UNITED
STATES
 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-K  ý
  
  ANNUAL REPORT UNDER SECTION 13 OR
  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended December 31, 2001  OR  o
  
  TRANSITION REPORT PURSUANT TO
  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For
the transition period
from             to  Commission
File Number     1-8542  ECHO BAY
MINES LTD. (Exact name of
registrant as specified in its charter)  Incorporated
  under the laws of Canada
  
  None(State or other
  jurisdiction ofincorporation or organization)
  
  (I.R.S. Employer
  Identification No.)Suite 1210, 10180-101 StreetEdmonton,
  Alberta
  
  T5J
  3S4(Address of principal executive offices)
  
  (Zip Code)Registrants
  telephone number, including area code: 
  (780) 496-9002  Securities
  registered pursuant to Section 12(b) of the Act:Title of each class
  
  Name of each exchange
  on which registeredCommon shares, no par value
  
  American Stock Exchange  
  Securities registered
pursuant to Section 12(g) of the Act: 
None  Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yesý     No    o Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.ý  Aggregate market
  value of the voting securities held by non-affiliates of the registrant at
  March 28, 2002
  
  U.S.$129,358,573Number of common
  shares outstanding as of March 28, 2002
  
  140,607,145 
   TABLE OF CONTENTS  PART IITEMS 1 AND
  2-BUSINESS AND PROPERTIESINTRODUCTIONProperty and Office
  LocationsMaterial SubsidiariesOPERATIONS SUMMARYGold and Silver ProductionRevenueProduction CostsRESERVESChange
  in Proven and Probable Mineral ReservesMEASURED AND INDICATED
  RESOURCESINFERRED RESOURCESROUND MOUNTAINGeology and
  Mineral ReservesMining
  and ProcessingLUPINGeology
  and Mineral ReservesMining and ProcessingSupplies,
  Utilities and TransportationWater Supply and Waste
  DisposalMCCOY/COVEGeology
  and Mineral ReservesMining
  and ProcessingKETTLE RIVERGeology and Mineral
  ReservesMining and ProcessingAQUARIUS DEVELOPMENT
  PROJECTEXPLORATIONSUNNYSIDEOTHERPrecious
  Metal Sales and Hedging ActivitiesCredit FacilitiesGovernmental
  and Environmental RegulationEmployeesExecutive Officers
  of the RegistrantMining Risks and InsuranceSupplies,
  Utilities and TransportationWaste DisposalRoyaltiesLease CommitmentsHistory of the CompanyRISK FACTORSGOLD PRICESSILVER PRICESEXCHANGE RATES    ITEM
  3-LEGAL PROCEEDINGSSUMMAOTHERITEM
  4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM
  5-MARKET FOR THE REGISTRANTS COMMON SHARES AND RELATED SHAREHOLDER MATTERSMARKET INFORMATIONDIVIDENDSCERTAIN TAX MATTERSUnited
  States Federal Income Tax ConsiderationsCanadian
  Federal Income Tax ConsiderationsITEM 6-SELECTED
  FINANCIAL DATAITEM
  7-MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
  OPERATIONSSUMMARYRESULTS OF OPERATIONSRevenueOperating CostsRoyaltiesDepreciation and
  AmortizationReclamation and Mine
  ClosureGeneral and AdministrativeExploration and DevelopmentProvision for Impaired
  AssetsLoss
  (Gain) on Sale of Interests in Mining and Other PropertiesLIQUIDITY AND CAPITAL
  RESOURCESCOMMITMENTS AND
  CONTINGENCIESHedging ActivitiesOtherCRITICAL ACCOUNTING
  POLICIESProperty evaluationsReclamation and mine
  closure costsITEM
  7A-QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKITEM
  8-FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO FINANCIAL
  STATEMENTSQUARTERLY FINANCIAL
  HIGHLIGHTS    ITEM
  9-CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
  DISCLOSUREPART IIIITEM
  10-DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11-EXECUTIVE
  COMPENSATIONITEM 12-SECURITY
  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM
  13-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSPART IVITEM
  14-EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-KSIGNATURES    CAUTIONARY SAFE HARBOR STATEMENT
UNDER THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995  With the exception
of historical matters, the matters discussed in this report are forward-looking
statements that involve risks and uncertainties that could cause actual results
to differ materially from targeted or projected results. Such forward-looking
statements include statements regarding:  targets for:          gold
and silver production;          cash
operating costs and certain significant expenses;          percentage
increases and decreases in production from the Company's principal mines; schedules for
completion of detailed feasibility studies and initial feasibility studies; potential
changes in reserves and production; the timing and
scope of future drilling and other exploration activities; expectations
regarding receipt of permits and commencement of mining or production; anticipated
grades and recovery rates; ability to
secure financing; potential
acquisitions or increases in property interests; and divestitures or
decreases in property interests.  Factors that could
cause actual results to differ materially include, among others:  fluctuations in
gold and silver prices; fluctuations in
grades and recovery rates; geological,
metallurgical, processing, access, transportation or other problems; results of
exploration activities or feasibility studies; changes in
project parameters as plans continue to be refined; political,
economic and operational risks; availability of
materials and equipment; regulatory
risks, including reclamation security requirements and the timing for the
receipt of governmental permits; force majeure
events; the failure of
plant, equipment or processes to operate in accordance with specifications or
expectations; accidents; labor relations; delays in
start-up dates for projects; environmental
costs and risks; and other factors
described herein or in the Companys filings with the U.S. Securities and
Exchange Commission.  Many of these
factors are beyond the Companys ability to predict or control.  Readers are cautioned not to put undue
reliance on forward-looking statements. 
See Risk Factors for items that could affect forward-looking
statements.    PART I  ITEMS 1
AND 2-BUSINESS AND PROPERTIES  INTRODUCTION In this report,
the Company refers to Echo Bay Mines Ltd. and its subsidiaries unless the context
specifies otherwise.  The Companys
financial statements are presented in accordance with generally accepted
accounting principles in Canada.  In
this report, all dollar amounts are expressed in U.S. dollars unless specified
otherwise.  The Company mines,
processes and explores for gold.  The
Company also produces silver at its McCoy/Cove mine in Nevada. The Company has
four operating mines: Round Mountain and McCoy/Cove in Nevada, U.S.A.; Kettle
River in Washington, U.S.A.; and Lupin in Nunavut Territory, Canada.  All of the Companys mines are 100% owned
except for Round Mountain, which is 50% owned.  The Companys
operations in 2001 were, and will continue to be, materially affected by the
price of gold, which averaged $271 per ounce in 2001 and $279 in 2000 and
1999.  At December 31, 2001 the gold
price was $277 per ounce. Throughout this report, the terms ounce and
milliounce are used as abbreviations for the troy ounce measure of weight.
One troy ounce is equal to 31.103 grams and one milliounce represents 0.001
ounce.  In 2001, the
Company produced a total of 657,784 ounces of gold and 6,451,425 ounces of
silver at an average cash operating cost of $223 per ounce. The Company reports
per ounce production cost data in accordance with The Gold Institute Production
Cost Standard (the Standard). The Gold Institute is an association of
suppliers of gold and gold products and includes leading North American gold
producers. Adoption of the Standard is voluntary, and the data presented may
not be comparable to data presented by other gold producers. Production costs
per ounce are derived from amounts included in the audited Statements of
Operations and include mine site operating costs such as mining, processing,
administration, transportation, royalties, production taxes, depreciation,
amortization and reclamation costs, but exclude financing, capital, development
and exploration costs. These costs are then divided by gold ounces produced to
arrive at the total production costs per ounce. The measures are furnished to
provide additional information and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with generally
accepted accounting principles. Throughout this report, all references to per ounce
production cost data, or cash operating costs, will be in accordance with the
standard.  In 2001, the
Company reported a net loss of $5.7 million on revenues of $238 million.  At December 31, 2001, the Company had 3.8
million ounces of gold reserves and 1.1 million ounces of silver reserves.  On February 13, 2002, the Company entered into an agreement with
Newmont Mining Corporation providing for the sale of the McCoy/Cove mine and
facilities in exchange for $6.0 million and the assumption of all reclamation
obligations at McCoy/Cove. The agreement is subject to the completion of due
diligence by Newmont on or before July 31, 2002.  On March 28, 2002
the Companys common shareholders authorized the issuance of up to an aggregate
of 361,561,230 common shares in exchange for the capital securities (note 7).
The exchange is anticipated to be completed on or before April 15, 2002.  For 2002, the
Company expects to produce 535,000 ounces of gold and 1.3 million ounces of
silver at an average cash operating cost of $225 per ounce of gold.  The expected decline in production will
result from the completion of milling at McCoy/Cove.  For a general identification of risk factors involved in the
Companys business, see Cautionary Safe Harbor Statement under the United
States Private Litigation Reform Act of 1995 and Risk Factors.     Property and Office
Locations    Properties:
  Offices:A.  Round Mountain (Nevada)
  1.  Edmonton
  (Alberta)B.  McCoy/Cove (Nevada)
  2.  Englewood
  (Colorado)C.  Kettle River (Washington)
  3.  Reno
  (Nevada)D.  Lupin (Nunavut)E.  Aquarius (Ontario)
  Material
Subsidiaries (all 100% owned) Echo Bay Inc. (Delaware) Echo
Bay Finance Corporation (Delaware) Echo Bay
Exploration Inc. (Delaware) Round Mountain Gold Corporation (Delaware) Echo Bay Minerals Company (Delaware) Sunnyside Gold Corporation (Delaware) Echo Bay Management Corporation (Delaware) Echo Bay Resources Inc. (Delaware) Corp. Air Inc. (Alberta)  A total of 24
subsidiaries were omitted because they are not considered significant
individually or in the aggregate.    OPERATIONS
SUMMARY Gold and Silver Production Gold Production (ounces)
  
  2001
  
  2000
  
  1999Round Mountain (50%)
  
  373,475
  
  320,064
  
  270,904Lupin
  
  139,327
  
  117,729
  
  McCoy/Cove
  
  94,633
  
  162,784
  
  124,536Kettle River
  
  50,349
  
  94,086
  
  104,396Total gold
  
  657,784
  
  694,663
  
  499,836Percentage increase (decrease) from prior year
  
  (5.3
  )%
  39.0
  %
  (6.8
  )%  Silver Production (ounces)
  
  2001
  
  2000
  
  1999Total silver-all from McCoy/Cove
  
  6,451,425
  
  12,328,297
  
  8,430,072Percentage increase (decrease) from prior year
  
  (47.7
  )%
  46.2
  %
  (10.4
  )%  Revenue Revenue Data  Year ended December 31
  
  2001
  
  2000
  
  1999GoldOunces sold
  
  667,015
  
  676,439
  
  486,592Average price realized per ounce  revenue basis
  
  $
  305
  
  $
  319
  
  $
  325Average price realized per ounce  cash basis(1)
  
  $
  281
  
  $
  294
  
  $
  335Average market price per ounce
  
  $
  271
  
  $
  279
  
  $
  279Revenue (millions of U.S. dollars)
  
  $
  203.6
  
  $
  215.8
  
  $
  158.2Percentage of total revenue
  
  86
  %
  77
  %
  75
  %SilverOunces sold
  
  7,241,147
  
  12,347,779
  
  9,173,012Average price realized per ounce - revenue basis
  
  $
  4.70
  
  $
  5.28
  
  $
  5.69Average price realized per ounce - cash basis(1)
  
  $
  4.77
  
  $
  5.21
  
  $
  5.22Average market price per ounce
  
  $
  4.39
  
  $
  5.00
  
  $
  5.25Revenue (millions of U.S. dollars)
  
  $
  34.1
  
  $
  65.2
  
  $
  52.2Percentage of total revenue
  
  14
  %
  23
  %
  25
  %Total revenue (millions of U.S. dollars)
  
  $
  237.7
  
  $
  281.0
  
  $
  210.4  
 (1) Excludes non-cash items affecting gold and silver
revenues, such as the recognition of deferred income or deferral of revenue to
future periods for hedge accounting purposes.  The effects of
changes in sales volume and prices were:  Revenue Variances  Year  ended
  December 31
  
  2001
  
  2000
  
  1999thousands of U.S. dollarsIncrease (decrease) in volume
  
  $
  (29,968
  )
  $
  79,770
  
  $
  (16,438
  )Lower gold prices
  
  (9,154
  )
  (4,084
  )
  (3,649
  )Higher (lower) silver prices
  
  (4,170
  )
  (5,061
  )
  (1,743
  )Increase/(decrease) in total revenue from the
  previous year
  
  $
  (43,292
  )
  $
  70,625
  
  $
  (21,830
  )  The decrease in
gold revenue from 2000 to 2001 was primarily due to lower gold prices
realized.  The decrease in silver
revenues from 2000 to 2001 was due to lower grades and decreased production at
McCoy/Cove. The increase in gold revenue from 1999 to 2000 was primarily due to
the re-commissioning of Lupin operations; increased mill grades and recoveries
at McCoy/Cove and higher leach pad tons at Round Mountain.  The increase in silver revenues from 1999 to
2000 was due to higher grades and increased production at McCoy/Cove.    Production Costs Production Costs per Ounce of Gold Produced
  
  2001
  
  2000
  
  1999Direct mining expense
  
  $
  214
  
  $
  192
  
  $
  237Deferred stripping and mine development costs
  
  11
  
  3
  
  (23
  )Inventory movements and other
  
  (2
  )
  (2
  )
  1Cash operating costs
  
  223
  
  193
  
  215Royalties
  
  10
  
  9
  
  11Production taxes
  
  
  
  2
  
  Total cash costs
  
  233
  
  204
  
  226Depreciation
  
  41
  
  35
  
  58Amortization
  
  14
  
  20
  
  20Reclamation and mine closure
  
  8
  
  12
  
  11Total production costs
  
  $
  296
  
  $
  271
  
  $
  315Percentage increase (decrease) from prior year
  
  9.2
  %
  (14.0
  )%
  (0.6
  )%  Cash Operating Costs per Ounce of Gold Produced
  
  2001
  
  2000
  
  1999Round Mountain
  
  $
  190
  
  $
  195
  
  $
  200Lupin
  
  246
  
  213
  
  McCoy/Cove
  
  252
  
  179
  
  221Kettle River
  
  288
  
  218
  
  238Company consolidated weighted average
  
  $
  223
  
  $
  193
  
  $
  215Percentage increase (decrease) from prior year
  
  15.5
  %
  (10.2
  )%
  3.4
  %  In 2001, the
average cash operating cost per ounce was $223 compared with $193 in 2000 and
$215 in 1999.  Cash operating costs per
ounce were higher in 2001 compared to 2000, reflecting lower production at
McCoy/Cove and Kettle River. Cash operating costs per ounce were lower in 2000
compared to 1999, reflecting increased grades and higher production at
McCoy/Cove. The Companys consolidated cash operating cost target is $225 per
ounce of gold produced in 2002.  Operating costs
include mining and processing costs for gold and silver sold during the year.
The most significant of these costs are labor, consumable materials, repairs of
machinery and equipment, fuel, utilities and environmental compliance.  The cost of transporting personnel and
freight to the Lupin mine is also a significant cost for that operation.  The reconciliation
of cash operating costs per ounce to the financial statements for the last
three years is provided below.  Reconciliation of Cash Operating Costs per Ounce to Financial
Statement 2001
  
  2000
  
  1999thousands of U.S. dollars, except per ounce amountsOperating costs per financial statements
  
  $
  175,341
  
  $
  173,435
  
  $
  139,816Change in finished goods inventory and other
  
  (2,334
  )
  208
  
  2,381Co-product cost of silver produced
  
  (26,322
  )
  (39,574
  )
  (34,732
  )Cash operating costs
  
  $
  146,685
  
  $
  134,069
  
  $
  107,465Gold ounces produced
  
  657,784
  
  694,663
  
  499,836Cash operating costs per ounce
  
  $
  223
  
  $
  193
  
  $
  215    RESERVES The data referred to herein, in respect of mineral reserves and mineral
resources, have been verified by Ralph Bullis, Director of Exploration.  Mr. Bullis, a full-time employee of the
Company, is aqualified person within the meaning of applicable Canadian
securities regulatory standards.  He has
verified the data disclosed herein, including any relevant sampling, analytical
and test data. Reserves reported for development properties are reviewed by independent
third parties in conjunction with feasibility studies. The following
table presents mineral reserves by property. 
A description of each mine follows the Mineral Reserves and Mineral
Resources sections.  See Risk Factors
for a discussion of items that could affect the Companys reserve estimates.  An Ore Reserve
or Mineral Reserve is the economically mineable part of a measured or
indicated resource demonstrated by at least a preliminary feasibility
study.  This study must include adequate
information on mining, processing, metallurgical, economic and other relevant
factors that demonstrate, at the time of reporting that economic extraction can
be justified.  An ore reserve or mineral
reserve gives effect to diluting materials and allowances for losses that may
occur when the material is mined but does not reflect any subsequent losses in
leaching or milling.  Mineral reserves
are further divided into proven and probable mineral reserves.  A Proven Mineral
Reserve comprises the economically mineable part of a measured mineral
resource where there is the highest degree of confidence in the estimate.  It is restricted to that part of the deposit
where production planning is taking place and for which any variation in the
estimate would not significantly affect potential economic viability.  A Probable
Mineral Reserve is the economically mineable part of an indicated, and in some
cases a measured mineral resource where there is a lesser degree of confidence
in the estimate.  The underlying
preliminary feasibility study must address whether economic extraction can be
justified.  Mineral
Reserves(1) (proven and
probable at December 31)  2001
  
  2000
  
  1999Tons
  
  Average
  grade(2)
  
  Contained
  ounces
  
  Contained
  ounces
  
  Contained
  ounces(thousands, except average grades)GoldMines:Round Mountain(3)
  
  118,490
  
  0.019
  
  2,244
  
  2,609
  
  2,938Lupin
  
  1,367
  
  0.256
  
  350
  
  434
  
  518McCoy/Cove
  
  430
  
  0.031
  
  13
  
  161
  
  514Kettle River
  
  129
  
  0.194
  
  25
  
  70
  
  1622,632
  
  3,274
  
  4,132Development
  properties:Aquarius
  
  17,527
  
  0.068
  
  1,189
  
  1,189
  
  1,164Total gold
  
  
  
  
  
  3,821
  
  4,463
  
  5,296SilverMcCoy/Cove
  
  430
  
  2.624
  
  1,128
  
  10,899
  
  28,243Total silver
  
  
  
  
  
  1,128
  
  10,899
  
  28,243  
 (1)Drill spacing used to
determine reserves varies by ore type and are as follows by property: Round
Mountain - 50 to 100 feet for proven reserves, 100 to 200 feet for probable
reserves; McCoy/Cove - 40 to 100 feet for proven reserves, 110 to 230 feet for
probable reserves; Lupin - 15 feet laterally and 65 feet vertically for proven
reserves, 75 feet for probable reserves; Kettle River - 75 feet for proven and
probable reserves; Aquarius - 82 feet for proven and probable reserves.  (2)Ounces per ton.  (3)The Companys 50% share
of tons and contained ounces.    The Company
reports extractable (minable) mineral reserves.  Reserves do not reflect recovery losses in the milling or heap
leaching processes, but do include allowance for dilution of ore in the mining
process.  Mineral reserves
were estimated based on a gold price of $300 per ounce at December 31, 2001
($300 per ounce at December 31, 2000 and $325 per ounce at December 31, 1999)
and a silver price of $4.25 per ounce at December 31, 2001 ($5.00 per ounce at
December 31, 2000 and $5.50 per ounce at December 31, 1999.)  The market price for gold has for more than
four years traded, on average, below the level used in estimating reserves at
December 31, 2001.  If the market price
for gold were to continue at such levels and the Company determined that its
reserves should be estimated at a significantly lower gold price than that used
at December 31, 2001, there would be a reduction in the amount of gold
reserves. The Company estimates that if reserves at December 31, 2001 were
based on $275 per ounce of gold, reserves would decrease by approximately 13%
at Round Mountain, 5% at Kettle River and 2% at the Aquarius development
property.  There would be no impact on
reserves at Lupin and McCoy/Cove.  The
estimates are based on extrapolation of information developed in the reserve
calculation, but without the same degree of analysis required for reserve
estimation.  Should any significant
reductions in reserves occur, material write-downs of the Companys investment
in mining properties and/or increased amortization, reclamation and closure
charges may be required.  Change in Proven and
Probable Mineral Reserves The reconciliation
of the change in proven and probable reserves from December 31, 2000 to
December 31, 2001 is as follows.  Gold
  
  Silver(millions
  of ounces)Proven and probable reserves at December 31, 2000
  
  4.5
  
  10.9Production(1)
  
  (0.8
  )
  (9.8
  )Extensions, discoveries and adjustmentsRound Mountain
  
  0.1
  
  Proven and probable reserves at December 31, 2001
  
  3.8
  
  1.1  
 (1)Production represents
previously modeled, in-situ ounces mined during 2001; this amount does not
reflect recovery losses from heap leaching and milling  For further information
on mineral reserves for specific mines, see the mines descriptions in
Business and Properties.    MEASURED
AND INDICATED RESOURCES The term Mineral
Resource covers mineralization and natural material of intrinsic economic
interest which has been identified and estimated through exploration and
sampling.  Within this mineralization
mineral reserves may subsequently be defined by the consideration and
application of technical, economic, legal, environmental, socio-economic and
governmental factors.  To qualify as a
mineral resource the material must have reasonable prospects for economic
extraction, having regard to relevant technical and economic factors.  Mineral resources are sub-divided, in
decreasing order of geological confidence, into measured, indicated and
inferred categories.  A Measured
Mineral Resource is one for which quantity, grade or quality, densities, shape
and physical characteristics are so well established that they can be estimated
with confidence sufficient to allow the appropriate application of technical
and economic parameters, to support production planning and evaluation of the
economic viability of the deposit.  The
estimate is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely
enough to confirm both geological and grade continuity.  An Indicated
Mineral Resourceis one where the nature, quality, quantity and distribution
of data are such as to allow confident interpretation of the geological
framework and reasonably to assume continuity of mineralization.  The indicated mineral resource estimate is
intended to be of sufficient quality to support a preliminary feasibility study
which can serve as the basis for development and production planning decisions.  Cautionary Note to U.S. Investors
concerning estimates of Measured and Indicated Resources This section uses
the terms measured and indicated resources. We advise U.S. investors that
while those terms are recognized and required by Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize them.  U.S.
investors are cautioned not to assume that all or any part of mineral deposits in
these categories will ever be converted into reserves.  The following table
presents measured and indicated resources by property. Measured and indicated
resources for producing mines and development properties are generally
estimated by the Company.  Measured and
Indicated Resources(1)(2) (at December 31)  2001
  
  2000
  
  1999Tons
  
  Average
  grade(3)
  
  Tons
  
  Average
  grade(3)
  
  Tons
  
  Average
  grade(3)(thousands, except average grades)GoldRound Mountain (50%)
  
  3,914
  
  0.024
  
  9,353
  
  0.022
  
  15,682
  
  0.020Lupin
  
  3
  
  0.215
  
  76
  
  0.263
  
  69
  
  0.275Kettle River
  
  94
  
  0.191
  
  418
  
  0.189
  
  17
  
  0.235McCoy/Cove
  
  
  
  
  
  
  
  
  
  100
  
  0.350SilverMcCoy/Cove
  
  
  
  
  
  
  
  
  
  100
  
  2.000  
 (1)Measured and indicated
resources have not been included in the proven and probable ore reserve
estimates because even though enough drilling, trenching, and/or underground
work indicate a sufficient amount and grade to warrant further exploration or development
expenditures, these resources do not qualify under the U.S. Securities and
Exchange Commission standards as commercially minable ore bodies until further
drilling, metallurgical work, and other economic and technical feasibility
factors based upon such work are resolved  (2)Quantities of measured
and indicated resources are roughly equivalent to the commonly used term
mineralized materials.  (3)Ounces per ton.    INFERRED RESOURCES An Inferred
Mineral Resourceis the part of a mineral resource for which quantity and
grade or quality can be estimated on the basis of geological evidence and
limited sampling and reasonably assumed, but not verified, geological and grade
continuity.  The information is based on
limited information and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes.  Due to the uncertainty which may attach to
inferred mineral resources, it cannot be assumed that all or any part of an
inferred mineral resource will be upgraded to an indicated or measured mineral
resource as a result of continued exploration.  Cautionary Note to U.S. Investors
concerning estimates of Inferred Resources This section uses
the term inferred resources.  We
advise U.S. investors that while this term is recognized and required by
Canadian regulations, the U.S. Securities and Exchange Commission does not
recognize it. Inferred Resources have a great amount of uncertainty as to
their existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an inferred resource
will ever be upgraded to a higher category. 
Under Canadian rules estimates of inferred resources may not form the
basis of feasibility or other economic studies. U.S. investors are cautioned not to
assume that all or any part of an inferred resource exists, or is economically
or legally minable.  The following
table presents inferred resources by property. 
Inferred resources for producing mines and development properties are
generally estimated by the Company.  Inferred
Resources(1) (at December 31)  2001
  
  2000
  
  1999Tons
  
  Average grade(2)
  
  Tons
  
  Average grade(2)
  
  Tons
  
  Average grade(2)(thousands, except average grades)GoldMines:Round Mountain (50%)
  
  29,999
  
  0.014
  
  45,267
  
  0.014
  
  47,440
  
  0.015Lupin
  
  369
  
  0.314
  
  611
  
  0.326
  
  739
  
  0.337Kettle River
  
  11
  
  0.182
  
  96
  
  0.177
  
  
  
  Development properties(3):Aquarius
  
  724
  
  0.066
  
  724
  
  0.066
  
  575
  
  0.078Ulu
  
  1,279
  
  0.326
  
  1,279
  
  0.326
  
  1,509
  
  0.374  
 (1)Inferred resources have
not been included in the proven and probable ore reserve estimates because even
though enough drilling, trenching, and/or underground work indicate a
sufficient amount and grade to warrant further exploration or development
expenditures, these resources do not qualify under the U.S. Securities and
Exchange Commission standards as commercially minable ore bodies until further
drilling, metallurgical work, and other economic and technical feasibility
factors based upon such work are resolved.  (2)Ounces per ton.  (3)The Companys
construction and production decisions at its development properties depend on
the issuance of appropriate permits and the ability of the Company to obtain
required financing.  See Aquarius
Development Project.    ROUND
MOUNTAIN The Company owns an undivided 50% interest in and
operates the Round Mountain gold mine. 
Homestake Mining Company owns the remaining undivided 50% interest in
the joint venture common operation.  The
Round Mountain gold mine is an open-pit mining operation located 60 miles north
of Tonopah in Nye County, Nevada.  The
property position consists of contiguous patented and unpatented mining claims
covering approximately 27,500 acres, while the active project boundary
encompasses 7,263 acres.  The Company
has received patents to convert minable land to patented status.  Patented claims cover all of the current
reserves in the ultimate pit.  The following
table sets forth operating data for the Round Mountain operation from 1997
through 2001.  The Companys share of
production is 50% of the ounces shown and the Company is obligated to pay 50%
of all operating, capital and other related costs.  2001
  
  2000
  
  1999
  
  1998
  
  1997Gold
  produced (ounces) (100%):Heap leachedreusable pad
  
  219,704
  
  141,176
  
  140,988
  
  182,378
  
  268,518Heap leacheddedicated pad
  
  369,750
  
  352,132
  
  215,825
  
  221,396
  
  195,558Milled
  
  156,854
  
  139,870
  
  157,901
  
  97,686
  
  6,410Other(1)
  
  642
  
  6,950
  
  27,094
  
  9,044
  
  7,194Total
  
  746,950
  
  640,128
  
  541,808
  
  510,504
  
  477,680Mining cost/ton of ore and
  waste
  
  $
  0.83
  
  $
  0.83
  
  $
  0.73
  
  $
  0.66
  
  $
  0.65Heap leaching cost/ton of
  ore
  
  $
  0.82
  
  $
  0.68
  
  $
  0.68
  
  $
  0.74
  
  $
  0.61Milling cost/ton of ore
  
  $
  3.07
  
  $
  2.80
  
  $
  2.92
  
  $
  3.36
  
  $
  4.38Production cost/ounce of
  gold producedDirect mining expense
  
  $
  178
  
  $
  200
  
  $
  221
  
  $
  209
  
  $
  208Deferred stripping cost
  
  14
  
  (1
  )
  (19
  )
  (7
  )
  2Inventory movements and
  other
  
  (2
  )
  (4
  )
  (2
  )
  (4
  )
  (3
  )Cash operating cost
  
  190
  
  195
  
  200
  
  198
  
  207Royalties
  paid
  
  18
  
  17
  
  19
  
  20
  
  22Production
  taxes
  
  2
  
  1
  
  
  
  3
  
  4Total cash cost
  
  210
  
  213
  
  219
  
  221
  
  233Depreciation
  
  40
  
  43
  
  48
  
  46
  
  39Amortization
  
  15
  
  18
  
  18
  
  18
  
  18Reclamation and mine
  closure
  
  9
  
  9
  
  9
  
  7
  
  7Total production costs
  
  $
  274
  
  $
  283
  
  $
  294
  
  $
  292
  
  $
  297Capital expenditures
  (millions)(2)
  
  $
  15.0
  
  $
  4.6
  
  $
  7.7
  
  $
  12.6
  
  $
  30.7Deferred (applied) mining
  expenditures (millions)(2)
  
  $
  (5.3
  )
  $
  0.4
  
  $
  5.1
  
  $
  1.7
  
  $
  (0.4
  )Heap leachedreusable pad:Ore processed (tons/day)
  
  23,601
  
  24,335
  
  15,602
  
  18,953
  
  26,608Total ore processed (000
  tons)
  
  8,520
  
  8,785
  
  5,741
  
  6,842
  
  9,552Grade (ounce/ton)
  
  0.035
  
  0.028
  
  0.034
  
  0.036
  
  0.036Recovery rate (%)
  
  77.4
  
  61.6
  
  73.4
  
  70.6
  
  74.9Heap leacheddedicated pad:Ore processed (tons/day)
  (100%)
  
  128,637
  
  141,047
  
  120,020
  
  101,892
  
  107,716Total ore processed (000
  tons) (100%)
  
  46,438
  
  50,918
  
  44,167
  
  36,783
  
  38,670Grade (ounce/ton)
  
  0.011
  
  0.011
  
  0.011
  
  0.010
  
  0.010Recovery rate (%)
  
  
  (3)
  
  (3)
  
  (3)
  
  (3)
  
  (3)Milled:(4)Ore processed (tons/day)
  (100%)
  
  10,171
  
  9,304
  
  8,083
  
  7,993
  
  n.m.Total ore processed (000
  tons) (100%)
  
  3,702
  
  3,387
  
  2,999
  
  2,885
  
  274Gold grade (ounce/ton)
  
  0.050
  
  0.045
  
  0.067
  
  0.045
  
  0.041Gold recovery rate (%)
  
  83.7
  
  83.1
  
  87.0
  
  77.9
  
  60.0  
 (1)A
high-grade occurrence was discovered in April 1992. A small gravity plant was
constructed to recover these ounces.  (2)The
Companys 50% share.  (3)For
dedicated leach pads, a gold recovery rate cannot be calculated until leaching
is complete. Based on metallurgical test work completed during 1994 and 1995,
the eventual recovery rate is estimated to be approximately 50%.  (4)Construction
of a mill to treat higher-grade non-oxidized ore was completed in the fourth
quarter of 1997.  n.mNot
meaningful.    Geology and Mineral Reserves Gold mineralization at Round Mountain primarily
occurs as electrum, a natural gold/silver alloy, in association with quartz,
adularia and pyrite.  The oblong
open-pit mine is over a mile at its longest dimension and currently more than
1,200 feet from the highest working level to the bottom of the pit. Round
Mountain mineral reserves(1)(2)  at December 31, 2001 were as follows.  Tonnage
  (000s short tons)
  
  Average
  grade
  of gold
  (ounces per ton)
  
  Gold
  content(3) 
  000s ounces)Round Mountain pit
  
  141,057
  
  0.022
  
  3,132Offloads and heap leach stockpiles(4)
  
  89,368
  
  0.010
  
  931Mill stockpiles
  
  6,554
  
  0.065
  
  425Total Proven and Probable-2001
  
  236,979
  
  0.019
  
  4,488Proven
  
  175,967
  
  0.018
  
  3,173Probable
  
  61,012
  
  0.022
  
  1,315Total Proven and Probable-2001
  
  236,979
  
  0.019
  
  4,488Total Proven and Probable-2000
  
  273,206
  
  0.019
  
  5,218  
 (1)The Companys share is
50% of the reserves presented.  (2)See Reserves for a
discussion of the estimation of proven and probable mineral reserves.  (3)Reserves
include allowances for dilution in mining but do not reflect losses in the
leaching process.  The average leach
recovery rate for the reusable pad in 2001 was 77.4%.  The eventual average recovery rate for the dedicated pad is
estimated to be approximately 50%.  The
mill recovery rate was 83.7% in 2001.  (4)The
offloads consist of approximately 42 million tons of previously crushed,
leached and rinsed ore. The heap leach stockpiles consist of approximately 47
million tons of previously unprocessed ore. Sampling and metallurgical testing
conducted in 1994 and 1995 confirmed that this material could be profitably
processed on the dedicated leach pads.  The cut-off grades
are 0.006 ounce of gold per ton for oxides and 0.010 ounce per ton for
non-oxides.  The prospective waste to
ore ratio of pit ore is 0.68:1.  Miningand Processing The Round Mountain operation uses conventional open-pit mining methods
and recovers gold using four independent processing operations.  These include crushed ore leaching (reusable
pad), run-of-mine ore leaching (dedicated pad), milling and the gravity concentration
circuit.  Most of the ore is heap
leached, with higher grade oxidized ores crushed and placed on the reusable
pad.  Lower grade ore,ore
removed from the reusable leach pad and stockpiled ore that was previously
leachedare placed on the dedicated pad.  The reusable pad
processed 23,601 tons of ore per day in 2001, compared to 24,335 tons per day
in 2000.  Reusable pad volume varies
with ore release, which is determined by the phases of the pit being
mined.  Reusable pad production
increased in 2001 to 219,704 ounces from 141,176 ounces in 2000 due to the
processing of higher grade ores and higher recoveries.    The dedicated pad
processed 128,637 tons of ore per day in 2001, compared to 141,047 tons per day
in 2000.  Production in 2001 from the
dedicated pad was 369,750 ounces, compared to 352,132 ounces in 2000, due to
higher recoveries.  The mill processed 10,171
tons per day in 2001 producing 156,854 ounces, compared to 9,304 tons per day
in 2000 producing 139,870 ounces.  The
mill facility achieved a recovery rate of 83.7% from both higher-grade oxide
and non-oxidized ores during 2001 by employing gravity concentration, fine
grinding and cyanide leaching.  Round Mountain mine
production is subject to a net smelter return royalty ranging from 3.53% at
gold prices of $320 per ounce or less to 6.35% at gold prices of $440 per ounce
or more.  Its production is also subject
to a gross revenue royalty of 3.0%, reduced to 1.5% after $75.0 million has
been paid.  Ore and waste rock were
mined at a rate of approximately 194,579 tons per day in 2001 compared to
193,837 tons per day in 2000.  In 2001, Round Mountain
purchased a new fleet of eight 240-ton haul trucks at a total cost of $18.0
million (the Companys share, $9.0 million). 
In 2002, Round Mountain plans to purchase four additional 240-ton haul
trucks at a total cost of approximately $9.0 million (the Companys share, $4.5
million).  Mining at Round Mountain
is expected to be complete during 2006 (assuming no additions to reserves),
with completion of stockpile processing in 2008.  The joint venture partners continue to support an aggressive
exploration program in the vicinity of the mine in order to add reserves and
extend the mine life.  In 2001, the
operation conducted an exploration program to explore for geologic environments
similar to the Round Mountain deposit.  In 2002, Round Mountain
is expected to produce approximately 700,000 ounces (the Companys share
350,000 ounces), 6% less than 2001s production of 746,950 ounces (the
Companys share, 373,475 ounces) reflecting anticipated lower dedicated pad
recovery from previously leached stockpiled material.  See Cautionary Safe Harbor Statement under the United States
Private Securities Litigation Reform Act of 1995 and  Risk Factors.    LUPIN The Lupin mine is an
underground operation located 250 miles northeast of Yellowknife in the Nunavut
Territory of Canada, 56 miles south of the Arctic Circle.  The Lupin mining lease
covers 6,998 acres.  The principal lease
was renewed for 21 years in 1992 and, provided the Company has complied with
its terms, is renewable for further 21 year periods subject to any
applicable regulations then in effect. 
The lease was granted by the Department of Indian Affairs and Northern
Development on behalf of the Crown and is subject to the provisions of the
Territorial Lands Act and the Canada Mining Regulations.  The lease is in good standing.  See Other-Governmental and Environmental
Regulation for discussion regarding Inuit ownership interests.  Based on current reserves
of 350,000 ounces and other resources of 0.4 million tons at an average grade
of 0.314 ounces of gold per ton, the mine plan projects production through
2004.  Drilling indicates additional
mineralization at depth, which if confirmed by additional drilling, could
extend the mine life for several more years. 
The Ulu satellite deposit, located approximately 100 miles north of
Lupin, represents the potential for additional mill feed for the site.  The following table sets
forth operating data for the Lupin mine from 1997 through 2001.  2001
  
  2000
  
  1999(1)
  
  1998(1)
  
  1997Gold
  produced (ounces)
  
  139,327
  
  117,729
  
  
  
  
  
  165,335Mining cost/ton of ore
  
  C$
  47.35
  
  C$
  42.36
  
  
  
  
  
  C$
  46.09Milling cost/ton of ore
  
  C$
  13.43
  
  C$
  13.98
  
  
  
  
  
  C$
  11.77Production cost/ounce of
  gold  produced:Canadian dollars:Direct mining expense
  
  C$
  420
  
  C$
  344
  
  
  
  
  
  C$
  381Deferred mine development
  
  (16
  )
  (6
  )
  
  
  
  
  13Inventory movements and
  other
  
  
  
  
  
  
  
  
  
  (1
  )Cash operating cost
  
  C$
  404
  
  C$
  338
  
  
  
  
  
  C$
  393U.S. dollars:Cash operating cost
  
  US$
  246
  
  US$
  213
  
  
  
  
  
  US$
  284Royalties
  
  
  
  
  
  
  
  
  
  Production taxes
  
  
  
  
  
  
  
  
  
  Total cash cost
  
  246
  
  213
  
  
  
  
  
  284Depreciation
  
  30
  
  27
  
  
  
  
  
  71Amortization
  
  7
  
  8
  
  
  
  
  
  24Reclamation and mine
  closure
  
  14
  
  17
  
  
  
  
  
  14Total production cost
  
  US$
  297
  
  US$
  265
  
  
  
  
  
  US$
  393Capital expenditures
  (millions US$)
  
  $
  2.6
  
  $
  4.7
  
  
  
  
  
  $
  12.3Deferred (applied) mining
  expenditures (millions US$)
  
  $
  1.5
  
  $
  0.4
  
  
  
  
  
  $
  (1.8
  )Milled:Ore processed (tons/day)
  
  1,883
  
  1,861
  
  
  
  
  
  2,167Total ore processed (000
  tons)
  
  685
  
  508
  
  
  
  
  
  789Grade (ounce/ton)
  
  0.218
  
  0.248
  
  
  
  
  
  0.226Recovery rate (%)
  
  93.2
  
  93.3
  
  
  
  
  
  92.6  
 (1)     The Lupin mine was under
care and maintenance in 1999 and 1998.    Geologyand Mineral Reserves Gold at the Lupin deposit
occurs in a Z-shaped isoclinally folded iron formation of Archean age.  Gold is associated with pyrrhotite,
arsenopyrite and quartz. Lupin mineral reserves(1) at December 31, 2001 were as
follows.  Tonnage
  (000s short tons)
  
  Average grade
  of gold
  (ounces per ton)
  
  Gold content(2)(000s ounces)Center Zone
  
  493
  
  0.278
  
  137East Zone
  
  128
  
  0.226
  
  27West Zone
  
  590
  
  0.251
  
  148McPherson Zone
  
  156
  
  0.263
  
  38Total Proven and Probable - 2001
  
  1,367
  
  0.256
  
  350Proven
  
  949
  
  0.254
  
  241Probable
  
  418
  
  0.259
  
  109Total Proven and Probable - 2001
  
  1,367
  
  0.256
  
  350Total Proven and Probable - 2000
  
  1,678
  
  0.259
  
  434  
 (1)     See Reserves for a
discussion of the estimation of proven and probable mineral reserves.  (2)     Reserves do not reflect losses in the
milling process but do include allowance for dilution of ore in the mining
process. The mining recovery factor was estimated at 85%. The average mill
recovery rate in 2001 was 93.2%.  The cut-off grade used in
the reserve calculation is 0.204 ounce of gold per ton except for portions of
the East Zone, where a cut-off grade of 0.150 ounce of gold per ton was
used.  The lower grade East Zone
represents 6% of total reserves at Lupin.  Mining and Processing Access to the Lupin
underground mine, removal of ore and waste, and movement of personnel within
the mine is by a shaft developed to a depth of 3,970 feet and by a ramp driven
to a depth of 4,510 feet.  The first
phase of the winze (internal shaft) has been developed between the 3,450 foot
level and the 4,400 foot level, allowing removal of ore and waste from deeper
within the mine.  However, additional
ground support is required and longer truck haulage distances are a factor as
the depth increases.  As a result,
mining in the deeper levels of the mine is slower and more expensive.  The mill processed 1,883
tons per day in 2001 compared to 1,861 tons per day in 2000. Production
increased due to a full year of production in 2001 compared to nine months of
production in 2000, partially offset by the mining and milling of lower grade
ore.  In 2002, Lupin is
expected to produce 140,000 ounces, approximately the same amount as in
2001.  See Cautionary Safe Harbor
Statement under the United States Private Securities Litigation Reform Act of
1995 and Risk Factors.  Supplies Utilitiesand Transportation The Lupin mill facilities
and mine are in a remote location in the sub-Arctic region of Canada.  The Company must, therefore, prepare for and
respond to difficult weather and other conditions.  At the mine, the Company maintains supplies of spare parts and
other materials, including fuel, in excess of that required at less remote
locations.  The principal supplies
needed for the operation of the Lupin mine are diesel fuel, chemical reagents
(including lime, cyanide and zinc), cement, grinding media, drill steel,
equipment parts, lubricants, food and explosives.  The largest single item is diesel fuel, which is used principally
to generate power.  A diesel-powered
generating plant provides power for all the Lupin facilities.  The powerhouse has a primary installed
capacity of approximately 18,000 kilowatts, which is supplemented by additional
standby generators having a combined capacity of 1,500 kilowatts.  Heating for the Lupin facilities is obtained
by using waste heat from these generators augmented by oil-fired boilers.    All equipment, materials
and supplies must be transported to the mine from Edmonton or Yellowknife.  Personnel are transported from these
locations and from Kugluktuk and Cambridge Bay in the Nunavut Territory.  In 2001, the cost of transporting personnel,
equipment, material and supplies to Lupin was approximately $5.2 million.  Each year since 1983, the Company has
completed a 360-mile ice road commencing 40 miles northeast of Yellowknife and
ending at the Lupin mine.  This is the
most economical way of transporting bulk items, including fuel, to the mine.
Winter road operating costs are shared with other users.  The winter road is usable for approximately
12 weeks each year beginning in mid-January, during which time tractor-trailers
can transport all of the Companys annual requirements for diesel fuel,
chemical reagents and other supplies. 
There are on-site facilities for the storage of approximately 5.4
million U.S. gallons of diesel fuel, which is in excess of the mines annual
requirements.  In order to operate the
winter road, the Company is required to obtain certain licenses from the
Federal and Territorial Governments.  To
date, the Company has experienced no significant difficulties in obtaining
these licenses.  The current license of
occupation expires in 2003.  The process
to file a new application for a jointly held license of occupation among major
road users is underway.  Surface facilities at the
Lupin mine include a 6,300-foot compacted gravel airstrip with an instrument
landing and navigation system and runway lighting.  Supplies and personnel that must be brought in by air are
transported principally on the Companys Boeing 727 aircraft, which carries up
to 114 passengers, or up to 35,000 pounds of freight, or a combination of both
passengers and freight.  Voice and data
communications with the Lupin mine are maintained via satellite, which provides
for uninterrupted communications regardless of weather conditions.  Water Supply and Waste Disposal Water for mining, milling
and domestic use is obtained on site by pumping from Contwoyto Lake.  Tailings from the mill are pumped into a
tailings pond or pumped underground as part of the paste-backfill.  Since 1995, approximately 31% of tailings
have been placed underground as paste-backfill. Water from the tailings pond is
processed through a water treatment plant and monitored for compliance with all
regulatory standards prior to discharge. 
In July of 2000, the Lupin water license was extended for a period of 8
years through 2008.    MCCOY/COVE The McCoy mine and
surrounding property is located in Lander County, Nevada, about 30 miles
southwest of the town of Battle Mountain. 
The Cove deposit, located one mile northeast of the McCoy deposit, was
discovered in early 1987.  Open pit
mining of the Cove deposit began in early 1988 and was completed in October
2000.  Underground mining of the Cove
deposit was completed in July 2001. 
Mining in the McCoy open pit was completed in April 2000.  The McCoy/Cove property
consists of approximately 946 unpatented and 9 patented claims covering
approximately 19,000 acres of United States federal land administered by the
Bureau of Land Management of the Department of the Interior.  The Company has completed all steps
currently required under U.S. law to convert certain unpatented claims to
patented status and has filed the appropriate applications for patents.  The patents have not been issued to date and
are currently in the process of government review.  See Other-Governmental and Environmental Regulation.  On February 13, 2002, the
Company entered into an agreement with Newmont Mining Corporation providing for
the sale of the McCoy/Cove mine and facilities in exchange for $6.0 million and
the assumption of all reclamation obligations at McCoy/Cove.  The agreement is subject to the completion
of due diligence by Newmont by July 31, 2002.  The following table sets
forth operating data for the McCoy/Cove operation from 1997 through 2001.  2001
  
  2000
  
  1999
  
  1998
  
  1997Gold produced (ounces)Milled
  
  70,395
  
  115,892
  
  79,336
  
  114,398
  
  131,905Heap leached
  
  24,238
  
  46,892
  
  45,200
  
  53,096
  
  55,129Total
  
  94,633
  
  162,784
  
  124,536
  
  167,494
  
  187,034Silver produced (ounces)Milled
  
  6,143,825
  
  11,417,439
  
  8,033,644
  
  9,014,817
  
  10,624,780Heap leached
  
  307,600
  
  910,858
  
  396,428
  
  398,006
  
  396,928Total
  
  6,451,425
  
  12,328,297
  
  8,430,072
  
  9,412,823
  
  11,021,708Mining cost/ton of ore and
  waste
  
  $
  
  
  $
  0.78
  
  $
  0.66
  
  $
  0.71
  
  $
  0.74Heap leaching cost/ton of
  ore
  
  $
  
  
  $
  2.44
  
  $
  1.82
  
  $
  1.74
  
  $
  1.70Milling cost/ton of ore
  
  $
  7.19
  
  $
  6.38
  
  $
  6.32
  
  $
  6.09
  
  $
  8.82Production cost/ounce of
  gold produced:Direct mining expense
  
  $
  239
  
  $
  166
  
  $
  252
  
  $
  200
  
  $
  276Deferred stripping cost
  
  13
  
  12
  
  (35
  )
  (1
  )
  (10
  )Inventory movements and
  other
  
  
  
  1
  
  4
  
  4
  
  5Cash operating cost
  
  252
  
  179
  
  221
  
  203
  
  271Royalties
  
  1
  
  3
  
  2
  
  3
  
  3Production taxes
  
  (3
  )
  5
  
  
  
  2
  
  (1
  )Total cash cost
  
  250
  
  187
  
  223
  
  208
  
  273Depreciation
  
  49
  
  26
  
  48
  
  52
  
  66Amortization
  
  9
  
  28
  
  27
  
  37
  
  44Reclamation and mine
  closure
  
  
  
  11
  
  11
  
  9
  
  10Total production cost
  
  $
  308
  
  $
  252
  
  $
  309
  
  $
  306
  
  $
  393Average gold-to-silver
  price ratio(1)
  
  62:1
  
  56:1
  
  54:1
  
  54:1
  
  67:1Capital expenditures
  (millions)
  
  $
  1.0
  
  $
  0.7
  
  $
  1.1
  
  $
  1.3
  
  $
  2.2Deferred (applied) mining
  expenditures (millions)
  
  $
  (2.2
  )
  $
  (5.1
  )
  $
  9.5
  
  $
  0.5
  
  $
  3.7Heap leached:Ore processed (tons/day)
  
  
  
  4,971
  
  11,262
  
  11,296
  
  17,840Total ore processed (000
  tons)
  
  
  
  1,809
  
  4,178
  
  4,112
  
  6,494Gold grade (ounce/ton)
  
  
  
  0.024
  
  0.022
  
  0.021
  
  0.018Silver grade (ounce/ton)
  
  
  
  0.96
  
  0.37
  
  0.26
  
  0.29Gold and silver recovery
  rates
  
  
  (2)
  
  (2)
  
  (2)
  
  (2)
  
  (2)Milled:Ore processed (tons/day)
  
  10,642
  
  11,461
  
  12,000
  
  11,829
  
  9,315Total ore processed (000
  tons)
  
  3,874
  
  4,172
  
  4,452
  
  4,306
  
  3,391Gold grade (ounce/ton)
  
  0.042
  
  0.053
  
  0.038
  
  0.046
  
  0.061Silver grade (ounce/ton)
  
  2.60
  
  3.71
  
  3.02
  
  2.95
  
  4.54Gold recovery rate (%)
  
  42.4
  
  50.7
  
  45.8
  
  57.8
  
  64.3Silver recovery rate (%)
  
  61.7
  
  69.8
  
  61.3
  
  69.8
  
  69.7  
 (1)To
convert costs per ounce of gold into comparable costs per ounce of co-product
silver, divide the production cost per ounce of gold by the periods average
gold-to-silver price ratio  (2)As
dedicated leach pads are used at McCoy/Cove, a gold recovery rate cannot be
calculated until leaching is complete. Based on metallurgical testing completed
in 1987-1989, as well as results of completion of one of three leach pads, the
ultimate recovery rate for crushed ore is estimated to be about 68% for gold
and 35% for silver and for run-of-mine ore, 48% for gold and 10% for silver.    Geology and Mineral Reserves McCoy/Cove mineral reserves(1) at December 31, 2001 were as follows.  Tonnage
  (000s short tons)
  
  Average
  grade
  (ounces per ton)
  
  Content(2)
  (000s ounces)Gold
  
  Silver
  
  Gold
  
  SilverStockpiles
  
  430
  
  0.031
  
  2.624
  
  13
  
  1,128Proven2001
  
  430
  
  0.031
  
  2.624
  
  13
  
  1,128Total Proven and Probable2000
  
  4,720
  
  0.034
  
  2.309
  
  161
  
  10,899  
 (1)See
Reserves for a discussion of the estimation of proven and probable mineral
reserves  (2)Reserves
include allowances for dilution in mining but do not reflect losses in the
recovery process. Recovery rates for the life-of-mine are estimated to be 55%
for gold and 68% for silver.  All
reserves are in stockpiles.  Mining and Processing Ore
mined from underground amounted to 88,000 tons in 2001, compared to 63,000 tons
mined in 2000.  The higher mining rate
is attributable to completion of development and greater experience in the ore
body.  Open pit mining was
completed in 2000 and a portion of the mining fleet is being used to move
stockpiled ore to the mill and for reclamation activities.  The processing of stockpiled material will
cease in early 2002 as the stockpiles are depleted; reclamation activities will
continue for several years.  Stockpiled ore decreased
from 4.7 million tons in 2000 to 0.4 million tons in 2001.  With the exception of the ore mined and
processed from the underground in 2001, all ore processed has been supplied
from stockpiles.  The stockpiled ore
will be consumed by early 2002.  Mill
throughput averaged 10,642 tons per day in 2001 compared to 11,461 in 2000 due
to longer retention times needed for carbonaceous ores.  Gold and silver from mill production
decreased in 2001 compared to 2000 due to lower grades and decreased recoveries
as a result of the lower grades.  McCoy/Cove production is
subject to a 2% net smelter return royalty. 
This royalty is based on sales less certain deductions.    The
Cove South Deep underground contributed 88,000 tons to the mill and produced
approximately 38,000 ounces of gold and 60,000 ounces of silver.  Mining was completed at Cove South Deep in
2001.  Residual
leaching continued on two of the heap leach pads in 2001.  Excellent results were obtained from
re-leaching side slopes and internal areas of these pads.  Residual leaching will continue in
2002.  Rinsing and restoration of the
first of three heap leach pads commenced in 1999 and contouring and seeding was
completed in 2000.  Heap
leach gold production was lower in 2001 compared to 2000 as no new ore was
placed on the pads in 2001. A total of 1.8 million tons of fresh ore was added
in 2000.  McCoy/Cove will
transition from a producing property to a property in reclamation in 2002.  The mill will continue processing the
remaining stockpiled ore until March and will then be shut down. As a result,
McCoy/Cove is expected to produce 10,000 ounces of gold and 1.3 million ounces
of silver by approximately the end of the first quarter of 2002.  See Cautionary Safe Harbor Statement
under the United States Private Securities Litigation Reform Act of 1995 and
Risk Factors.    KETTLE
RIVER The Kettle River
properties are located in Ferry County in the State of Washington and cover
approximately 8,588 acres through patented and unpatented mining claims and fee
lands.  In 2000, exploration
efforts identified an extension to the northeast of the K-2 project. This area
was developed in 2001 and is scheduled for mining in 2002.  However, additions to reserves were less
than expected and the Company recorded a provision for impaired assets of $4.4
million in the fourth quarter of 2001. 
The need for, and the amount of, the provision was determined by
comparing asset carrying values to estimated future net cash flows from
existing reserves.  The following table sets
forth operating data for the Kettle River operation from 1997 through 2001.  2001
  
  2000
  
  1999
  
  1998
  
  1997Gold produced (ounces)
  
  50,349
  
  94,086
  
  104,396
  
  113,692
  
  129,866Mining cost/ton of ore
  
  $
  25.20
  
  $
  20.52
  
  $
  23.57
  
  $
  21.65
  
  $
  21.53Milling cost/ton of ore
  
  $
  12.02
  
  $
  11.58
  
  $
  11.22
  
  $
  10.71
  
  $
  10.58Production cost/ounce of gold produced:Direct mining expense
  
  $
  229
  
  $
  224
  
  $
  239
  
  $
  238
  
  $
  231Deferred mine development
  
  
  
  
  
  
  
  
  
  Inventory movements and other
  
  59
  
  (6
  )
  (1
  )
  6
  
  (4
  )Cash operating cost
  
  288
  
  218
  
  238
  
  244
  
  227Royalties
  
  10
  
  13
  
  15
  
  12
  
  14Production taxes
  
  1
  
  1
  
  2
  
  1
  
  2Total cash cost
  
  299
  
  232
  
  255
  
  257
  
  243Depreciation
  
  19
  
  11
  
  55
  
  77
  
  54Amortization
  
  42
  
  8
  
  8
  
  5
  
  36Reclamation and mine closure
  
  15
  
  15
  
  15
  
  12
  
  12Total production cost
  
  $
  375
  
  $
  266
  
  $
  333
  
  $
  351
  
  $
  345Capital expenditures (millions)
  
  $
  4.1
  
  $
  1.4
  
  $
  0.5
  
  $
  1.5
  
  $
  3.8Milled:Ore processed (tons/day)
  
  934
  
  1,470
  
  1,698
  
  2,017
  
  2,118Total ore processed (000 tons)
  
  340
  
  535
  
  630
  
  734
  
  771Grade (ounce/ton)
  
  0.178
  
  0.209
  
  0.198
  
  0.187
  
  0.197Recovery rate (%)
  
  83.0
  
  84.1
  
  83.7
  
  82.8
  
  85.4  Geology and Mineral Reserves Mineral reserves at the K-2 deposit are contained in steeply dipping
quartz carbonate veins hosted by Eocene age volcanic rocks.  Kettle River mineral reserves(1) at December
31, 2001 were as follows.  Tonnage
  (000s short tons)
  
  Average grade
  of gold 
  (ounces per ton)
  
  Gold content(2)(000s ounces)Ore stockpiles
  
  22
  
  0.182
  
  4K-2
  
  107
  
  0.196
  
  21Total Proven and Probable-2001
  
  129
  
  0.194
  
  25Proven
  
  105
  
  0.197
  
  21Probable
  
  24
  
  0.179
  
  4Total Proven and Probable-2001
  
  129
  
  0.194
  
  25Total Proven and Probable-2000
  
  363
  
  0.193
  
  70  
 (1)See
Reserves for a discussion of the estimation of proven and probable mineral
reserves.  (2)Reserves
do not reflect losses in the milling process but do include allowance for
dilution in the mining process. The average mill recovery rate of gold in 2001
was 83.0%.    The cut-off grade is
0.143 ounces of gold per ton at K-2.  Mining and
Processing At Kettle River, a series
of deposits are mined and trucked to feed a central mill. In 2001,
approximately 78% of ore milled came from K-2 and 22% came from Lamefoot
stockpiles.  The mill processed
approximately 934 tons of ore per day in 2001, compared to 1,470 tons per day
in 2000.  Total Kettle River production
decreased in 2001 compared to 2000 due to the completion of Lamefoot mining in
2000.  The mining method used at
K-2 is longhole open stoping, with delayed backfill.  Total K-2 ore production in 2001 was 221,547 tons compared to
227,671 in 2000.  K-2 area production at
Kettle River is subject to a 5% gross proceeds royalty and a net smelter return
royalty ranging from 2% at gold prices of $300 per ounce or less to 3% at gold
prices of $400 per ounce or more.  A
portion of production from the Lamefoot area of the Kettle River mine is
subject to a 5% net smelter return royalty.  In 2002, Kettle River is
expected to produce approximately 35,000 ounces of gold, which is 30% less than
the 50,349 ounces of gold produced in 2001, reflecting lower mill tonnage.  See Cautionary Safe Harbor Statement
under the United States Private Securities Litigation Reform Act of 1995 and
Risk Factors.    AQUARIUS DEVELOPMENT PROJECT In 1997, the Company
deferred a final construction decision on its 100%-owned Aquarius gold project,
located in Macklem Township, 40 kilometers east of Timmins, Ontario, Canada.  Based on the revised
bankable feasibility study completed during 2000, Aquarius has proven and
probable reserves of 1,189,000 ounces of gold at December 31, 2000 (17.5
million tons of ore at an average grade of 0.068 ounces per ton).  The reserves are based on a cutoff grade of
0.015 ounce per ton.  The cutoff grade
was based on a price of $300 per ounce of gold.  The Company expensed
Aquarius holding costs of $0.8 million in 2001 and $0.7 million in 2000.  At December 31, 2001, the Company has a net
book value of approximately $43.7 million in acquisition and construction costs
related to Aquarius.  Further delays in
development and construction from continued low gold prices could result in a
write-down of all or a portion of these costs. 
The Company expects to expense approximately $1.1 million in development
holding costs for Aquarius in 2002.  EXPLORATION In addition to conducting
exploration for new gold deposits, the Company explores for extensions of known
reserves at its mines and development properties.  The Companys exploration program concentrates on those projects
believed to represent the most promising near-term prospects.  In particular, exploration efforts are
focused on projects located where the Company already has, or plans an
extensive gold mining infrastructure, principally those prospects in North
America.  At Round Mountain,
drilling continued at the Gold Hill property located approximately four miles
north of the current mining and processing facilities.  Results were encouraging and additional
drilling will continue in 2002 to delineate the potential.  At Kettle River, drilling
continued to define an extension to the northeast of the K-2 deposit.  In 2002, work will continue to further
delineate and define the resource.  SUNNYSIDE In 1996, Sunnyside Gold
Corporation (SGC), an indirect wholly owned subsidiary of the Company,
finalized a consent decree with the State of Colorado that set standards for
the release of all reclamation and water treatment permits and resolved future
enforcement issues regarding groundwater seeps and springs.  SGC estimates that it will take at least two
more years for all of the conditions of the consent decree agreement to be
fulfilled by both parties.  SGC has $3.6
million accrued at December 31, 2001 for future reclamation costs at the
Sunnyside mine.  SGCs provision for
future reclamation costs is reviewed periodically and adjusted, as additional
information becomes available.  OTHER Precious Metal Sales and Hedging Activities The Companys doré bars
are further refined by third parties and the refined gold and silver is sold to
banks or precious metal dealers.  The Companys
profitability is subject to changes in gold and silver prices, exchange rates,
interest rates and certain commodity prices. 
To reduce the impact of such changes, the Company attempts to lock in
the future value of certain of these items through hedging transactions.  These transactions are accomplished through
the use of derivative financial instruments, the value of which is derived from
movements in the underlying prices or rates.  The Company continually
monitors its hedging policy in light of forecasted production, operating and
capital expenditures, exploration and development requirements and factors
affecting volatility of gold prices such as actual and prospective interest
rate and gold lease rate performance. 
The gold-related instruments used in these transactions include forward
sales contracts and options. These forward sales contracts obligate the Company
to sell gold at a specific price on a future date.  Call options give the holder the right, but not the obligation to
buy gold on a specific future date at a specific price.  These tools reduce the risk associated with
gold price declines, but also could limit the Companys participation in
increases of gold prices. The Company engages in forward currency-exchange
contracts to reduce the impact on the Lupin mines operating costs caused by
fluctuations in the exchange rate of U.S. dollars to Canadian dollars.    The Company assesses the
exposure that may result from a hedging transaction prior to entering into the
commitment, and only enters into transactions which it believes accurately
hedge the underlying risk and could be safely held to maturity.  The Company does not engage in the practice
of trading derivative securities for profit. 
The Company regularly reviews its unrealized gains and losses on hedging
transactions.  The credit risk exposure
related to all hedging activities is limited to the unrealized gains on
outstanding contracts based on current market prices.  To reduce counterparty credit exposure, the Company deals only
with large, credit-worthy financial institutions and limits credit exposure to
each.  In addition, the Company deals
only in markets it considers highly liquid to allow for situations where
positions may need to be reversed.  At December 31, 2001, the
estimated fair value of the Companys hedge portfolio was $1.4 million. The
Companys current counterparties do not require margin deposits.  Sensitivity to various market factors
underlying these contracts are shown in note 18 to the consolidated financial
statements.  In 2001, the Company
delivered approximately 19% of gold production against forward sales and put
options at an average commitment price of $317 per ounce.  This compares with 37% of gold production at
$313 per ounce in 2000 and 77% of gold production at $346 per ounce in
1999.  Approximately 21% of silver
production was delivered against forward sales and put options at an average
cash price of $5.86 per ounce in 2001. 
This compares to 35% at $5.71 per ounce in 2000 and 43% at $5.66 per
ounce in 1999.  The Companys commodity
contracts as of December 31, 2001 are shown in note 18 to the consolidated
financial statements.  For the year
2002, this position includes forward sales of approximately 60,000 ounces of
gold at a minimum forward price of $293 per ounce. In addition, the Company has
sold call options for 120,000 ounces of gold at an average strike price of $297
per ounce.  These forward sales
contracts and call options represent approximately 5% of current reserves. The
reduced hedging position results from continued weakness in spot gold prices
and low forward premiums resulting in lower hedge prices that can be achieved.  The Companys hedging
commitments are described in note 18 to the Companys consolidated financial
statements.  See also Qualitative and
Quantitative Disclosures about Market Risk.  Credit Facilities On October 5, 2001, a $17
million revolving credit and $4 million letter of credit facility was
established with HSBC Bank USA.  The
facility has been guaranteed by an affiliate of Franco-Nevada Mining
Corporation Limited, which holds approximately 67.8% of the Companys capital
securities.  This credit facility
expires in September 2002.  The Company
expects to generate sufficient cash flow from operations at current gold prices
to repay a significant portion of the outstanding balance.  The Company expects to establish a new
facility prior to the expiration date of the current facility.  See also Liquidity and Capital Resources.    Governmental and
Environmental Regulation Canada The mining industry in
the Nunavut Territory, where the Companys Lupin mine is situated, operates
under Canadian federal and territorial legislation governing prospecting,
development, production, environmental protection, exports, income taxes, labor
standards, mine safety and other matters. 
The Company believes its Canadian operations are operating in
substantial compliance with applicable law.  The Companys Lupin
operation is subject to environmental regulation primarily by the Federal
Department of Indian Affairs and Northern Development and the Nunavut Water
Board.  In addition, any changes or
additions to existing operations at Lupin may be subject to environmental assessment
by the federal government under the Canadian Environmental Assessment Act
(Canada).  The Department of Fisheries
& Oceans (Canada) and the Department of the Environment (Canada) have an
enforcement role in the event of environmental incidents, but presently have no
direct regulatory role in relation to the Lupin operation.  Lupin is also subject to the jurisdiction of
the Nunavut Department of Sustainable Development pursuant to the Nunavut
Environmental Protection Act.  This Act
contains requirements to obtain licenses and permits that may affect the Lupin
operation in the future.  The Company
believes it is in substantial compliance with all relevant territorial
environmental law.  On April 1, 1999, the
Nunavut Agreement, dated May 25, 1993, between the Inuit of Canadas eastern
arctic region and Her Majesty the Queen in right of Canada, came into
force.  Under this agreement, the Inuit
were granted ownership of approximately 360,000 square kilometers of land in an
area referred to as the Nunavut Settlement Area, including ownership of subsurface
rights in approximately 37,500 square kilometers of those lands.  Third party interests in lands in the
Nunavut Settlement Area created prior to April 1, 1999 are protected under the
Nunavut Agreement.  Where a third party
was granted a mining lease under the Canada Mining Regulations in lands
comprising the Nunavut Settlement Area, that interest continues in accordance
with the terms and conditions on which it was granted, including any rights
granted under the legislation that gave rise to the interest.  However, where any successor legislation has
the effect of diminishing the rights afforded to the federal government, it
will not bind the Inuit without its consent. The Inuit are entitled to receive
whatever compensation is payable by the interest holder for the use or
exploitation of mineral rights.  The
federal government continues to administer the third party interest on behalf
of the Inuit, unless the third party and the Inuit enter into an agreement under
which the third party agrees to the administration of their interest by the
Inuit. In the event such an agreement is reached, the applicable legislation
will cease to apply to the third party interest.  Subsurface interests in such lands continue to be administered in
accordance with applicable legislation relating to those interests and are not
affected by the Nunavut Agreement.  Third party interests in
lands in the Nunavut Settlement Area created on or after April 1, 1999 are
granted, in the case of surface rights, by the appropriate regional Inuit
association and, in the case of subsurface rights, by Nunavut Tungavik
Incorporated, which will hold subsurface title to Inuit owned lands and will be
additionally responsible, in consultation with the appropriate regional Inuit
associations, for the administration and management of those subsurface rights.  United
States The Companys U.S.
operations are subject to comprehensive regulation with respect to operational,
environmental, safety and similar matters by federal agencies including the
U.S. Department of the Interior (Bureau of Land Management), the U.S.
Department of Agriculture (U.S. Forest Service), the U.S. Environmental
Protection Agency (EPA), the U.S. Mine Safety and Health Administration
(MSHA) and similar state and local agencies. 
Failure to comply with applicable laws, regulations and permits can
result in injunctive actions, damages and civil and criminal penalties.  If the Company expands or changes its
existing operations or proposes any new operations, it may be required to obtain
additional or amended permits or authorizations in accordance with the National
Environmental Policy Act or state law counterparts.  The Company spends substantial time, effort and funds in
planning, constructing and operating its facilities to ensure compliance with
U.S. environmental and other regulatory requirements.  Such efforts and expenditures are common throughout the U.S.
mining industry and generally should not have a material adverse effect on the
Companys competitive position.    The Company believes its
U.S. operations are in substantial compliance with applicable air and water
quality laws and regulations, including reporting requirements under the
Emergency Planning Community Right to Know Act, and that it has acquired or
applied for all permits required under such laws or requested by the states in
which it is operating.  Certain wastes from
mining and mineral processing operations are currently exempt from regulation
under the Bevill amendment to the federal Resource Conservation and Recovery
Act (RCRA).  However, Congress may
consider revision and reauthorization of RCRA, as well as the federal Clean
Water Act and Endangered Species Act, each of which substantially affects mine
development and operations.  The effect
of any revised or additional regulation on the Companys U.S. operations cannot
be determined until the legislative process is completed and new administrative
rules are issued, but they can have a significant impact upon operations of all
mining companies and increase the costs of those operations.  New laws and regulations,
amendments to existing laws and regulations, administrative interpretation of
existing laws and regulations, or more stringent enforcement of existing laws
and regulations, could have a material adverse impact on the Companys results
of operations and financial condition, although the results of such actions are
speculative.  For example, during recent
legislative sessions, legislation was considered in the United States Congress
which proposed a number of modifications to the General Mining Law of 1872,
which has traditionally governed the location and maintenance of unpatented
mining claims and related activities on federal land.  Among these modifications were proposals that would have (i)
imposed a royalty on production from unpatented mining claims, (ii) increased
the cost of holding and maintaining such claims, and (iii) imposed more
specific reclamation requirements and standards for operations on such
claims.  Although none of these proposed
modifications was enacted into law, Congress may consider the same or similar
proposals in 2002 as well.  The one area in which
specific action has been taken relates to the regulation of surface activities
on federally owned lands administered by the Bureau of Land Management
(BLM).  New surface management
regulations (the 3809 Regulations) were enacted and became effective on
January 20, 2001.  The effect of the new
3809 Regulations is to create a significantly more stringent and restrictive
environment for activities and operations on federal lands involving unpatented
mining claims and millsites.  For
example, the new 3809 Regulations provide that all activities on unpatented
mining claims or millsites for which approval of a Plan of Operations is required
(which includes all activities other than exploration activities that disturb
less than five acres of surface) are subject to a new standard of review by the
BLM, which must make a determination that the proposed activities would not
cause substantial irreparable harm to significant scientific, cultural or
environmental resource values that cannot be effectively mitigated.  That new standard would apply to any new
significant activities undertaken by the Company or its subsidiaries on federal
public lands.  Imposition of that new
standard does not affect the Companys existing approved Plans of Operation at
its Round Mountain, McCoy/Cove and Kettle River properties.  If the Company makes any substantive
modifications to those existing Plans of Operation (such as widening a road or
expanding a leach pad or tailings facility), that standard (as well as all
other provisions of the new 3809 Regulations) would apply unless the Company
could demonstrate to the BLMs satisfaction that it was not practical for economic,
environmental, safety or technical reasons. 
In addition, under previous regulations, up to 75% of financial security
for the performance of reclamation obligations could be provided by corporate
guarantees.  While the new 3809
Regulations do provide for existing financial guarantees to continue to be in
effect, no new corporate guarantees were to be accepted after July 19,
2001.  To the extent applied to
modifications of the Companys current operations, and to the extent the
Company engages in activities or operations on public lands outside of its
current permit boundaries (including any new projects), the new 3809
Regulations will make the process for the preparation and obtaining of approval
of a Plan of Operations more time-consuming and expensive, and any such
proposed activities or operations will be subject to more detailed and
expensive regulatory requirements. 
Moreover, the Companys ultimate ability to have any such proposed
activities or operations approved will be subject to a much greater level of
uncertainty.  The new regulations may
not significantly affect existing operations, so long as such operations do not
require, for their continuing viability, new discretionary permits for land
outside the boundaries of land currently permitted or significant changes
within current permit boundaries.  New,
including expanded, exploration or mining operations will need to quantify the
cost burden imposed by the new regulations when assessing the economic
viability of any project.    In addition, the BLM has
called upon two of the Companys subsidiaries to provide other security to
replace corporate guarantees that had been given in respect of the Round
Mountain and McCoy/Cove operations totaling approximately $33 million.  The subsidiaries consider the BLMs action,
taken by administrative decision, to be arbitrary, capricious and an abuse of
discretion and will vigorously oppose and contest the decision.  The BLM has not asked for additional
security amounts, rather the agency has requested a different form of
security.  If the BLM position were to
prevail there is a risk the BLM would initiate action designed to have
operations suspended at the applicable location.  The potential impact on the Company as a result of such
administrative action is difficult to predict. 
See Risk Factors.  The federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA),
commonly called the Superfund Act, contains stringent reporting requirements
for the release or disposal of hazardous substances, with substantial fines for
noncompliance.  In addition, under
CERCLA, any party responsible for the release or threatened release of a
hazardous substance into the environment is liable for all clean-up costs.  Responsible parties under CERCLA include the
owner or operator of the site where the release occurs or anyone who owned or
operated the site when a disposal was made, regardless of culpability.  Mining wastes are subject to CERCLA regulation
if they contain hazardous substances, and the EPA has included several mining
sites on its list of high-priority sites for clean up under CERCLA.  Various types of dust
control, revegetation and similar reclamation-related measures are generally
required for the Companys U.S. operations under specific state or federal air,
water quality and mine reclamation rules and permits.  The BLM and Forest Service permits and Plans of Operations for
the Companys operations also contain reclamation-related requirements.  The Company believes its operations are in
substantial compliance with these reclamation requirements.  Reclamation spending in 2001 amounted to
approximately $4.9 million.  The Company believes that
all of its U.S. operations are currently being conducted in substantial
compliance with applicable MSHA and similar state labor, health and safety
rules.  Employees At December 31, 2001, the
Company employed 1,194 persons excluding temporary employees directly involved
in short-term programs, broken down as follows.  Round Mountain, including
  ancillary services
  648McCoy/Cove
  143Kettle River
  88Lupin
  284Technical and corporate staff and other
  311,194  A sufficient supply of
qualified workers is available for both Canadian and U.S. operations, although
the continuation of such supply depends upon a number of factors, including the
availability of other employment opportunities.  None of the Companys employees are represented by labor unions.
The Company believes it generally has good relations with its employees.  The Company provides its employees with a
competitive compensation package and comprehensive benefits program.    Executive Officers of the Registrant The executive officers of the Company are listed below.  Name
  
  Age
  
  Position
  with the Company and business experience within the last five yearsLOIS-ANN L. BRODRICK
  
  58
  
  Vice President and Corporate Secretary of the
  Company since March 1998; Corporate Secretary of the Company from May 1996 to
  March 1998ROBERT L. LECLERC
  
  57
  
  Chairman and Chief Executive Officer of the Company
  since April 1997; Chairman of the Company from May 1996 to April 1997JERRY L.J. MCCRANK
  
  51
  
  Vice President, Operations of the Company since
  March 1998; General Manager at Lupin from July 1997 to March 1998; General
  Manager, Operations from November 1996 to July 1997TOM S.Q. YIP
  
  44
  
  Vice President, Finance and Chief Financial Officer
  of the Company since August 1999; Vice President, Controller and Principal
  Accounting Officer of the Company from March 1998 to August 1999; Controller
  and Principal Accounting Officer of the Company from September 1997 to March
  1998; prior thereto Director, Internal Audit  Mining Risks and
Insurance The Company carries
insurance against property damage, including boiler and machinery insurance,
and comprehensive general liability insurance of $50 million per occurrence,
which is applicable to all operations. 
The Company carries special liability policies applicable to aircraft
and motor vehicles.  It is also insured
against dishonesty and gold and silver bullion thefts, as well as losses of
goods in transit.  The property damage
and boiler and machinery insurance policies include coverage for business
interruption resulting from an insured physical loss, subject to a five-day
waiting period and a maximum indemnification period of one year.  Risks not insured against
include mine cave-ins, mine flooding and other uninsurable underground hazards,
ground failure in open-pit mines and most types of environmental pollution
against which the Company cannot insure or against which it has elected not to
insure.  The Company believes that
it has taken adequate precautions to minimize the risk of environmental
pollution.  However, with respect to
certain mines, there is some risk that cyanide may escape from leach pads or
tailings dams in sufficient quantities to cause water or surface
pollution.  See Governmental and
Environmental Regulation.  Underground mining is
generally subject to certain types of risks and hazards, including unusual or
unexpected formations, pressures, cave-ins, flooding and other conditions.  The Company has not experienced any
significant cave-ins at its underground mines. 
In addition, because mining can be conducted on a number of different
levels at the same time, a cave-in in one area would not necessarily affect
mining in other areas.  Open-pit mining, such as
that conducted at certain of the Companys mines, is generally subject to
certain types of risks and hazards, primarily pit wall failure.  Open pit mining is conducted in phases and a
pit wall failure in one area would not necessarily affect overall pit design or
mining in unaffected areas.    Supplies Utilities and Transportation The principal supplies
needed for the operation of the Companys mines are explosives, diesel fuel,
chemical reagents (including cyanide, lime, sulfur dioxide, sodium hydroxide
and zinc dust), cement, equipment parts and lubricants.  Power is supplied to the
Companys mines by power companies or by diesel generators. Each mine has
access to adequate water.  Each of the U.S. mines
has good road access by either paved or gravel roads from state highways.  The Lupin mill facilities
and mine are in a remote location in the sub-Arctic region of Canada. The
Company must therefore prepare for and respond to difficult weather and other
conditions. All equipment, materials and supplies must be transported to the
mine from Edmonton or Yellowknife. 
Personnel are transported from these locations and from Kugluktuk and
Cambridge Bay in the Nunavut Territory. 
Each year since 1983, the Company has completed a 360-mile ice road
commencing 40 miles northeast of Yellowknife and ending at the Lupin mine.  This is the most economical way of
transporting bulk items, including fuel, to the mine.  The Company operates a Boeing 727 to transport personnel and some
supplies to the mine.  Waste Disposal Heap leaching is done
with a weak cyanide solution held within a closed circuit, which includes the
leach pads and surface holding ponds. 
Leached ore from the reusable pad at Round Mountain is rinsed and fed to
the mill or placed on dedicated pads. 
Where dedicated pads are used, the leached ore remains on the pads.  Mill processing may use a cyanide leaching
solution, which is contained within the mills processing circuits.  See Governmental and Environmental
Regulation.  See also Lupin-Water Supply and Waste Disposal.  Royalties Round Mountain mine
production is subject to a net smelter return royalty ranging from 3.53% at
gold prices of $320 per ounce or less to 6.35% at gold prices of $440 per ounce
or more.  Its production is also subject
to a gross revenue royalty of 3.0%, reduced to 1.5% after $75.0 million has
been paid.  McCoy/Cove production is
subject to a 2% net smelter return royalty. 
This royalty is based on sales less certain deductions.  A portion of production
from the Lamefoot area of the Kettle River mine is subject to a 5% net smelter
return royalty.  K-2 area production at
Kettle River is subject to a 5% gross proceeds royalty and a net smelter return
royalty ranging from 2% at gold prices of $300 per ounce or less to 3% at gold
prices of $400 per ounce or more.  Lease Commitments The Company leases office
premises for its head office functions, and enters into lease commitments for
office equipment.  The Company incurred
$1.1 million in rental expense in 2001, net of $1.4 million in rental income
related to office subleases.  The
Companys commitments under the remaining terms of the leases are approximately
$6.7 million, payable as follows: $2.0 million in 2002, $1.6 million in 2003,
$1.5 million in 2004, $1.0 million in 2005, $0.1 million in 2006 and $0.5
million thereafter.  History of the
Company The Company was
incorporated in Canada in 1964 and is governed by the Canada Business
Corporations Act.  The business of the
Company has always involved precious metal (gold and silver) exploration,
development and production.  Gold and
silver are produced at four operating mines: see Operations Summary.    Since the beginning of
the Companys last fiscal year, the most significant event has been the
agreement to exchange the Companys capital securities for common shares.  This transaction, negotiated in September
and October 2001 with the holders of the capital securities, was submitted to a
shareholder vote.  At a special meeting
of shareholders held March 28, 2002, a resolution was passed authorizing the
issuance of sufficient common shares to retire the capital securities.  The transaction is anticipated to be
completed on or before April 15, 2002. 
Once completed, control of the Company will no longer rest with the
shareholders that were asked to vote on the resolution.  Franco-Nevada Mining Corporation
(Franco-Nevada) is the most significant holder of the Companys capital
securities with 67.8%.  Franco-Nevada is
a corporation whose traditional business involved the acquisition of royalty
interests in precious metals mines and other properties.  In early 2002, Franco-Nevada completed a
business combination transaction with Newmont Mining Corporation (Newmont), a
large gold producer based in the United States.  As a result of this transaction, Franco-Nevada has become part of
Newmont.  RISK
FACTORS Continued depressed gold prices may negatively affect the
Companys production, profitability, reserves and liquidity.  The
profitability of the Companys current operations is directly related and
sensitive to the market price of gold, which fluctuates widely due to factors
beyond the Companys control.  Since
1997, gold prices have been at depressed levels and may remain at such
depressed levels in the future.  If gold
prices should fall below the Companys cash costs of production and remain at
such levels for any sustained period of time, it may not be economically
feasible to continue commercial production at any or all of the Companys
mines.  This previously occurred in
January 1998, when the Company temporarily suspended operations at the Lupin
mine.  Also in 1997, the Company deferred
a final construction decision on its Aquarius development project and deferred
further development of the Ulu satellite deposit in Canada due to the
decline in gold prices.  The cash operating costs
at the Companys four operating mines averaged $223 per ounce in 2001 and are
expected to average approximately $225 per ounce in 2002.  Total production costs were $296 per ounce
in 2001 and are expected to average approximately $300 per ounce in 2002.  Given the current price of gold, $301 per
ounce as of March 28, 2002, the Company may experience liquidity difficulties,
and its ability to invest funds in exploration and development may be
significantly impaired.  While the
Company continues to generate cash flow from operations at current gold prices,
the amount of cash flow available for acquisitions, investments, exploration
and development remains very limited.  Declines
in the market price of gold and related precious metals also may require the
Company to write-down its reserves, which would adversely affect production,
profitability and theCompanys financial
position.  The gold price used in
estimating the Companys mineral reserves at December 31, 2001 was $300 per
ounce. The market price was $277 per ounce at December 31, 2001.  The market price of gold has for more than
four years traded, on average, below the price at which the Company estimates
its reserves.  If the Company were to
determine that its reserves and future cash flows should be estimated at a
significantly lower gold price than that used at December 31, 2001, there would
likely be a reduction in the amount of gold reserves.The Company
estimates that if reserves at December 31, 2001 were based on $275 per ounce of
gold, reserves would decrease by approximately 13% at Round Mountain, 5% at
Kettle River and 2% at the Aquarius development property.  Should any significant reductions in
reserves occur, material write-downs of the Companys investment in mining
properties and increased amortization, reclamation and closure charges may be
required.For example, in 2001, due to an unexpected reduction in reserves, a $4.4
million provision was made for impaired assets at Kettle River.  Under
certain such circumstances, the Company may discontinue the development of a
project or mining at one or more of its properties.    The
Company has implemented a hedging program to reduce the risk associated with
gold price volatility, however, there is no assurance that the Companys
hedging strategies will be successful. 
See Other-Precious Metal Sales and Hedging Activities and Managements
Discussion and Analysis  Commitments and Contingencies.  Failure to replace reserves may negatively affect production.  Because
mines have limited lives based on proven and probable reserves, the Company
must continually replace and expand its reserves as it produces gold and
silver.  It is currently estimated that
McCoy/Cove and Kettle River have less than one year of mine life remaining
without the development of additional reserves.  The Companys ability to maintain or increase its annual production
of gold and silver will be dependent in significant part on its ability to
bring new mines into production, such as the Aquarius project in Canada, and to
expand existing mines.  No
assurance can be given that the Companys exploration programs will result in
the replacement of current production with new reserves or that the Companys
development program will be able to extend the life of the Companys existing
mines.  In the event that new reserves
are not developed, the Company will not be able to sustain its current level of
gold or silver production beyond the life of its existing reserve estimates and
revenues will decrease as a result.  There
are a number of uncertainties inherent in any exploration and development
program relating to:  the
location of economic mineral reserves; the development
of appropriate metallurgical processes; the
receipt of necessary governmental permits; and the
construction of mining and processing facilities.  Accordingly,
there can be no assurance that the Companys efforts will yield new reserves to
replace and expand current reserves.  Failure
to develop new mines or expand existing mines may negatively affect future
production.  The
Companys ability to maintain, or increase, its annual production of gold will
be dependent in significant part on its ability to bring new mines into
production, such as the Aquarius project in Canada, and to expand existing
mines.  In 1997, the Company deferred a
final construction decision on Aquarius and deferred further development of the
Ulu satellite deposit in Canada.  The
economic feasibility analysis with respect to any individual project is based
upon:          the interpretation of
geological data obtained from drill holes and other sampling techniques;         estimates of cash operating costs based upon anticipated
tonnage and grades of ore to be mined and processed;         gold and silver price
assumptions;         the configuration of the
ore body;         expected recovery rates of
metals from the ore;         comparable facility and
equipment costs;         anticipated climatic
conditions;         estimates of labor
productivity; and         royalty or other ownership
burdens.  The
Companys feasibility studies are based on the Companys knowledge of the
operating history of similar ore bodies in the region.  The actual operating results of its
development projects, however, may differ materially from those anticipated,
and uncertainties related to operations are increased further in the case of
development projects.  In addition to
the successful completion of final feasibility studies, the issuance of necessary
permits and receipt of adequate financing are required for successful
development of properties. See Other-Governmental and Environmental
Regulation and Liquidity and Capital Resources.    The Company encounters strong
competition from other mining companies in connection with the acquisition of
personnel and properties producing or capable of producing precious metals.  As a
result of this competition, some of which is with companies with greater
financial resources, the Company may be unable to maintain or acquire the
personnel and expertise required to develop and operate its properties.  Also, the Company may be unable to acquire
attractive mining properties on terms it considers acceptable or at all.  Consequently, its revenues, operations and
financial condition could be materially adversely affected.  Failure to secure the necessary letters of credit or surety
bonds or to provide the necessary corporate guarantees to secure reclamation
obligations, could result in violation of the Companys operating permits and
impact the Companys ability to continue operating at specific locations.  Certain regulatory
agencies may require security to be provided for some or all of the cost to
restore land disturbed during operations. 
The Company has typically provided letters of credit, surety bonds and
corporate guarantees as security for these future reclamation costs. The market
place for third party security instruments is, however, very limited to the
mining industry and to the Company in particular.  If the Company is unable to secure the necessary forms of
security, its ability to continue operations at specific locations could be
jeopardized.  Even where the Company
currently has security in place for reclamation costs, it may be required to
provide additional, or alternative, financial instruments.  For example, early in 2001, regulators in
Nevada called upon two of the Companys subsidiaries to provide other forms of
security to replace corporate guarantees that had been given in respect of the
Round Mountain and McCoy/Cove operations totaling approximately $33
million.  The Company disagrees with the
regulators position and believes that the subsidiaries qualify under the
criteria set out for corporate guarantees and will oppose the regulatory
position.  If the Company is required to
provide additional or alternative forms of security, and is unable to do so at
acceptable costs or at all, it may be prohibited from commencing or continuing
operations and its financial condition and prospects would be adversely
affected.  See Other-Governmental and Environmental Regulation.  Reserve estimates are inherently uncertain.  Any material inaccuracies in the Companys
reserve estimates or assumptions underlying reserve estimates could cause
reserves to be overstated.  The
estimation of reserves and resources is inherently uncertain and involves
subjective judgments about many relevant factors.  The accuracy of any such estimate is a function of:  the
quantity and quality of available drilling data; engineering
and geological interpretation; testing
and production experience; gold
prices; operating
and capital costs; short-term
operating factors such as the need for sequential development of ore bodies;
and the
processing of new or different ore grades and ore types.  The volume and grade of
reserves mined and processed and recovery rates may not be the same as
currently anticipated.If it is not, the Company may discontinue
the development of a project or mining at one or more of its properties.  Reserve
calculations and life-of-mine plans using significantly lower prices (see gold
price affect on the Companys production, profitability, reserves and
liquidity) could result in material write-downs of its investment in mining
properties and increased amortization, reclamation and closure charges.    The Companys activities are subject to
complex laws and regulations that can adversely affect operating and
development costs, the timing of operations and/or the ability to operate.  The
Companys mining operations and exploration and development activities are
subject to extensive Canadian, U.S. and other foreign federal, state,
provincial, territorial and local laws and regulations governing exploration,
development, production, exports, taxes, labor standards, waste disposal,
protection of the environment, reclamation, historic and cultural resources
preservation, mine safety and occupational health, toxic substances, reporting
and other matters.  The costs of discovering,
evaluating, planning, designing, developing, constructing, operating and
closing the Companys mines and other facilities in compliance with such laws
and regulations are significant.  It is
possible that the costs and delays associated with compliance with such laws
and regulations could become such that the Company would not proceed with the
development or operation of a mine. 
Future regulatory developments, such as more stringent environmental
protection laws, regulations and enforcement policies thereunder, and claims
for damages to property and persons resulting from the Companys operations,
could result in substantial costs and liabilities, reduced profits and a
deterioration of its financial condition.  The
Company is required to obtain governmental permits to develop its reserves and
for expansion or advanced exploration activities at its operating properties
and its exploration properties. 
Obtaining the necessary governmental permits is a complex and
time-consuming process involving numerous Canadian, U.S. or foreign federal, state,
provincial, territorial and local agencies. 
The Company will be required to obtain additional permits to allow it to
construct and operate properties currently under development.  The duration and success of each permitting
effort are contingent upon many variables not within the Companys
control.  If the Company is unable to
obtain the necessary approvals, it will not be able to commence production at
the applicable mine.  See
Other-Governmental and Environmental Regulation.  In
addition, there is a risk that private individuals or entities may assert that
the Companys activities have caused damage to their interests.  For example, in 2000, a subsidiary of the
Company and numerous other parties were served with a complaint from the
Colorado School of Mines for environmental cleanup costs at a federal
Comprehesive Environmental Response, Compensation and Liability Act site.  The Companys share of the settlement was
approximately $89,500.  The Companys mining operations are subject to significant
risks that may not be covered by insurance.  The
business of gold and silver mining is generally subject to a number of risks
and hazards, including:  environmental
conditions; industrial
accidents; labor
disputes; unusual
or unexpected geological conditions; ground
or slope failures, cave-ins; changes
in the regulatory environment; and natural
phenomena such as inclement weather conditions, floods, blizzards and
earthquakes.  Such occurrences could result in:  damage
to mineral properties or production facilities; personal
injury or death; environmental
damage to the Companys properties or the properties of others; delays
in mining; monetary
losses and possible legal liability.  The Company maintains
insurance against some risks that are typical in the gold mining industry.  Where the Company believes the amounts to be
reasonable, they may not provide adequate coverage in some circumstances.  Insurance against some risks (including some
liabilities for environmental pollution or other hazards as a result of
exploration and production) are not generally available to the Company or to
other companies within the industry on acceptable terms.  See Other - Mining Risks and Insurance.    De-listing from the American Stock Exchange would limit the
ability of U.S. investors  to buy or sell the Companys common shares.  Early in 2000, The
American Stock Exchange advised the Company that its listing eligibility was
under review.  The review was undertaken
because the Company had fallen below two of the Exchanges continued listing
guidelines. The Company had sustained net losses in its five most recent fiscal
years (1995 to 1999) and in the Exchanges view, the Companys shareholders
equity under generally accepted accounting principles in the United States is
inadequate.  Although the Company has
attempted to meet the minimum requirements of the American Stock Exchange, it
may not succeed in maintaining its listing. 
If the Company were de-listed the liquidity of its common shares would
be aversely affected.  Certain of the Companys United States
property rights consist of unpatented lode mining claims.  Unpatented
mining claims and millsites are generally considered to be subject to greater
title risk than other real property interests. 
The validity of an unpatented mining claim or millsite, in terms of its
location and maintenance, and the uses thereof, is dependent on strict
compliance with a complex body of federal and state statutory and decisional
law, administrative interpretation of that law and, for unpatented mining
claims, the existence of a discovery of valuable minerals.  In addition, there are few public records
that definitively control the issues of validity and ownership of unpatented mining
claims or millsites.  There can be no
assurance that title to any of its unpatented mining claims or millsites may
not be defective.    GOLD PRICES The following table sets
forth annual high, low, average and end of period afternoon fixing gold prices
in U.S. dollars per troy ounce on the London Bullion Market.  Year ended
  December 31,2002*
  
  2001
  
  2000
  
  1999
  
  1998
  
  1997High
  
  $
  304
  
  $
  293
  
  $
  313
  
  $
  326
  
  $
  313
  
  $
  367Low
  
  278
  
  256
  
  264
  
  253
  
  273
  
  283Average
  
  290
  
  271
  
  279
  
  279
  
  294
  
  332End of Period
  
  301
  
  277
  
  274
  
  290
  
  286
  
  293  
 * Through March 28, 2002  SILVER
PRICES The following table sets
forth annual high, low, average and end of period noon prices in U.S. dollars
per troy ounce as quoted by Handy & Harman.  Year ended
  December 31,2002*
  
  2001
  
  2000
  
  1999
  
  1998
  
  1997High
  
  $
  4.78
  
  $
  4.86
  
  $
  5.53
  
  $
  5.77
  
  $
  7.31
  
  $
  6.13Low
  
  4.26
  
  4.06
  
  4.60
  
  4.91
  
  4.72
  
  4.18Average
  
  4.51
  
  4.39
  
  5.00
  
  5.25
  
  5.54
  
  4.87End of Period
  
  4.69
  
  4.50
  
  4.60
  
  5.40
  
  4.87
  
  6.13  
 * Through March 28, 2002  EXCHANGE
RATES The exchange rates of the
Canadian dollar to the U.S. dollar at the end of each period and the high, the
low and the average exchange rates for each period, were as follows (such
rates, which are expressed in Canadian dollars, being the noon buying rates
quoted by the Bank of Canada for U.S. dollars).  Year ended
  December 31,2002*
  
  2001
  
  2000
  
  1999
  
  1998
  
  1997High
  
  C$
  1.5767
  
  C$
  1.4936
  
  C$
  1.4341
  
  C$
  1.4433
  
  C$
  1.4075
  
  C$
  1.3353Low
  
  1.6132
  
  1.6012
  
  1.5593
  
  1.5514
  
  1.5765
  
  1.4358Average
  
  1.5945
  
  1.5482
  
  1.4852
  
  1.4864
  
  1.4823
  
  1.3838End of Period
  
  1.5935
  
  1.5956
  
  1.5002
  
  1.4433
  
  1.5512
  
  1.4352  
 * Through March 28, 2002    ITEM 3-LEGAL PROCEEDINGS  SUMMA In September 1992, the
Summa Corporation commenced a lawsuit against Echo Bay Exploration Inc. and
Echo Bay Management Corporation, indirect subsidiaries of the Company, alleging
improper deductions in the calculation of royalties payable over several years
of production at the McCoy/Cove and Manhattan mines.  The matter was tried in the Nevada State Court in April 1997,
with Summa claiming more than $13 million in damages, and, in September 1997,
judgement was rendered for the Echo Bay companies.  The decision was appealed by Summa to the Supreme Court of
Nevada, which heard the matter on November 9, 1999.  On April 26, 2000, the
Supreme Court of Nevada reversed the decision of the trial court and remanded
the case back to the trial court for a calculation of the appropriate
[royalties] in a manner not inconsistent with this order.  The case was decided by a panel comprised of
three of the seven Justices of the Supreme Court of Nevada and the Echo Bay
defendants petitioned that panel for a rehearing.  The petition was denied by the three member panel on May 15, 2000
and remanded to the lower court for consideration of other defenses and
arguments put forth by the Echo Bay defendants.  The Echo Bay defendants filed a petition for a hearing before the
full Court and on December 22, 2000, the Court recalled its previous
decision.  Both the Echo Bay defendants
and their counsel believe that grounds exist to modify or reverse the
decision.  The Company has $1.5 million
accrued related to the Summa litigation. 
If the appellate reversal of the trial decision is maintained and the
trial court, on remand, were to dismiss all the Echo Bay defenses, the royalty
calculation at McCoy/Cove would change and additional royalties would be
payable.  Neither the Company nor its
counsel believe it is possible to quantify the precise amount of liability
pursuant to a revised royalty calculation.  OTHER The Company is also
engaged in routine litigation incidental to its business.  ITEM
4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  There were no matters
submitted to a vote of security holders during the fourth quarter of 2001.  On March 28, 2002 the
Companys common shareholders authorized the issuance of up to an aggregate of
361,561,230 common shares in exchange for the capital securities. The exchange
is anticipated to be completed on or before April 15, 2002.    PART II  ITEM
5-MARKET FOR THE REGISTRANTS COMMON SHARES AND RELATED
SHAREHOLDER MATTERS  MARKET
INFORMATION The Companys common
shares were first sold to the public at $2.36 per share in
April 1983.  The Companys current
stock exchange listings, together with the date of listing, are set out below.  Canada-Toronto (April 1983) United States-American (October 1983) France-Paris (March 1985) Belgium-Brussels (October 1985) Switzerland-Zurich (April 1987) Germany-Frankfurt (November 1988)  The following table sets
forth for the period from January 1, 2000 through February 28, 2002 the high
and low reported prices and trading volume of the common shares on The Toronto
Stock Exchange and the American Stock Exchange.  The
  Toronto Stock Exchange
  
  American
  Stock ExchangeHigh
  
  Low
  
  Volume
  
  High
  
  Low
  
  Volume(Canadian
  Dollars)
  
  (shares in
  thousands)
  
  (U.S.
  Dollars)
  
  (shares in
  thousands)2000First Quarter
  
  2.85
  
  1.76
  
  2,445
  
  1.94
  
  1.25
  
  7,052Second Quarter
  
  2.09
  
  1.30
  
  2,824
  
  1.38
  
  0.88
  
  6,776Third Quarter
  
  1.61
  
  1.05
  
  2,075
  
  1.06
  
  0.69
  
  4,763Fourth Quarter
  
  1.15
  
  0.52
  
  2,749
  
  0.75
  
  0.32
  
  8,6802001First Quarter
  
  1.49
  
  0.59
  
  4,307
  
  0.95
  
  0.38
  
  6,842Second Quarter
  
  2.00
  
  0.89
  
  3,800
  
  1.24
  
  0.51
  
  11,026Third Quarter
  
  1.60
  
  0.79
  
  2,860
  
  1.04
  
  0.51
  
  7,122October
  
  1.12
  
  0.90
  
  801
  
  0.72
  
  0.60
  
  1,766November
  
  1.10
  
  0.90
  
  794
  
  0.73
  
  0.57
  
  1,683December
  
  0.95
  
  0.81
  
  435
  
  0.61
  
  0.50
  
  2,1262002January
  
  1.05
  
  0.82
  
  863
  
  0.65
  
  0.50
  
  6,329February
  
  1.60
  
  1.00
  
  1,984
  
  0.97
  
  0.60
  
  6,457  On March 28, 2002, the
closing price of the common shares on The Toronto Stock Exchange and on the
American Stock Exchange was C$1.48 and U.S.$0.92, respectively.  On March 28, 2002 the
Companys common shareholders authorized the issuance of up to an aggregate of
361,561,230 common shares in exchange for the capital securities (see note 7 to
the consolidated financial statements). 
The exchange is anticipated to be completed on or before April 15, 2002.  Early in 2000, The
American Stock Exchange advised the Company that its listing eligibility was under
review.  The review was undertaken
because the Company had fallen below two of the Exchanges continued listing
guidelines. The Company had sustained net losses in its five most recent fiscal
years (1995 to 1999) and in the Exchanges view, the Companys shareholders
equity under generally accepted accounting principles in the United States is
inadequate.  The Company has addressed
the Exchanges concerns through periodic progress reviews and believes
significant progress has been made in respect of the shareholder equity issue,
with the anticipated completion of the capital securities exhange transaction.    DIVIDENDS The Company suspended
payment of dividends beginning in 1997. 
The declaration and payment of future dividends is dependent upon the
Companys capital requirements, earnings and economic outlook.  Additionally, since April 1998, the Company
has exercised its right to defer its interest payment to holders of the capital
securities.  During the deferral period,
the Company is prohibited from paying dividends.  See Certain Tax
Matters-Canadian Federal Income Tax Considerations for information with
respect to Canadian withholding tax applicable to non-Canadian shareholders.  CERTAIN TAX MATTERS The following paragraphs
summarize certain United States and Canadian federal income tax considerations
in connection with the receipt of dividends paid on common shares of the
Company and certain United States and Canadian federal income tax
considerations in connection with a disposition of common shares.  These tax considerations are stated in brief
and general terms and are based on United States and Canadian law currently in
effect.  There are other potentially
significant United States and Canadian federal income tax considerations and
state, provincial or local income tax considerations with respect to ownership
and disposition of the common shares which are not discussed herein.  The tax considerations relative to ownership
and disposition of the common shares may vary from taxpayer to taxpayer depending
on the taxpayers particular status. 
Accordingly, prospective purchasers should consult with their tax
advisors regarding tax considerations that may apply to their particular
situation.  United States Federal Income Tax Considerations Dividends on common
shares paid to U.S. citizens or corporations (including any Canadian federal
income tax withheld) will be generally subject to U.S. federal ordinary income
taxation to the extent that a shareholder received a distribution out of the
shareholders ratable share of the Companys current or accumulated earnings
and profits (e.g., a taxable dividend distribution).  To the extent that the amount of the dividend distribution
exceeds the shareholders ratable share, such excess would not be taxable but
would reduce the shareholders basis in the Companys common stock.  To the extent that the distribution exceeds
the shareholders adjusted basis in the shares (i.e. cost less all non-taxable
dividend distributions), the excess would be taxable as a gain as if the
shareholder had sold or exchanged the shares. 
In this case, holding periods for capital gain purposes would be the
same as the holding period for such stock from which that dividend would be
attributed.  Such dividends will not be
eligible for the deduction for dividends received by corporations (unless such
corporation owns by vote and value at least 10% of the stock of the Company, in
which case a portion of such dividend may be eligible for such deduction).  U.S. corporations, U.S.
citizens and U.S. residents will generally be entitled, subject to certain
limitations, to a credit against their U.S. federal income tax for Canadian
federal income taxes withheld from such dividends.  Taxpayers may claim a deduction for such taxes if they do not
elect to claim such tax credit.  No
deduction for foreign taxes may be claimed by an individual taxpayer who does
not itemize deductions.  Because the
application of the foreign tax credit depends upon the particular circumstances
of each shareholder, shareholders are urged to consult their own tax advisors
in this regard.    The Company believes that
it is not a passive foreign investment company (a PFIC), a foreign
personal holding company (a FPHC), or a controlled foreign corporation (a
CFC), for United States Federal income tax purposes, and the Company does not
expect to become a PFIC, a FPHC or a CFC. 
If the Company were, or were to become, a PFIC, a FPHC, or a CFC, some
or all United States shareholders would be required to include in their taxable
income certain undistributed amounts of the Companys income, or, in certain
circumstances, to pay an interest charge together with tax calculated at
maximum rates on certain excess distributions, including gains on the sale of
stock.  Any United States person
who owns 5% or more in value of the stock of the Company may be required to
file IRS Form 5471 with respect to the Company and its non-United States
subsidiaries to report certain acquisitions or dispositions of stock of the
Company.  Annual filings of Form 5471
would be required from any United States person owning 50% or more of the stock
of the Company or, if the Company were a FPHC or a CFC, from certain United
States persons owning 10% or more of the stock of the Company.  Canadian Federal Income Tax Considerations Dividends paid on common
shares held by non-residents of Canada will generally be subject to Canadian
withholding tax.  This withholding tax
is levied at the basic rate of 25%, although this rate may be reduced by the
terms of any applicable tax treaty.  The
Canada-U.S. tax treaty provides that the withholding rate on dividends paid to
U.S. residents on common shares is 5%, if such dividends were paid to a
shareholder which is a company and which owns at least 10% of the voting stock
of the Company, or 15% in all other cases. 
Generally, a non-resident of Canada who holds common shares as capital
property will not be subject to Canadian federal income tax on capital gains
realized on the disposition of his or her common shares provided that during
the five years preceding the disposition the non-resident, together with
non-arms-length persons, has not at any time owned 25% or more of the issued
shares of any class of the Company.    ITEM 6-SELECTED FINANCIAL DATA  The following table is
derived in part from the audited consolidated financial statements of the
Company.  The consolidated financial
statements have been prepared in accordance with accounting principles
generally accepted in Canada. In all material respects, they conform with
principles generally accepted in the United States (except as described in
footnote 1 to this table and note 15 to the Companys consolidated financial
statements).  This information should be
read in conjunction with the audited consolidated financial statements and the
notes thereto.  Selected
  Financial Data(1)
  
  Year ended
  December 312001
  
  2000
  
  1999
  
  1998
  
  1997millions
  of U.S. dollars except for gold price and per share dataStatement
  of Operations DataRevenue
  
  $
  237.7
  
  $
  281.0
  
  $
  210.4
  
  $
  232.2
  
  $
  305.4Average gold price realized per ounce
  
  $
  305
  
  $
  319
  
  $
  325
  
  $
  333
  
  $
  362Earnings (loss) before taxes(2)
  
  $
  (8.8
  )
  $
  16.8
  
  $
  (37.1
  )
  $
  (19.8
  )
  $
  (418.7
  )Effective tax rate
  
  35.7
  %
  (10.4
  )%
  (0.6
  )%
  (1.8
  )%
  (0.4
  )%Net earnings (loss)(2)
  
  $
  (5.7
  )
  $
  18.6
  
  $
  (37.3
  )
  $
  (20.1
  )
  $
  (420.5
  )Net earnings (loss) attributable to common
  shareholders(2)(3)
  
  $
  (23.0
  )
  $
  3.2
  
  $
  (51.0
  )
  $
  (32.6
  )
  $
  (426.2
  )Net earnings (loss) per common share(2)(3)
  
  $
  (0.16
  )
  $
  0.02
  
  $
  (0.36
  )
  $
  (0.23
  )
  $
  (3.06
  )Weighted average common shares outstanding
  (millions)
  
  140.6
  
  140.6
  
  140.6
  
  140.1
  
  139.4Balance
  Sheet DataWorking capital (deficiency)
  
  $
  1.6
  
  $
  2.7
  
  $
  4.0
  
  $
  (0.5
  )
  $
  (28.7
  )Current ratio
  
  1.03
  
  1.04
  
  1.07
  
  0.99
  
  0.73Total assets
  
  $
  260.8
  
  $
  313.6
  
  $
  340.2
  
  $
  368.1
  
  $
  432.8Debt
  
  $
  23.7
  
  $
  32.5
  
  $
  56.7
  
  $
  52.8
  
  $
  66.5Deferred income taxes
  
  $
  0.9
  
  $
  4.7
  
  $
  7.4
  
  $
  7.5
  
  $
  7.9Shareholders equity
  
  $
  106.8
  
  $
  116.8
  
  $
  101.1
  
  $
  133.8
  
  $
  153.7Common shares outstanding (millions)
  
  140.6
  
  140.6
  
  140.6
  
  140.6
  
  139.4Other
  DataDividends paid on common shares
  - total
  
  $
  
  
  $
  
  
  $
  
  
  $
  
  
  $
  - per share
  
  $
  
  
  $
  
  
  $
  
  
  $
  
  
  $
  Net cash flows provided from (used in) operating
  activities
  
  $
  31.6
  
  $
  46.5
  
  $
  29.6
  
  $
  12.1
  
  $
  (12.0
  )Capital and exploration spending
  
  $
  26.2
  
  $
  16.5
  
  $
  14.7
  
  $
  24.1
  
  $
  151.1  
 (1)This
information should be read in conjunction with the Companys audited
consolidated financial statements and accompanying notes.  Commitments and contingencies are described
in note 19 to the Companys consolidated financial statements.  The Companys consolidated financial
statements are prepared in accordance with Canadian generally accepted
accounting principles.  Had the
consolidated financial statements been prepared in accordance with U.S.
generally accepted accounting principles, certain selected financial data would
be disclosed as follows.  See also note
15 to the Companys consolidated financial statements.  2001
  
  2000
  
  1999
  
  1998
  
  1997Earnings (loss) before income taxes
  
  $
  (32.2
  )
  $
  0.5
  
  $
  (48.1
  )
  $
  (40.4
  )
  $
  (499.9
  )Net earnings (loss)
  
  $
  (29.1
  )
  $
  2.3
  
  $
  (48.3
  )
  $
  (40.8
  )
  $
  (454.7
  )Net earnings (loss) per common share
  
  $
  (0.21
  )
  $
  0.02
  
  $
  (0.34
  )
  $
  (0.29
  )
  $
  (3.26
  )Total assets
  
  $
  234.4
  
  $
  314.5
  
  $
  341.3
  
  $
  370.1
  
  $
  435.5Debt
  
  $
  117.0
  
  $
  126.5
  
  $
  151.3
  
  $
  144.9
  
  $
  159.3Accrued interest on capital securities
  
  $
  64.2
  
  $
  46.1
  
  $
  30.0
  
  $
  15.7
  
  $
  3.0Deferred income taxes
  
  $
  0.9
  
  $
  4.7
  
  $
  7.4
  
  $
  7.5
  
  $
  7.9Shareholders equity (deficit)
  
  $
  (29.8
  )
  $
  (19.5
  )
  $
  (19.6
  )
  $
  24.2
  
  $
  67.4  (2)In
2001, the Company recorded a $4.4 million provision for impaired assets ($0.03
per share).  In 1997, the Company
recorded a $362.7 million provision for impaired assets and other charges
($2.60 per share).  (3)After interest
expense on the equity portion of the capital securities, issued in 1997.  See note 7 to the consolidated financial
statements.    ITEM
7-MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS  The following discussion
of the financial results of the Companys operations for the years 1999 through
2001 should be read in conjunction with the financial data and the Companys
consolidated financial statements included elsewhere in this report.  The Companys consolidated financial
statements are prepared in accordance with accounting principles generally
accepted in Canada.  Except as described
in note 15 to the Companys consolidated financial statements, they conform in
all material respects to those principles generally accepted in the United
States.  Material changes in the
Companys reserves may significantly impact results of operations and asset
carrying values.  See the discussion of
reserves in Business and Properties-Reserves.  The following contains
statements that are, by their nature, forward-looking and uncertain.  See Cautionary Safe Harbor Statement
under the United States Private Litigation Reform Act of 1995, Business and
Properties-Risk Factors and Commitments and Contingencies for a discussion
of certain factors that should be considered in evaluating these statements.  SUMMARY The Company had a net
loss of $5.7 million ($0.16 loss per share) in 2001 compared with net earnings
of $18.6 million ($0.02 earnings per share) in 2000 and a net loss of $37.3
million ($0.36 loss per share) in 1999. 
The 2001 results compared to 2000 reflect 41% lower silver sales volume,
lower gold and silver prices realized and the provision for impaired assets at
Kettle River.  These factors were
partially offset by lower depreciation, amortization, reclamation, exploration
and development expenses.  The 2000
results compared to 1999 reflect 39% higher gold and 35% higher silver sales
volume, the 1999 loss on the sale of the Companys interest in Paredones
Amarillos, and lower depreciation and amortization.  These factors were partially offset by increased operating costs and
lower gold and silver prices realized in 2000.  The Company produced
657,784 ounces of gold during the year, a decrease of 5% from 2000 and 6.5
million ounces of silver during the year, a decrease of 48% from 2000.  Production targets for 2002 are 535,000
ounces of gold and 1.3 million ounces of silver.  The expected decline in production results from the completion of
operations at McCoy/Cove and Kettle River.  The average gold price
realized by the Company in 2001 was $305 per ounce.  This was above the average market price of $271 per ounce in
2001, but lower than the $319 per ounce average price realized in 2000. The
Company has forward sales contracts on 60,000 ounces of its estimated 2002 gold
production at a minimum average price of $293 per ounce.  In 2001, operating
activities provided net cash flows of $31.6 million.  RESULTS OF OPERATIONS Revenue Revenue decreased to
$237.7 million in 2001 from $281.0 million in 2000, reflecting 1% lower gold
volume ($3.0 million) and 41% lower silver sales volume ($27.0 million),
resulting primarily from lower grades and decreased production at
McCoy/Cove.  Revenues were also affected
by lower gold prices realized ($9.2 million) and silver prices realized ($4.2
million). Revenue increased to $281.0 million in 2000 from $210.4 million in
1999, reflecting higher gold and silver sales volume ($79.8 million), resulting
primarily from the recommencement of Lupin operations and increased production
at McCoy/Cove.  These factors were
partially offset by lower gold and silver prices realized.  Operating Costs Consolidated cash
operating costs per ounce of gold produced were $223 in 2001, $193 in 2000 and
$215 in 1999.  Cash operating costs
generally reflect mining and processing costs, most significantly labor,
consumable materials, repairs of machinery and equipment, fuel, utilities and
environmental compliance. Cash operating costs per ounce were higher in 2001
compared to 2000, reflecting lower production at McCoy/Cove and Kettle River
and increased fuel, electricity and reagent costs at Round Mountain. Cash
operating costs per ounce were lower in 2000 compared to 1999, reflecting
increased grades and higher production at McCoy/Cove.     The Companys cash
operating cost target for 2002 is $225 per ounce of gold produced.  Royalties Royalties decreased to
$7.6 million in 2001 from $8.0 million in 2000 primarily due to decreased
production at McCoy/Cove and Kettle River, partially offset by increased
production at Round Mountain.  Royalties
increased from $7.2 million in 1999 to $8.0 million in 2000 due to increased
production at McCoy/Cove.  The Companys
royalty expense target for 2002 is $6 million. 
See note 19 to the consolidated financial statements.  Depreciation and Amortization Depreciation expense was
$31.1 million in 2001, $32.5 million in 2000, and $40.9 million in 1999.
Depreciation expense decreased in 2001 and 2000 from 1999 due to McCoy/Cove and
Kettle River assets approaching the end of their useful lives and being fully
depreciated and not replaced.  Depreciation
per ounce was $41 in 2001, $35 in 2000 and $58 in 1999.  Amortization varies with
the quantity of gold and silver sold and the mix of production from the various
mines.  The quantities of the Companys
proven and probable reserves also affect amortization expense, as the Companys
investment is amortized over these ounces. 
Amortization expense of $11.0 million in 2001 compared to $18.2 million
in 2000 and $14.0 million in 1999 reflect changes in production levels.  Amortization per ounce was $14 in 2001, $20
in 2000 and $20 in 1999.  For 2002, the Company
expects depreciation and amortization expense to be $35 million, compared to
$42.1 million in 2001.  Reclamation and Mine Closure Reclamation and mine
closure expense varies with the quantity of gold and silver produced and the
mix of production from the various mines. 
The quantities of the Companys proven and probable reserves also affect
reclamation and mine closure expense, as the total estimated costs are accrued
over these ounces. Reclamation and mine closure expense decreased by $4.5
million in 2001 compared to 2000, as McCoy/Cove was fully accrued by the end of
2000.  The increase in 2000 compared to
1999 reflects increased production.  For
2002, the Company expects this expense to be $6 million.  General and Administrative General and
administrative costs in 2001 were at the same level as in 2000. The decrease in
2000 compared to 1999 reflects downsizing and cost reduction initiatives.  For 2002, the Company expects general and
administrative costs will remain at approximately $6 million.  Exploration and Development Exploration and
development expense was $3.5 million in 2001 down from $10.3 million in 2000
and $8.8 million in 1999.  Exploration
and development expense includes Lupin costs relating to the recommencement of
operations of $4.8 million in 2000 and annual care and maintenance costs of
$3.4 million in 1999.  The Company has
reduced exploration and development programs in response to market conditions,
which may limit the discovery and development of new reserves.  This could have adverse implications on the
Company as McCoy/Cove and Kettle River near the end of their mine lives. For
2002, the Company expects exploration and development expenditures to total $5
million.    Provision for Impaired Assets In 2001, due to an
unexpected reduction in reserves, a $4.4 million provision was made for
impaired assets at Kettle River.  Loss (Gain) on Sale of Interests in Mining and Other
Properties In 1999, the Company
recognized a $13.8 million loss on the sale of its 60% interest in the
Paredones Amarillos project in Mexico to its joint venture partner.  LIQUIDITY AND CAPITAL RESOURCES In 2001, the market price
of gold averaged $271 per ounce.  A
depressed gold price significantly affects the Companys ability to proceed
with construction of the Aquarius mine, to expand its exploration activities,
to refinance its indebtedness on favorable terms or to pursue new acquisitions
or investments.  Net cash flows provided
from operating activities were $31.6 million in 2001, compared with net cash
flows provided from operating activities of $46.5 million in 2000 and $29.6
million in 1999.  The decrease in 2001
cash flow reflects the decreased production at McCoy/Cove.  Net cash used in
investing activities in 2001 totaled $24.0 million, largely related to
investments in mining properties, plant and equipment at Round Mountain ($15.0
million), Kettle River ($4.2 million), Lupin ($2.6 million) and McCoy/Cove
($1.0 million).  Cash used for long-term
investments was $1.9 million in 2001, primarily for reclamation and other
long-term deposits.  Net cash used in
financing activities was $9.5 million in 2001 reflecting debt repayments.  At December 31, 2001, the
Company had $12.4 million in cash and cash equivalents and $1.9 million in
short-term investments recorded at the lower of cost or fair value.  The fair value of the short-term investments
at December 31, 2001 was $4.5 million.  At December 31, 2001, the
Companys current debt was $17.0 million. 
Long-term debt was $6.7 million, representing the present value of the
$100 million capital securities principal due in 2027.  The Companys existing
revolving credit facility is scheduled to expire in September 2002 and the
Company currently has $17.0 million outstanding under this facility.  The Company believes it is currently in
compliance with the credit facility covenants. The Company plans to establish a
new credit facility in advance of the expiration date, although the amount of
the required facility and the terms thereof are unknown.  At present, and absent new credit
requirements, the Companys need to draw down on a bank facility beyond
September 30, 2002 will not be significant.  At December 31, 2001, the
estimated fair value of the Companys hedge portfolio was $1.4 million. A
change in the gold price of $10 per ounce would result in a change in fair
value of the hedge position by $0.9 million assuming no changes in interest
rates, gold lease rates or other volatility factors underlying the Companys hedge
position.  On March 28, 2002 the
Companys common shareholders authorized the issuance of up to an aggregate of
361,561,230 common shares in exchange for the capital securities (note 7). The
exchange is anticipated to be completed on or before April 15, 2002.  The Company expects to
spend $11 million for capital expenditures in 2002 funded by its operating cash
flow.  The Company will continue to
monitor its discretionary spending in view of the current gold market, the cost
structure of its operating mines and the availability of additional credit and
will modify or reduce its discretionary spending where necessary.    Early in 2000, the
American Stock Exchange advised the Company that its listing eligibility was
under review.  The review was undertaken
because the Company had fallen below two of the Exchanges continued listing
guidelines. The Company had sustained net losses in its five most recent fiscal
years (1995 to 1999) and in the Exchanges view, the Companys shareholders
equity under generally accepted accounting principles in the United States is
inadequate.  The Company has addressed
the Exchanges concerns through periodic progress reviews and believes
significant progress has been made in respect of the shareholder equity issue,
with the anticipated completion of the capital securities exhange transaction.  COMMITMENTS AND CONTINGENCIES Hedging Activities The Companys
profitability is subject to changes in gold prices, exchange rates, interest
rates and certain commodity prices.  To
reduce the impact of such changes, the Company attempts to lock in the future
value of certain of these items through hedging transactions.  These transactions are accomplished through
the use of derivative financial instruments, the values of which are derived
from movements in the underlying prices or rates.  The Company continually
monitors its hedging policy in light of forecasted production, operating and
capital expenditures, exploration and development requirements and factors
affecting volatility of gold prices such as actual and prospective interest
rate and gold lease rate performance. 
Forward sales contracts obligate the Company to sell gold at a specific
price on a future date.  Call options
give the holder the right, but not the obligation to buy gold at a specific
future date at a specific price.  These
tools reduce the risk associated with gold price declines, but also could limit
the Companys participation in increases of gold prices. The Company engages in
forward currency-exchange contracts to reduce the impact on the Lupin mines
operating costs caused by fluctuations in the exchange rate of U.S. dollars to
Canadian dollars.  Gains and losses
resulting from hedging activities are recognized in earnings on a basis
consistent with the hedged item. When hedged production is sold, revenue is
recognized in amounts implicit in the commodity loan, delivery commitment or
option agreement.  Gains or losses on
foreign currency hedging activities are recorded in operating costs, or
capitalized in the cost of assets, when the hedged Canadian dollars are
purchased.  Gains and losses on early
termination of hedging contracts are deferred until the hedged items are
recognized in earnings.  Premiums paid
or received on gold option contracts purchased or sold are deferred and
recognized in earnings on the option expiration dates.  The Company assesses the
exposure that may result from a hedging transaction prior to entering into the
commitment, and only enters into transactions that it believes accurately hedge
the underlying risk and could be safely held to maturity.  The Company does not engage in the practice
of trading derivative securities for profit. 
The Company regularly reviews its unrealized gains and losses on hedging
transactions.  The credit risk exposure
related to all hedging activities is limited to the unrealized gains on
outstanding contracts based on current market prices.  To reduce counterparty credit exposure, the Company deals only
with large, credit-worthy financial institutions and limits credit exposure to
each.  In addition, the Company deals
only in markets it considers highly liquid to allow for situations where
positions may need to be reversed.  At December 31, 2001, the
estimated fair value of the Companys hedge portfolio was $1.4 million.  The Companys current counterparties do not
require margin deposits.  Sensitivity to
various market factors underlying these contracts are shown in note 18 to the
consolidated financial statements.    In 2001, the Company
delivered approximately 19% of gold production against forward sales and put
options at an average commitment price of $317 per ounce.  This compares with 37% of gold production at
$313 per ounce in 2000 and 77% of gold production at $346 per ounce in
1999.  Approximately 21% of silver
production was delivered against forward sales and put options at an average
cash price of $5.86 per ounce in 2001. 
This compares to 35% at $5.71 per ounce in 2000 and 43% at $5.66 per
ounce in 1999.  The Companys hedge
position as of December 31, 2001 includes forward sales of 60,000 gold ounces
at a minimum price of $293 per ounce in 2002. 
These forward sales contracts and call options represent approximately
5% of current reserves.  The reduced
hedging position results from continued weakness in spot gold prices and low
forward premiums resulting in lower hedge prices that can be achieved.  The Companys hedging
commitments are described in note 18 to the Companys consolidated financial
statements.  See also Qualitative and
Quantitative Disclosures about Market Risk.  Other The Companys operations
are subject to laws and regulations concerning protection of the environment.
These laws and regulations change periodically and are generally becoming more
restrictive, which may have the effect of increasing its future costs. Certain
of the Companys subsidiaries have provided corporate guarantees and other
forms of security to regulatory authorities in connection with future
reclamation activities.  Early in 2001,
regulators in Nevada called upon two of the Companys subsidiaries to provide
other security to replace corporate guarantees that had been given in respect
of the Round Mountain and McCoy/Cove operations totaling approximately $33
million.  The Company disagrees with the
regulators position and believes that the subsidiaries qualify under the
criteria set out for corporate guarantees and will oppose the regulatory
position.  Although the outcome cannot
be predicted, the Company and their counsel believe that the Company will
prevail. See Business and Properties - Other - Governmental and Environmental
Regulation.  The Companys operations
are subject to certain royalty obligations as described in note 19 to the
Companys consolidated financial statements. 
Lease commitments are described in note 19 to the Companys consolidated
financial statements.  The Companys
provision for future reclamation and closure costs at the former Sunnyside mine
in Colorado is reviewed periodically and may be adjusted, as additional
information becomes available.  Other
commitments and contingencies are discussed in notes 18 and 19 to the
consolidated financial statements.  CRITICAL ACCOUNTING POLICIES Property evaluations The
Company periodically reviews mining schedules, production levels and asset
lives in its life-of-mine planning for all of its operating and development
properties.  Significant changes in the
life-of-mine plans may occur as a result of mining experience, new ore
discoveries, changes in mining methods and rates, process changes, investments
in new equipment and technology, precious metals price assumptions, and other
factors.  Based on this analysis, the
Company reviews its accounting estimates and adjusts depreciation,
amortization, deferred mining and reclamation rates for each mine where necessary.
In the event of an impairment, the Company may be required to write-down the
carrying value of a mine or mines.In 2001, due to an unexpected
reduction in reserves, a $4.4 million provision was made for impaired assets at
Kettle River.  As a
result of the foregoing risks, expenditures on any and all projects, actual
production quantities and rates, and cash costs may be materially and adversely
affected and may differ materially from anticipated expenditures, production
quantities and rates, and costs, and estimated production dates may be delayed
materially.  Any such events can
materially and adversely affect the Companys business, financial condition,
results of operations and cash flows.    Reclamation and mine closure costs Future reclamation costs
are determined using managements best estimates of the scope of work to be
performed and the related costs to meet current regulatory requirements.  The estimated future reclamation and mine
closure cost is $62.1 million; see note 8 to the consolidated financial
statements.  These estimates may change
based on future changes in operations, costs, reclamation activities and
regulatory requirements.  Increases in
the estimated reclamation obligations or decreases in the estimated recoverable
ounces of gold could result in an increase in reclamation expense or
potentially require material write-downs of mining properties.    ITEM
7A-QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK  See Managements
Discussion and Analysis-Commitments and Contingencies for a discussion of
market risks related to the Companys hedging activities.  The following table
provides information as of December 31, 2001 about the Companys derivative
financial instruments and other financial instruments that are sensitive to
changes in commodity prices, interest rates and exchange rates.  Expected
  Year of Maturity2002
  
  2003
  
  2004
  
  2005
  
  2006
  
  There-After
  
  Fair Value
  of Financial
  Instruments(Amounts
  in millions of U.S.dollars, except amounts per ounce or unless otherwise
  noted)Assets:Short-term investments
  
  
  
  
  
  
  
  
  
  
  
  
  
  $
  4.5Liabilities:Currency loans
  
  $
  17.0
  
  
  
  
  
  
  
  
  
  
  
  $
  17.0Capital securities(1)
  
  
  
  
  
  
  
  
  
  
  
  
  
  $
  6.7Principal
  
  
  
  
  
  
  
  
  
  
  
  $
  100.0Fixed interest rate(2)
  
  11
  %
  11
  %
  11
  %
  11
  %
  11
  %
  11
  %Derivative financial
  instruments:Gold forward sales
  
  
  
  
  
  
  
  
  
  
  
  
  
  $
  2.0Ounces
  
  60,000
  
  
  
  
  
  
  
  
  
  Price per ounce
  
  $
  293
  
  
  
  
  
  
  
  
  
  Gold call options sold
  
  
  
  
  
  
  
  
  
  
  
  
  
  $
  (0.7
  )Ounces
  
  120,000
  
  
  
  
  
  
  
  
  
  Price per ounce
  
  $
  297
  
  
  
  
  
  
  
  
  
  Foreign currency
  contracts(3)
  
  
  
  
  
  
  
  
  
  
  
  
  
  $
  0.1Canadian dollars (000s)
  
  33,300
  
  
  
  
  
  
  
  
  
  Exchange rate (C$ to
  US$1.00)
  
  1.60
  
  
  
  
  
  
  
  
  
    
 (1)At
December 31, 2001, the present value of the $100.0 million principal payment in
2027 was $6.7 million.  Interest accrued
and deferred to December 31, 2001 was $64.2 million.  On September 5, 2001, the Company announced that it had reached
an agreement with significant holders of the capital securities to exchange
their capital securities for common shares. 
On March 28, 2002 the Company's common shareholders authorized the
issuance of up to an aggregate of 361,561,230 common shares in exchange for the
capital securities. The exchange is anticipated to be completed on or before
April 15, 2002. See notes 7 and 20.  (2)During
a period of interest deferral, the interest rate on the capital securities is
12%, compounded semi-annually.  (3)     In
January 2002, the Company contracted to purchase an additional C$33.0 million
in 2002 at the same rate.    ITEM
8-FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  INDEX TO FINANCIAL STATEMENTS  Managements
  Responsibility For Financial ReportingReport Of
  Independent Chartered AccountantsConsolidated Balance SheetsConsolidated
  Statements Of OperationsConsolidated
  Statements Of DeficitConsolidated
  Statements Of Cash FlowNotes to
  Consolidated Financial Statements    Managements
Responsibility for Financial Reporting  The accompanying
financial statements and related data are the responsibility of management.
Management has prepared the statements in accordance with accounting principles
generally accepted in Canada.  The integrity of the
financial reporting process is also the responsibility of management.
Management maintains systems of internal controls designed to provide
reasonable assurance that transactions are authorized, assets are safeguarded,
and reliable financial information is produced. Management selects accounting
principles and methods that are appropriate to the Companys circumstances, and
makes decisions affecting the measurement of transactions in which estimates or
judgments are required to determine the amounts reported.  The Board of Directors is
responsible for ensuring that management fulfills its responsibilities for
financial reporting. The Board carries out this responsibility principally
through its Audit Committee.  The Audit Committee
consists entirely of outside directors. The Committee meets periodically with
management and the external auditors to discuss internal financial controls,
auditing matters and financial reporting issues. The Committee satisfies itself
that each party is properly discharging its responsibilities; reviews the
quarterly and annual financial statements and the external auditors report;
and recommends the appointment of the external auditors for review by the Board
and approval by the shareholders.  The external auditors
audit the financial statements annually on behalf of the shareholders. They
also perform certain procedures related to the Companys unaudited interim
financial statements and report their findings to the Audit Committee. The
external auditors have free access to management and the Audit Committee.   /s/ Robert L. LeclercRobert L. LeclercChairman and Chief
  Executive Officer and Director/s/ Tom S.Q. YipTom S.Q. YipVice President, Finance
  and
  Chief Financial OfficerJanuary 31, 2002    Report
of Independent Chartered Accountants  The Board of Directors Echo Bay Mines Ltd.  We have audited the
consolidated balance sheets of Echo Bay Mines Ltd. as at December 31, 2001 and
2000 and the consolidated statements of operations, deficit and cash flow for
each of the years in the three-year period ended December 31, 2001. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.  We conducted our audits
in accordance with auditing standards generally accepted in Canada and the
United States. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.  In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of the Company as at December 31,
2001 and 2000 and the results of its operations and its cash flows for each of
the years in the three-year period ended December 31, 2001 in accordance with
accounting principles generally accepted in Canada.  Edmonton, Canada
  /s/  Ernst & Young LLPJanuary 31, 2002,
  except for notes 7 and
  20 as to which the date is March 28, 2002
  Chartered Accountants    ECHO BAY MINES LTD.  CONSOLIDATED
BALANCE SHEETS  December 31  2001
  
  2000thousands of U.S. dollarsASSETSCurrent assets:Cash and cash equivalents
  
  $
  12,351
  
  $
  14,269Short-term investments
  
  1,910
  
  2,186Interest and accounts receivable
  
  3,645
  
  3,022Inventories (note 2)
  
  29,506
  
  39,443Prepaid expenses and other assets
  
  3,725
  
  6,05851,137
  
  64,978Plant and equipment (note 3)
  
  120,969
  
  138,527Mining properties (note 3)
  
  32,903
  
  41,691Long-term investments and other assets (note 4)
  
  55,795
  
  68,412$
  260,804
  
  $
  313,608LIABILITIES
  AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued liabilities
  
  $
  24,284
  
  $
  24,159Income and mining taxes payable
  
  3,570
  
  5,780Debt and other financings (note 5)
  
  17,000
  
  26,500Reclamation and mine closure liabilities (note 8)
  
  3,841
  
  1,914Deferred income (note 6)
  
  876
  
  3,96449,571
  
  62,317Debt and other financings (note 5)
  
  6,714
  
  6,032Deferred income (note 6)
  
  47,042
  
  74,148Reclamation and mine closure liabilities (note 8)
  
  49,726
  
  49,632Deferred income taxes
  
  925
  
  4,694Commitments and contingencies (notes 8, 18 and 19)Shareholders equity:Common shares (note 14), no par value, unlimited
  number authorized; issued and outstanding - 140,607,145 shares
  
  713,343
  
  713,343Capital securities (note 7)
  
  157,453
  
  140,076Deficit
  
  (734,665
  )
  (711,680
  )Foreign currency translation
  
  (29,305
  )
  (24,954
  )106,826
  
  116,785$
  260,804
  
  $
  313,608  See accompanying notes.    ECHO BAY MINES LTD.  CONSOLIDATED STATEMENTS OF OPERATIONS  Year ended December 31  2001
  
  2000
  
  1999thousands of U.S. dollars, Except
  for per share dataRevenue
  
  $
  237,684
  
  $
  280,976
  
  $
  210,351Expenses:Operating costs
  
  175,341
  
  173,435
  
  139,816Royalties (note 19)
  
  7,597
  
  8,034
  
  7,197Production taxes
  
  177
  
  2,460
  
  256Depreciation and amortization
  
  42,101
  
  50,664
  
  54,941Reclamation and mine closure
  
  6,098
  
  10,572
  
  7,025General and administrative
  
  5,623
  
  5,650
  
  7,429Exploration and development
  
  3,466
  
  10,336
  
  8,754Interest and other (note 9)
  
  1,722
  
  3,012
  
  8,194Provision for impaired assets (note 10)
  
  4,384
  
  
  
  Loss on sale of interest in Paredones Amarillos
  (note 11)
  
  
  
  
  
  13,795246,509
  
  264,163
  
  247,407Earnings (loss) before income taxes
  
  (8,825
  )
  16,813
  
  (37,056
  )Income tax expense (recovery) (note 12)
  
  (3,147
  )
  (1,748
  )
  216Net earnings (loss)
  
  $
  (5,678
  )
  $
  18,561
  
  $
  (37,272
  )Net earnings (loss) attributable to common
  shareholders (note 7)
  
  $
  (22,985
  )
  $
  3,164
  
  $
  (50,969
  )Earnings (loss) per sharebasic and fully diluted
  
  $
  (0.16
  )
  $
  0.02
  
  $
  (0.36)Weighted average number of shares outstanding
  (thousands)basic and fully diluted
  
  140,607
  
  140,607
  
  140,607  CONSOLIDATED
STATEMENTS OF DEFICIT  Year ended December 31  2001
  
  2000
  
  1999thousands of U.S. dollarsBalance, beginning of year
  
  $
  (711,680
  )
  $
  (714,844
  )
  $
  (663,875
  )Net earnings (loss)
  
  (5,678
  )
  18,561
  
  (37,272
  )Interest on capital securities, net of nil tax
  effect (note 7)
  
  (17,307
  )
  (15,397
  )
  (13,697
  )Balance, end of year
  
  $
  (734,665
  )
  $
  (711,680
  )
  $
  (714,844
  )  See accompanying notes.    ECHO BAY MINES LTD.  CONSOLIDATED STATEMENTS OF CASH FLOW  Year ended December 31  2001
  
  2000
  
  1999thousands
  of U.S. dollarsCASH PROVIDED FROM (USED IN):OPERATING ACTIVITIESNet earnings (loss)
  
  $
  (5,678
  )
  $
  18,561
  
  $
  (37,272
  )Add (deduct):Depreciation
  
  31,093
  
  32,457
  
  40,957Amortization
  
  11,008
  
  18,207
  
  13,984Amortization (deferral) of
  mining costs
  
  6,118
  
  4,202
  
  (8,107
  )Deferred income included in
  revenue (note 6)
  
  (18,609
  )
  (24,473
  )
  (11,129
  )Deferred income included in
  operating costs (note 6)
  
  (2,846
  )
  (3,149
  )
  Deferral of gains on
  restructuring of hedge commitments
  
  
  
  4,287
  
  14,324Deferred income taxes
  
  (3,358
  )
  (2,400
  )
  Net gain on sale of other
  assets (note 9)
  
  (700
  )
  (432
  )
  (736
  )Unrealized losses on share
  investments
  
  150
  
  28
  
  1,508Provision for impaired assets(note 10)
  
  4,384
  
  
  
  Loss on sale of interest inParedones
  Amarillos (note 11)
  
  
  
  
  
  13,795Other
  
  588
  
  (1,084
  )
  651Change in cash invested in
  operating assets and liabilities:Interest and accounts
  receivable
  
  (648
  )
  (85
  )
  864Inventories
  
  8,780
  
  (2,869
  )
  882Prepaid expenses and other
  assets
  
  166
  
  (31
  )
  290Accounts payable and accrued
  liabilities
  
  3,304
  
  496
  
  (459
  )Income and mining taxes
  payable
  
  (2,174
  )
  2,790
  
  1331,578
  
  46,505
  
  29,565INVESTING ACTIVITIESMining properties, plant and
  equipment
  
  (22,817
  )
  (11,589
  )
  (25,158
  )Long-term investments and
  other assets
  
  (1,879
  )
  (524
  )
  (5,135
  )Proceeds on sale of plant and
  equipment
  
  943
  
  332
  
  972Cost of repurchase of gold
  and silver hedging contracts
  
  
  
  
  
  (3,334
  )Other
  
  (243
  )
  894
  
  (926
  )(23,996
  )
  (10,887
  )
  (33,581
  )FINANCING ACTIVITIESDebt borrowings
  
  
  
  12,000
  
  17,000Debt repayments
  
  (9,500
  )
  (36,750
  )
  (16,181
  )Other
  
  
  
  
  
  (1,389
  )(9,500
  )
  (24,750
  )
  (570
  )Net increase (decrease) in
  cash and cash equivalents
  
  (1,918
  )
  10,868
  
  (4,586
  )Cash and cash equivalents,
  beginning of year
  
  14,269
  
  3,401
  
  7,987Cash and cash equivalents,
  end of year
  
  $
  12,351
  
  $
  14,269
  
  $
  3,401  See accompanying notes.    ECHO BAY MINES LTD.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  December 31, 2001  Tabular dollar amounts in
thousands of U.S. dollars, except amounts per share and per ounce or
unless otherwise noted  1.      SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES General Echo Bay Mines Ltd.
mines, processes and explores for gold and silver. Gold accounted for 86% of
2001 revenue and silver 14%. The Company has four operating mines: Round
Mountain and McCoy/Cove in Nevada, U.S.A.; Kettle River in Washington, U.S.A.;
and Lupin in Nunavut Territory, Canada. 
All of the Companys mines are 100% owned except for Round Mountain,
which is 50% owned.  The Companys financial
position and operating results are directly affected by the market price of
gold in relation to the Companys production costs.  Silver price fluctuations also affect the Companys financial
position and operating results, although to a lesser extent.  Gold and silver prices fluctuate in response
to numerous factors beyond the Companys control.  The consolidated
financial statements are prepared on the historical cost basis in accordance
with accounting principles generally accepted in Canada and, in all material
respects, conform with accounting principles generally accepted in the United
States, except as described in note 15. 
The statements are expressed in U.S. dollars.  The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those
estimates.  Certain of the
comparative figures have been reclassified to conform to the current years
presentation.  Principles of consolidation The consolidated
financial statements include the accounts of the Company and its
subsidiaries.  Interests in joint
ventures, each of which by contractual arrangement is jointly controlled by all
parties having an equity interest in the joint venture, are accounted for using
the proportionate consolidation method to consolidate the Companys share of
the joint ventures assets, liabilities, revenues and expenses.  Share investments Short-term investments,
comprised of publicly traded common shares, are recorded at the lower of cost
or quoted market prices, with unrealized losses included in income.  Long-term common share investments are
recorded at cost.  A provision for loss
is recorded in income if there is a decline in the market value of a long-term
share investment that is other than temporary. 
If the Companys share investment represents more than a 20% ownership
interest and the Company can exercise significant influence over the investee,
the equity method of accounting is used. 
The equity method reports the investment at cost adjusted for the
Companys pro rata share of the investees undistributed earnings or losses
since acquisition.  Foreign currency translation The Companys
self-sustaining Canadian operations are translated into U.S. dollars using the
current-rate method, which translates assets and liabilities at the year-end
exchange rate and translates revenue and expenses at average exchange
rates.  Exchange differences arising on
translation are recorded as a separate component of shareholders equity.  The change in the balance is attributable to
fluctuations in the exchange rate of U.S. dollars to Canadian dollars.    Revenue recognition Revenue is recognized
when title to delivered gold or silver and the risks and rewards of ownership
pass to the buyer.  Earnings (loss) per share Earnings (loss) per share
are calculated based on the weighted average number of common shares
outstanding during the year.  For per
share calculations, the amount of capital securities interest that is charged
directly to the deficit decreases the earnings, or increases the loss,
attributable to common shareholders. 
Fully diluted earnings (loss) per share are the same as basic earnings
(loss) per share because the Companys outstanding options are not dilutive.  Cash and cash equivalents The Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.  Inventories Precious metals and
in-process inventories are valued at the lower of cost, using the first-in,
first-out method, or net realizable value. 
Materials and supplies are valued at the lower of average cost or
replacement cost.  Plant and equipment Plant and equipment are
recorded at cost.  Depreciation is
provided using the straight-line method over each assets estimated economic
life to a maximum of 20 years.  Mining properties- producing mines acquisition and
development costs Mining properties are
recorded at cost of acquisition.  Mine
development costs include expenditures incurred to develop new ore bodies, to
define further resources in existing ore bodies and to expand the capacity of
operating mines.  These expenditures are
amortized against earnings on the unit-of-production method based on estimated
recoverable ounces of gold. Estimated recoverable ounces of gold include proven
and probable reserves and non-reserve material when sufficient objective
evidence exists to determine that it is probable the non-reserve material will
be produced.  For the purpose of
preparing financial information in accordance with United States generally
accepted accounting principles, only proven and probable reserves are
considered when applying the unit-of-production method. Non-reserve material
was not used in the periods covered by these financial statements when applying
the unit-of-production method under both Canadian and U.S. generally accepted
accounting standards.  Development properties At properties identified
as having the potential to add to the Companys proven and probable reserves,
the direct costs of acquisition and development are capitalized only if there
is sufficient objective evidence to indicate that it is probable that the
property will become an operating mine. Factors considered in making this
assessment include the existence and nature of known resources and proven and
probable reserves, whether the proximity of the property to existing mines and
ore bodies increases the probability of developing an operating mine, the
results of recent drilling on the property and the existence of feasibility
studies or other analyses demonstrating the existence of commercially
recoverable ore.  Capitalized costs are
evaluated for recoverability when events or circumstances indicate that
investment in the property may be impaired and are written off if it is
determined that the project is not commercially feasible in the period in which
this determination is made.  The
assessment of cost recoverability is based on proven and probable reserves on
the property, if any, as well as resources which do not meet the criteria for
classification as a proven or probable reserve.  If production commences, capitalized costs are transferred to
producing mines acquisition and development costs and amortized as described
above.     For the purpose of
preparing financial information in accordance with United States generally
accepted accounting principles, all costs associated with a property that has
the potential to add to the Companys proven and probable reserves are expensed
until a final feasibility study demonstrating the existence of proven and
probable reserves is completed.  No
costs have been capitalized in the periods covered by these financial
statements that do not meet the criteria for capitalization under both Canadian
and U.S. generally accepted accounting standards.  Deferred  mining costs Mining costs incurred to
remove ore and waste from an open pit and to access new production areas in an
underground mine are capitalized as long-term deferred costs.  These costs are deferred because they relate
to gold that will be produced in future years and they are charged to operating
costs in the period that the related production occurs.  For open pit operations,
mining costs are capitalized on an individual mine basis, using the ratio of
total tons of waste and ore to be mined to total gold ounces to be recovered
over the life of the mine.  Costs are
capitalized in periods when the ratio of tons mined to gold produced exceeds
the expected average for the mine.  Amortization
occurs in periods when the ratio is less than the expected average.  This accounting method considers variations
in grade and recovery in addition to waste-to-ore ratios and results in the
recognition of mining costs evenly over the life of the mine as gold is
produced.  For underground mining
operations, the costs of accessing and developing new production areas are
deferred and expensed as operating costs in the period in which the related
production occurs.  Exploration costs The costs of exploration
programs are expensed as incurred.  Reclamation and mine closure costs Estimated site
restoration and closure costs for each producing mine are charged against
operating earnings on the unit-of-production method based on estimated
recoverable ounces of gold.  Income taxes In 2000, the Company
adopted the provisions of CICA Handbook Section 3465 Income Taxes on a
prospective basis.  The provisions
require the use of the liability method of tax allocation and the recognition
of deferred income taxes based on the differences between the carrying amounts
of assets and liabilities for accounting and tax purposes.  The adoption of the standard had no effect
on the Companys financial statements.    Property evaluations The Company annually
reviews detailed engineering life-of-mine plans for each mine.  Long-lived assets are evaluated for
impairment when events or changes in circumstances indicate that the related
carrying amounts may not be recoverable. 
Expected future undiscounted cash flows are calculated using estimated
recoverable ounces of gold (considering proven and probable mineral reserves
and mineral resources expected to be converted into mineral reserves), future
sales prices (considering current and historical prices, price trends and
related factors), operating costs, capital expenditures, reclamation and mine
closure costs.  Reductions in the
carrying amount of long-lived assets, with a corresponding charge to earnings,
are recorded to the extent that the estimated future cash flows are less than
the carrying amount.  The Companys estimates
of future cash flows are subject to risks and uncertainties. It is possible
that changes may occur which could affect the recoverability of the Companys
long-lived assets.  For the purpose of
preparing financial information in accordance with United States generally
accepted accounting principles, estimated recoverable ounces of gold include
proven and probable reserves. Impairment amounts reported in these financial
statements under Canadian or U.S. generally accepted accounting standards are
not affected by this difference.  Reserve risks If the Company were to
determine that its reserves and future cash flows should be calculated at a
significantly lower gold price than the $300 per ounce price used at December
31, 2001, there would likely be a material reduction in the amount of gold
reserves.  In addition, if the price
realized by the Company for its gold or silver bullion were to decline
substantially below the price at which mineral reserves were calculated for a
sustained period of time, the Company potentially could experience material
write-downs of its investment in its mining properties.  Under certain of such circumstances, the
Company might discontinue the development of a project or mining at one or more
of its properties or might temporarily suspend operations at a producing
property and place that property in a care and maintenance mode.  Reserves could also be materially and
adversely affected by changes in operating and capital costs and short-term
operating factors such as the need for sequential development of ore bodies and
the processing of new or different ore grades and ore types.  Significant changes in
the life-of-mine plans can occur as a result of mining experience, new ore
discoveries, changes in mining methods and rates, process changes, investments
in new equipment and technology, and other factors.  Changes in the significant assumptions underlying future cash
flow estimates, including assumptions regarding precious metals prices, may
have a material effect on future carrying values and operating results.  Capitalization of interest Interest cost is
capitalized on construction programs until the facilities are ready for their
intended use.    Employeebenefit plans Obligations and related
costs under defined contribution employee benefit plans are accrued as the
benefits are earned by the employees. 
The Company does not have any defined benefit plans.  Stock-based compensation plans The Company has three
stock-based compensation plans, which are described in note 14.  No compensation expense is recognized for
these plans when the stock or stock options are issued to employees.  Any consideration paid by employees on the
exercise of stock options is credited to share capital.  Hedging activities The Companys
profitability is subject to changes in gold and silver prices, exchange rates,
interest rates and certain commodity prices. 
To reduce the impact of such changes, the Company locks in the future
value of certain of these items through hedging transactions.  These transactions are accomplished through
the use of derivative financial instruments, the value of which is derived from
movements in the underlying prices or rates.  The gold- and
silver-related instruments used in these transactions include forward sales
contracts and options. These forward sales contracts obligate the Company to
sell gold or silver at a specific price on a future date.  Call options give the holder the right, but
not the obligation to buy gold or silver at a specific future date at a
specific price.  These tools reduce the
risk of gold and silver price declines, but also could limit the Companys
participation in increases of gold and silver prices.  The Company engages in forward currency-exchange contracts to
reduce the impact on the Lupin mines operating costs caused by fluctuations in
the exchange rate of U.S. dollars to Canadian dollars.  Gains and losses
resulting from hedging activities are recognized in earnings on a basis
consistent with the hedged item.  When
hedged production is sold, revenue is recognized in amounts implicit in the
commodity loan, delivery commitment or option agreement.  Gains or losses on foreign currency are
recorded in operating costs, or capitalized in the cost of assets, when the
hedged Canadian dollar transactions occur. 
Gains and losses on early termination of hedging contracts are deferred
until the formerly hedged items are recognized in earnings.  Premiums paid or received on gold and silver
option contracts purchased or sold are deferred and recognized in earnings on
the option expiration dates.  Call
options written after October 24, 2000 are carried at fair value in accordance
with Emerging Issues Committee Abstract 113, Accounting by Commodity Producers
for Written Call Options.  2.      INVENTORIES  2001
  
  2000Precious metals bullion
  
  $
  12,215
  
  $
  18,357In-process
  
  5,720
  
  8,293Materials and supplies
  
  11,571
  
  12,793$
  29,506
  
  $
  39,443    3.      PROPERTY, PLANT
AND EQUIPMENT  Net book value
  
  
  
  
  
  2001
  
  2000Property
  and percentage owned
  
  Plant and Equipment
  
  Mining Properties
  
  Net Book
  Value
  
  Net Book
  ValueRound Mountain (50%)
  
  $
  57,387
  
  $
  18,614
  
  $
  76,001
  
  $
  81,333McCoy/Cove (100%)
  
  10,093
  
  11
  
  10,104
  
  20,786Lupin (100%)
  
  20,638
  
  1,555
  
  22,193
  
  26,066Kettle River (100%)
  
  
  
  
  
  
  
  1,948Aquarius (100%)
  
  30,957
  
  12,723
  
  43,680
  
  48,025Other
  
  1,894
  
  
  
  1,894
  
  2,060$
  120,969
  
  $
  32,903
  
  $
  153,872
  
  $
  180,218  Plant and equipment
  
  2001
  
  2000Cost
  
  Net Book
  Value
  
  Cost
  
  Net Book
  ValueLand improvements and utility systems
  
  $
  72,977
  
  $
  3,220
  
  $
  72,853
  
  $
  5,165Buildings
  
  153,779
  
  25,466
  
  155,893
  
  33,518Equipment
  
  385,086
  
  53,371
  
  384,236
  
  62,311Construction in progress
  
  43,337
  
  38,912
  
  40,671
  
  37,533$
  655,179
  
  $
  120,969
  
  $
  653,653
  
  $
  138,527  Mining properties
  
  2001
  
  2000Producing mines acquisition and development costs
  
  $
  280,545
  
  $
  276,951Less accumulated amortization
  
  260,365
  
  248,79220,180
  
  28,159Development properties acquisition and development
  costs
  
  12,723
  
  13,532$
  32,903
  
  $
  41,691  During 2001, the Company wrote down the carrying values of the Kettle
River mine (note 10).  4.LONG-TERM
INVESTMENTS AND OTHER ASSETS  2001
  
  2000Modification of hedging contracts
  
  $
  29,305
  
  $
  30,458Deferred mining costs
  
  15,648
  
  21,808Reclamation and other deposits
  
  10,485
  
  8,639Premiums paid on gold and silver option contracts
  
  1,871
  
  11,115Other
  
  357
  
  25357,666
  
  72,273Less current portion included in prepaid expenses
  and other assets
  
  1,871
  
  3,861$
  55,795
  
  $
  68,412  Modification
of hedging contracts Losses
on the early termination or other restructuring of gold and silver hedging
contracts are deferred until the formerly hedged items are recognized in
earnings.  These deferred losses are
expected to be recognized as follows: $5.0 million in 2002, $5.2 million in
2003, $11.0 million in 2004, $4.6 million in 2005, $1.9 million in 2006 and
$1.6 million thereafter.  Refer to note
6 for a discussion of the deferral of gains on the modification of hedging
contracts.    Deferred
mining costs The
deferred mining ratio for the Round Mountain mine in 2001 was 112 tons per
ounce recovered (2000 - 127 tons, 1999 - 127 tons). The deferred mining ratio
for the McCoy/Cove mine in 2001 was 15 tons per ounce recovered (2000 - 76
tons, 1999 - 60 tons).  Premiums
paid on gold and silver hedging contracts Premiums
paid on gold and silver hedging contracts are deferred and recognized in
earnings on their expiration dates. 
These deferred premiums will be recognized in 2002.  Refer to note 6 for a discussion of the
deferral of premiums received on gold and silver option contracts sold.  5.      DEBT
AND OTHER FINANCINGS  2001
  
  2000Currency loans
  
  $
  17,000
  
  $
  26,500Capital securities (note 7)
  
  6,714
  
  6,03223,714
  
  32,532Less current portion
  
  17,000
  
  26,500$
  6,714
  
  $
  6,032  Currency
loans On October 5, 2001, a new $17 million revolving credit and $4 million
letter of credit facility was established with HSBC Bank USA. The new facility
has been guaranteed by an affiliate of Franco-Nevada Mining Corporation
Limited.  The Company has drawn down on
the revolving credit facility to repay bank debt of $17 million and has
replaced the $4 million letter of credit issued under the previous
facility.  The principal amount of the
credit facility matures on September 30, 2002 and interest is payable quarterly
at LIBOR plus 2.125%.  As a result of
Franco-Nevada agreeing to give this guarantee, the interest rate payable by the
Company is lower than it would have been without the guarantee.  Accordingly, the Company has agreed to pay
Franco-Nevada a fee equal to 50 percent of the saving realized by the
Company.  At December 31, 2001, the
effective interest rate on the revolving loan was 4.335%.  Other
information Certain of the Companys financing arrangements require it to maintain
specified ratios of assets to liabilities and cash flow to debt. The Company is
in compliance with these ratios and other covenant requirements.  The Company had $24.7 million in outstanding surety bonds and letters
of credit at December 31, 2001, primarily related to the bonding of future
reclamation obligations.  At December
31, 2001, annual fees on the letters of credit range from 0.5% to 2.125%.  Interest payments were
$1.8 million in 2001, $4.3 million in 2000 and $5.0 million in 1999.    6.      DEFERRED INCOME  2001
  
  2000Modification of hedging contracts
  
  $
  47,042
  
  $
  66,471Premiums received on gold and silver hedging
  contracts
  
  876
  
  11,64147,918
  
  78,112Less current portion
  
  876
  
  3,964$
  47,042
  
  $
  74,148  Modification
of hedging contracts Gains
on the early termination or other restructuring of gold, silver and foreign
currency hedging contracts are deferred until the formerly hedged items are
recognized in earnings.  These deferred
gains are expected to be recognized as follows: $35.6 million in 2002, $2.5
million in 2003, $3.9 million in 2004, $3.7 million in 2005 and $1.3 million in
2006.  Refer to note 4 for a discussion
of the deferral of losses on the modification of hedging contracts.  Premiums
received on gold and silver option contracts Premiums
received on gold and silver option contracts sold are deferred and recognized
in earnings on the option expiration dates. 
These deferred premiums will be recognized in 2002.  Refer to note 4 for a discussion of the
deferral of premiums paid on gold and silver hedging contracts.  7.      CAPITAL SECURITIES In 1997, the Company
issued $100.0 million of 11% capital securities due in April 2027.  The effective interest rate on the capital
securities is 11%, or 12% compounded semi-annually during a period of interest
deferral.  The Company has the right
to defer interest payments on the capital securities for a period not to exceed
10 consecutive semi-annual periods. 
During a period of interest deferral, interest accrues at a rate of 12%
per annum, compounded semi-annually, on the full principal amount and deferred
interest.  Since April 1998, the Company
has exercised its right to defer its interest payments to holders of the
capital securities.  Interest accrued
and deferred to date amounts to $64.2 million at December 31, 2001 and is payable
no later than April 1, 2003 together with any additional compounded or deferred
interest up to that date. The Company, at its option, may satisfy its deferred
interest obligation by delivering common shares to the indenture trustee for
the capital securities.  The trustee
would sell the Companys shares and remit the proceeds to the holders of the
securities in payment of the deferred interest obligation.  Deferred interest obligations not settled
with proceeds from the sale of shares remain an unsecured liability of the
Company.  The present value of the
capital securities principal amount, $6.7 million, has been classified as debt
within gold and other financings (note 5). 
The present value of the future interest payments of $93.3 million plus
deferred accrued interest has been classified within a separate component of
shareholders equity as the Company has the unrestricted ability to settle the
future interest payments by issuing its own common shares to the trustee for
sale.  Interest on the debt portion of
the capital securities has been classified as interest expense on the
consolidated statement of earnings, and interest on the equity portion of the
capital securities has been charged directly to deficit on the consolidated
balance sheet.  For purposes of per
share calculations, interest on the equity portion decreases the earnings
attributable to common shareholders. 
See note 15 for a discussion of differences in treatment of the capital
securities under generally accepted accounting principles in the United States.    On March 28, 2002 the
Companys common shareholders authorized the issuance of up to an aggregate of
361,561,230 common shares in exchange for the capital securities. The exchange
is anticipated to be completed on or before April 15, 2002.  8.      RECLAMATION AND MINE CLOSURE LIABILITIES  2001
  
  2000Round Mountain
  
  $ 13,674
  
  $ 10,659McCoy/Cove
  
  17,546
  
  19,284Lupin
  
  9,584
  
  8,280Kettle River
  
  9,119
  
  8,620Sunnyside
  
  3,644
  
  4,70353,567
  
  51,546Less current portion
  
  3,841
  
  1,914$ 49,726
  
  $ 49,632  At December 31, 2001, the
Companys estimate of future reclamation and mine closure costs is $62.1
million, which it believes will meet current regulatory requirements.  The aggregate obligation accrued to December
31, 2001 was $53.6 million, including accruals of $7.4 million in 2001, $10.6
million in 2000, and $7.0 million in 1999. 
The remaining $8.5 million, including $6.6 million at Round Mountain and
$1.9 million at Lupin, will be accrued on the unit-of-production method over
the remaining life of each mine. 
Assumptions used to estimate reclamation and mine closure costs are
based on the work that is required under currently applicable permits, laws and
regulations.  These estimates may change
based on future changes in operations, cost of reclamation activities and
regulatory requirements.  9.      INTEREST AND OTHER  2001
  
  2000
  
  1999Interest income
  
  $
  (760
  )
  $
  (964
  )
  $
  (166
  )Interest expense
  
  2,560
  
  5,194
  
  4,723Unrealized loss on share investments
  
  150
  
  28
  
  1,508Gain on sale of share investments
  
  
  
  (181
  )
  (485
  )Gain on sale of plant and equipment
  
  (700
  )
  (251
  )
  (251
  )Alaska - Juneau reclamation
  
  
  
  (2,048
  )
  Other
  
  472
  
  1,234
  
  2,865$
  1,722
  
  $
  3,012
  
  $
  8,194  10.PROVISION FOR IMPAIRED
ASSETS The recoverability of the
Companys carrying values of its operating and development properties are
assessed by comparing carrying values to estimated future net cash flows from
each property when conditions are present indicating impairment may exist.  In 2001, the Company recorded a $4.4 million
provision for impaired assets relating to its Kettle River mine due to an
unexpected decrease in reserves.    11.    LOSS ON SALE OF
INTEREST IN PAREDONES AMARILLOS The Company agreed in
1999 to sell its 60% interest in the Paredones Amarillos project in Mexico to
its joint venture partner.  In return,
the Company received full ownership of a mill, valued at $2.5 million, owned by
the joint venture and a 2% net profits royalty capped at $2.0 million related
to Paredones Amarillos production.  The
joint venture partner assumed all project liabilities.  In 1999, the Company recognized a loss on
the sale of Paredones Amarillos of $13.8 million.  12.    INCOME TAX
EXPENSE Geographic components The geographic components
of earnings before income tax expense and income tax expense were as follows.  2001
  
  2000
  
  1999Earnings (loss) before income taxes:Canada
  
  $
  952
  
  $
  637
  
  $
  (22,386
  )United States and other
  
  (9,777
  )
  16,176
  
  (14,670
  )$
  (8,825
  )
  $
  16,813
  
  `
  (37,056
  )Current income tax expense:Canada
  
  $
  166
  
  $
  201
  
  $
  216United States and other
  
  45
  
  451
  
  211
  
  652
  
  216Deferred income tax expense (recovery):Canada
  
  (3,358
  )
  (2,400
  )
  United States and other
  
  
  
  
  
  (3,358
  )
  (2,400
  )
  Income tax expense (recovery)
  
  $
  (3,147
  )
  $
  (1,748
  )
  $
  216  Effective tax rate The effective tax rate on
the Companys earnings differed from the combined Canadian federal and
provincial corporate income tax rates of 43.1% for 2001 and 2000 and 43.5% for
1999 for the following reasons.  2001
  
  2000
  
  1999Earnings (loss) before income taxes
  
  $
  (8,825
  )
  $
  16,813
  
  $
  (37,056
  )Income tax effect of:Expected Canadian federal and provincial corporate
  income taxes
  
  $
  (3,805
  )
  $
  7,246
  
  $
  (16,115
  )Utilization of net operating loss
  
  
  
  (5,760
  )
  (838
  )Operating loss from which no tax benefit is derived
  
  3,964
  
  
  
  Canadian resource allowance and earned depletion
  
  (172
  )
  113
  
  (2,153
  )Foreign earnings subject to different income tax
  rates
  
  965
  
  (1,326
  )
  18,182Other items
  
  (4,099
  )
  (2,021
  )
  1,140Income tax expense (recovery)
  
  $
  (3,147
  )
  $
  (1,748
  )
  $
  216Effective tax rate (current and deferred)
  
  35.7
  %
  (10.4
  )%
  (0.6
  )%    Loss
carryforwards At December 31, 2001, the Company had U.S. net operating loss
carryforwards of approximately $416 million to apply against future taxable
income and $207 million to apply against future alternative minimum taxable
income. These loss carryforwards do not include the provisions for impaired
assets, which have not yet been recognized fully for income tax purposes. The
net operating loss carryforwards expire at various times from 2002 to 2021.
Additionally, the Company has Canadian non-capital loss carryforwards of approximately
$81 million and net capital loss carryforwards of approximately $202 million.
The non-capital loss carryforwards expire at various times from 2003 to
2008.  The net capital loss
carryforwards have no expiration date.  Deferred
tax liabilities and asset Significant components of the
Companys deferred tax liabilities and assets are as follows.  2001
  
  2000Canada
  
  U.S. and
  other
  
  Total
  
  Canada
  
  U.S. and
  other
  
  Totalmillions of U.S. dollarsDeferred tax liabilities:Tax over book depreciation and depletion
  
  $
  3.3
  
  $
  
  
  $
  3.3
  
  $
  6.4
  
  $
  
  
  $
  6.4Other tax liabilities
  
  2.7
  
  
  
  2.7
  
  5.3
  
  0.8
  
  6.1Total deferred tax liabilities
  
  6.0
  
  
  
  6.0
  
  11.7
  
  0.8
  
  12.5Deferred tax assets:Net operating loss and other carryforwards
  
  120.3
  
  147.9
  
  268.2
  
  117.2
  
  145.0
  
  262.2Book over tax depreciation and depletion
  
  33.0
  
  21.3
  
  54.3
  
  34.5
  
  13.2
  
  47.7Accrued liabilities
  
  5.1
  
  17.6
  
  22.7
  
  4.7
  
  19.8
  
  24.5Other tax assets
  
  1.8
  
  4.7
  
  6.5
  
  9.2
  
  4.7
  
  13.9Total deferred tax assets before allowance
  
  160.2
  
  191.5
  
  351.7
  
  165.6
  
  182.7
  
  348.3Valuation allowance for deferred tax assets
  
  (155.1
  )
  (191.5
  )
  (346.6
  )
  (158.6
  )
  (181.9
  )
  (340.5
  )Total deferred tax assets
  
  5.1
  
  
  
  5.1
  
  7.0
  
  0.8
  
  7.8Net deferred tax liabilities
  
  $
  0.9
  
  $
  
  
  $
  0.9
  
  $
  4.7
  
  $
  
  
  $
  4.7  The net increase in the
valuation allowance for deferred tax assets was $6.1 million for 2001 and $71.0
million for 2000.  Income tax payments Income tax payments were
$0.7 million in 2001, $0.2 million in 2000 and $0.2 million in 1999.  13.    PREFERRED SHARES The Company is authorized
to issue an unlimited number of preferred shares, issuable in series.  Each series is to consist of such number of
shares and to have such designation, rights, privileges, restrictions and
conditions as may be determined by the directors.  No preferred shares are currently issued.  14.    COMMON SHARES The Company had
140,607,145 common shares outstanding during each of the three years ended
December 31, 1999, 2000 and 2001.    Dividends The Company has not paid
dividends since 1996 and is prohibited from paying common share dividends
during a period of interest deferral related to the capital securities (note
7).  Restricted share grant plan Effective February 1997,
the Company adopted a restricted share grant plan to provide incentive to
officers of the Company.  The Company
has reserved an aggregate of 750,000 common shares for issuance under the plan,
but no grants are outstanding.  The
vesting of any shares, which may be granted under this plan, is at the
discretion of the Compensation Committee of the Board of Directors.  Employee Share Incentive Plan and Director Equity Plan These plans provide for
the granting of options to purchase common shares to officers and employees
(under the employee share incentive plan) and to eligible directors (under the
director equity plan). Outstanding share options under the plans are
exercisable at prices equal to the market value on the date of grant.  The option holder may exercise each share
option over a period of 10 years from the date of grant.  Options generally vest in 25% increments on
the first, second, third and fourth year anniversaries following the grant
date.  Option prices are denominated in
Canadian dollars.  No more grants are to
be made under the director equity plan.  Changes in the number of
options outstanding during the three years ended December 31, 2001 were as
follows.  Employee
  Share Incentive Plan
  
  Director
  Equity PlanNumber of
  Shares
  
  Weighted
  Average Exercise Price
  
  Number of
  Shares
  
  Weighted
  Average Exercise PriceOptions outstanding,
  December 31, 1998
  
  4,977,320
  
  C$
  10.44
  
  240,450
  
  C$
  11.141999:       Options granted
  
  1,170,000
  
  2.55
  
  
  
  Options expired
  
  (34,937
  )
  9.75
  
  
  
  Options forfeited
  
  (618,697
  )
  9.94
  
  
  
  Options outstanding, December 31, 1999
  
  5,493,686
  
  C$
  8.82
  
  240,450
  
  C$
  11.142000:       Options
  granted
  
  
  
  
  
  
  
  Options expired
  
  (100,458
  )
  12.88
  
  
  
  Options forfeited
  
  (1,021,417
  )
  8.92
  
  (13,000
  )
  5.85Options outstanding, December 31, 2000
  
  4,371,811
  
  C$
  8.71
  
  227,450
  
  C$
  11.442001:       Options
  granted
  
  
  
  
  
  
  
  Options expired
  
  (64,655
  )
  8.88
  
  
  
  Options forfeited
  
  (666,589
  )
  8.66
  
  
  
  Options outstanding, December 31, 2001
  
  3,640,567
  
  C$
  8.72
  
  227,450
  
  C$
  11.44  The number of shares
reserved for future grants at December 31, 2001 is 5,971,935 under the Employee
Share Incentive Plan.  The number and
weighted average price of shares exercisable under the Employee Share Incentive
Plan are 3,076,154 at C$9.80 at December 31, 2001; 3,389,484 at C$10.41 at
December 31, 2000; and 3,521,787 at C$11.66 at December 31, 1999.  The number and weighted average price of
shares exercisable under the Director Equity Plan are 217,700 at C$11.78 at
December 31, 2001; 196,575 at C$12.40 at December 31, 2000; and 171,575 at
C$12.73 at December 31, 1999.    Options outstanding at
December 31, 2001 had the following characteristics.  Number  of
  Shares
  Outstanding
  
  Exercise
  Price Range
  
  Weighted
  Average Exercise
  Price of Shares
  Outstanding
  
  Weighted
  Average
  Years Until Expiration
  
  Number of
  Shares Exercisable
  
  Weighted
  Average Exercise
  Price of Shares
  ExercisableEmployee Share Incentive
  Plan1,402,533
  
  C$2.55    3.59
  
  C$
  2.94
  
  8
  
  838,120
  
  C$
  3.041,007,721
  
  5.75  10.70
  
  8.73
  
  5
  
  1,007,721
  
  8.731,110,563
  
  13.38  16.50
  
  14.95
  
  3
  
  1,110,563
  
  14.95119,750
  
  18.25  19.63
  
  18.48
  
  4
  
  119,750
  
  18.48Director Equity Plan143,000
  
  C$3.70  12.50
  
  C$
  8.67
  
  5
  
  133,250
  
  C$
  9.0384,450
  
  14.25  18.25
  
  16.13
  
  3
  
  84,450
  
  16.13  15.    DIFFERENCES
BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) U.S.
GAAP financial statements The Company prepares its
consolidated financial statements in accordance with accounting principles
generally accepted in Canada, which differ in some respects from those in the
United States, as described below.  In accordance with
Canadian GAAP, the present value of the principal amount of the capital
securities issued in 1997 is classified as debt within gold and other
financings, while the present value of the future interest payments is
classified as a separate component of shareholders equity (note 7).  The deferred accrued interest is classified
within this equity component as the Company has the option to satisfy the
deferred interest by delivering common shares. 
The related issuance costs were allocated proportionately to deferred
financing charges and retained earnings based on the debt and equity
classifications.  Interest on the
capital securities has been allocated proportionately to interest expense and
deficit based on the debt and equity classifications.  Under U.S. GAAP, the face value of the securities would be
classified entirely as debt within gold and other financings; the related
issuance costs would be classified as deferred financing charges within
long-term investments and other assets and would be amortized to interest expense
over the life of the securities; and the interest on the capital securities
would be classified entirely as interest expense.  In accordance with
Canadian GAAP, certain long-term foreign exchange contracts are considered to
be hedges of the cost of goods to be purchased in foreign currencies in future
periods.  Gains and losses related to
changes in market values of such contracts are recognized as a component of the
cost of goods when the related hedged purchases occur. In 2001, the Company
recognized $2.8 million in deferred foreign exchange gains.  Under U.S. GAAP, foreign exchange contracts
would be carried at market value and changes included in current earnings.  In accordance with
Canadian GAAP, the Companys short-term share investments are carried at the
lower of cost or market based on quoted market prices.  Under U.S. GAAP, these investments would
have been marked to market, with unrealized gains or losses excluded from
earnings and reported as accumulated other comprehensive income in shareholders
equity, net of tax.    At December 31, 2001, the
Company had 120,000 ounces of gold call options sold with an average strike
price of $297 per ounce.  The Company
sold these call options to enhance prices on certain of its gold forward contracts.
In accordance with U.S. GAAP, the 120,000 ounces of gold call options sold
would not qualify for hedge accounting and therefore would be marked to market
at December 31, 2001.  As a result, the
Company recorded a loss of $0.8 million in 2001, a gain of $3.0 million in 2000
and a loss of $2.1 million in 1999 under U.S. GAAP.  In accordance with
Canadian GAAP, capitalized mine development costs include expenditures incurred
to develop new ore bodies, to define further resources in existing ore bodies
and to expand the capacity of operating mines. 
The Company capitalized development costs of $2.2 million in 2001; $1.2
million in 2000 and $0.1 million in 1999 for the extension to the K-2 deposit
at the Kettle River mine.  Under U.S.
GAAP, development costs are capitalized only when converting mineralized
material to reserves or for further delineation of existing reserves.  The development expenditures resulted in
additions to mineralized material but did not add to mineral reserves.  Therefore under U.S. GAAP, the expenditures
would be classified as exploration expense.  The effects on the
consolidated statement of earnings of the above differences would have been as
follows.  2001
  
  2000
  
  1999Net earnings (loss) under Canadian GAAP
  
  $
  (5,678
  )
  $
  18,561
  
  $
  (37,272
  )Additional interest expense on capital securities
  
  (17,307
  )
  (15,397
  )
  (13,697
  )Amortization of deferred financing costs on capital
  securities
  
  (634
  )
  (633
  )
  (633
  )Change in market value of foreign exchange contracts
  
  426
  
  948
  
  5,540Change in market value of option contracts
  
  (1,291
  )
  2,964
  
  (2,146
  )Amortization of deferred foreign exchange gains
  
  (2,846
  )
  (3,149
  )
  Transition adjustment on adoption of FAS 133
  
  (3,090
  )
  
  
  Unrealized loss on short-term investments
  
  150
  
  28
  
  Kettle River exploration expense
  
  (2,234
  )
  (1,229
  )
  (108
  )Kettle River amortization expense
  
  2,103
  
  163
  
  Provision for impaired assets
  
  1,305
  
  
  
  Net earnings (loss) under U.S. GAAP
  
  $
  (29,096
  )
  $
  2,256
  
  $
  (48,316
  )Earnings (loss) per share under U.S. GAAP
  
  $
  0.21
  
  $
  0.02
  
  $
  (0.34
  )    The effects of the GAAP differences on the consolidated balance sheet
would have been as follows.  December
  31, 2001
  
  Canadian GAAP
  
  Capital Securities
  
  Derivative Contracts
  
  Other
  
  U.S. GAAPShort-term investments
  
  $
  1,910
  
  $
  
  
  $
  
  
  $
  2,636
  
  $
  4,546Long-term investments and other assets
  
  55,795
  
  158
  
  (29,305
  )
  141
  
  26,789Accounts payable and accrued liabilities
  
  24,284
  
  
  
  691
  
  
  
  24,975Debt and other financings
  
  23,714
  
  93,286
  
  
  
  
  
  117,000Deferred income
  
  47,918
  
  
  
  (47,918
  )
  
  
  Accrued interest on capital securities
  
  
  
  64,167
  
  
  
  
  
  64,167Common shares
  
  713,343
  
  
  
  
  
  36,428
  
  749,771Capital securities
  
  157,453
  
  (157,453
  )
  
  
  
  
  Deficit
  
  (734,665
  )
  158
  
  (3,563
  )
  (36,109
  )
  (774,179
  )Foreign currency translation
  
  (29,305
  )
  
  
  
  
  29,305
  
  Accumulated other comprehensive loss
  
  
  
  
  
  21,485
  
  (26,847
  )
  (5,362
  )Shareholders equity (deficit)
  
  106,826
  
  (157,295
  )
  17,922
  
  2,777
  
  (29,770
  )  December
  31, 2000
  
  Canadian
  GAAP
  
  Capital
  Securities
  
  Other
  
  U.S. GAAPShort-term investments
  
  $
  2,186
  
  $
  
  
  $
  760
  
  $
  2,946Mining properties
  
  41,691
  
  
  
  (1,174
  )
  40,517Long-term investments and other assets
  
  68,412
  
  792
  
  533
  
  69,737Debt and other financings
  
  32,532
  
  93,968
  
  
  
  126,500Deferred income
  
  78,112
  
  
  
  (2,846
  )
  75,266Accrued interest on capital securities
  
  
  
  46,108
  
  
  
  46,108Common shares
  
  713,343
  
  
  
  36,428
  
  749,771Capital securities
  
  140,076
  
  (140,076
  )
  
  
  Deficit
  
  (711,680
  )
  792
  
  (34,195
  )
  (745,083
  )Foreign currency translation
  
  (24,954
  )
  
  
  24,954
  
  Accumulated other comprehensive loss
  
  
  
  
  
  (24,222
  )
  (24,222
  )Shareholders equity (deficit)
  
  116,785
  
  (139,284
  )
  2,965
  
  (19,534
  )  The continuity of shareholders equity (deficit) from December 31, 2000
to December 31, 2001 under U.S. GAAP would have been as follows. 2001Balance, beginning of year
  
  $
  (19,534
  )Net loss
  
  (29,096
  )Other comprehensive income
  
  18,860Balance, end of year
  
  $
  (29,770
  )    The following statement
of comprehensive income (loss) would be disclosed in accordance with U.S. GAAP.  2001
  
  2000
  
  1999Net earnings (loss) under U.S. GAAP
  
  $
  (29,096
  )
  $
  2,256
  
  $
  (48,316
  )Other comprehensive income (loss), after a nil
  income tax effect:Unrealized gain on share investments arising during
  period
  
  1,726
  
  732
  
  Foreign currency translation adjustments
  
  (4,351
  )
  (2,940
  )
  4,562Transition adjustment on adoption of FAS 133
  
  39,234
  
  
  
  Modification of derivative contracts realized in net
  income
  
  (17,749
  )
  
  
  Other comprehensive income (loss)
  
  18,860
  
  (2,208
  )
  4,562Comprehensive income (loss)
  
  $
  (10,236
  )
  $
  48
  
  $
  (43,754
  )  Additionally, under U.S. GAAP, the equity section of the balance sheet
would present a subtotal for accumulated other comprehensive loss, as follows. 2001
  
  2000Unrealized gain on share investments
  
  $
  2,458
  
  $
  732Modification of derivative contracts
  
  21,485
  
  Foreign currency translation
  
  (29,305
  )
  (24,954
  )Accumulated other comprehensive loss
  
  $
  (5,362
  )
  $
  (24,222
  )  Stock-based
compensation Financial Accounting Standards Board (FASB) Statement No. 123,
Accounting for Stock-Based Compensation, gives the option to either follow
fair value accounting or to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB No. 25) and related
Interpretations.  The Company has
determined that it will elect to continue to follow APB No. 25 and related
Interpretations in accounting for its employee and director stock options in
financial information prepared in conformity with U.S. GAAP.  In accordance with Canadian GAAP and U.S. GAAP (under APB No. 25), the
Company does not recognize compensation expense for stock option grants in the
earnings statement, as the market prices of the underlying stock on the grant
dates do not exceed the exercise prices of the options granted.  Had the Company adopted Statement No. 123 for its U.S. GAAP disclosure,
the following net earnings and losses would have been reported.  2001
  
  2000
  
  1999Net earnings (loss) under U.S. GAAP
  
  $
  (29,096
  )
  $
  2,256
  
  $
  (48,316
  )Pro forma stock compensation expense,after a nil
  income tax effect
  
  (405
  )
  (929
  )
  (1,845
  )Pro forma net earnings (loss) under U.S. GAAP
  
  $
  (29,501
  )
  $
  1,327
  
  $
  (50,161
  )Pro forma earnings (loss) per share under U.S. GAAP
  
  $
  (0.21
  )
  $
  0.01
  
  $
  (0.36
  )  The Company has utilized the Black-Scholes option valuation model to
estimate the fair value of options granted, assuming a weighted average option
life of six years, a risk-free interest rate of 6.25%, a zero dividend yield
and a volatility factor of 60% for 1999 grants.  The weighted average fair value of options granted was estimated
at $1.08 per share in 1999.  There were
no grants in 2001 or 2000.    Derivative instruments and hedging activities On January 1, 2001, the
Company implemented FASB Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities and Statement No. 138 Accounting for
Certain Derivative Instruments and Certain Hedging Activities.  The Company has designated its gold forward
contracts as normal sales as defined by Statement No. 138 and these contracts
are therefore excluded from the scope of Statement No. 133. Foreign exchange
contracts and gold call options have not been designated as hedges for U.S.
GAAP purposes and are recognized at fair value on the balance sheet with
changes in fair value recorded in earnings. Gains and losses on the early termination
or other restructuring of gold, silver and foreign currency hedging contracts
are deferred in accumulated other comprehensive income until the formerly
hedged items are recorded in earnings. 
The transition adjustment recorded under U.S. GAAP at January 1, 2001
decreased assets by $18.3 million, liabilities by $54.4 million and net
earnings by $3.1 million, and increased accumulated other comprehensive income
by $39.2 million.  Recent accounting pronouncements In
2001, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 143, Accounting for Asset Retirement Obligations,
which is effective for fiscal years beginning after June 15, 2002.  The Statement requires legal obligations
associated with the retirement of long-lived assets be recognized at their fair
value at the time that the obligations are incurred.  Upon initial recognition of a liability, that cost should be
capitalized as part of the related long-lived assets and allocated to expense
over the useful life of the asset.  The
Company will adopt Statement 143 on January 1, 2003.  Due to the number of operating facilities that the company
maintains, the expected impact of adoption of Statement 143 on the Company's
financial position or results of operations has not yet been determined.  Other The estimated fair values
of cash and cash equivalents, short-term investments and currency loans
approximate their book values.  The fair
values were determined from quoted market prices or estimated using discounted
cash flow analysis.  See note 18 for
further disclosure regarding estimated fair values of financial instruments.    16.    JOINT VENTURES Summarized below is the
Companys 50% interest in the Round Mountain mine, accounted for by the
proportionate consolidation method.  2001
  
  2000
  
  1999Revenues
  
  $
  105,450
  
  $
  90,633
  
  $
  87,469Expenses:Operating costs
  
  72,049
  
  60,231
  
  52,880Royalties
  
  6,881
  
  5,585
  
  5,021Production taxes
  
  664
  
  470
  
  57Depreciation and amortization
  
  20,570
  
  18,978
  
  17,704Reclamation and mine closure
  
  3,361
  
  2,880
  
  2,438Exploration
  
  663
  
  529
  
  431Other
  
  (761
  )
  (753
  )
  753Earnings before income taxes
  
  $
  2,023
  
  $
  2,713
  
  $
  8,185  2001
  
  2000
  
  1999Current assets
  
  $
  40,224
  
  $
  33,425
  
  $
  33,105Non-current assets
  
  96,376
  
  109,211
  
  126,611Current liabilities
  
  (15,154
  )
  (11,244
  )
  (10,667
  )Non-current liabilities
  
  (15,311
  )
  (18,023
  )
  (18,845
  )Equity
  
  $
  106,135
  
  $
  113,369
  
  $
  130,204  2001
  
  2000
  
  1999Net cash provided from (used in):Operating activities
  
  $
  15,146
  
  $
  10,849
  
  $
  4,538Investing activities
  
  (15,046
  )
  (4,664
  )
  (8,229
  )Financing activities
  
  
  
  
  
  Net increase (decrease) in cash
  
  $
  100
  
  $
  6,185
  
  $
  (3,691
  )  17.    SEGMENT INFORMATION The Companys management
regularly evaluates the performance of the Company by reviewing operating
results on a minesite by minesite basis. 
As such, the Company considers each producing minesite to be an
operating segment.  The Company has four
operating mines: Round Mountain and McCoy/Cove in Nevada, U.S.A.; Kettle River
in Washington, U.S.A.; and Lupin in Nunavut Territory, Canada.  The Company recommenced operations at its
Lupin mine in the Nunavut Territory, Canada in April 2000.  All are 100% owned except for Round
Mountain, which is 50% owned.  The Companys management
generally monitors revenues on a consolidated basis. Information regarding the
Companys consolidated revenues is provided below.  2001
  
  2000
  
  1999Total gold and silver revenues
  
  $
  237,684
  
  $
  280,976
  
  $
  210,351Average gold price realized per ounce
  
  $
  305
  
  $
  319
  
  $
  325Average silver price realized per ounce
  
  $
  4.70
  
  $
  5.28
  
  $
  5.69    In making operating
decisions and allocating resources, the Companys management specifically
focuses on the production levels and operating costs incurred by each operating
segment, as summarized in the following tables.  Gold
  Production (ounces)
  
  2001
  
  2000
  
  1999Round Mountain (50%)
  
  373,475
  
  320,064
  
  270,904McCoy/Cove
  
  94,633
  
  162,784
  
  124,536Lupin
  
  139,327
  
  117,729
  
  Kettle River
  
  50,349
  
  94,086
  
  104,396Total gold
  
  657,784
  
  694,663
  
  499,836  Silver Production (ounces)
  
  2001
  
  2000
  
  1999Total silverall from McCoy/Cove
  
  6,451,425
  
  12,328,297
  
  8,430,072Operating costs
  
  2001
  
  2000
  
  1999Round Mountain (50%)
  
  $
  72,049
  
  $
  60,501
  
  $
  53,055McCoy/Cove
  
  53,015
  
  69,920
  
  63,429Lupin
  
  34,722
  
  22,883
  
  Kettle River
  
  15,555
  
  20,131
  
  23,332Total operating costs per financial statements
  
  $
  175,341
  
  $
  173,435
  
  $
  139,816  Royalties
  
  2001
  
  2000
  
  1999Round Mountain (50%)
  
  $
  6,880
  
  $
  5,585
  
  $
  5,021McCoy/Cove
  
  213
  
  1,228
  
  644Kettle River
  
  504
  
  1,221
  
  1,532Total royalties per financial statements
  
  $
  7,597
  
  $
  8,034
  
  $
  7,197  Depreciation
  and amortization
  
  2001
  
  2000
  
  1999Round Mountain (50%)
  
  $
  20,570
  
  $
  18,978
  
  $
  17,704McCoy/Cove
  
  12,638
  
  21,539
  
  22,743Lupin
  
  5,226
  
  4,874
  
  5,381Kettle River
  
  2,011
  
  2,637
  
  6,141Depreciation of non-minesite assets
  
  1,656
  
  2,636
  
  2,972Total depreciation and amortization per financial
  statements
  
  $
  42,101
  
  $
  50,664
  
  $
  54,941  Total
  assets
  
  2001
  
  2000Minesites:Round Mountain (50%)
  
  $
  110,864
  
  $
  121,592McCoy/Cove
  
  21,256
  
  42,354Lupin
  
  31,199
  
  34,860Kettle River
  
  5,351
  
  10,101Development properties:Aquarius
  
  44,048
  
  48,437Non-minesite assets
  
  48,086
  
  56,264Total assets
  
  $
  260,804
  
  $
  313,608    Capital
  expenditures
  
  2001
  
  2000
  
  1999Round Mountain (50%)
  
  $
  15,033
  
  $
  4,620
  
  $
  7,669McCoy/Cove
  
  1,002
  
  670
  
  1,147Lupin
  
  2,622
  
  4,642
  
  11Kettle River
  
  4,150
  
  1,402
  
  467  Deferred
  (applied) mining expenditures
  
  2001
  
  2000
  
  1999Round Mountain (50%)
  
  $
  (5,323
  )
  $
  411
  
  $
  5,058McCoy/Cove
  
  (2,247
  )
  (5,062
  )
  9,534Lupin
  
  1,452
  
  449
  
    Financial information regarding geographic areas is set out below.  2001
  
  2000
  
  1999Revenue:Canada
  
  $
  53,160
  
  $
  44,370
  
  $
  United States
  
  184,524
  
  236,606
  
  210,351Total revenue
  
  $
  237,684
  
  $
  280,976
  
  $
  210,351  2001
  
  2000Assets:Canada
  
  $
  108,824
  
  $
  118,073United States
  
  150,089
  
  193,431Other
  
  1,891
  
  2,104Total assets
  
  $
  260,804
  
  $
  313,608  18.    HEDGING ACTIVITIES AND COMMITMENTS The Company reduces the
risk of future gold price declines by hedging a portion of its production.  The principal hedging tools used are gold
forward sales contracts and options.  The Company assesses the
exposure that may result from a hedging transaction prior to entering into the
commitment, and only enters into transactions which it believes accurately
hedge the underlying risk and could be safely held to maturity.  The Company does not engage in the practice
of trading derivative securities for profit. 
The Company regularly reviews its unrealized gains and losses on hedging
transactions.  The credit risk exposure
related to all hedging activities is limited to the unrealized gains on
outstanding contracts based on current market prices.  To reduce counterparty credit exposure, the Company deals only
with large, credit-worthy financial institutions and limits credit exposure to
each.  The counterparties for the
Companys current hedge positions do not require margin deposits.  In addition, the Company deals only in
markets it considers highly liquid to allow for situations where positions may
need to be reversed.    Gains
and losses on the early termination or other restructuring of gold, silver and
foreign currency hedging contracts are deferred until the formerly hedged items
are recognized in earnings (notes 4 and 6).  Premiums
paid or received on gold and silver options contracts purchased or sold are
deferred and recognized in earnings on the option expiration dates (notes 4 and
6).  Gold commitments At December 31, 2001, the
Company has commitments to deliver 60,000 ounces of gold at a minimum price of
$293 per ounce.  The Companys option
position at December 31, 2001 included 120,000 ounces of gold call options sold
at an average strike price of $297 per ounce.  Forward Sales contracts
of 60,000 ounces of gold as well as the call options sold of 120,000 ounces of
gold represent approximately 5% of the Companys reserves.  This amount of future hedging is reduced
from 2001.  In 2001, 19% of gold
production was delivered against forward sales contracts. The reduced hedging
position results from continued weakness in spot gold prices and low forward
premiums resulting in lower hedge prices that can be achieved.  The Company continues to monitor its hedging
policy in light of forecasted production, operating and capital expenditures,
exploration and development requirements and factors affecting gold price
volatility.  Currency position At December 31, 2001, the
Company had an obligation under foreign currency exchange contracts to purchase
C$33.3 million in 2002 at an exchange rate of C$1.60 to U.S.$1.00. In January
2002, the Company entered into contracts to purchase an additional C$33.0
million in 2002 at the same rate.  Shown below are the
carrying amounts and estimated fair values of the Companys other outstanding
hedging instruments at December 31, 2001 and 2000.  December
  31, 2001
  
  December
  31, 2000Carrying
  Amount
  
  Estimated 
  Fair Value
  
  Carrying
  Amount
  
  Estimated
  Fair ValueGold forward sales
  
  $
  
  
  $
  2,000
  
  $
  
  
  $
  5,700Silver forward sales
  
  
  
  
  
  
  
  1,800Gold options
  - calls sold
  
  (630
  )
  (700
  )
  (3,000
  )
  (2,200
  )- calls
  purchased
  
  
  
  
  
  6,800
  
  2,400Silver options
  - puts
  purchased
  
  
  
  
  
  1,200
  
  1,400- puts sold
  
  
  
  
  
  (1,300
  )
  (400
  )- calls
  purchased
  
  
  
  
  
  700
  
  Foreign currency contracts
  
  
  
  100
  
  
  
  (300
  )$
  1,400
  
  
  
  $
  8,400  Fair values are estimated
for the contract settlement dates based on market quotations of various input
variables.  These variables are used in
valuation models that estimate the fair market value.    The fair value of the
Companys hedged position can be affected by market conditions beyond the
Companys control.  The effect of
changes in various market factors on the Companys outstanding hedged position
at December 31, 2001 would be as follows.  Amount of
  Change
  
  Effect on
  Market Value of
  Hedged PositionChange in:Gold prices
  
  $ 10/ounce
  
  $
  900Canadian dollars
  
  U.S.$0.01
  
  $
  300Interest rates (effect on gold and silver forward
  sales and options)
  
  1%
  
  $
  140  Hedging gains and losses represent the difference between spot or
market prices and realized amounts. The hedging gains (losses) recognized in
earnings are as follows.  2001
  
  2000
  
  1999Revenue:Gold loans and swaps
  
  $
  703
  
  $
  1,289
  
  $
  1,658Gold forward sales
  
  22,245
  
  25,754
  
  17,710Silver forward sales
  
  3,426
  
  3,333
  
  3,439Gold and silver options
  
  (402
  )
  (506
  )
  4,077Operating costs:Foreign currency contracts
  
  (2,113
  )
  (1,179
  )
  (3,068
  )$
  23,859
  
  $
  28,691
  
  $
  23,816  19.    OTHER COMMITMENTS AND CONTINGENCIES Royalties Round Mountain mine
production is subject to a net smelter return royalty ranging from 3.53% at
gold prices of $320 per ounce or less to 6.35% at gold prices of $440 per ounce
or more.  Its production is also subject
to a gross revenue royalty of 3.0%, reduced to 1.5% after $75.0 million has
been paid.  McCoy/Cove production is
subject to a 2% net smelter return royalty. 
This royalty is based on sales less certain deductions.  A portion of production
from the Lamefoot area of the Kettle River mine is subject to a 5% net smelter
return royalty.  K-2 area production at
Kettle River is subject to a 5% gross proceeds royalty and a net smelter return
royalty ranging from 2% at gold prices of $300 per ounce or less to 3% at gold
prices of $400 per ounce or more.  Operating lease commitments The Companys principal
lease commitments are for equipment and office premises.  The Company incurred $1.1 million in rental
expense in 2001, net of $1.4 million in rental income related to office
subleases.  The Companys commitments
under the remaining terms of the leases are approximately $6.7 million, payable
as follows: $2.0 million in 2002, $1.6 million in 2003, $1.5 million in 2004,
$1.0 million in 2005, $0.1 million in 2006 and $0.5 million thereafter.    Summa In September 1992, the
Summa Corporation commenced a lawsuit against Echo Bay Exploration Inc. and Echo
Bay Management Corporation, indirect subsidiaries of the Company, alleging
improper deductions in the calculation of royalties payable over several years
of production at the McCoy/Cove and Manhattan mines.  The matter was tried in the Nevada State Court in April 1997,
with Summa claiming more than $13 million in damages, and, in September 1997,
judgement was rendered for the Echo Bay companies.  The decision was appealed by Summa to the Supreme Court of
Nevada, which heard the matter on November 9, 1999.  On April 26, 2000, the
Supreme Court of Nevada reversed the decision of the trial court and remanded
the case back to the trial court for a calculation of the appropriate
[royalties] in a manner not inconsistent with this order.  The case was decided by a panel comprised of
three of the seven Justices of the Supreme Court of Nevada and the Echo Bay
defendants petitioned that panel for a rehearing.  The petition was denied by the three member panel on May 15, 2000
and remanded to the lower court for consideration of other defenses and
arguments put forth by the Echo Bay defendants.  The Echo Bay defendants filed a petition for a hearing before the
full Court and on December 22, 2000, the Court recalled its previous
decision.  Both the Echo Bay defendants and
their counsel believe that grounds exist to modify or reverse the
decision.  The Company has $1.5 million
accrued related to the Summa litigation. 
If the appellate reversal of the trial decision is maintained and the
trial court, on remand, were to dismiss all the Echo Bay defenses, the royalty
calculation at McCoy/Cove would change and additional royalties would be
payable.  Handy
and Harman On March 29, 2000 Handy
& Harman Refining Group, Inc., which operated a facility used by the
Company for the refinement of dore bars, filed for protection under Chapter 11
of the U.S. Bankruptcy Code.  The
Company has a claim for gold and silver accounts at this refining facility with
an estimated market value of approximately $2.4 million.  The outcome of these proceedings is
uncertain at this time.  Security for reclamation Certain of the Companys
subsidiaries have provided corporate guarantees and other forms of security to
regulatory authorities in connection with future reclamation activities.  Early in 2001, regulators in Nevada called
upon two of the Companys subsidiaries to provide other security to replace
corporate guarantees that had been given in respect of the Round Mountain and
McCoy/Cove operations totaling approximately $33 million.  The Company disagrees with the regulators
position and believes that the subsidiaries qualify under the criteria set out
for corporate guarantees and will oppose the regulatory position.  Although the outcome cannot be predicted,
the Company and its counsel believe that the Company will prevail.  20.SUBSEQUENT EVENTS On February 13, 2002, the
Company entered into an agreement with Newmont Mining Corporation providing for
the sale of the McCoy/Cove mine and facilities in exchange for $6.0 million and
the assumption of all reclamation obligations at McCoy/Cove. The agreement is
subject to the completion of due diligence by Newmont on or before July 31,
2002.  On March 28, 2002 the
Companys common shareholders authorized the issuance of up to an aggregate of
361,561,230 common shares in exchange for the capital securities (note 7).  The exchange is anticipated to be completed
on or before April 15, 2002.    QUARTERLY FINANCIAL HIGHLIGHTS (Unaudited) (millions of U.S. dollars except per share data)  Revenue
  
  Net
  Earnings
  (Loss)
  
  Earnings
  (Loss)
  per Share2001First quarter
  
  $
  64.5
  
  $
  3.8
  
  $
  Second quarter
  
  63.7
  
  (0.4
  )
  (0.03
  )Third quarter
  
  58.5
  
  (0.2
  )
  (0.03
  )Fourth quarter
  
  51.0
  
  (8.9
  )
  (0.10
  )Total
  
  $
  237.7
  
  $
  (5.7
  )
  $
  (0.16
  )2000First quarter
  
  $
  51.8
  
  $
  (2.7
  )
  $
  (0.04
  )Second quarter
  
  84.3
  
  10.2
  
  0.04Third quarter
  
  76.4
  
  9.0
  
  0.04Fourth quarter
  
  68.5
  
  2.1
  
  (0.02
  )Total
  
  $
  281.0
  
  $
  18.6
  
  $
  0.02  The net loss in the fourth quarter of 2001 includes a provision for
Kettle River impaired assets of $4.4 million ($0.03 per share).  ITEM
9-CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE  None.   PART III  ITEM
10-DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT  The information about the
directors of the Company required by this item is located in the Echo Bay Mines
Ltd. proxy statement to be filed within 120 days after the end of the fiscal
year, and is incorporated herein by reference. Information about the executive
officers of the Company required by this item appears in Part I of this Annual
Report on Form 10-K.  ITEM 11-EXECUTIVE COMPENSATION  The information required
by this item will appear in the Echo Bay Mines Ltd. proxy statement to be filed
within 120 days after the end of the fiscal year, and is incorporated herein by
reference.  ITEM
12-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT  The information required
by this item will appear in the Echo Bay Mines Ltd. proxy statement to be filed
within 120 days after the end of the fiscal year, and is incorporated herein by
reference.  ITEM
13-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  The information required
by this item will appear in the Echo Bay Mines Ltd. proxy statement to be filed
within 120 days after the end of the fiscal year, and is incorporated herein by
reference.    PART IV  ITEM
14-EXHIBITS FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K  (a)     The following documents are filed as part
of this report:  1.       Financial Statements included in Part II, Item 8 Echo Bay
Mines Ltd.  Managements
  Responsibility For Financial ReportingReport Of
  Independent Chartered AccountantsConsolidated Balance SheetsConsolidated
  Statements Of OperationsConsolidated
  Statements Of DeficitConsolidated
  Statements Of Cash FlowNotes to
  Consolidated Financial Statements  2.Financial
Statement Schedules included in Part IV
All schedules are omitted because they are not applicable or the required
information is shown in
the financial statements or notes thereto.  3.Exhibits
required to be filed by Item 601 of Regulation S-K
Exhibits 23.1 and 24 are filed herewith. All other exhibits are incorporated by
reference
as indicated below.  Exhibit
  No.
  
  Exhibit Description3.1
  
  Restated Articles of
  Incorporation of the Registrant (incorporated herein by reference to Exhibit
  3(a) of Registration Statement No. 2-84687).3.2
  
  By-Laws of the
  Registrant (incorporated herein by reference to Exhibit 3(b) of Registration
  Statement No. 2-84687).4.1
  
  Shelf registration
  statement, as amended, dated February 12, 1998 (incorporated herein by
  reference to Registration Statement 333-35857 and amendments thereto).4.2
  
  Indenture and First
  Supplemental Indenture between Echo Bay Mines Ltd. and Bankers Trust Company
  and Global Security for 11% Capital Securities dated March 27, 1997
  (incorporated herein by reference to the report on Form 8-K of file No.
  1-8542 which was made effective on March 31, 1997).4.3
  
  Second Supplemental
  Indenture between Echo Bay Mines Ltd. and Bankers Trust Company and Global
  Security for 11% Capital Securities dated September 15, 1998 (incorporated
  herein by reference to the report on Form 8-K of file No. 1-8542 which was
  made effective on November 2, 1998).4.4
  
  Third Supplemental
  Indenture between Echo Bay Mines Ltd. and Bankers Trust Company and Global
  Security for 11% Capital Securities dated December 4, 2001 (incorporated
  herein by reference to the report on Form 8-K of file No. 1-8542 which was
  made effective on December 5, 2001).    10.1
  
  Employee Share
  Incentive Plan (incorporated herein by reference to Exhibit 10(n) of
  Registration Statement No. 2-84687).10.2
  
  Amendment dated
  February 18, 1986, to the Employee Share Incentive Plan described in 10.1
  above (incorporated herein by reference to Exhibit 10.29 of the report on
  Form 10-K of file No. 1-8542 for the year ended December 31, 1986).10.3
  
  Director Equity Plan
  and amendment to Employee Share Incentive Plan (incorporated herein by
  reference to Registration Statement on Form S-8, file No. 33-91696).10.4
  
  Employment Agreement
  dated May 10, 1996 with Robert L. Leclerc (incorporated herein by reference
  to exhibit 10.6 of the report on Form 10-K of file No. 1-8542 for the year
  ended December 31, 1996).10.5
  
  Employee Share
  Incentive Plan and Restricted Share Grant Plan (incorporated herein by
  reference to Registration Statement on Form S-8, file No. 333-31835).10.6
  
  Registration Statement
  dated May 14, 1998 (incorporated herein by reference to Registration
  Statement on Form S-3, file No. 333-52613 and amendments thereto).10.7
  
  Second Amended and
  Restated Gold Bullion Loan Agreement dated as of February 11, 1999
  (incorporated herein by reference to exhibit 10.7 of the report on Form 10-K
  of file No. 1-8542 for the year ended December 31, 1999).23.1
  
  Consent of Ernst &
  Young LLP.24
  
  Power of Attorney.  (b)     Reports on Form 8-K  Filed on October
12, 2001, related to new bank facility arrangements.  Filed on December
5, 2001, related to the third supplemental indenture dated December 4, 2001
regarding the capital securities.  Filed on February
20, 2002, related to the proposed sale of the McCoy/Cove mill complex.    SIGNATURES  Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.  ECHO BAY MINES LTD.By:
  /s/ Robert L. LeclercRobert L. Leclerc,
  Chairman
  Chief Executive Officer and DirectorDate:
  April 1, 2002  Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant in the capacity
and on the date indicated.  Signature
  
  Title
  
  
  Date/s/ Robert L. Leclerc
  
  Chairman, Chief
  Executive
  Officer and Director
  
  
  April 1, 2002Robert L. Leclerc/s/ Tom S.Q. Yip
  
  Vice President, Finance
  and
  Chief Financial OfficerTom S.Q. Yip/s/ David A. Ottewell
  
  Controller and
  Principal
  Accounting OfficerDavid A. Ottewell  * JOHN N. ABELL * PETER CLARKE * JOHN F. MCOUAT  * with Robert L.
Leclerc, a majority of the Board of Directors  * By
  /s/ Lois-Ann L.
  Brodrick
  
  April 1, 2002Lois-Ann L. Brodrick,
  Attorney-in-fact