="2002-12-03T13:40">e.<SPAN class="cm3">&nbsp;
5259:</SPAN>Removing a Director before the expiration of his term
5260:of<o:p></o:p></INS></SPAN></P>
5261:<P class=MsoNormal
5262:class="cm5o"><SPAN
5263:class="cmb"><INS cite="mailto:srreid"
5264:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
5265:</SPAN>office;<o:p></o:p></INS></SPAN></P>
5266:<P class=MsoNormal
5267:class="cm5o"><SPAN
5268:class="cmb"><INS cite="mailto:srreid"
5269:datetime="2002-12-03T13:40">f.<SPAN class="cm3">&nbsp;
5270:</SPAN>Certain alterations of share capital;<o:p></o:p></INS></SPAN></P>
5271:<P class=MsoNormal
5272:class="cm5o"><SPAN
5273:class="cmb"><INS cite="mailto:srreid"
5274:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
5275:</SPAN>(1) increasing the number of authorized
5276:shares;<o:p></o:p></INS></SPAN></P>
5277:<P class=MsoNormal
5278:class="cm5o"><SPAN
5279:class="cmb"><INS cite="mailto:srreid"
5280:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
5281:</SPAN>(2) subdivision, consolidation and/or changes in
5282:shares;<o:p></o:p></INS></SPAN></P>
5283:<P class=MsoNormal
5284:class="cm5m"><SPAN
5285:class="cmb"><INS cite="mailto:srreid"
5286:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
5287:</SPAN>(3) reduction in capital<o:p></o:p></INS></SPAN></P>
5288:<P class=MsoNormal
5289:class="cm5o"><SPAN
5290:class="cmb"><INS cite="mailto:srreid"
5291:datetime="2002-12-03T13:40">g.<SPAN class="cm3">&nbsp;
5292:</SPAN>Changing the Company name;<o:p></o:p></INS></SPAN></P>
5293:<P class=MsoNormal
5294:class="cm5o"><SPAN
5295:class="cmb"><INS cite="mailto:srreid"
5296:datetime="2002-12-03T13:40">h.<SPAN class="cm3">&nbsp;
5297:</SPAN>Altering any restrictions on the Company's business;
5298:and<o:p></o:p></INS></SPAN></P>
5299:<P class=MsoNormal
5300:class="cm5o"><SPAN
5301:class="cmb"><INS cite="mailto:srreid"
5302:datetime="2002-12-03T13:40">i.<SPAN class="cm3">&nbsp;
5303:</SPAN>Amalgamations with another company.<o:p></o:p></INS></SPAN></P>
5304:<P class=MsoNormal
5305:class="cm5o"><B
5306:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5307:<P class=MsoNormal
5308:class="cm5p"><![if !supportLists]><B
5309:class="cm6"><SPAN class="cmb"><INS
5310:cite="mailto:srreid" datetime="2002-12-03T13:42">B.<SPAN
5311:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5312:</SPAN></INS></SPAN></B><![endif]><B
5313:class="cm6"><U><SPAN class="cmb"><INS
5314:cite="mailto:srreid" datetime="2002-12-03T13:41"><U>Memorandum and
5315:</U></INS><INS cite="mailto:srreid" datetime="2002-12-03T13:42"><U>articles of
5316:association.<o:p></o:p></U></INS></SPAN></U></B></P>
5317:<P class=MsoNormal
5318:class="cm5q"><B
5319:class="cm6"><U><SPAN class="cmb"><INS
5320:cite="mailto:srreid"
5321:datetime="2002-12-03T13:42"><U><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></U></INS></SPAN></U></B></P>
5322:<P class=MsoNormal
5323:class="cm5q"><SPAN
5324:class="cm36"><SPAN
5325:class="cm5r"><INS cite="mailto:srreid"
5326:datetime="2002-12-03T13:42"><SPAN
5327:class="cm5r">Incorporate</SPAN></INS><SPAN
5328:class="cm5r"><INS cite="mailto:srreid"
5329:datetime="2002-12-03T13:53"><SPAN
5330:class="cm5r">d</SPAN></INS><SPAN
5331:class="cm5r"><INS cite="mailto:srreid"
5332:datetime="2002-12-03T13:42"><SPAN class="cm5r">
5333:by reference</SPAN></INS><INS cite="mailto:srreid" datetime="2002-12-03T13:53">
5334:&#8211; see Item 19. </INS><INS cite="mailto:srreid"
5335:datetime="2002-12-03T13:54">&#8220;</INS><INS cite="mailto:srreid"
5336:datetime="2002-12-03T13:53">Exhibits</INS><INS cite="mailto:srreid"
5337:datetime="2002-12-03T13:54">&#8221;</INS><SPAN
5338:class="cm5r"><INS cite="mailto:srreid"
5339:datetime="2002-12-03T13:42"><SPAN
5340:class="cm5r">.<SPAN
5341:class="cm5r"><o:p></o:p></SPAN></SPAN></INS></SPAN></SPAN></SPAN></SPAN></SPAN></P>
5342:<P class=MsoNormal
5343:class="cm5q"><B
5344:class="cm6"><U><SPAN class="cmb"><INS
5345:cite="mailto:srreid"
5346:datetime="2002-12-03T13:42"><U><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></U></INS></SPAN></U></B></P>
5347:<P class=MsoNormal
5348:class="cm5s"><![if !supportLists]><B
5349:class="cm6"><SPAN class="cmb"><INS
5350:cite="mailto:srreid" datetime="2002-12-03T13:43">C.<SPAN
5351:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
5352:</SPAN></INS></SPAN></B><![endif]><B
5353:class="cm6"><U><SPAN class="cmb"><INS
5354:cite="mailto:srreid" datetime="2002-12-03T13:42"><U>Material
5355:contracts.</U></INS><INS cite="mailto:srreid"
5356:datetime="2002-12-03T13:43"><U><o:p></o:p></U></INS></SPAN></U></B></P>
5357:<P class=MsoNormal
5358:class="cm5t"><B
5359:class="cm6"><U><SPAN class="cmb"><INS
5360:cite="mailto:srreid"
5361:datetime="2002-12-03T13:43"><U><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></U></INS></SPAN></U></B></P>
5362:<P class=MsoNormal
5363:class="cm5t"><SPAN
5364:class="cm36"><SPAN
5365:class="cm5u"><INS cite="mailto:srreid"
5366:datetime="2002-12-03T13:43"><SPAN
5367:class="cm5u">Not applicable.</SPAN></INS><SPAN
5368:class="cm5u"><INS cite="mailto:srreid"
5369:datetime="2002-12-03T13:42"><SPAN
5370:class="cm5u"><o:p></o:p></SPAN></INS></SPAN></SPAN></SPAN></P>
5371:<P class=MsoNormal
5372:class="cm5v"><B
5373:class="cm6"><U><SPAN class="cmb"><INS
5374:cite="mailto:srreid"
5375:datetime="2002-12-03T13:42"><U><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></U></INS></SPAN></U></B></P>
5376:<P class=MsoNormal
5377:class="cm5w"><B
5378:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5379:<P class=MsoNormal class="cmj"><B
5380:class="cm6"><U><SPAN class="cmb"><INS
5381:cite="mailto:srreid" datetime="2002-12-03T13:41"><U>D.<SPAN
5382:class="cm3">&nbsp;&nbsp;&nbsp; </SPAN></U></INS>Exchange Controls
5383:and Other Limitations Affecting Security Holders<o:p></o:p></SPAN></U></B></P>
5384:<P class=MsoNormal class="cmj"><B
5385:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5386:<P class=MsoNormal class="cmj"><B
5387:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5388:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5389:Investment Canada Act (the &#8220;ICA&#8221;), which became effective on 6/30/85, regulates
5390:the acquisition by non-Canadians of control of a Canadian business
5391:enterprise.<SPAN class="cm3">&nbsp; </SPAN>In effect, the ICA
5392:required review by Investment Canada, the agency which administers the ICA, and
5393:approval by the Canadian government in the case of an acquisition of control of
5394:a Canadian business by a non-Canadian (other than a &#8220;NAFTA investor&#8221; as defined
5395:in the ICA) where:<SPAN class="cm3">&nbsp; </SPAN>(i) in the case
5396:of a direct acquisition<SPAN class="cm3">&nbsp; </SPAN>(for
5397:example, through a share purchase or asset purchase), the assets of the business
5398:are $5 million or more in value; or (ii) in<SPAN
5399:class="cm3">&nbsp; </SPAN>the<SPAN
5400:class="cm3">&nbsp; </SPAN>case<SPAN
5401:class="cm3">&nbsp; </SPAN>of an indirect<SPAN
5402:class="cm3">&nbsp; </SPAN>acquisition<SPAN
5403:class="cm3">&nbsp; </SPAN>(for<SPAN
5404:class="cm3">&nbsp; </SPAN>example,<SPAN
5405:class="cm3">&nbsp; </SPAN>the acquisition<SPAN
5406:class="cm3">&nbsp; </SPAN>of<SPAN class="cm3">&nbsp;
5407:</SPAN>the foreign parent of the<SPAN class="cm3">&nbsp;
5408:</SPAN>Canadian <SPAN class="cm3">&nbsp;</SPAN>business)
5409:where<SPAN class="cm3">&nbsp; </SPAN>the Canadian business has
5410:assets of $50 million or<SPAN class="cm3">&nbsp; </SPAN>more
5411:in<SPAN class="cm3">&nbsp; </SPAN>value or if the Canadian
5412:business represents more than<SPAN class="cm3">&nbsp; </SPAN>50%
5413:of<SPAN class="cm3">&nbsp; </SPAN>the assets of the original group
5414:and the Canadian<SPAN class="cm3">&nbsp; </SPAN>business has
5415:assets of $5 million or more in value.<SPAN class="cm3">&nbsp;
5416:</SPAN><o:p></o:p></SPAN></P>
5417:<P class=MsoNormal class="cmj"><SPAN
5418:class="cmb">Review and approval are also required for acquisition or
5419:establishment of a new business in areas concerning &#8220;Canada&#8217;s cultural heritage
5420:or national identity&#8221; such as book publishing, film production and distribution,
5421:television and radio, production and distribution of<SPAN
5422:class="cm3">&nbsp; </SPAN>music, and the oil and natural gas
5423:industry, regardless<SPAN class="cm3">&nbsp; </SPAN>of the size of
5424:the investment.<o:p></o:p></SPAN></P>
5425:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5426:<P class=MsoNormal class="cmj"><SPAN class="cmb">In
5427:the context of the Company, in essence, three methods of acquiring control of a
5428:Canadian business are regulated by the ICA:<SPAN
5429:class="cm3">&nbsp; </SPAN>(i) the acquisition of all or
5430:substantially all of the assets used in carrying on the Canadian business;<SPAN
5431:class="cm3">&nbsp; </SPAN>(ii) the acquisition, directly or
5432:indirectly, of voting shares of a Canadian corporation carrying on the Canadian
5433:business;<SPAN class="cm3">&nbsp; </SPAN>(iii) the acquisition of
5434:voting shares of an entity which controls, directly or indirectly, another
5435:entity carrying on a Canadian business.<SPAN class="cm3">&nbsp;
5436:</SPAN>An acquisition of a majority of the voting interests of an<SPAN
5437:class="cm3">&nbsp; </SPAN>entity,<SPAN
5438:class="cm3">&nbsp; </SPAN>including a corporation, is deemed<SPAN
5439:class="cm3">&nbsp; </SPAN>to<SPAN class="cm3">&nbsp;
5440:</SPAN>be<SPAN class="cm3">&nbsp; </SPAN>an acquisition<SPAN
5441:class="cm3">&nbsp; </SPAN>of control under the ICA.<SPAN
5442:class="cm3">&nbsp; </SPAN>An acquisition of less than one-third of
5443:the voting shares of a corporation is deemed not to be an acquisition of
5444:control.<SPAN class="cm3">&nbsp; </SPAN>An acquisition of less
5445:than a majority, but one-third or more, of the voting shares of a corporation is
5446:presumed to be an acquisition of control unless<SPAN
5447:class="cm3">&nbsp; </SPAN>it<SPAN class="cm3">&nbsp;
5448:</SPAN>can<SPAN class="cm3">&nbsp; </SPAN>be established that<SPAN
5449:class="cm3">&nbsp; </SPAN>on<SPAN class="cm3">&nbsp;
5450:</SPAN>the<SPAN class="cm3">&nbsp; </SPAN>acquisition<SPAN
5451:class="cm3">&nbsp; </SPAN>the corporation is not, in fact,
5452:controlled by the acquirer through the<SPAN class="cm3">&nbsp;
5453:</SPAN>ownership<SPAN class="cm3">&nbsp; </SPAN>of voting
5454:shares.<SPAN class="cm3">&nbsp;&nbsp; </SPAN>For partnerships,
5455:trusts, joint ventures or other unincorporated entities, an acquisition of less
5456:than a majority of the voting interests is deemed not to be an acquisition of
5457:control.<o:p></o:p></SPAN></P>
5458:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5459:<P class=MsoNormal class="cmj"><SPAN
5460:class="cmb">In<SPAN class="cm3">&nbsp; </SPAN>1988,
5461:the ICA was amended pursuant to the Free Trade Agreement dated 1/2/88 between
5462:Canada and the United States to relax the restriction of the ICA.<SPAN
5463:class="cm3">&nbsp; </SPAN>As a result of these amendments, except
5464:where the Canadian business is in the cultural, oil and gas, uranium, financial
5465:services or transportation sectors, the threshold for direct acquisition of
5466:control by U.S. investors and other foreign investors acquiring control of a
5467:Canadian business from U.S. investors has been raised from<SPAN
5468:class="cm3">&nbsp; </SPAN>$5 million to $150 million of gross
5469:assets, and indirect acquisitions are not reviewable.<o:p></o:p></SPAN></P>
5470:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5471:<P class=MsoNormal class="cmj"><SPAN class="cmb">In
5472:addition to the foregoing, the ICA requires that all other acquisitions of
5473:control of Canadian businesses by non-Canadians are subject to formal
5474:notification to the Canadian government.<SPAN class="cm3">&nbsp;
5475:</SPAN>These provisions require a foreign investor to give notice in the
5476:required form, which notices are for information, as opposed to review,
5477:purposes.<o:p></o:p></SPAN></P>
5478:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5479:<P class=MsoNormal class="cmj"><B
5480:class="cm6"><U><SPAN
5481:class="cmb">Taxation<o:p></o:p></SPAN></U></B></P>
5482:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5483:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5484:following summary of the material Canadian federal income tax considerations
5485:generally applicable in respect of the common shares reflects the Company&#8217;s
5486:opinion, based on tax advice provided by BDO Dunwoody, Chartered Accountants,
5487:Calgary, Alberta, Canada and BDO Seidman, Denver, Colorado, USA.<SPAN
5488:class="cm3">&nbsp; </SPAN>The tax consequences to any particular
5489:holder of common shares will vary according to the status of that holder as an
5490:individual, trust, corporation or member of a partnership, the jurisdiction in
5491:which that holder is subject to taxation, the place where that holder is
5492:resident and, generally, according to that holder&#8217;s particular
5493:circumstances.<SPAN class="cm3">&nbsp; </SPAN>This summary is
5494:applicable only to holders who are resident in the United States, have never
5495:been resident in Canada, deal at arm&#8217;s length with the Company, hold their
5496:common shares as capital property and who will not use or hold the common shares
5497:in carrying on business in Canada.<SPAN class="cm3">&nbsp;
5498:</SPAN>Special rules, which are not discussed in this summary, may apply to a
5499:United States holder that is an issuer that carries on business in Canada and
5500:elsewhere.<o:p></o:p></SPAN></P>
5501:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5502:<P class=MsoNormal class="cmj"><SPAN
5503:class="cmb">This summary is based upon the provisions of the Income
5504:Tax Act of Canada and the regulations thereunder (collectively, the &#8220;Tax Act, or
5505:ITA&#8221;) and the Canada-United States Tax Convention as amended by the Protocols
5506:thereto (the &#8220;Tax Convention&#8221;) as at the date of the Registration Statement and
5507:the current administrative practices of Revenue Canada, Customs, Excise and
5508:Taxation.<SPAN class="cm3">&nbsp; </SPAN>This summary does not
5509:take into account Canadian provincial income tax
5510:consequences.<o:p></o:p></SPAN></P>
5511:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5512:<P class=MsoNormal class="cmj"><SPAN
5513:class="cmb">This summary is not exhaustive of all possible income
5514:tax consequences.<SPAN class="cm3">&nbsp; </SPAN>It is not
5515:intended as legal or tax advice to any particular holder of common stock and
5516:should not be so construed.<SPAN class="cm3">&nbsp; </SPAN>Each
5517:holder should consult his own tax advisor with respect to the income tax
5518:consequences applicable to him in his own particular
5519:circumstances.<o:p></o:p></SPAN></P>
5520:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5521:<P class=MsoNormal class="cmj"><U><SPAN
5522:class="cmb">North American Free Trade Agreement
5523:(Canada)<o:p></o:p></SPAN></U></P>
5524:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5525:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5526:Investment Act was amended with the North American Free Trade Agreement<SPAN
5527:class="cm3">&nbsp; </SPAN>(NAFTA) to provide for special review
5528:thresholds for Americans (including<SPAN class="cm3">&nbsp;&nbsp;
5529:</SPAN>&#8220;American-controlled &#8220;entities&#8221; as defined in the Investment Act). Under
5530:the Investment Act, as amended, an investment in the Registrant&#8217;s common shares
5531:by an American would be reviewable only if it was an investment to acquire
5532:control of the Registrant and the value of the assets of the Registrant was
5533:equal to or greater than a specified amount<SPAN
5534:class="cm3">&nbsp; </SPAN>(the<SPAN
5535:class="cm3">&nbsp; </SPAN>&#8220;Review Threshold&#8221;), which increases in
5536:stages.<SPAN class="cm3">&nbsp; </SPAN>The Review Threshold is
5537:currently<SPAN class="cm3">&nbsp; </SPAN>$150 million and remains
5538:at $150 million in constant 1992 dollars (calculated as prescribed in the
5539:Investment Act) after 1992.<o:p></o:p></SPAN></P>
5540:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5541:<P class=MsoNormal class="cmj"><U><SPAN
5542:class="cmb">Disposition of Common Shares</SPAN></U><SPAN
5543:class="cmb"><o:p></o:p></SPAN></P>
5544:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5545:<P class=MsoNormal class="cmj"><SPAN class="cmb">If
5546:a non-resident were to dispose of common shares of the Company to another
5547:Canadian corporation which deals or is deemed to deal on a non-arm&#8217;s length
5548:basis with the non-resident and which, immediately after the disposition, is
5549:connected with the Company<SPAN class="cm3">&nbsp; </SPAN>(i.e.,
5550:which holds shares representing more than 10% of the voting power and more than
5551:10% of the market value of all issued and outstanding shares of the Company),
5552:the amount by which the fair market value of any consideration<SPAN
5553:class="cm3">&nbsp;&nbsp; </SPAN>(other than any<SPAN
5554:class="cm3">&nbsp; </SPAN>shares<SPAN
5555:class="cm3">&nbsp; </SPAN>of the purchaser corporation)<SPAN
5556:class="cm3">&nbsp; </SPAN>exceeds the paid-up capital of the<SPAN
5557:class="cm3">&nbsp; </SPAN>common shares sold will be deemed to be
5558:taxable as a dividend paid<SPAN class="cm3">&nbsp; </SPAN>by<SPAN
5559:class="cm3">&nbsp; </SPAN>the purchasing corporation, either
5560:immediately or<SPAN class="cm3">&nbsp; </SPAN>eventually<SPAN
5561:class="cm3">&nbsp; </SPAN>by means<SPAN
5562:class="cm3">&nbsp; </SPAN>of a deduction in computing the paid-up
5563:capital<SPAN class="cm3">&nbsp; </SPAN>of<SPAN
5564:class="cm3">&nbsp; </SPAN>the purchasing<SPAN
5565:class="cm3">&nbsp; </SPAN>corporation,<SPAN
5566:class="cm3">&nbsp; </SPAN>and subject to withholding<SPAN
5567:class="cm3">&nbsp; </SPAN>taxes<SPAN
5568:class="cm3">&nbsp; </SPAN>as<SPAN class="cm3">&nbsp;
5569:</SPAN>described below.<o:p></o:p></SPAN></P>
5570:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5571:<P class=MsoNormal class="cmj"><SPAN
5572:class="cmb">Under the Tax Act, a gain from the sale of common shares
5573:by a non-resident will not be subject to Canadian tax, provided the shareholder
5574:(and/or persons who do not deal at arm&#8217;s length with the shareholder) have not
5575:held a &#8220;substantial interest&#8221; in the Company<SPAN
5576:class="cm3">&nbsp; </SPAN>(25% or more of the shares of any class
5577:of the Company&#8217;s stock) at any time in the five years preceding the
5578:disposition.<SPAN class="cm3">&nbsp; </SPAN>Generally, the Tax
5579:Convention will exempt from Canadian taxation any capital gain realized by a
5580:resident of the United States, provided that the value of the common shares is
5581:not derived principally from real property situated in
5582:Canada.<o:p></o:p></SPAN></P>
5583:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5584:<P class=MsoNormal class="cmj"><U><SPAN
5585:class="cmb">Dividend</SPAN></U><SPAN
5586:class="cmb"><o:p></o:p></SPAN></P>
5587:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5588:<P class=MsoNormal class="cmj"><SPAN class="cmb">In
5589:the case of any dividends paid to non-residents, the Canadian tax is withheld by
5590:the Company, which remits only the net amount to the shareholder.<SPAN
5591:class="cm3">&nbsp; </SPAN>By virtue of Article X of the Tax
5592:Convention, the rate of tax on dividends paid to residents of the United States
5593:is generally limited to 15% of the gross dividend (or 5% in the case of certain
5594:corporate shareholders owning at least 10% of the Company&#8217;s voting shares).<SPAN
5595:class="cm3">&nbsp;&nbsp; </SPAN>In the absence of the Tax
5596:Convention provisions, the rate of Canadian withholding tax imposed on
5597:non-residents is 25% of the gross dividend.<SPAN
5598:class="cm3">&nbsp;&nbsp; </SPAN><o:p></o:p></SPAN></P>
5599:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5600:<P class=MsoNormal class="cmj"><SPAN
5601:class="cmb">Stock dividends received by non-residents from the
5602:Company are taxable by Canada as ordinary dividends and therefore the
5603:withholding tax rates will be applicable.<o:p></o:p></SPAN></P>
5604:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5605:<P class=MsoNormal class="cmj"><SPAN
5606:class="cmb">Where a holder disposes of common shares to the
5607:Company<SPAN class="cm3">&nbsp; </SPAN>(unless the Company
5608:acquired the common shares in the open market in the manner in which shares
5609:would normally be purchased by any member of the public), this will result in a
5610:deemed dividend to the U.S. holder equal to the amount by which the
5611:consideration paid by the Company exceeds the paid-up capital of such
5612:stock.<SPAN class="cm3">&nbsp; </SPAN>The amount of such dividend
5613:will be subject to withholding tax as described above.<o:p></o:p></SPAN></P>
5614:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5615:<P class=MsoNormal class="cmj"><U><SPAN
5616:class="cmb">Capital Gains</SPAN></U><SPAN
5617:class="cmb"><o:p></o:p></SPAN></P>
5618:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5619:<P class=MsoNormal class="cmj"><SPAN class="cmb">A
5620:non-resident of Canada is not subject to tax under the ITA in respect of a
5621:capital gain realized upon the disposition of a share of a class that is listed
5622:on a prescribed stock exchange unless the share represents &#8220;taxable Canadian
5623:property&#8221; to the holder thereof.<SPAN class="cm3">&nbsp; </SPAN>A
5624:common share of the Company will be taxable Canadian property to a non-resident
5625:holder if, at any time during the period of five years immediately preceding the
5626:disposition, the non-resident holder, persons with whom the non-resident holder
5627:did not deal at arm&#8217;s length, or the non-resident holder and persons with whom
5628:he/she did not deal at arm&#8217;s length owned 25% or more of the issued shares of
5629:any class or series of the Company.<SPAN class="cm3">&nbsp;
5630:</SPAN>In the case of a non-resident holder to whom shares of the Company
5631:represent taxable Canadian property and who is resident in the United States, no
5632:Canadian tax will be payable on a capital gain realized on such shares by reason
5633:of the Tax <o:p></o:p></SPAN></P>
5634:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5635:<P class=MsoNormal class="cmj"><SPAN
5636:class="cmb">Convention unless the value of such shares is derived
5637:principally from real property situated in Canada or the non-resident holder
5638:previously held the shares while resident in Canada.<SPAN
5639:class="cm3">&nbsp; </SPAN>The Company believes that the value of
5640:its common shares is derived from real property situated outside
5641:Canada.<o:p></o:p></SPAN></P>
5642:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5643:<P class=MsoNormal class="cmj"><U><SPAN
5644:class="cmb">Certain United States Federal Income Tax
5645:Consequences<o:p></o:p></SPAN></U></P>
5646:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5647:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5648:following is a discussion of certain possible United States Federal income tax
5649:consequences, under the law, generally applicable to a U.S. Holder (as defined
5650:below) of common shares of the Company.<SPAN class="cm3">&nbsp;
5651:</SPAN>This discussion does not address all potentially relevant Federal income
5652:tax matters and it does not address consequences peculiar to persons subject to
5653:special provisions of Federal income tax law, such as those described below as
5654:excluded from the definition of a U.S. Holder. In addition, this discussion does
5655:not cover any state, local or foreign tax consequences.<o:p></o:p></SPAN></P>
5656:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5657:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5658:following discussion is based upon the sections of the Internal Revenue Code of
5659:1986, as amended (&#8220;the Code&#8221;), Treasury Regulations,<SPAN
5660:class="cm3">&nbsp; </SPAN>published<SPAN
5661:class="cm3">&nbsp; </SPAN>Internal<SPAN
5662:class="cm3">&nbsp; </SPAN>Revenue<SPAN
5663:class="cm3">&nbsp;&nbsp; </SPAN>Service (&#8220;IRS&#8221;) rulings, published
5664:administrative positions of the<SPAN class="cm3">&nbsp; </SPAN>IRS
5665:and<SPAN class="cm3">&nbsp; </SPAN>court decisions that are
5666:currently applicable, any or<SPAN class="cm3">&nbsp; </SPAN>all of
5667:which could be materially and adversely changed, possibly on a retroactive
5668:basis, at any time.<SPAN class="cm3">&nbsp; </SPAN>In addition,
5669:the discussion does not consider the potential effects, both adverse and
5670:beneficial, of recently proposed legislation which, if enacted, could be
5671:applied, possibly on a retroactive basis, at any time.<SPAN
5672:class="cm3">&nbsp; </SPAN>The following discussion is for general
5673:information only and is not intended to be, nor should it be construed to be,
5674:legal or tax advice to any holder or prospective holder of common shares of the
5675:Company and no opinion or representation with respect to the United States
5676:Federal income tax consequences to any such holder or prospective holder is
5677:made.<SPAN class="cm3">&nbsp; </SPAN>Accordingly, holders and
5678:prospective holders<SPAN class="cm3">&nbsp; </SPAN>of common
5679:shares of<SPAN class="cm3">&nbsp; </SPAN>the<SPAN
5680:class="cm3">&nbsp; </SPAN>Company<SPAN
5681:class="cm3">&nbsp; </SPAN>should consult their own tax advisors
5682:about the federal, state, local, and<SPAN class="cm3">&nbsp;&nbsp;
5683:</SPAN>foreign<SPAN class="cm3">&nbsp; </SPAN>tax<SPAN
5684:class="cm3">&nbsp; </SPAN>consequences<SPAN
5685:class="cm3">&nbsp; </SPAN>of<SPAN class="cm3">&nbsp;
5686:</SPAN>purchasing,<SPAN class="cm3">&nbsp; </SPAN>owning<SPAN
5687:class="cm3">&nbsp;&nbsp; </SPAN>and disposing of common shares of
5688:the Company.<o:p></o:p></SPAN></P>
5689:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5690:<P class=MsoNormal class="cmj"><U><SPAN
5691:class="cmb">U.S. Holders<o:p></o:p></SPAN></U></P>
5692:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5693:<P class=MsoNormal class="cmj"><SPAN class="cmb">As
5694:used herein, a (&#8220;U.S. Holder&#8221;) includes a holder of common shares of the Company
5695:who is a citizen or resident of the United States, a corporation created or
5696:organized in or under the laws of the United States or of any political
5697:subdivision thereof and any other person or entity whose ownership of common
5698:shares of the Company is effectively connected with the conduct of a trade or
5699:business in the United States.<SPAN class="cm3">&nbsp;&nbsp;
5700:</SPAN>A<SPAN class="cm3">&nbsp; </SPAN>U.S. Holder<SPAN
5701:class="cm3">&nbsp; </SPAN>does not include persons subject to
5702:special<SPAN class="cm3">&nbsp; </SPAN>provisions of<SPAN
5703:class="cm3">&nbsp; </SPAN>Federal income tax law, such as<SPAN
5704:class="cm3">&nbsp; </SPAN>tax-exempt<SPAN
5705:class="cm3">&nbsp; </SPAN>organizations, qualified<SPAN
5706:class="cm3">&nbsp; </SPAN>retirement plans, financial
5707:institutions,<SPAN class="cm3">&nbsp; </SPAN>insurance companies,
5708:real estate investment trusts, regulated<SPAN class="cm3">&nbsp;
5709:</SPAN>investment companies,<SPAN class="cm3">&nbsp;
5710:</SPAN>broker-dealers, non-resident alien<SPAN class="cm3">&nbsp;
5711:</SPAN>individuals<SPAN class="cm3">&nbsp; </SPAN>or foreign<SPAN
5712:class="cm3">&nbsp; </SPAN>corporations<SPAN
5713:class="cm3">&nbsp; </SPAN>whose ownership of common shares<SPAN
5714:class="cm3">&nbsp; </SPAN>of<SPAN class="cm3">&nbsp;
5715:</SPAN>the Company<SPAN class="cm3">&nbsp; </SPAN>is<SPAN
5716:class="cm3">&nbsp; </SPAN>not effectively connected with the<SPAN
5717:class="cm3">&nbsp; </SPAN>conduct<SPAN
5718:class="cm3">&nbsp; </SPAN>of<SPAN class="cm3">&nbsp;
5719:</SPAN>a trade<SPAN class="cm3">&nbsp; </SPAN>or<SPAN
5720:class="cm3">&nbsp; </SPAN>business in the United States and<SPAN
5721:class="cm3">&nbsp; </SPAN>shareholders<SPAN
5722:class="cm3">&nbsp; </SPAN>who acquired <SPAN
5723:class="cm3">&nbsp;</SPAN>their<SPAN
5724:class="cm3">&nbsp; </SPAN>stock through the exercise of<SPAN
5725:class="cm3">&nbsp; </SPAN>employee<SPAN
5726:class="cm3">&nbsp; </SPAN>stock options or otherwise as
5727:compensation.<o:p></o:p></SPAN></P>
5728:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5729:<P class=MsoNormal class="cmj"><U><SPAN
5730:class="cmb">Distributions on Common Shares of the
5731:Company</SPAN></U><SPAN class="cmb"><o:p></o:p></SPAN></P>
5732:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5733:<P class=MsoNormal class="cmj"><SPAN
5734:class="cmb">U.S. Holders receiving dividend distributions (including
5735:constructive dividends) with respect to common shares of
5736:the<o:p></o:p></SPAN></P>
5737:<P class=MsoNormal class="cmj"><SPAN
5738:class="cmb">Company are required to include in gross income for
5739:United States Federal income tax purposes the gross amount of such distributions
5740:to the extent that the Company has current or accumulated earnings and profits,
5741:without reduction for any Canadian income tax withheld from such
5742:distributions.<SPAN class="cm3">&nbsp; </SPAN>Such Canadian tax
5743:withheld may be credited, subject to certain limitations, against the U.S.
5744:Holder&#8217;s United States Federal Income tax liability or, alternatively, may be
5745:deducted in computing the U.S. Holder&#8217;s United States Federal taxable income by
5746:those who itemize deductions.<SPAN class="cm3">&nbsp; </SPAN>(See
5747:more detailed discussion at &#8220;Foreign Tax Credit&#8221; below).<SPAN
5748:class="cm3">&nbsp; </SPAN>To the extent that distributions exceed
5749:current or accumulated earnings and profits of the Company, they will be treated
5750:first as a return of capital up to the U.S. Holder&#8217;s adjusted basis in the
5751:common shares and thereafter as gain from the sale or exchange of the common
5752:shares.<SPAN class="cm3">&nbsp; </SPAN>Preferential tax rates for
5753:long-term capital gains are applicable to a U.S. Holder which is an individual,
5754:estate or trust.<SPAN class="cm3">&nbsp; </SPAN>There are
5755:currently no preferential tax rates for long-term capital gains for a U.S.
5756:Holder which is a corporation.<o:p></o:p></SPAN></P>
5757:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5758:<P class=MsoNormal class="cmj"><SPAN
5759:class="cmb">Dividends paid on the common shares of the Company will
5760:not generally be eligible for the dividends received deduction provided to
5761:corporations receiving dividends from certain United States corporations.<SPAN
5762:class="cm3">&nbsp;&nbsp; </SPAN>A U.S. Holder which is a
5763:corporation may, under certain circumstances, be entitled to a 70% deduction of
5764:the United States source portion of dividends received from the Company (unless
5765:the Company qualifies as a &#8220;foreign personal holding company&#8221; or a<SPAN
5766:class="cm3">&nbsp; </SPAN>&#8220;passive foreign investment company&#8221;, as
5767:defined below) if such U.S. Holder owns shares representing at least 10% of the
5768:voting power and value of the Company.<SPAN class="cm3">&nbsp;
5769:</SPAN>The availability of this deduction is subject to several complex
5770:limitations, which are beyond the scope of this
5771:discussion.<o:p></o:p></SPAN></P>
5772:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5773:<P class=MsoNormal class="cmj"><U><SPAN
5774:class="cmb">Foreign Tax Credit</SPAN></U><SPAN
5775:class="cmb"><o:p></o:p></SPAN></P>
5776:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5777:<P class=MsoNormal class="cmj"><SPAN class="cmb">A
5778:U.S. Holder who pays (or has withheld from distributions) Canadian income tax
5779:with respect to the ownership of common shares of the Company may be entitled,
5780:at the option of the U.S. Holder, to either a deduction or a tax credit for such
5781:foreign tax paid or withheld.<SPAN class="cm3">&nbsp;
5782:</SPAN>Generally, it will be more advantageous to claim a credit because a
5783:credit reduces United States Federal income taxes on a dollar-for-dollar basis,
5784:while a deduction merely reduces the taxpayer&#8217;s income subject to tax.<SPAN
5785:class="cm3">&nbsp; </SPAN>This election is made on year-by-year
5786:basis and applies to all foreign income taxes (or taxes in lieu of income tax)
5787:paid by (or withheld from) the U.S. Holder during the year.<SPAN
5788:class="cm3">&nbsp; </SPAN><o:p></o:p></SPAN></P>
5789:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5790:<P class=MsoNormal class="cmj"><SPAN
5791:class="cmb">There are significant and complex limitations which
5792:apply to the credit, among which is the general limitation that the credit
5793:cannot exceed the proportionate share of the U.S. Holder&#8217;s United States income
5794:tax liability that the U.S. Holder&#8217;s foreign source income bears to his/her or
5795:its worldwide taxable income.<SPAN class="cm3">&nbsp; </SPAN>In
5796:the determination of the application of this limitation, the various items of
5797:income and deduction must be classified into foreign and domestic sources.<SPAN
5798:class="cm3">&nbsp; </SPAN>Complex rules govern this classification
5799:process.<SPAN class="cm3">&nbsp; </SPAN>There are further
5800:limitations on the foreign tax credit for certain types of income such as
5801:&#8220;passive income&#8221;, &#8220;high withholding tax interest&#8221;, &#8220;financial services income&#8221;,
5802:&#8220;shipping income&#8221;, and certain other classifications of income.<SPAN
5803:class="cm3">&nbsp; </SPAN>The availability of the foreign tax
5804:credit and the application of the limitations on the credit are fact specific
5805:and holders and prospective holders of common shares of the Company should
5806:consult their own tax advisors regarding their individual
5807:circumstances.<o:p></o:p></SPAN></P>
5808:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5809:<P class=MsoNormal class="cmj"><U><SPAN
5810:class="cmb">Disposition of Common Shares of the
5811:Company</SPAN></U><SPAN class="cmb"><o:p></o:p></SPAN></P>
5812:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5813:<P class=MsoNormal class="cmj"><SPAN class="cmb">A
5814:U.S.<SPAN class="cm3">&nbsp; </SPAN>Holder will recognize gain or
5815:loss upon the sale of common shares of the Company equal to the difference, if
5816:any, between<SPAN class="cm3">&nbsp; </SPAN>(i) the amount of cash
5817:plus the fair market value of any property received, and (ii) the shareholder&#8217;s
5818:tax basis in the common shares of the Company.<SPAN
5819:class="cm3">&nbsp; </SPAN>This gain or loss will be capital gain
5820:or loss if the common shares are capital asset in the hands of the U.S. Holder,
5821:which will be a short-term or long-term capital gain or loss depending upon the
5822:holding period of the U.S. Holder.<SPAN class="cm3">&nbsp;
5823:</SPAN>Gains and losses are netted and combined according to special rules in
5824:arriving at the overall capital gain or loss for a particular tax year.<SPAN
5825:class="cm3">&nbsp; </SPAN>Deductions for net capital losses are
5826:subject to significant limitations.<SPAN class="cm3">&nbsp;
5827:</SPAN>For U.S. Holders who are individuals, any unused portion of such net
5828:capital loss may be carried over to be used in later tax years until such net
5829:capital loss is thereby exhausted.<SPAN class="cm3">&nbsp;
5830:</SPAN>For U.S. Holders who are corporations (other than corporations subject to
5831:Subchapter S of the Code), an unused net capital loss may be carried back three
5832:years from the loss year and carried forward five years from the loss year to be
5833:offset against capital gains until such net capital loss is thereby
5834:exhausted.<o:p></o:p></SPAN></P>
5835:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5836:<P class=MsoNormal class="cmj"><U><SPAN
5837:class="cmb">Other considerations<o:p></o:p></SPAN></U></P>
5838:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5839:<P class=MsoNormal class="cmj"><SPAN class="cmb">In
5840:the following four circumstances, the above sections of the discussion may not
5841:describe the United States Federal income tax consequences resulting from the
5842:holding and disposition of common shares of the Company.<SPAN
5843:class="cm3">&nbsp; </SPAN>However, on the basis of (a) the number
5844:of shareholders of its common shares, (b) the majority ownership of its shares
5845:by Canadian residents, and (c) the majority of its assets are actively managed
5846:(not passively held), the Company believes that its is neither a &#8220;Foreign
5847:Personal Holding Company&#8221;, &#8220;Foreign Investment Company&#8221;, &#8220;Passive Foreign
5848:Investment Company&#8221;, nor a &#8220;Controlled Foreign
5849:Corporation&#8221;.<o:p></o:p></SPAN></P>
5850:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5851:<P class=MsoNormal class="cmj"><U><SPAN
5852:class="cmb">Foreign Personal Holding Company</SPAN></U><SPAN
5853:class="cmb"><o:p></o:p></SPAN></P>
5854:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5855:<P class=MsoNormal class="cmj"><SPAN class="cmb">If
5856:at any time during a taxable year more than 50% of the total combined voting
5857:power or the total value of the Company outstanding shares is owned, actually or
5858:constructively, by five or fewer individuals who are citizens or residents of
5859:the United States and 50% or more of the Company&#8217;s gross income for such year
5860:was derived from certain passive sources (e.g. from dividends received from its
5861:subsidiaries), the Company would be treated as a &#8220;foreign personal holding
5862:company.&#8221;<SPAN class="cm3">&nbsp; </SPAN>In that event, U.S.
5863:Holders that hold common shares of the Company would be required to include in
5864:gross income for such year their allowable portions of such passive income to
5865:the extent the Company does not actually distribute such
5866:income.<o:p></o:p></SPAN></P>
5867:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5868:<P class=MsoNormal class="cmj"><U><SPAN
5869:class="cmb">Foreign Investment Company</SPAN></U><SPAN
5870:class="cmb"><o:p></o:p></SPAN></P>
5871:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5872:<P class=MsoNormal class="cmj"><SPAN class="cmb">If
5873:50% or more of the combined voting power or total value of the Company
5874:outstanding shares are held, actually or constructively,<SPAN
5875:class="cm3">&nbsp; </SPAN>by citizens or residents of the
5876:United<SPAN class="cm3">&nbsp; </SPAN>States, United States
5877:domestic partnerships or corporations, or<SPAN class="cm3">&nbsp;
5878:</SPAN>estates or<SPAN class="cm3">&nbsp; </SPAN>trusts other than
5879:foreign estates or trusts (as<SPAN class="cm3">&nbsp;
5880:</SPAN>defined<SPAN class="cm3">&nbsp; </SPAN>by the<SPAN
5881:class="cm3">&nbsp; </SPAN>Code Section 7701(a)(31)), and the
5882:Company is found<SPAN class="cm3">&nbsp; </SPAN>to<SPAN
5883:class="cm3">&nbsp; </SPAN>be engaged primarily in the business of
5884:investing, reinvesting,<SPAN class="cm3">&nbsp; </SPAN>or trading
5885:in securities, commodities, or any interest therein,<SPAN
5886:class="cm3">&nbsp; </SPAN>it is<SPAN
5887:class="cm3">&nbsp; </SPAN>possible<SPAN
5888:class="cm3">&nbsp; </SPAN>that the Company might be treated<SPAN
5889:class="cm3">&nbsp; </SPAN>as<SPAN class="cm3">&nbsp;
5890:</SPAN>a<SPAN class="cm3">&nbsp; </SPAN>&#8220;foreign investment<SPAN
5891:class="cm3">&nbsp; </SPAN>company&#8221;<SPAN
5892:class="cm3">&nbsp; </SPAN>as defined in Section 1246<SPAN
5893:class="cm3">&nbsp; </SPAN>of<SPAN class="cm3">&nbsp;
5894:</SPAN>the<SPAN class="cm3">&nbsp; </SPAN>Code, causing<SPAN
5895:class="cm3">&nbsp; </SPAN>all<SPAN
5896:class="cm3">&nbsp; </SPAN>or<SPAN class="cm3">&nbsp;
5897:</SPAN>part of any gain realized<SPAN class="cm3">&nbsp;
5898:</SPAN>by<SPAN class="cm3">&nbsp; </SPAN>a<SPAN
5899:class="cm3">&nbsp; </SPAN>U.S.<SPAN
5900:class="cm3">&nbsp; </SPAN>Holder selling or exchanging common
5901:shares of the Company to be treated as ordinary income rather than capital
5902:gains.<o:p></o:p></SPAN></P>
5903:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5904:<P class=MsoNormal class="cmj"><U><SPAN
5905:class="cmb">Passive Foreign Investment Company</SPAN></U><SPAN
5906:class="cmb"><o:p></o:p></SPAN></P>
5907:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5908:<P class=MsoNormal class="cmj"><SPAN class="cmb">As
5909:a foreign corporation with U.S. Holders, the Company could potentially be
5910:treated as a passive foreign investment company (&#8220;PFIC&#8221;), as defined in Section
5911:1297 of the Code, depending upon the percentage of the Company&#8217;s income which is
5912:passive, or the percentage of the Company&#8217;s assets which is held for the purpose
5913:of producing passive income.<o:p></o:p></SPAN></P>
5914:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5915:<P class=MsoNormal class="cmj"><SPAN
5916:class="cmb">Certain United States income tax legislation contains
5917:rules governing PFICs, which can have significant tax effects on U.S.
5918:shareholders of foreign corporations.<SPAN class="cm3">&nbsp;
5919:</SPAN>These rules do not apply to non-U.S. shareholders.<SPAN
5920:class="cm3">&nbsp; </SPAN>Section 1297(a) of the Code defines PFIC
5921:as a corporation that is not formed in the United States and, for any taxable
5922:year, either (i) 75% or more of its gross income is &#8220;passive income&#8221;, which
5923:includes interest, dividends and certain rents and royalties or (ii) the average
5924:percentage, by fair market value (or, if the company is a controlled foreign
5925:corporation or makes an election, by adjusted tax basis), of its assets that
5926:produce or are held for the production of<SPAN class="cm3">&nbsp;
5927:</SPAN>&#8220;passive income&#8221; is 50% or more.<SPAN class="cm3">&nbsp;
5928:</SPAN>The taxation of a US shareholder who owns stock in a PFIC is extremely
5929:complex and is therefore beyond the scope of this discussion.<SPAN
5930:class="cm3">&nbsp; </SPAN>US persons should consult with their own
5931:tax advisors with regards to the impact of these rules.<o:p></o:p></SPAN></P>
5932:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
5933:<P class=MsoNormal class="cmj"><U><SPAN
5934:class="cmb">Controlled Foreign Corporation<o:p></o:p></SPAN></U></P>
5935:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5936:<P class=MsoNormal class="cmj"><SPAN class="cmb">If
5937:more than 50% of the voting power of all classes of stock or the total value of
5938:the stock of the Company is owned, directly or indirectly, by citizens or
5939:residents of the United States, United States domestic partnerships and
5940:corporations or estates or trusts other than foreign estates or trusts, each of
5941:whom own 10% or more of the total combined voting power of all classes of stock
5942:of the Company or the total value of the stock of (&#8220;United States shareholder&#8221;),
5943:the Company could be treated as a controlled foreign corporation&#8221; under Subpart
5944:F of the Code.<o:p></o:p></SPAN></P>
5945:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5946:<P class=MsoNormal class="cmj"><SPAN
5947:class="cmb">This classification would effect many complex results
5948:including the required inclusion by such United States shareholders in income of
5949:their pro rata share: of &#8220;Subpart F Income&#8221; (as specially defined by the Code)
5950:of the Company; of the Company&#8217;s earnings invested in U.S. property; and of
5951:earnings invested &#8220;excess passive assets&#8221; (as specifically defined by the Code).
5952:The Company, In addition, under Section 1248 of the Code, gain from the sale or
5953:exchange of common shares of the Company by a U.S. person who is or was a United
5954:States shareholder (as defined in the Code) at any time during the five years
5955:period ending with the sale or exchange is treated as ordinary dividend income
5956:to the extent of earnings and profits of the Company attributable to the stock
5957:sold or exchanged.<SPAN class="cm3">&nbsp; </SPAN>Because of the
5958:complexity of Subpart F, and because it is not clear that the Company is a
5959:controlled foreign corporation, a more detailed review of these rules is outside
5960:of the scope of this discussion.<o:p></o:p></SPAN></P>
5961:<P class=MsoNormal class="cmj"><B
5962:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5963:<P class=MsoNormal class="cmj"><B
5964:class="cm6"><U><SPAN class="cmb">Change in
5965:Accountants<o:p></o:p></SPAN></U></B></P>
5966:<P class=MsoNormal class="cmj"><SPAN
5967:class="cm36"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5968:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5969:Company changed accountants effective 11/20/01 from Evancic Perrault Robertson,
5970:Certified General Accountants to KPMG LLP, Chartered Accountants. There were no
5971:reportable disagreements between the Company and its former auditor and there
5972:have been no reservations, adverse or qualified opinions, or denial of opinion
5973:contained in the former auditor&#8217;s reports.<SPAN class="cm3">&nbsp;
5974:</SPAN><o:p></o:p></SPAN></P>
5975:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5976:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
5977:resignation of the former auditors and the recommendation to appoint the new
5978:auditors were considered and approved by the Board of
5979:Directors.<o:p></o:p></SPAN></P>
5980:<P class=MsoNormal class="cmj"><B
5981:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
5982:<P class=MsoNormal class="cmj"><B
5983:class="cm6"><U><SPAN class="cmb">ITEM 11.
5984:QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK<SPAN
5985:class=msoDel><DEL cite="mailto:srreid"
5986:datetime="2002-12-03T14:45">S</DEL></SPAN></SPAN></U></B><SPAN
5987:class="cm36"><o:p></o:p></SPAN></P>
5988:<P class=MsoNormal class="cmj"><SPAN
5989:class="cm36"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
5990:<P class=MsoNormal class="cmj"><SPAN class="cmb">We
5991:have operations in Canada, the United States and a number of countries outside
5992:of the United States and therefore we are subject to risks typical of an
5993:international business including, but not limited to, differing economic
5994:conditions, changes in political climate, differing tax structures, other
5995:regulations and restrictions and foreign exchange rate volatility.<SPAN
5996:class="cm3">&nbsp; </SPAN>Accordingly, our future results could be
5997:materially adversely affected by changes in these or other
5998:factors.<o:p></o:p></SPAN></P>
5999:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6000:<P class=MsoNormal class="cmj"><SPAN class="cmb">Our
6001:capital and mineral exploration expenditures are substantially in U.S. dollars.
6002:We incur the majority of our administrative expenses in Canadian dollars.<SPAN
6003:class="cm3">&nbsp; </SPAN>We are exposed, in the normal course of
6004:business, to foreign currency risks on these expenditures. We have evaluated our
6005:exposure to these risks and have determined that our only significant foreign
6006:currency exposure at this time is to the U.S. dollar.<SPAN
6007:class="cm3">&nbsp; </SPAN><o:p></o:p></SPAN></P>
6008:<P class=MsoNormal class="cmj"><SPAN
6009:class="cm5x"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6010:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
6011:Company does not engage in hedging transactions and our gains and losses on
6012:foreign currency transactions are not significant.<o:p></o:p></SPAN></P>
6013:<P class=MsoNormal
6014:class="cm5y"><SPAN
6015:class="cm36"><INS cite="mailto:srreid"
6016:datetime="2002-12-03T13:55"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
6017:<P class=MsoNormal class="cmj"><B
6018:class="cm6"><U><SPAN class="cmb"><INS
6019:cite="mailto:srreid" datetime="2002-12-03T13:56"><U>ITEM 12.<SPAN
6020:class="cm3">&nbsp;&nbsp;&nbsp; </SPAN>DESCRIPTION OF SECURITIES
6021:OTHER THAN DEBT SECURITIES</U></INS></SPAN></U></B><SPAN
6022:class="cm36"><INS cite="mailto:srreid"
6023:datetime="2002-12-03T13:56"><o:p></o:p></INS></SPAN></P>
6024:<P class=MsoNormal
6025:class="cm5z"><SPAN
6026:class="cm36"><INS cite="mailto:srreid"
6027:datetime="2002-12-03T13:56"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
6028:<P class=MsoNormal
6029:class="cm5z"><SPAN
6030:class="cm36"><INS cite="mailto:srreid"
6031:datetime="2002-12-03T13:56">Not applicable</INS><SPAN
6032:class="cm60"><SPAN
6033:class="cm60"><o:p></o:p></SPAN></SPAN></SPAN></P>
6034:<P class=MsoNormal class="cm2" align=center><B
6035:class="cm6"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
6036:<P class=MsoNormal class="cm2" align=center><B
6037:class="cm6"><SPAN class="cmb">PART
6038:II<o:p></o:p></SPAN></B></P>
6039:<P class=MsoNormal
6040:class="cm61"><SPAN
6041:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:06"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
6042:<P class=MsoNormal class="cmj"><B><U><SPAN
6043:class="cmb"><SPAN class="cm62"><INS
6044:cite="mailto:pdowad" datetime="2002-12-03T12:06"><U><SPAN
6045:class="cm62">ITEM 13.<SPAN
6046:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN><SPAN
6047:class="cm62">DEFAULTS, DIVIDEND ARREARAGES AND
6048:DELINQUENCIES<SPAN
6049:class="cm62"><o:p></o:p></SPAN></SPAN></SPAN></U></INS></SPAN></SPAN></U></B></P>
6050:<P class=MsoNormal
6051:class="cm63"><SPAN
6052:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:07"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
6053:<P class=MsoNormal
6054:class="cm64"><SPAN
6055:class="cmb"><INS cite="mailto:pdowad"
6056:datetime="2002-12-03T12:07">Not applicable</INS><o:p></o:p></SPAN></P>
6057:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6058:<P class=MsoNormal class="cmj"><B
6059:class="cm6"><U><SPAN class="cmb">ITEM
6060:14.<SPAN class="cm3">&nbsp; </SPAN>MATERIAL MODIFICATIONS TO THE
6061:RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS<o:p></o:p></SPAN></U></B></P>
6062:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6063:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6064:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
6065:Company has not materially altered the rights of security holders since the last
6066:annual report.<SPAN class="cm3">&nbsp; </SPAN><SPAN
6067:class=msoDel><DEL cite="mailto:srreid" datetime="2002-12-03T13:44">A summary of
6068:the rights of security holders follows.</DEL></SPAN><o:p></o:p></SPAN></P>
6069:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6070:<P class=MsoNormal class="cmj"><SPAN
6071:class="cmb"><INS cite="mailto:pdowad"
6072:datetime="2002-12-03T12:07"><SPAN class=msoDel><DEL cite="mailto:srreid"
6073:datetime="2002-12-03T13:44">[THIS STUFF BELOW SHOULD &#8211; IT SEEMS TO ME &#8211; BE IN
6074:ITEM 10.A]</DEL></SPAN><INS
6075:datetime="2002-12-03T12:07"><o:p></o:p></INS></INS></SPAN></P>
6076:<P class=MsoNormal
6077:class="cm64"><SPAN
6078:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:07"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
6079:<P class=MsoNormal
6080:class="cm64"><SPAN
6081:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6082:datetime="2002-12-03T13:40">The authorized capital of the Registrant is
6083:100,000,000 common shares without par value of which 10,744,218 were issued and
6084:outstanding at 10/31/02.</DEL></SPAN><SPAN class=msoDel><DEL
6085:cite="mailto:srreid"
6086:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6087:<P class=MsoNormal class="cmj"><SPAN
6088:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6089:datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
6090:class=msoDel><DEL cite="mailto:srreid"
6091:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6092:<P class=MsoNormal class="cmj"><SPAN
6093:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6094:datetime="2002-12-03T13:40">All of the authorized common shares of the
6095:Registrant are of the same class and, once issued, rank equally as to dividends,
6096:voting powers, and participation in assets.<SPAN
6097:class="cm3">&nbsp; </SPAN>Holders of common shares are entitled to
6098:one vote for each share held of record in all matters to be acted upon by the
6099:shareholders.<SPAN class="cm3">&nbsp; </SPAN>&nbsp;Holders of
6100:common shares are entitled to receive such dividends as may be declared from
6101:time to time by the Board of Directors, in its discretion, out of funds legally
6102:available therefore.</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6103:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6104:<P class=MsoNormal class="cmj"><SPAN
6105:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6106:datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
6107:class=msoDel><DEL cite="mailto:srreid"
6108:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6109:<P class=MsoNormal class="cmj"><SPAN
6110:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6111:datetime="2002-12-03T13:40">Upon liquidation, dissolution or winding up of the
6112:Registrant, holders of common shares are entitled to receive pro rata the assets
6113:of the Registrant, if any, remaining after payments of all debts and
6114:liabilities.<SPAN class="cm3">&nbsp; </SPAN>No shares have been
6115:issued subject to call or assessment.<SPAN class="cm3">&nbsp;
6116:</SPAN>There are no pre-emptive or conversion rights and no provisions for
6117:redemption or purchase for cancellation, surrender, or sinking or purchase
6118:funds.</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6119:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6120:<P class=MsoNormal class="cmj"><SPAN
6121:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6122:datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
6123:class=msoDel><DEL cite="mailto:srreid"
6124:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6125:<P class=MsoNormal class="cmj"><SPAN
6126:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6127:datetime="2002-12-03T13:40">The Company is not aware of any Restrictions or
6128:limitations on the rights of non-resident or foreign owners to hold, vote, or
6129:receive remittance on the Registrant's securities, other than those discussed in
6130:"Exchange Controls and Other Limitations Affecting Security
6131:Holders".</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6132:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6133:<P class=MsoNormal class="cmj"><SPAN
6134:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6135:datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
6136:class=msoDel><DEL cite="mailto:srreid"
6137:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6138:<P class=MsoNormal class="cmj"><SPAN
6139:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6140:datetime="2002-12-03T13:40">There are no restrictions on the repurchase or
6141:redemption of common shares of the Registrant while there is any arrearage in
6142:the payment of dividends or sinking fund installments.</DEL></SPAN><SPAN
6143:class=msoDel><DEL cite="mailto:srreid"
6144:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6145:<P class=MsoNormal class="cmj"><SPAN
6146:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6147:datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
6148:class=msoDel><DEL cite="mailto:srreid"
6149:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6150:<P class=MsoNormal class="cmj"><SPAN
6151:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6152:datetime="2002-12-03T13:40">Provisions as to the modification, amendment or
6153:variation of such shareholder rights or provisions are contained in the
6154:</DEL></SPAN><I class="cm34"><SPAN class=msoDel><DEL
6155:cite="mailto:srreid" datetime="2002-12-03T13:40">Company
6156:Act</DEL></SPAN></I><SPAN class=msoDel><DEL cite="mailto:srreid"
6157:datetime="2002-12-03T13:40"> of British Columbia.<SPAN
6158:class="cm3">&nbsp; </SPAN>Unless the </DEL></SPAN><I
6159:class="cm34"><SPAN class=msoDel><DEL cite="mailto:srreid"
6160:datetime="2002-12-03T13:40">Company Act</DEL></SPAN></I><SPAN class=msoDel><DEL
6161:cite="mailto:srreid" datetime="2002-12-03T13:40"> or the Registrant's Articles
6162:or memorandum otherwise provide, any action to be taken by a resolution of the
6163:members may be taken by an ordinary resolution or by a vote of a majority or
6164:more of the shares represented at the shareholders' meeting.</DEL></SPAN><SPAN
6165:class=msoDel><DEL cite="mailto:srreid"
6166:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6167:<P class=MsoNormal class="cmj"><SPAN
6168:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6169:datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
6170:class=msoDel><DEL cite="mailto:srreid"
6171:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6172:<P class=MsoNormal class="cmj"><SPAN
6173:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6174:datetime="2002-12-03T13:40">The Registrant's Articles and the </DEL></SPAN><I
6175:class="cm34"><SPAN class=msoDel><DEL cite="mailto:srreid"
6176:datetime="2002-12-03T13:40">B.C. Company Act </DEL></SPAN></I><SPAN
6177:class=msoDel><DEL cite="mailto:srreid" datetime="2002-12-03T13:40">contain
6178:provisions, which require a "special resolution" for effecting certain corporate
6179:actions.<SPAN class="cm3">&nbsp; </SPAN>Such a "special
6180:resolution" requires a three-quarters vote of shareholders rather than a simple
6181:majority for passage.<SPAN class="cm3">&nbsp; </SPAN>The principle
6182:corporate actions that require a "special resolution" include:</DEL></SPAN><SPAN
6183:class=msoDel><DEL cite="mailto:srreid"
6184:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6185:<P class=MsoNormal class="cmj"><SPAN
6186:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6187:datetime="2002-12-03T13:40"><![if !supportEmptyParas]>&nbsp;<![endif]></DEL></SPAN><SPAN
6188:class=msoDel><DEL cite="mailto:srreid"
6189:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6190:<P class=MsoNormal class="cmj"><SPAN
6191:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6192:datetime="2002-12-03T13:40">a.<SPAN class="cm3">&nbsp;
6193:</SPAN>Transferring Company's jurisdiction from British
6194:Columbia</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6195:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6196:<P class=MsoNormal class="cmj"><SPAN
6197:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6198:datetime="2002-12-03T13:40">&nbsp;&nbsp;&nbsp;&nbsp;to another
6199:jurisdiction;</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6200:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6201:<P class=MsoNormal class="cmj"><SPAN
6202:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6203:datetime="2002-12-03T13:40">b.<SPAN class="cm3">&nbsp;
6204:</SPAN>Giving material financial assistance to executive
6205:officers</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6206:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6207:<P class=MsoNormal class="cmj"><SPAN
6208:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6209:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
6210:</SPAN>and/or directors;</DEL></SPAN><SPAN class=msoDel><DEL
6211:cite="mailto:srreid"
6212:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6213:<P class=MsoNormal class="cmj"><SPAN
6214:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6215:datetime="2002-12-03T13:40">c.<SPAN class="cm3">&nbsp;
6216:</SPAN>Material conflicts of interest by Directors;</DEL></SPAN><SPAN
6217:class=msoDel><DEL cite="mailto:srreid"
6218:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6219:<P class=MsoNormal class="cmj"><SPAN
6220:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6221:datetime="2002-12-03T13:40">d.<SPAN class="cm3">&nbsp;
6222:</SPAN>Disposing of all or substantially all of the Company's</DEL></SPAN><SPAN
6223:class=msoDel><DEL cite="mailto:srreid"
6224:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6225:<P class=MsoNormal class="cmj"><SPAN
6226:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6227:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
6228:</SPAN>undertakings;</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6229:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6230:<P class=MsoNormal class="cmj"><SPAN
6231:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6232:datetime="2002-12-03T13:40">e.<SPAN class="cm3">&nbsp;
6233:</SPAN>Removing a Director before the expiration of his term
6234:of</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6235:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6236:<P class=MsoNormal class="cmj"><SPAN
6237:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6238:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
6239:</SPAN>office;</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6240:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6241:<P class=MsoNormal class="cmj"><SPAN
6242:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6243:datetime="2002-12-03T13:40">f.<SPAN class="cm3">&nbsp;
6244:</SPAN>Certain alterations of share capital;</DEL></SPAN><SPAN class=msoDel><DEL
6245:cite="mailto:srreid"
6246:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6247:<P class=MsoNormal class="cmj"><SPAN
6248:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6249:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
6250:</SPAN>(1) increasing the number of authorized shares;</DEL></SPAN><SPAN
6251:class=msoDel><DEL cite="mailto:srreid"
6252:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6253:<P class=MsoNormal class="cmj"><SPAN
6254:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6255:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
6256:</SPAN>(2) subdivision, consolidation and/or changes in
6257:shares;</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6258:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6259:<P class=MsoNormal class="cmj"><SPAN
6260:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6261:datetime="2002-12-03T13:40"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;
6262:</SPAN>(3) reduction in capital</DEL></SPAN><SPAN class=msoDel><DEL
6263:cite="mailto:srreid"
6264:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6265:<P class=MsoNormal class="cmj"><SPAN
6266:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6267:datetime="2002-12-03T13:40">g.<SPAN class="cm3">&nbsp;
6268:</SPAN>Changing the Company name;</DEL></SPAN><SPAN class=msoDel><DEL
6269:cite="mailto:srreid"
6270:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6271:<P class=MsoNormal class="cmj"><SPAN
6272:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6273:datetime="2002-12-03T13:40">h.<SPAN class="cm3">&nbsp;
6274:</SPAN>Altering any restrictions on the Company's business;
6275:and</DEL></SPAN><SPAN class=msoDel><DEL cite="mailto:srreid"
6276:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6277:<P class=MsoNormal class="cmj"><SPAN
6278:class="cmb"><SPAN class=msoDel><DEL cite="mailto:srreid"
6279:datetime="2002-12-03T13:40">i.<SPAN class="cm3">&nbsp;
6280:</SPAN>Amalgamations with another company.</DEL></SPAN><SPAN class=msoDel><DEL
6281:cite="mailto:srreid"
6282:datetime="2002-12-03T13:40"><o:p></o:p></DEL></SPAN></SPAN></P>
6283:<P class=MsoNormal class="cmj"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></P>
6284:<P class=MsoNormal class="cm2" align=center><B
6285:class="cm6"><SPAN class="cmb">PART
6286:III</SPAN></B><SPAN class="cmb"><o:p></o:p></SPAN></P>
6287:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6288:<P class=MsoNormal class="cmj"><B
6289:class="cm6"><U><SPAN class="cmb">ITEM
6290:17.<SPAN class="cm3">&nbsp; </SPAN>FINANCIAL
6291:STATEMENTS</SPAN></U></B><SPAN class="cmb"><o:p></o:p></SPAN></P>
6292:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6293:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6294:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
6295:Company's&nbsp;financial statements are&nbsp;stated in Canadian Dollars (CDN$)
6296:and are prepared in accordance with Canadian Generally Accepted Accounting
6297:Principles (GAAP), the application of which, in the case of the Company,
6298:conforms in all material respects for the periods presented with US &nbsp;GAAP,
6299:except as disclosed in footnotes to the financial
6300:statements.<o:p></o:p></SPAN></P>
6301:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6302:<P class=MsoNormal class="cmj"><SPAN class="cmb">The
6303:audited financial statements for the year ended May 31, 2002 as required under
6304:ITEM #17 are included hereto immediately following the text of this annual
6305:report. The audit report of KPMG LLP, Independent Auditors, are included herein
6306:immediately preceding the financial statements.<INS cite="mailto:pdowad"
6307:datetime="2002-12-03T12:08"><o:p></o:p></INS></SPAN></P>
6308:<P class=MsoNormal
6309:class="cm65"><SPAN
6310:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:08"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
6311:<P class=MsoNormal
6312:class="cm65"><B><U><SPAN
6313:class="cmb"><SPAN class="cm66"><INS
6314:cite="mailto:pdowad" datetime="2002-12-03T12:08"><U><SPAN
6315:class="cm66">I<SPAN
6316:class="cm66">TEM 18.<SPAN
6317:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN><SPAN
6318:class="cm66">FINANCIAL STATEMENTS<SPAN
6319:class="cm66"><o:p></o:p></SPAN></SPAN></SPAN></SPAN></U></INS></SPAN></SPAN></U></B></P>
6320:<P class=MsoNormal
6321:class="cm65"><SPAN
6322:class="cmb"><INS cite="mailto:pdowad" datetime="2002-12-03T12:08"><![if !supportEmptyParas]>&nbsp;<![endif]><o:p></o:p></INS></SPAN></P>
6323:<P class=MsoNormal
6324:class="cm65"><SPAN
6325:class="cmb"><INS cite="mailto:pdowad"
6326:datetime="2002-12-03T12:08">Not applicable.<SPAN
6327:class="cm3">&nbsp; </SPAN>The Company has elected to file under
6328:Item 17.</INS><o:p></o:p></SPAN></P>
6329:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6330:<P class=MsoNormal class="cmj"><B
6331:class="cm6"><U><SPAN class="cmb">ITEM
6332:19.<SPAN class="cm3">&nbsp;
6333:</SPAN>EXHIBITS<o:p></o:p></SPAN></U></B></P>
6334:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6335:<P class=MsoNormal class="cmj"><B
6336:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
6337:<P class=MsoNormal class="cmj"><B
6338:class="cm6"><U><SPAN class="cmb">(A)
6339:Audited Financial Statements<o:p></o:p></SPAN></U></B></P>
6340:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6341:<P class=MsoNormal
6342:class="cm67"><![if !supportLists]><SPAN
6343:class="cm68">Ø<SPAN
6344:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6345:</SPAN></SPAN><![endif]><SPAN class="cmb">Auditor's Report, dated
6346:October 18, 2002<o:p></o:p></SPAN></P>
6347:<P class=MsoNormal
6348:class="cm69"><![if !supportLists]><SPAN
6349:class="cm68">Ø<SPAN
6350:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6351:</SPAN></SPAN><![endif]><SPAN class="cmb"><INS cite="mailto:pdowad"
6352:datetime="2002-12-03T12:09">C</INS><SPAN class=msoDel><DEL cite="mailto:pdowad"
6353:datetime="2002-12-03T12:09">B</DEL></SPAN><INS cite="mailto:pdowad"
6354:datetime="2002-12-03T12:09">onsolidated B</INS>alance Sheets at May 31, 2002 and
6355:2001 <o:p></o:p></SPAN></P>
6356:<P class=MsoNormal
6357:class="cm6a"><![if !supportLists]><SPAN
6358:class="cm68">Ø<SPAN
6359:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6360:</SPAN></SPAN><![endif]><SPAN class="cmb"><INS cite="mailto:pdowad"
6361:datetime="2002-12-03T12:09">Consolidated </INS>Statements of Operations and
6362:Deficit<o:p></o:p></SPAN></P>
6363:<P class=MsoNormal class="cmj"><SPAN
6364:class="cmb"><SPAN class="cm3">&nbsp;&nbsp; </SPAN>for
6365:the Year<INS cite="mailto:pdowad" datetime="2002-12-03T12:09">s</INS> ended May
6366:31, 2002, 2001 and 2000<o:p></o:p></SPAN></P>
6367:<P class=MsoNormal
6368:class="cm6b"><![if !supportLists]><SPAN
6369:class="cm68">Ø<SPAN
6370:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6371:</SPAN></SPAN><![endif]><SPAN class="cmb"><INS cite="mailto:pdowad"
6372:datetime="2002-12-03T12:10">Consolidated </INS>Statements of <SPAN
6373:class=msoDel><DEL cite="mailto:pdowad" datetime="2002-12-03T12:09">Changes in
6374:</DEL></SPAN>Cash Flows<o:p></o:p></SPAN></P>
6375:<P class=MsoNormal class="cmj"><SPAN
6376:class="cmb"><SPAN class="cm3">&nbsp;&nbsp; </SPAN>for
6377:the Years ended May 31, 2002, 2001 and 2000<o:p></o:p></SPAN></P>
6378:<P class=MsoNormal
6379:class="cm6c"><![if !supportLists]><SPAN
6380:class="cm68">Ø<SPAN
6381:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6382:</SPAN></SPAN><![endif]><SPAN class="cmb">Notes to <SPAN
6383:class=msoDel><DEL cite="mailto:pdowad" datetime="2002-12-03T12:10">the
6384:</DEL></SPAN><INS cite="mailto:pdowad" datetime="2002-12-03T12:10">Consolidated
6385:</INS>Financial Statements<o:p></o:p></SPAN></P>
6386:<P class=MsoNormal class="cmj"><B
6387:class="cm6"><U><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></U></B></P>
6388:<P class=MsoNormal class="cmj"><B
6389:class="cm6"><U><SPAN class="cmb">(B)<SPAN
6390:class="cm3">&nbsp; </SPAN>Additions to
6391:exhibits<o:p></o:p></SPAN></U></B></P>
6392:<P class=MsoNormal class="cmj"><SPAN
6393:class="cmb"><SPAN
6394:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6395:</SPAN><o:p></o:p></SPAN></P>
6396:<P class=MsoNormal class="cmj"><SPAN
6397:class="cmb">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<SPAN
6398:class="cm3">&nbsp; </SPAN>Certificate of Incorporation, Name
6399:Changes<o:p></o:p></SPAN></P>
6400:<P class=MsoNormal class="cmj"><SPAN
6401:class="cmb"><SPAN
6402:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6403:</SPAN>and Articles/By-Laws of the Company.<o:p></o:p></SPAN></P>
6404:<P class=MsoNormal class="cmj"><SPAN class="cmb">--
6405:Included by reference of 20F Registration Statement Amendment #2
6406:--<o:p></o:p></SPAN></P>
6407:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6408:<P class=MsoNormal class="cmj"><SPAN
6409:class="cmb"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;
6410:</SPAN>2.<SPAN class="cm3">&nbsp; </SPAN>Instruments defining the
6411:rights of holders<o:p></o:p></SPAN></P>
6412:<P class=MsoNormal class="cmj"><SPAN
6413:class="cmb"><SPAN
6414:class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6415:</SPAN>of equity or debt securities being registered.<o:p></o:p></SPAN></P>
6416:<P class=MsoNormal class="cmj"><SPAN class="cmb">--
6417:Included by reference of 20F Registration Statement Amendment #2
6418:--<o:p></o:p></SPAN></P>
6419:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6420:<P class=MsoNormal class="cmj"><SPAN
6421:class="cmb"><SPAN class="cm3">&nbsp;&nbsp;&nbsp;&nbsp;
6422:</SPAN>3.<SPAN class="cm3">&nbsp; </SPAN>Other
6423:Exhibits:<o:p></o:p></SPAN></P>
6424:<P class=MsoNormal
6425:class="cm6d"><![if !supportLists]><SPAN
6426:class="cmb">a.<SPAN
6427:class="cm1d">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6428:</SPAN></SPAN><![endif]><SPAN class="cmb">Notice/Information
6429:Circular for Annual General Meetings<o:p></o:p></SPAN></P>
6430:<P class=MsoNormal class="cm6e"><SPAN
6431:class="cmb"><SPAN class="cm3">&nbsp;&nbsp; </SPAN>held
6432:November 14, 2002 -- Included by reference Form 6K --<o:p></o:p></SPAN></P>
6433:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6434:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P><SPAN
6435:class="cmk"><BR
6436:class="cmf"
6437:clear=all></SPAN>
6438:<P class=MsoNormal class="cmj"><![if !supportEmptyParas]><![endif]>&nbsp;<SPAN
6439:class="cmb"><o:p></o:p></SPAN></P>
6440:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6441:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6442:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6443:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6444:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6445:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6446:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6447:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6448:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6449:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6450:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6451:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6452:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6453:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6454:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6455:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6456:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6457:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6458:<P class=MsoNormal class="cm2" align=center>SIGNATURE PAGE</P>
6459:<P class=MsoNormal class="cm2" align=center><SPAN
6460:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6461:<P class=MsoNormal class="cm2" align=center><SPAN
6462:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6463:<P class=MsoNormal class="cm2" align=center><SPAN
6464:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6465:<P class=MsoNormal class="cmj"><SPAN
6466:class="cmb">Pursuant to the requirements of section 12g of the
6467:Securities Exchange Act of 1934, the Registrant certifies that it meets all of
6468:the requirements for filing on Form 20-F and has duly caused this Annual Report
6469:to its Registration Statement to be signed on its behalf by the undersigned,
6470:thereunto duly authorized.<o:p></o:p></SPAN></P>
6471:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6472:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6473:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6474:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6475:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6476:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6477:<P class=MsoNormal class="cm2" align=center><U><SPAN
6478:class="cmb">Calais Resources Inc.: SEC File No.
6479:0-29392<o:p></o:p></SPAN></U></P>
6480:<P class=MsoNormal class="cm2" align=center><SPAN
6481:class="cmb">Registrant<o:p></o:p></SPAN></P>
6482:<P class=MsoNormal class="cm2" align=center><SPAN
6483:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6484:<P class=MsoNormal class="cm2" align=center><SPAN
6485:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6486:<P class=MsoNormal class="cm2" align=center><SPAN
6487:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6488:<P class=MsoNormal class="cm2" align=center><SPAN
6489:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6490:<P class=MsoNormal class="cm2" align=center><SPAN
6491:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6492:<P class=MsoNormal class="cm2" align=center><SPAN
6493:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6494:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6495:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6496:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6497:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6498:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6499:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6500:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6501:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6502:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6503:<P class=MsoNormal class="cmj"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6504:<P class=MsoNormal class="cmj"><SPAN
6505:class="cmb">Dated <U>NOVEMBER 22 ,2002 </U><SPAN
6506:class="cm3">&nbsp;</SPAN><SPAN
6507:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6508:</SPAN>By<U><SPAN class="cm3">&nbsp;&nbsp; </SPAN>&#8220;ART DAHER&#8221;
6509:<SPAN class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
6510:class="cm3">&nbsp;&nbsp;</SPAN><SPAN
6511:class="cmi">&nbsp;&nbsp;&nbsp; </SPAN><o:p></o:p></U></SPAN></P>
6512:<P class=MsoNormal><SPAN
6513:class="cm4"><SPAN
6514:class="cm4n">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6515:</SPAN><SPAN class="cm3">&nbsp;&nbsp;&nbsp; </SPAN><SPAN
6516:class="cmi">&nbsp;&nbsp; </SPAN><SPAN
6517:class="cm3">&nbsp;&nbsp;</SPAN><SPAN
6518:class="cmi">&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><SPAN
6519:class="cm3">&nbsp;&nbsp;&nbsp;</SPAN>Art Daher,
6520:Secretary/Director<o:p></o:p></SPAN></P>
6521:<P class=MsoNormal class="cm2" align=center><B
6522:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6523:<P class=MsoNormal class="cm2" align=center><B
6524:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6525:<P class=MsoNormal class="cm2" align=center><B
6526:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6527:<P class=MsoNormal class="cm2" align=center><B
6528:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6529:<P class=MsoNormal class="cm2" align=center><B
6530:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6531:<P class=MsoNormal class="cm2" align=center><B
6532:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6533:<P class=MsoNormal class="cm2" align=center><B
6534:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6535:<P class=MsoNormal class="cm2" align=center><B
6536:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6537:<P class=MsoNormal class="cm2" align=center><B
6538:class="cm6"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></B></P>
6539:<P class=MsoNormal><B class="cm6"><SPAN
6540:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P><B
6541:class="cm6"><SPAN
6542:class="cmk"><BR
6543:class="cmf"
6544:clear=all></SPAN></B>
6545:<P class=MsoNormal class="cm2" align=center><![if !supportEmptyParas]><![endif]>&nbsp;<B
6546:class="cm6"><SPAN
6547:class="cmb"><o:p></o:p></SPAN></B></P>
6548:<P class=MsoNormal class="cm2" align=center><B
6549:class="cm6"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
6550:<P class=MsoNormal class="cm2" align=center><B
6551:class="cm6"><SPAN
6552:class="cmb">CERTIFICATIONS<o:p></o:p></SPAN></B></P>
6553:<P class=MsoNormal class="cm2" align=center><B
6554:class="cm6"><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
6555:<P class=MsoNormal><B class="cm6"><SPAN
6556:class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></B></P>
6557:<P class=MsoNormal><SPAN class="cmb">I, CERTIFY
6558:THAT:<o:p></o:p></SPAN></P>
6559:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6560:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6561:<P class=MsoList
6562:class="cm6f"><![if !supportLists]><SPAN
6563:class="cmb">1.<SPAN
6564:class="cm1d">&nbsp;&nbsp;&nbsp;
6565:</SPAN></SPAN><![endif]><SPAN class="cmb">I HAVE REVIEWED THIS
6566:ANNUAL REPORT ON Form 20-F of Calais Resources Inc.<o:p></o:p></SPAN></P>
6567:<P class=MsoNormal
6568:class="cm6g"><![if !supportLists]><SPAN
6569:class="cmb">2.<SPAN
6570:class="cm1d">&nbsp;&nbsp;&nbsp;
6571:</SPAN></SPAN><![endif]><SPAN class="cmb">Based on my knowledge,
6572:this annual report does not contain any untrue statement of a material fact or
6573:omit to state a material fact necessary to make the statements made, in light of
6574:the circumstances under which such statements were made, not misleading with
6575:respect to the period covered by this annual report; and<o:p></o:p></SPAN></P>
6576:<P class=MsoNormal
6577:class="cm6h"><![if !supportLists]><SPAN
6578:class="cmb">3.<SPAN
6579:class="cm1d">&nbsp;&nbsp;&nbsp;
6580:</SPAN></SPAN><![endif]><SPAN class="cmb">Based on my knowledge, the
6581:financial statements, and other financial information included in this annual
6582:report, fairly present in all material respects the financial condition, results
6583:of operations and cash flows of the registrant as of, and for, the periods
6584:presented in this annual report.<o:p></o:p></SPAN></P>
6585:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6586:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6587:<P class=MsoNormal><SPAN class="cmb">Date: November 22, 2002<SPAN
6588:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6589:</SPAN><U>/s/_&#8221;MELVIN MARTIN&#8221;________________<o:p></o:p></U></SPAN></P>
6590:<P class=MsoHeader class="cmg"><SPAN class="cmb"><SPAN
6591:class="cm4m">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6592:</SPAN>MELVIN MARTIN / Director<o:p></o:p></SPAN></P>
6593:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6594:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6595:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6596:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6597:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6598:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6599:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6600:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6601:<P class=MsoNormal><SPAN class="cmb">I, CERTIFY
6602:THAT:<o:p></o:p></SPAN></P>
6603:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6604:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6605:<P class=MsoList
6606:class="cm6i"><![if !supportLists]><SPAN
6607:class="cmb">4.<SPAN
6608:class="cm1d">&nbsp;&nbsp;&nbsp;
6609:</SPAN></SPAN><![endif]><SPAN class="cmb">I HAVE REVIEWED THIS
6610:ANNUAL REPORT ON Form 20-F of Calais Resources Inc.<o:p></o:p></SPAN></P>
6611:<P class=MsoNormal
6612:class="cm6j"><![if !supportLists]><SPAN
6613:class="cmb">5.<SPAN
6614:class="cm1d">&nbsp;&nbsp;&nbsp;
6615:</SPAN></SPAN><![endif]><SPAN class="cmb">Based on my knowledge,
6616:this annual report does not contain any untrue statement of a material fact or
6617:omit to state a material fact necessary to make the statements made, in light of
6618:the circumstances under which such statements were made, not misleading with
6619:respect to the period covered by this annual report; and<o:p></o:p></SPAN></P>
6620:<P class=MsoNormal
6621:class="cm6k"><![if !supportLists]><SPAN
6622:class="cmb">6.<SPAN
6623:class="cm1d">&nbsp;&nbsp;&nbsp;
6624:</SPAN></SPAN><![endif]><SPAN class="cmb">Based on my knowledge, the
6625:financial statements, and other financial information included in this annual
6626:report, fairly present in all material respects the financial condition, results
6627:of operations and cash flows of the registrant as of, and for, the periods
6628:presented in this annual report.<o:p></o:p></SPAN></P>
6629:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6630:<P class=MsoNormal><SPAN class="cmb"><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></SPAN></P>
6631:<P class=MsoNormal><SPAN class="cmb">Date: November 22, 2002<SPAN
6632:class="cm2i">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </SPAN><U>/s/_&#8221;ART
6633:DAHER&#8221;____________<o:p></o:p></U></SPAN></P>
6634:<P class=MsoNormal><SPAN class="cmb"><SPAN
6635:class="cm4m">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6636:</SPAN>ART DAHER / Secretary/Director<o:p></o:p></SPAN></P>
6637:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
6638:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
6639:<P class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P>
6640:<P
6641:class=MsoNormal><![if !supportEmptyParas]><![endif]>&nbsp;<o:p></o:p></P></DIV></BODY></HTML>