<PAGE>

================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
    1934

                   For the fiscal year ended December 31, 2002

                                       OR

[ ] 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 of                            (I.R.S. Employer
    incorporation or organization)                           Identification No.)

52nd Floor, Scotia Plaza, 40 King Street West
           Toronto, Ontario                                        M5H 3Y2
------------------------------------------                         -------
 (Address of principal executive offices)                        (Zip Code)

       Registrant's telephone number, including area code: (416) 365-5123
                                                           --------------

           Securities registered pursuant to Section 12(b) of the Act:

                                                          Name of each exchange
      Title of each class                                  on which registered
      -------------------                                  -------------------
Common Share Purchase Warrants                           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. Yes   X   No
                                              -----    -----

   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. [X]

   Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes   X   No
                                                -----    -----

Aggregate market value of the voting securities held by
non-affiliates of the registrant at June 28, 2002...............U.S.$275,019,983
                                                                ----------------

Number of common shares outstanding as of March 26, 2003.............541,272,675
                                                                     -----------

================================================================================

<PAGE>

                                TABLE OF CONTENTS


   PART I 1

ITEMS 1 AND 2-BUSINESS AND PROPERTIES..........................................1
   INTRODUCTION................................................................1
     Property and Office Locations.............................................3
     Material Subsidiaries.....................................................3
   OPERATIONS SUMMARY..........................................................4
     Gold and Silver Production................................................4
     Revenue...................................................................4
     Production Costs..........................................................5
   RESERVES....................................................................7
     Change in Proven and Probable Mineral Reserves............................8
   MEASURED AND INDICATED RESOURCES............................................9
   INFERRED RESOURCES.........................................................10
   ROUND MOUNTAIN.............................................................11
     Geology and Mineral Reserves.............................................12
     Mining and Processing....................................................12
   LUPIN......................................................................14
     Geology and Mineral Reserves.............................................15
     Mining and Processing....................................................15
     Supplies, Utilities and Transportation...................................15
     Water Supply and Waste Disposal..........................................16
   KETTLE RIVER...............................................................17
     Geology and Mineral Reserves.............................................17
     Mining and Processing....................................................18
   MCCOY/COVE.................................................................19
   Geology and Mineral Reserves...............................................20
      Mining and Processing...................................................20
   AQUARIUS DEVELOPMENT PROJECT...............................................22
   EXPLORATION................................................................22
   SUNNYSIDE..................................................................22
   OTHER......................................................................22
     Precious Metal Sales and Hedging Activities..............................22
     Credit Facilities........................................................23
     Governmental and Environmental Regulation................................24
     Employees................................................................26
     Mining Risks and Insurance...............................................27
     Supplies, Utilities and Transportation...................................27
     Waste Disposal...........................................................27
     Royalties................................................................28
     Lease Commitments........................................................28
     History of the Company...................................................28
   RISK FACTORS...............................................................28
   GOLD PRICES................................................................33
   SILVER PRICES..............................................................33
   EXCHANGE RATES.............................................................33

ITEM 3-LEGAL PROCEEDINGS......................................................34

                                       i
<PAGE>

   SUMMA......................................................................34
   HANDY AND HARMAN...........................................................34
   OTHER......................................................................34

ITEM 4-SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................35

   PART II....................................................................36

ITEM 5-MARKET FOR THE REGISTRANT'S COMMON SHARES AND RELATED
            SHAREHOLDER MATTERS...............................................36
   MARKET INFORMATION.........................................................36
   DIVIDENDS..................................................................36

ITEM 6-SELECTED FINANCIAL DATA................................................37

ITEM 7-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS............................38
   SUMMARY....................................................................38
   RESULTS OF OPERATIONS......................................................38
     Revenue..................................................................38
     Operating Costs..........................................................39
     Royalties................................................................39
     Depreciation and Amortization............................................39
     Reclamation and Mine Closure.............................................39
     General and Administrative...............................................39
     Exploration and Development..............................................40
     Provision for Impaired Assets............................................40
   LIQUIDITY AND CAPITAL RESOURCES............................................40
   COMMITMENTS AND CONTINGENCIES..............................................41
     Hedging Activities.......................................................41
     Other....................................................................42
   CRITICAL ACCOUNTING POLICIES...............................................43
     Property evaluations.....................................................43
     Reclamation and mine closure costs.......................................43

ITEM 7A-QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET
            RISK..............................................................43

ITEM 8-FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................44
   INDEX TO FINANCIAL STATEMENTS..............................................44

QUARTERLY FINANCIAL HIGHLIGHTS................................................76

ITEM 9-CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE...............................76

   PART III...................................................................77

                                       ii
<PAGE>

ITEM 10-DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................77

ITEM 11-EXECUTIVE COMPENSATION................................................78

ITEM 12-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT........................................................78

ITEM 13-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................79


ITEM 14-CONTROLS AND PROCEDURES...............................................79

   PART IV....................................................................80

ITEM 15-EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
            FORM 8-K..........................................................80

SIGNATURES ...................................................................82


CERTIFICATIONS ...............................................................83

                                      iii

<PAGE>

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:

o  targets for:
   o  gold and silver production;
   o  cash operating costs and certain significant expenses;
   o  percentage increases and decreases in production from the Company's
      principal mines;
o  schedules for completion of detailed feasibility studies and initial
   feasibility studies;
o  potential changes in reserves and production;
o  the timing and scope of future drilling and other exploration activities;
o  expectations regarding receipt of permits and commencement of mining or
   production;
o  anticipated grades and recovery rates;
o  ability to secure financing;
o  potential acquisitions or increases in property interests; and
o  divestitures or decreases in property interests.

Factors that could cause actual results to differ materially include, among
others:

o  fluctuations in gold and silver prices;
o  fluctuations in grades and recovery rates;
o  geological, metallurgical, processing, access, transportation or other
   problems;
o  results of exploration activities or feasibility studies;
o  changes in project parameters as plans continue to be refined;
o  political, economic and operational risks;
o  availability of materials and equipment;
o  regulatory risks, including reclamation security requirements and the timing
   for the receipt of governmental permits;
o  force majeure events;
o  the failure of plant, equipment or processes to operate in accordance with
   specifications or expectations;
o  accidents;
o  labor relations;
o  delays in start-up dates for projects;
o  environmental costs and risks; and
o  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.


                                       iv
<PAGE>

                                     PART I

                      ITEMS 1 AND 2-BUSINESS AND PROPERTIES

INTRODUCTION
In this report, the "Company" or "Echo Bay" 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.

On June 10, 2002, the Company, Kinross Gold Corporation ("Kinross") and TVX Gold
Inc. ("TVX") announced they had entered into an agreement (the "Kinross
Combination") providing for the proposed combination of the companies. In a
concurrent transaction, TVX agreed to acquire from Newmont Mining Corporation
("Newmont") the interest in the TVX Newmont Americas joint venture that it did
not already own. The combination of the companies was conditional upon the
completion of this purchase. On January 31, 2003 the purchase from Newmont and
the proposed combination were completed. Shareholders of Echo Bay (other than
Kinross) received 0.1733 of a Kinross common share for each Echo Bay common
share after giving effect to a three-for-one share consolidation of the
outstanding common shares of Kinross immediately prior to the combination. As a
result, the Company and its subsidiaries are now wholly-owned subsidiaries of
Kinross.

The Company is a North American gold mining company which mines, processes and
explores primarily for gold. The Company has two operating mines: Round Mountain
in Nevada, United States and Lupin in Nunavut Territory, Canada. The Company's
Kettle River mine in Washington, United States was placed on care and
maintenance during the fourth quarter of 2002. The Company holds a 100% interest
in its Kettle River and Lupin mines and a 50% interest in its Round Mountain
mine, which it operates, with the remaining 50% interest held by affiliates of
Barrick Gold Corporation.


The Company's operations in 2002 were, and will continue to be, materially
affected by the price of gold, which averaged $310 per ounce in 2002, $271 in
2001 and $279 in 2000. At December 31, 2002 the gold price was $343 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 2002, the Company produced a total of 538,709 ounces of gold and 1,470,094
ounces of silver at an average cash operating cost of $221 per ounce. Cash
operating costs and total production costs are non-GAAP measures. For further
information on these non-GAAP measures, please refer to the disclosure under the
heading "Calculation of Cash Operating Costs and Total Production Costs" on
pages 5 and 6. Total cash operating costs and cash operating costs per ounce are
calculated in accordance with gold industry guidelines. These per ounce measures
may not be comparable to similarly titled measures of other companies.
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
and gold equivalent 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.

In 2002, the Company reported a net loss of $7.7 million on revenues of $206.5
million. At December 31, 2002, the Company had an aggregate of 3.4 million
ounces of gold reserves and no silver reserves.

On April 3, 2002 the Company issued 361,561,230 common shares, representing
approximately 72% of the then outstanding common shares after giving effect to
such issuance, in exchange for all of its $100

                                       1
<PAGE>

million aggregate principal amount of 11% junior subordinated debentures due
2027, plus accrued and unpaid interest thereon (see note 7 to the Company's
consolidated financial statements).

In May 2002, the Company sold a total of 39,100,000 units at a price of $0.70
per unit for aggregate gross proceeds of approximately $27.4 million. Each unit
consisted of one common share and one share purchase warrant. The common shares
and the warrants comprising the units separated upon closing and the warrants
continue to trade on the Toronto Stock Exchange and on the American Stock
Exchange. As a consequence of the Kinross Combination, each warrant, previously
entitling the holder to purchase one common share of the Company, now entitles
the holder to purchase 0.1733 of a post-consolidated Kinross common share at a
price of $0.90, at any time prior to November 14, 2003.

On June 9, 2002, Echo Bay Exploration Inc. and Echo Bay Minerals Company, two
subsidiaries of the Company, entered into an asset purchase agreement, amended
November 19, 2002, with Newmont USA, a subsidiary of Newmont, providing for the
conveyance of the McCoy/Cove complex in Nevada, U.S.A. to Newmont. The agreement
replaced a letter agreement dated February 13, 2002 related to the conveyance of
the McCoy/Cove complex, which called for a payment to our subsidiaries of $6
million and the assumption by Newmont of all reclamation and closure
obligations. Under the February 13, 2002 letter agreement, Newmont had no
obligation to complete the transaction. Newmont indicated it was willing to
proceed with the conveyance of the McCoy/Cove complex only if the Kinross
Combination was completed and the cash payment was eliminated. Accordingly, a
new agreement was reached expressly containing these two conditions. The closing
of the transaction was subject to, among other conditions, the completion of the
Kinross Combination. The Kinross Combination was completed January 31, 2003 and
the McCoy/Cove assets were subsequently conveyed to Newmont on February 7, 2003.
In consideration, Newmont has agreed to assume all liabilities and obligations
relating to the reclamation or remediation required for the McCoy/Cove complex.

On February 27, 2003, Round Mountain Gold Corporation, a wholly-owned subsidiary
of the Company along with Kinross and two of its wholly-owned subsidiaries ("the
Borrowers"), entered into a new syndicated credit facility. The new syndicated
credit facility has a maturity date of December 31, 2005 and a total committed
amount of $125.0 million. The primary purpose of the credit facility is to
enable the Borrowers to issue letters of credit to various regulatory agencies
to satisfy financial assurance requirements. Shares of Round Mountain Gold
Corporation along with various other assets of Kinross are pledged as collateral
for this facility.

For 2003, the Company expects to produce 500,000 ounces of gold at an average
cash operating cost of $211 per ounce of gold. The expected decline in
production and average cash operating cost is the result of the completion of
mining and processing at McCoy/Cove on March 31, 2002 and the cessation of
mining operations at Kettle River in October, 2002. 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."


                                       2
<PAGE>

  [PICTURE DEPICTING THE GENERAL GEOGRAPHICAL LOCATION OF MINING PROPERTIES AND
                       OFFICES ON A MAP OF NORTH AMERICA]




PROPERTY AND OFFICE LOCATIONS

Operating & Development Properties:         Offices:
A.  Round Mountain (Nevada)(1) (4)          1.  Toronto (Ontario)
B.  Lupin (Nunavut)(4)                      2.  Edmonton (Alberta)(6)
C.  Kettle River (Washington)(2)            3.  Englewood (Colorado)(6)
D.  McCoy/Cove (Nevada)(3)                  4.  Reno (Nevada)(6)
E.  Aquarius (Ontario)(5)

    (1)  50% ownership
    (2)  Property placed on care and maintenance October 2002
    (3)  Property conveyed to Newmont February 7, 2003
    (4)  Operating mine
    (5)  Development property
    (6)  Office in the process of being closed effective January 31, 2003

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)

A total of 13 subsidiaries were omitted because they are not considered
significant individually or in the aggregate.


                                       3
<PAGE>
<TABLE>
<CAPTION>

OPERATIONS SUMMARY
GOLD AND SILVER PRODUCTION
GOLD PRODUCTION (OUNCES)                                                 2002              2001             2000
                                                             ------------------------------------------------------
<S>                                                                   <C>               <C>              <C>
Round Mountain (50%) (1)                                              377,747           373,475          320,064
Lupin                                                                 113,835           139,327          117,729
Kettle River (3)                                                       30,626            50,349           94,086
McCoy/Cove (4)                                                         16,501            94,633          162,784
                                                             ------------------------------------------------------
Total gold                                                            538,709           657,784          694,663
                                                             ======================================================
Percentage increase (decrease) from prior year                         (18.1%)            (5.3%)           39.0%

SILVER PRODUCTION (OUNCES)                                               2002              2001             2000
                                                             ------------------------------------------------------
Total silver - all from McCoy/Cove (4)                              1,470,094         6,451,425       12,328,297
                                                             ======================================================
Percentage increase (decrease) from prior year                         (77.2%)           (47.7%)           46.2%

REVENUE
REVENUE DATA
Year ended December 31                                                   2002              2001             2000
                                                             ------------------------------------------------------
GOLD
Ounces sold                                                           547,024           667,015          676,439
Average price realized per ounce - revenue basis                  $       361       $       305      $       319
Average price realized per ounce - cash basis (2)                 $       306       $       281      $       294
Average market price per ounce                                    $       310       $       271      $       279
Revenue (millions of U.S. dollars)                                $     197.3       $     203.6      $     215.8
Percentage of total revenue                                               96%               86%              77%

SILVER
Ounces sold                                                         2,118,181         7,241,147       12,347,779
Average price realized per ounce - revenue basis                  $      4.36       $      4.70      $      5.28
Average price realized per ounce - cash basis (2)                 $      4.36       $      4.77      $      5.21
Average market price per ounce (4)                                $      4.62       $      4.39      $      5.00
Revenue (millions of U.S. dollars)                                $       9.2       $      34.1      $      65.2
Percentage of total revenue                                                4%               14%              23%
                                                             ------------------------------------------------------
Total revenue (millions of U.S. dollars)                          $     206.5       $     237.7      $     281.0
                                                             ======================================================

   (1) Echo Bay's 50% share.
   (2) 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.
   (3) Mining and processing activities completed October 2002. Mine placed on
       care and maintenance.
   (4) McCoy/Cove completed mining and processing activities on March 31, 2002.
       The average silver price for the first quarter was $4.49 per ounce. For
       the purposes of calculating the average gold-to-silver price ratio, the
       average price of gold during the same period was $290 per ounce.

The effects of changes in sales volume and prices were:

REVENUE VARIANCES
(thousands of U.S. dollars)
Year ended December 31                                                   2002              2001             2000
                                                             ------------------------------------------------------
(Decrease) increase in volume                                     $   (60,729)      $   (29,968)     $    79,770
Higher (lower) gold prices                                             30,309            (9,154)          (4,084)
Lower silver prices                                                      (735)           (4,170)          (5,061)
                                                             ------------------------------------------------------
(Decrease) / increase in total revenue from the previous year     $   (31,155)      $   (43,292)     $    70,625
                                                             ======================================================
</TABLE>

The decrease in gold and silver revenues from 2001 to 2002 was primarily due to
lower gold and silver production resulting from the completion of mining and
processing activities at McCoy/Cove on March 31, 2002 and the cessation of
mining operation at Kettle River in October 2002. Gold production also

                                       4
<PAGE>

declined at Lupin due to lower grades and tons processed. 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.

CALCULATION OF CASH OPERATING COSTS AND TOTAL PRODUCTION COSTS

Cash operating costs and total production costs are furnished to provide
additional information and are non-GAAP measures. These measures should not be
considered in isolation as a substitute for measures of performance prepared in
accordance with generally accepted accounting principles and are not necessarily
indicative of operating profit or cost from operations as determined under
generally accepted accounting principles.

<TABLE>
<CAPTION>
PRODUCTION COSTS
PRODUCTION COSTS PER OUNCE OF GOLD PRODUCED                              2002              2001             2000
                                                             ------------------------------------------------------
<S>                                                                   <C>               <C>              <C>
  Direct mining expense                                              $    218          $    214         $    192
  Deferred stripping and mine development costs                             5                11                3
  Inventory movements and other                                            (2)               (2)              (2)
                                                             ------------------------------------------------------
Cash operating costs                                                      221               223              193
  Royalties                                                                14                10                9
  Production taxes                                                          2                --                2
                                                             ------------------------------------------------------
Total cash costs                                                          237               233              204
  Depreciation                                                             47                41               35
  Amortization                                                             14                14               20
  Reclamation and mine closure                                              9                 8               12
                                                             ------------------------------------------------------
Total production costs                                               $    307          $    296         $    271
                                                             ======================================================
Percentage increase (decrease) from prior year                           3.7%              9.2%           (14.0%)

CASH OPERATING COSTS PER OUNCE OF GOLD PRODUCED                          2002              2001             2000
                                                             ------------------------------------------------------
Round Mountain                                                       $    183          $    190         $    195
Lupin                                                                     330               246              213
KettleRiver                                                               276               288              218
McCoy/Cove                                                                225               252              179
                                                             ------------------------------------------------------
Company consolidated weighted average                                $    221          $    223         $    193
                                                             ======================================================
Percentage increase (decrease) from prior year                          (0.9%)            15.5%           (10.2%)
</TABLE>

In 2002, the average cash operating cost per ounce was $221 compared with $223
in 2001 and $193 in 2000. Cash operating costs per ounce were marginally lower
in 2002 compared to 2001 due to a reduction in the amortization of deferred
mining costs at Round Mountain as the deferred mining ratio dropped from 112
tons in 2001 to 95 tons in 2002. This was offset by higher mining costs at
Lupin. Cash operating costs per ounce were higher in 2001 compared to 2000,
reflecting lower production at McCoy/Cove and Kettle River. The Company's
consolidated cash operating cost target is $211 per ounce of gold produced in
2003.

The above non-GAAP measures have been calculated on a consistent basis in each
period.

For reasons of comparability, cash operating costs and total production costs do
not include items such as property write-downs which do not occur in all periods
but are included under GAAP in the determination of net earnings or loss.

Cash operating costs and total production costs are calculated in accordance
with the "Gold Institute Production Cost Standard". Cash operating costs and
production costs may not be comparable to similarly titled measures of other
companies.

                                       5
<PAGE>

Cash operating costs and total production costs are used by management to assess
profitability and cash flow of individual operations as well as to compare to
other precious metal producers.

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.

<TABLE>
<CAPTION>
RECONCILIATION OF CASH OPERATING
COSTS PER OUNCE TO FINANCIAL STATEMENTS
(thousands of U.S. dollars, except per ounce amounts)                    2002              2001             2000
                                                             ------------------------------------------------------
<S>                                                               <C>               <C>              <C>
Round Mountain
Operating costs per financial statements                          $    68,323       $    72,049      $    60,501
Change in finished goods inventory and other                              991            (1,165)           2,062
                                                             ------------------------------------------------------
Cash operating costs                                              $    69,314       $    70,844      $    62,563
                                                             ======================================================
Gold ounces produced                                                  377,747           373,475          320,064
Cash operating costs per ounce                                    $       183       $       190      $       195

Lupin
Operating costs per financial statements                          $    37,194       $    34,721      $    22,883
Change in finished goods inventory and other                              383              (469)           2,211
                                                             ------------------------------------------------------
Cash operating costs                                              $    37,577       $    34,252      $    25,094
                                                             ======================================================
Gold ounces produced                                                  113,835           139,327          117,729
Cash operating costs per ounce                                    $       330       $       246      $       213

Kettle River
Operating costs per financial statements                          $     9,166       $    15,555      $    20,131
Change in finished goods inventory and other                             (717)           (1,031)             333
                                                             ------------------------------------------------------
Cash operating costs                                              $     8,449       $    14,524      $    20,464
                                                             ======================================================
Gold ounces produced                                                   30,626            50,349           94,086
Cash operating costs per ounce                                    $       276       $       288      $       218

McCoy/Cove
Operating costs per financial statements                          $    13,453       $    53,016      $    69,920
Change in finished goods inventory and other                           (4,598)           (2,797)          (1,180)
                                                             ------------------------------------------------------
Cash operating costs                                              $     8,855       $    50,219      $    68,740
                                                             ======================================================
Gold ounces produced                                                   16,501            94,633          162,784
Silver ounces produced                                              1,470,094         6,451,425       12,328,297
Average gold-to-silver price ratio                                       64.6              61.7             55.7
Cash operating costs per ounce                                    $       225       $       252      $       179

Consolidated
Operating costs per financial statements                          $   128,136       $   175,341      $   173,435
Change in finished goods inventory and other                           (3,941)           (5,462)           3,426
                                                             ------------------------------------------------------
Cash operating costs                                              $   124,195       $   169,879      $   176,861
                                                             ======================================================
Gold ounces produced                                                  538,709           657,784          694,663
Silver ounces produced                                              1,470,094         6,451,425       12,328,297
Average gold-to-silver price ratio                                       64.6              61.7             55.7
Cash operating costs per ounce                                    $       221       $       223      $       193
</TABLE>

                                       6
<PAGE>

RESERVES
The data referred to herein, in respect of mineral reserves and mineral
resources, have been verified by Ralph Bullis, Director of Exploration of the
Company and by Mr. Rod Cooper, Director of Technical Services for, and a
full-time employee of Kinross, the Company's sole shareholder. Mr. Bullis and
Mr. Cooper are both "qualified persons" within the meaning of applicable
Canadian securities regulatory standards. They have 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 a 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.

<TABLE>
<CAPTION>
Mineral Reserves (1)
(thousands, except average grades)
(proven and probable at December 31)
                                                                                 2002          2001          2000
                                           ------------------------------------------------------------------------
                                                                Average     Contained     Contained     Contained
                                                     Tons     grade (2)        Ounces        Ounces        Ounces
                                            -----------------------------------------------------------------------
<S>                                                <C>            <C>           <C>           <C>           <C>
GOLD
MINES:
   Round Mountain (3)                              96,056         0.020         1,875         2,244         2,609
   Lupin                                            1,328         0.250           332           350           434
   Kettle River                                        19         0.211             4            25            70
   McCoy/Cove (4)                                     Nil           n/a             -            13           161
                                                                        -------------------------------------------
                                                                                2,211         2,632         3,274
DEVELOPMENT PROPERTIES:
   Aquarius                                        17,527         0.068         1,189         1,189         1,189
                                                                        -------------------------------------------
Total gold                                                                      3,400         3,821         4,463
                                                                        ===========================================

SILVER
   McCoy/Cove (4)                                     Nil           n/a             -         1,128        10,899
                                                                        -------------------------------------------
Total silver                                                                        -         1,128        10,899
                                                                        ===========================================
</TABLE>

(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; Lupin - 15 feet laterally and 65
     feet vertically for proven reserves, 75 feet for probable reserves; Kettle
     River - up to 50 feet for proven reserves and 50 to 75 feet for probable
     reserves; McCoy/Cove - 40 to 100 feet for proven reserves, 110 to 230 feet
     for probable reserves; Aquarius - 82 feet for proven and probable reserves.

                                       7
<PAGE>

(2)  Ounces per ton.
(3)  The Company's 50% share of tons and contained ounces.
(4)  The McCoy/Cove complex was conveyed to a subsidiary of Newmont effective
     February, 7, 2003.

The Company reports extractable (mineable) 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, 2002 ($300 per ounce at December 31, 2001 and $300 per ounce at
December 31, 2000) and a silver price of $4.25 per ounce at December 31, 2001
and $5.00 per ounce at December 31, 2000. The market price for gold had for more
than four years traded, on average, below the level used in estimating reserves
at December 31, 2001. However, during 2002 the market price of gold traded at an
average price of $310 per ounce and ended the year at $343 per ounce. During the
first quarter of 2003, the market price of gold continued to increase to a high
of $382 on February 5, 2003 before falling back to $330 on March 26, 2003. If
the market price for gold were to have remained depressed and the Company
determined that its reserves should be estimated at a significantly lower gold
price than that used, there would be a reduction in the amount of gold reserves.
In the event that 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, 2001 to December 31, 2002 is as follows.

                                                        (millions of ounces)
                                                       Gold             Silver
                                                     ---------------------------
Proven and probable reserves at December 31, 2001        3.8               1.1
   Production (1)                                       (0.6)             (1.1)
   Extensions, discoveries and adjustments
     Round Mountain                                      0.2                --
                                                     ---------------------------
Proven and probable reserves at December 31, 2002        3.4               Nil
                                                     ===========================

(1)  Production represents previously modeled, in-situ ounces mined during 2002;
     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."


                                       8
<PAGE>

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, but has not yet been qualified as a Mineral Reserve.
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 these 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 MINERAL
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)
(thousands, except average grades) (at December 31)

<TABLE>
<CAPTION>
                                                 2002                       2001                      2000
                             ------------------------   ------------------------  ------------------------
                                              Average                    Average                   Average
                                     Tons   grade (3)           Tons   grade (3)          Tons   Grade (3)
                             --------------------------------------------------------------------------------
<S>                                <C>          <C>           <C>          <C>          <C>          <C>
GOLD
Round Mountain (50%) (4)           6,950        0.020         3,914        0.024        9,353        0.022
Lupin                                  -            -             3        0.215           76        0.263
Kettle River                          24        0.167            94        0.191          418        0.189
</TABLE>

(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 has been completed to 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 mineable ore bodies until
     further drilling, metallurgical work, and other economic and technical
     feasibility factors based upon such work are resolved. Measured and
     indicated resources were estimated based on a gold price of $300 per ounce
     for Kettle River and $325 per ounce for Round Mountain at December 31,
     2002.

(2)  Quantities of measured and indicated resources are roughly equivalent to
     the commonly used term "mineralized materials. "

(3)  Ounces per ton.

(4)  Echo Bay's 50% share.

                                       9
<PAGE>

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 MINEABLE.

The following table presents Inferred Resources by property. Inferred Resources
for producing mines and development properties are generally estimated by the
Company.

<TABLE>
<CAPTION>

Inferred Resources (1)
(thousands, except average grades) (at December 31)

                                                             2002                       2001                      2000
                                         ------------------------  -------------------------  ------------------------
                                                          Average                    Average                   Average
                                                 Tons   grade (2)           Tons   grade (2)          Tons   Grade (2)
                                         -----------------------------------------------------------------------------
<S>                                         <C>           <C>          <C>           <C>         <C>           <C>
GOLD
MINES:
Round Mountain (50%) (3)                      21,500        0.013        29,999        0.014       45,267       0.014
Lupin                                            315        0.303           369        0.314          611       0.326
Kettle River                                     551        0.370            11        0.182           96       0.177


DEVELOPMENT PROPERTIES (4):
Aquarius                                         724        0.066           724        0.066          724       0.066
Ulu                                            1,279        0.326         1,279        0.326        1,279       0.326
</TABLE>

(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 has been completed to 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 mineable ore bodies until further drilling,
     metallurgical work, and other economic and technical feasibility factors
     based upon such work are resolved. Inferred resources were estimated based
     on a gold price of $300 per ounce at December 31, 2002, except for those at
     Round Mountain which are based on a gold price of $325 per ounce.

(2)  Ounces per ton.

(3)  Echo Bay's 50% share.

(4)  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."

                                       10
<PAGE>

ROUND MOUNTAIN
The Company owns an undivided 50% interest in and operates the Round Mountain
gold mine. Affiliates of Barrick Gold Corporation own 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
mineable 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 1998 through 2002. The Company's share of production is 50% of the ore
processed and ounces shown and the Company is obligated to pay 50% of all
operating, capital and other related costs.

<TABLE>
<CAPTION>
                                                    2002            2001            2000            1999            1998
                                         --------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>             <C>             <C>
Gold produced (ounces) (100%):
   Heap leached - reusable pad                   242,808         219,704         141,176         140,988         182,378
   Heap leached - dedicated pad                  347,966         369,750         352,132         215,825         221,396
   Milled                                        153,946         156,854         139,870         157,901          97,686
   Other (1)                                      10,774             642           6,950          27,094           9,044
                                             -----------     -----------     -----------     -----------     -----------
   Total                                         755,494         746,950         640,128         541,808         510,504
Mining cost/ton of ore and waste            $       0.80    $       0.83    $       0.83    $       0.73    $       0.66
Heap leaching cost/ton of ore               $       0.84    $       0.82    $       0.68    $       0.68    $       0.74
Milling cost/ton of ore                     $       3.18    $       3.07    $       2.80    $       2.92    $       3.36
Production cost/ounce of gold produced

   Direct mining expense                    $        176    $        178    $        200    $        221    $        209
   Applied (deferred) stripping cost                   9              14                   (1)       (19)             (7)
   Inventory movements and other                      (2)             (2)                  (4)        (2)             (4)
                                             ----------- --------------- -------------------------------     -----------
     Cash operating cost                             183             190             195             200             198
   Royalties paid                                     20              18              17              19              20
   Production taxes                                    4               2               1              --               3
                                             -----------     -----------     -----------     -----------     -----------
     Total cash cost                                 207             210             213             219             221
   Depreciation                                       44              40              43              48              46
   Amortization                                       15              15              18              18              18
   Reclamation and mine closure                        9               9               9               9               7
                                             --------------  --------------  --------------  --------------  -----------

     Total production costs                 $        275    $        274    $        283    $        294    $        292
                                             --------------  --------------  --------------  --------------  -----------
Capital expenditures (millions) (2)         $        8.6    $       15.0    $        4.6    $        7.7    $       12.6
Deferred (applied) mining
   expenditures (millions)(2)               $       (3.4)   $       (5.3)   $        0.4    $        5.1    $        1.7
Heap leached-reusable pad:

  Ore processed (tons/day)                        26,987          23,601          24,335          15,602          18,953
   Total ore processed (000 tons)                  9,742           8,520           8,785           5,741           6,842
   Grade (ounce/ton)                               0.043           0.035           0.028           0.034           0.036
   Recovery rate (%)                                61.3            77.4            61.6            73.4            70.6
Heap leached-dedicated pad:

   Ore processed (tons/day)                      135,222         128,637         141,047         120,020         101,892
   Total ore processed (000 tons)                 48,815          46,438          50,918          44,167          36,783
   Grade (ounce/ton)                               0.011           0.011           0.011           0.011           0.010
   Recovery rate (%)                                  (3)             (3)             (3)             (3)             (3)

Milled:
   Ore processed (tons/day)                       10,067          10,171           9,304           8,083           7,993
   Total ore processed (000 tons)                  3,664           3,702           3,387           2,999           2,885
   Gold grade (ounce/ton)                          0.050           0.050           0.045           0.067           0.045
   Gold recovery rate (%)                           84.6            83.7            83.1            87.0            77.9
</TABLE>

(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.

                                       11
<PAGE>

(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%.

Cash operating costs and total production costs are non-GAAP measures. For
further information on these non-GAAP measures, please refer to the disclosure
under the heading "Calculation of Cash Operating Costs and Total Production
Costs" on pages 5 and 6.

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, 2002 were as follows.

<TABLE>
<CAPTION>
                                                                                  Average grade
                                                                    Tonnage             of gold  Gold content (3)
                                                         (000's short tons)    (ounces per ton)    (000's ounces)
                                                         -------------------------------------------------------------
<S>                                                          <C>                   <C>               <C>
Round Mountain pit                                                  115,632               0.022             2,543
Offloads and heap leach stockpiles (4)                               68,919               0.011               726
Mill stockpiles                                                       7,561               0.064               480
                                                         -------------------------------------------------------------
Total Proven and Probable-2002                                      192,112               0.020             3,749
                                                         =============================================================

Proven                                                               94,564               0.017             1,629
Probable                                                             97,548               0.022             2,120
                                                         -------------------------------------------------------------
Total Proven and Probable-2002                                      192,112               0.020             3,749
                                                         =============================================================

Total Proven and Probable-2001                                      236,979               0.019             4,488
                                                         =============================================================
</TABLE>

(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 2002 was 61.3%. The eventual average recovery rate for the
     dedicated pad is estimated to be approximately 50%. The mill recovery rate
     was 84.6% in 2002.

(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 pad.

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 0.53:1.

MINING AND 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 leached are placed on the dedicated pad.

The reusable pad processed 26,987 tons of ore per day in 2002, compared to
23,601 tons per day in 2001. Reusable pad volume varies with ore release, which
is determined by the phases of the pit being mined.

                                       12
<PAGE>

Reusable pad production increased in 2002 to 242,808 ounces from 219,704 ounces
in 2001 due to the processing of higher grade ores.

The dedicated pad processed 135,222 tons of ore per day in 2002, compared to
128,637 tons per day in 2001. Production in 2002 from the dedicated pad was
347,966 ounces, compared to 369,750 ounces in 2001, due to increased tons placed
in 2000 producing higher ounces in 2001.

The mill processed 10,067 tons per day in 2002 producing 153,946 ounces,
compared to 10,171 tons per day in 2001 producing 156,854 ounces. The mill
facility achieved a recovery rate of 84.6% from both higher-grade oxide and
non-oxidized ores during 2002 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. For
the period from the date that the royalty commenced through December 31, 2002,
cumulative royalties of $33.1 million have been paid.

Ore and waste rock were mined at a rate of approximately 174,920 tons per day in
2002 compared to 194,579 tons per day in 2001.

In 2002, Round Mountain purchased four additional 240-ton haul trucks at a total
cost of $9.0 million (the Company's share, $4.5 million). In 2003, Round
Mountain plans to add Phase 4 to the West Dedicated Pad at a total cost of
approximately $6.1 million (the Company's share, $3.1 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
2002, the operation conducted an exploration program to explore for geologic
environments similar to the Round Mountain deposit. A scoping study was
completed in the fourth quarter of 2002 for Gold Hill (five miles from the Round
Mountain deposit) based on encouraging drill results during the year. A 2003
drill program will further test the potential economics of this area.

In 2003, Round Mountain is expected to produce approximately 720,000 ounces (the
Company's share, 360,000 ounces), 5% less than 2002's production of 755,494
ounces (the Company's share, 377,747 ounces) reflecting lower dedicated pad tons
and increased sulfide ore. See "Cautionary `Safe Harbor' Statement under the
United States Private Securities Litigation Reform Act of 1995" and "Risk
Factors".

                                       13
<PAGE>

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 332,000 ounces of gold, the mine plan projects
production until 2005. Drilling indicates additional mineralization at depth,
which if confirmed by additional development, 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 1998
through 2002.

<TABLE>
<CAPTION>
                                                   2002           2001           2000       1999 (1)      1998 (1)
                                          ---------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>            <C>            <C>
Gold produced (ounces)                          113,835        139,327        117,729             --            --
Mining cost/ton of ore                       C$   56.85     C$   47.35     C$   42.36             --            --
Milling cost/ton of ore                      C$   13.63     C$   13.43     C$   13.98             --            --
Production cost/ounce of gold  produced:
   (Canadian dollars):
     Direct mining expense                   C$     554     C$     420     C$     344             --            --
     Deferred mine development                      (25)           (16)            (6)            --            --
     Inventory movements and other                   --             --             --             --            --
                                                -------        -------        -------       --------      --------
       Cash operating cost                   C$     529     C$     404     C$     338             --            --
                                                -------        -------        -------       --------      --------
   (U.S. dollars):
     Cash operating cost                     US$    330     US$    246     US$    213             --            --
     Royalties                                       --             --             --             --            --
     Production taxes                                --             --             --             --            --
                                                -------        -------        -------       --------      --------
       Total cash cost                              330            246            213             --            --
     Depreciation                                    40             30             27             --            --
     Amortization                                     6              7              8             --            --
     Reclamation and mine closure                    15             14             17             --            --
                                                -------        -------        -------       --------      --------
     Total production cost                   US$    391     US$    297     US$    265             --            --
                                                -------        -------        -------       --------      --------
Capital expenditures (millions US$)             $   2.4        $   2.6        $   4.7             --            --
Deferred mining
   Expenditures (millions US$)                  $   1.1        $   1.5        $   0.4             --            --
Milled:
   Ore processed (tons/day)                       1,711          1,883          1,861             --            --
   Total ore processed (000 tons)                   623            685            508             --            --
   Grade (ounce/ton)                              0.197          0.218          0.248             --            --
   Recovery rate (%)                               92.6           93.2           93.3             --            --
</TABLE>

(1)  The Lupin mine was under care and maintenance in 1999 and 1998 and
     recommenced production in April 2000.

Cash operating costs and total production costs are non-GAAP measures. For
further information on these non-GAAP measures, please refer to the disclosure
under the heading "Calculation of Cash Operating Costs and Total Production
Costs" on pages 5 and 6.

                                       14
<PAGE>

GEOLOGY AND 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, 2002 were as follows.

<TABLE>
<CAPTION>
                                                                                  Average grade
                                                                    Tonnage             of gold  Gold content (2)
                                                         (000's short tons)    (ounces per ton)    (000's ounces)
                                                         -------------------------------------------------------------
<S>                                                                  <C>               <C>                  <C>
Center Zone                                                             313               0.254                79
East Zone                                                                --                  --                --
West Zone                                                               898               0.251               225
McPherson Zone                                                          117               0.235                28
                                                         -------------------------------------------------------------
Total Proven and Probable-2002                                        1,328               0.250               332
                                                         =============================================================

Proven                                                                  843               0.236               199
Probable                                                                485               0.274               133
                                                         -------------------------------------------------------------
Total Proven and Probable-2002                                        1,328               0.250               332
                                                         =============================================================

Total Proven and Probable-2001                                        1,367               0.256               350
                                                         =============================================================
</TABLE>

(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 2002 was
     92.6%.

The cut-off grade used in the reserve calculation is 0.204 ounce of gold per
ton.

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 5,000 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 1,711 tons per day in 2002 compared to 1,883 tons per day in
2001. Production decreased due to mining from narrower sections of the deposit
than planned and production problems caused by lost flexibility due to
insufficient ore development in prior years. The rate of development has been
increased to help overcome these problems.

In 2003, Lupin is expected to produce 140,000 ounces, slightly more than in
2002. See "Cautionary `Safe Harbor' Statement under the United States Private
Securities Litigation Reform Act of 1995" and "Risk Factors."

SUPPLIES, UTILITIES AND 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

                                       15
<PAGE>

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 2002, the cost of
transporting personnel, equipment, material and supplies to Lupin was
approximately $6.0 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. Operation of the road is now joint-ventured with
diamond mining companies having operations located along the route. Operating
costs are shared with these 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 adequate for 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. A new license has been issued, effective
May 1, 2003 for a 30-year period.

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.

                                       16
<PAGE>

KETTLE RIVER
The Kettle River properties are located in Ferry County in the State of
Washington and cover approximately 7,672 acres through patented and unpatented
mining claims and fee lands.

In 2002, Kettle River operations continued to produce ore from its K-2 mine.
Mining and milling operations were suspended at the end of October, when the
bulk of the K-2 reserves were exhausted. Exploration efforts focused on an area
to the east of the K-2 mine called the Emanuel Creek project. This area will be
developed in 2003 and is scheduled for mining in 2004.

The following table sets forth operating data for the Kettle River operation
from 1998 through 2002.

<TABLE>
<CAPTION>
                                                    2002           2001           2000           1999          1998
                                          ---------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>           <C>           <C>
Gold produced (ounces)                            30,626         50,349         94,086        104,396       113,692
Mining cost/ton of ore                      $      21.18   $      25.20   $      20.52   $      23.57  $      21.65
Milling cost/ton of ore                     $      10.27   $      12.02   $      11.58   $      11.22  $      10.71
Production cost/ounce of gold produced:
   Direct mining expense                    $        268   $        229   $        224   $        239  $        238
   Deferred mine development                          --             --             --             --            --
   Inventory movements and other                       8             59             (6)            (1)            6
                                             -----------    -----------    --------------------------   -----------
     Cash operating cost                             276            288            218            238           244
   Royalties                                           5             10             13             15            12
   Production taxes                                    2              1              1              2             1
                                             -----------    -----------    -----------    -----------   -----------
     Total cash cost                                 283            299            232            255           257
   Depreciation                                       --             19             11             55            77
   Amortization                                       52             42              8              8             5
   Reclamation and mine closure                       --             15            15              15            12
                                             -----------    -----------   -----------     -----------   -----------
     Total production cost                  $        335   $        375   $        266   $        333  $        351
                                             -----------    -----------    -----------    -----------   -----------
Capital expenditures (millions)             $        1.6   $        4.1   $        1.4   $        0.5  $        1.5
Milled:
   Ore processed (tons/day)                          586            934          1,470          1,698         2,017
   Total ore processed (000 tons)                    213            340            535            630           734
   Grade (ounce/ton)                               0.171          0.178          0.209          0.198         0.187
   Recovery rate (%)                                84.0           83.0           84.1           83.7          82.8
</TABLE>

Cash operating costs and total production costs are non-GAAP measures. For
further information on these non-GAAP measures, please refer to the disclosure
under the heading "Calculation of Cash Operating Costs and Total Production
Costs" on pages 5 and 6.

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, 2002 were as follows.

<TABLE>
<CAPTION>
                                                                                  Average grade
                                                                    Tonnage             of gold  Gold content (2)
                                                          (000's short tons)   (ounces per ton)    (000's ounces)
                                                         -------------------------------------------------------------
<S>                                                                 <C>             <C>                   <C>
Ore stockpiles                                                            9               0.178                 2
K-2                                                                      10               0.240                 2
                                                         -------------------------------------------------------------
Total Proven and Probable-2002                                           19               0.211                 4
                                                         =============================================================

Proven                                                                   19               0.211                 4
Probable                                                                 --                  --                --
                                                         -------------------------------------------------------------
Total Proven and Probable-2002                                           19               0.211                 4
                                                         =============================================================

Total Proven and Probable-2001                                          129               0.194                25
                                                         =============================================================
</TABLE>

                                       17
<PAGE>

(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 2002 was 84.0%.

The cut-off grade is 0.145 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. The mill processed approximately 586 tons of ore per day in 2002, compared
to 934 tons per day in 2001. Total Kettle River production decreased in 2002
compared to 2001 due to the completion of K-2 mining in October 2002.

The mining method used at K-2 is longhole open stoping, with delayed backfill.
Total K-2 ore production in 2002 was 197,569 tons compared to 221,547 in 2001.

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.

In 2003, Kettle River will be developing the Emanuel Creek project, which is
scheduled to enter production in 2004. See "Cautionary `Safe Harbor' Statement
under the United States Private Securities Litigation Reform Act of 1995" and
"Risk Factors."


                                       18
<PAGE>

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 completed all steps currently required under U.S. law to convert
certain unpatented claims to patented status and filed the appropriate
applications for patents. The patents were awarded on August 17th, 2001 and
received in January 2002. See "Other-Governmental and Environmental Regulation."

On February 7, 2003, as noted in the introduction, the McCoy/Cove complex was
conveyed to a subsidiary of Newmont. Mining and processing activities at the
McCoy/Cove complex were completed on March 31, 2002. All of the Company's silver
production came from McCoy/Cove.

The following table sets forth operating data for the McCoy/Cove operation from
1998 through 2002.

<TABLE>
<CAPTION>
                                                  2002            2001            2000           1999            1998
                                        --------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>             <C>            <C>
Gold produced (ounces)
   Milled                                        9,906          70,395         115,892         79,336         114,398
   Heap leached                                  6,595          24,238          46,892         45,200          53,096
                                            ----------      ----------      ----------     ----------      ----------
   Total                                        16,501          94,633         162,784        124,536         167,494
Silver produced (ounces)
   Milled                                    1,410,594       6,143,825      11,417,439      8,033,644       9,014,817
   Heap leached                                 59,500         307,600         910,858        396,428         398,006
                                            ----------      ----------    ------------     ----------      ----------
   Total                                     1,470,094       6,451,425      12,328,297      8,430,072       9,412,823
Mining cost/ton of ore and waste           $        --     $        --     $      0.78    $      0.66     $      0.71
Heap leaching cost/ton of ore              $        --     $        --     $      2.44    $      1.82     $      1.74
Milling cost/ton of ore                    $     10.49     $      7.19     $      6.38    $      6.32     $      6.09
Production cost/ounce of gold produced:
  Direct mining expense                    $       216     $       239     $       166    $       252     $       200
  Deferred stripping cost                           --              13              12            (35)             (1)
  Inventory movements and other                      9              --               1              4               4
                                            ----------      ----------      ----------     ----------      ----------
   Cash operating cost                             225             252             179            221             203
  Royalties                                          1               1               3              2               3
  Production taxes                                (12)             (3)               5             --               2
                                            ----------      ----------      ----------     ----------      ----------
   Total cash cost                                 214             250             187            223             208
  Depreciation                                      51              49              26             48              52
  Amortization                                      --               9              28             27              37
  Reclamation and mine closure                      --              --              11             11               9
                                            ----------      ----------      ----------     ----------      ----------
   Total production cost                   $       265     $       308     $       252    $       309     $       306
                                            ----------      ----------      ----------     ----------      ----------
Average gold-to-silver price ratio (1)            65:1            62:1            56:1           54:1            54:1
Capital expenditures (millions)            $        --     $       1.0     $       0.7    $       1.1     $       1.3
Deferred (applied) mining
  Expenditures (millions)                  $        --     $      (2.2)    $      (5.1)   $       9.5     $       0.5
Heap leached:
   Ore processed (tons/day)                         --              --           4,971         11,262          11,296
   Total ore processed (000 tons)                   --              --           1,809          4,178           4,112
   Gold grade (ounce/ton)                           --              --           0.024          0.022           0.021
   Silver grade (ounce/ton)                         --              --            0.96           0.37            0.26
   Gold and silver recovery rates                   (2)             (2)             (2)            (2)             (2)
</TABLE>

                                       19
<PAGE>
<TABLE>
<CAPTION>
                                                  2002            2001            2000           1999            1998
                                        --------------------------------------------------------------------------------
<S>                                            <C>            <C>             <C>            <C>             <C>
Milled:
   Ore processed (tons/day)                      6,451          10,642          11,461         12,000          11,829
   Total ore processed (000 tons)                  587           3,874           4,172          4,452           4,306
   Gold grade (ounce/ton)                        0.034           0.042           0.053          0.038           0.046
   Silver grade (ounce/ton)                       3.46            2.60            3.71           3.02            2.95
   Gold recovery rate (%)                         43.3            42.4            50.7           45.8            57.8
   Silver recovery rate (%)                       64.0            61.7            69.8           61.3            69.8
</TABLE>

(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.

(3)  2002 data reflects results through March 31, 2002, the last production
     quarter for McCoy/Cove.

GEOLOGY AND MINERAL RESERVES
McCoy/Cove Mineral Reserves (1) at December 31, 2002 were as follows.

<TABLE>
<CAPTION>
                                              Tonnage           Average grade                      Content (2)
                                   (000's short tons)         (ounces per ton)                    (000's ounces)
                                  -----------------------------------------------------------------------------------------
<S>                               <C>                        <C>              <C>                   <C>         <C>
                                                                  GOLD          SILVER              GOLD          SILVER
Total Proven - 2002                              Nil               n/a             n/a               Nil             Nil
                                  =========================================================================================

Total Proven - 2001 (stockpile)                  430             0.031           2.624                13           1,128
                                  =========================================================================================
</TABLE>

(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 2001 reserves were in stockpiles and included in the proven category. All
reserves have been mined and processed at McCoy/Cove.

MINING AND PROCESSING
Open pit mining was completed in 2000 and underground mining was completed in
2001. All ore processed in 2002 was from stockpiles. The processing of this
material ceased in early 2002 as the stockpiles were depleted. As of February 7,
2003, the Company is no longer responsible for any reclamation or remediation
activities. The responsibility for these was assumed by Newmont in consideration
for the conveyance of the McCoy/Cove assets.

Mill throughput averaged 6,450 tons per day in 2002 compared to 10,642 in 2001
due to longer retention times needed for carbonaceous ores and only 70 days of
operation in the quarter instead of the usual 91. Gold and silver from mill
production decreased in 2002 compared to 2001 due to the depletion of reserves.

McCoy/Cove production was subject to a 2% net smelter return royalty. This
royalty was based on sales less certain deductions.

Residual leaching continued on the third of three heap leach pads in 2002 for
the entire year. Excellent results were obtained from re-leaching side slopes
and internal areas of this pad. Residual leaching

                                       20
<PAGE>

continued in 2003 until the conveyance to Newmont. Leaching on the second of
three heap leach pads was suspended in September 2002 and the pad was allowed to
go into a drain-down mode. Rinsing and restoration of the first of three heap
leach pads commenced in 1999 and contouring and seeding was completed in 2000.

McCoy/Cove transitioned from a producing property to reclamation property in
2002. All mining, milling and heap leach stacking is complete. Ongoing
reclamation work saw the completion of approximately 800 acres of recontouring
and revegetation during 2002. Further reclamation work continued until the
conveyance to Newmont on February 7, 2003. See "Cautionary `Safe Harbor'
Statement under the United States Private Securities Litigation Reform Act of
1995" and "Risk Factors."


                                       21
<PAGE>

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 Mineral Reserves of 1,189,000 ounces of gold as at
December 31, 2002 (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 $0.5 million in 2002, $0.8
million in 2001 and $0.7 million in 2000. At December 31, 2002, the Company has
a net book value of approximately $42.9 million (2001 - $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 incur
minimal development holding costs for Aquarius in 2003.

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, there are several underground targets in proximity to and
accessible from the bottom of the open pit. In addition, the Company and its
joint venture partner have committed to a drilling program, along with related
field work at Gold Hill, an exploration project owned by the joint venture and
located approximately four miles north of the existing Round Mountain pit. Gold
Hill has displayed Round Mountain style mineralization over a presently known
area that measures approximately 2,000 by 4,000 feet.

At the Company's wholly-owned Kettle River operation, the Company is evaluating
exploration in an area named Emanuel Creek, located adjacent to the existing
production area. Exploration work is ongoing as the Company expects to develop
this project and bring it into production in 2004.

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. In
December 2002, the consent decree was replaced with undertakings by the to
perform or fund a limited number of activities. SGC estimates that it will take
approximately two more years for reclamation activities to be completed. SGC has
$2.4 million accrued at December 31, 2002 (December 31, 2001 - $3.6 million) 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 dore 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.

                                       22
<PAGE>

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 Company is not
currently party to any derivative financial instruments relating to precious
metals. Previously, the gold-related instruments used in these transactions
included forward sales contracts and options. 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. Any use of call options requires the Company to
recognize unrealized gains and losses on those options in current period
earnings unless the options are included in a put-call combination eligible for
hedge accounting. 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.

Credit risk is the risk that a counterparty might fail to fulfill its
performance obligations under the terms of a derivative contract. The Company's
credit risk related to all hedging activities is limited to the unrealized gains
on outstanding contracts based on current market prices. The Company minimizes
its credit risk by entering into transactions with large credit-worthy financial
institutions, limiting the amount of its exposure to each counterparty, and
monitoring the financial condition of its counterparties. 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, 2002, the estimated fair value of the Company's hedge portfolio
was $0.1 million. The Company's current counterparties do not require margin
deposits. Sensitivity to various market factors underlying these contracts are
shown in note 16 to the consolidated financial statements.

In 2002, the Company delivered approximately 21% of gold production against
forward sales and call options at an average commitment price of $292 per ounce.
This compares with 19% of gold production at $317 per ounce in 2001 and 37% of
gold production at $313 per ounce in 2000. No silver production was delivered
against forward sales or put options in 2002. This compares to 21% at $5.86 per
ounce in 2001 and 35% at $5.71 per ounce in 2000.

The Company's commodity contracts as of December 31, 2002 and December 31, 2001
are shown in note 16 to the consolidated financial statements. All positions
held by the Company relating to precious metals were delivered into or expired
in 2002. The Company does not plan to enter into any new precious metal
positions in 2003 given higher spot gold prices and low forward premiums.

The Company's hedging commitments are described in note 16 to the Company's
consolidated financial statements. See also "Qualitative and Quantitative
Disclosures about Market Risk."

CREDIT FACILITIES
The Company has a $4 million letter of credit facility with HSBC Bank USA which
was established in October 2001. The facility is currently cash collateralized.
This credit facility, which expired in September 2002, was extended to March 27,
2003. This facility and cash collateralization was necessary in connection with
financial assurance required by regulatory authorities for future reclamation
activities. The Company expects to cancel this facility and have the cash
deposit released in connection with steps undertaken by Kinross, the Company's
parent, to issue letters of credit for reclamation security under the new
syndicated credit facility described below. See also "Liquidity and Capital
Resources."

                                       23
<PAGE>

On February 27, 2003, Round Mountain Gold Corporation, a wholly-owned subsidiary
of the Company along with Kinross and two of its wholly-owned subsidiaries ("the
Borrowers"), entered into a new syndicated credit facility. The new syndicated
credit facility has a maturity date of December 31, 2005 and a total committed
amount of $125.0 million. The primary purpose of the credit facility is to
enable the Borrowers to issue letters of credit to various regulatory agencies
to satisfy financial assurance requirements. Shares of Round Mountain Gold
Corporation along with various other assets of Kinross are pledged as collateral
for this 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

                                       24
<PAGE>

("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 could 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 were enacted into law, Congress may consider the same or similar
proposals in 2003 as well as in future years.

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 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 are to

                                       25
<PAGE>

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. The McCoy/Cove complex
and the associated reclamation obligation was conveyed to a subsidiary of
Newmont on February 7, 2003. The BLM request, relevant to operations at Round
Mountain, seeks replacement security of approximately $16 million to bring the
total to approximately $22 million, the Company's 50% share. 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 if the Company did not, or was unable to, comply with the
new requirements. The potential impact on the Company as a result of such
administrative action is difficult to predict. See "Risk Factors."

Various types of rehabilitation 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 2002 amounted to approximately $9.2 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, 2002, the Company employed 990 persons excluding temporary
employees directly involved in short-term programs, broken down as follows.

Round Mountain, including ancillary services                        613
Kettle River                                                         49
Lupin                                                               309
Technical and corporate staff and other (1)                          19
                                                             ----------
                                                                    990
                                                             ==========
(1) Includes McCoy/Cove.

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. In connection with the Kinross Combination completed January 31, 2003,
employment of most corporate staff was terminated. Duties performed by these
employees are now performed by employees of Kinross, the Company's parent.

                                       26
<PAGE>

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. 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. 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."

                                       27
<PAGE>

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.

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 $1.4 million
in rental expense in 2002, net of $1.8 million in rental income related to
office subleases. The Company's commitments under the remaining terms of the
leases are approximately $4.7 million, payable as follows: $1.6 million in 2003,
$1.5 million in 2004, $1.0 million in 2005, $0.1 million in 2006, $0.1 million
in 2007 and $0.4 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 two operating mines. The Company placed two other
mines on care and maintenance in 2002, the most recent in October 2002, while
another completed mining activities in March 2002 and was conveyed to a
subsidiary of Newmont on February 7, 2003: see "Operations Summary."

Since the beginning of the Company's last fiscal year, the most significant
event has been the combination of the Company with Kinross and TVX, which was
completed on January 31, 2003. The Company is now a wholly-owned subsidiary of
Kinross.

RISK FACTORS
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.

Beginning in 1997, gold prices sank to depressed levels and remained there until
late in 2002. While gold prices have maintained these levels in 2003, they could
return to 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 $221 per
ounce in 2002 and are expected to average approximately $211 per ounce in 2003
from the Company's remaining two mines. Total production costs were $307 per
ounce in 2002 and are expected to average approximately $279 per ounce in 2003.
The current price of gold of $330 per ounce as of March 26, 2003, helps to
alleviate liquidity difficulties, and gives the Company greater ability to
invest funds in exploration and development. At lower gold prices, the Company's
ability to generate positive cash flow and to generate sufficient funds to
engage in exploration and development activities may be significantly impaired.

                                       28
<PAGE>

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
profitability and the Company's financial position. The gold price used in
estimating the Company's mineral reserves at December 31, 2002 was $300 per
ounce. The market price was $343 per ounce at December 31, 2002. While the
average market price of gold for 2002 traded above the price at which the
Company estimates its reserves, it 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,
2002, there would be a reduction in the amount of gold reserves. 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 currently has no hedging program in place to reduce the risk
associated with gold price volatility. 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. 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 such as the Emanuel Creek project located adjacent to the Kettle
River mine and the Gold Hill project near the Round Mountain mine.

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. In
such case, the Company would be required to cut its costs in order to avoid an
adverse impact on its financial results. There can be no assurance that the
Company could cut its costs sufficiently quickly, or enough in order to avoid
this adverse impact.

There are a number of uncertainties inherent in any exploration and development
program relating to:

o  the location of economic mineral reserves;
o  the development of appropriate metallurgical processes;
o  the receipt of necessary governmental permits; and
o  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.
However, the Company does expect to develop the Emanuel Creek project adjacent
to the Kettle River mine during 2003, bringing it into production in 2004.

The economic feasibility analysis with respect to any individual project is
based upon:

                                       29
<PAGE>

o  the interpretation of geological data obtained from drill holes and other
   sampling techniques;
o  estimates of cash operating costs based upon anticipated tonnage and grades
   of ore to be mined and processed;
o  gold and silver price assumptions;
o  the configuration of the ore body;
o  expected recovery rates of metals from the ore;
o  comparable facility and equipment costs;
o  anticipated climatic conditions;
o  estimates of labor productivity; and
o  royalty or other ownership burdens.

The Company's feasibility studies are typically 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 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, regulators in Nevada have called upon one 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
operation. 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. As of January 31, 2003, the Company has the support of Kinross in
posting the necessary security in connection with reclamation obligations. 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:

                                       30
<PAGE>

o  the quantity and quality of available drilling data;
o  engineering and geological interpretation;
o  testing and production experience;
o  gold prices;
o  operating and capital costs;
o  short-term operating factors such as the need for sequential development of
   ore bodies; and
o  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 the discussion under the risk factor discussing gold prices above) could
result in material write-downs of the Company's 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 the Company's 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 Comprehensive 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:

                                       31
<PAGE>

o  environmental conditions;
o  industrial accidents;
o  labor disputes;
o  unusual or unexpected geological conditions;
o  ground or slope failures, cave-ins;
o  changes in the regulatory environment; and
o  natural phenomena such as inclement weather conditions, floods, blizzards and
   earthquakes.

Such occurrences could result in:

o  damage to mineral properties or production facilities;
o  personal injury or death;
o  environmental damage to the Company's properties or the properties of others;
o  delays in mining;
o  monetary losses and possible legal liability.

The Company maintains insurance against some risks that are typical in the gold
mining industry. While the Company believes the amounts of coverage it maintains
to be reasonable, it 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."

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 the Company's
unpatented and other mining claims or millsites may not be defective.

REPERCUSSIONS FROM TERRORIST ACTS COMMITTED IN THE UNITED STATES COULD HARM
BUSINESS OPERATIONS AND ADVERSELY IMPACT THE COMPANY'S ABILITY TO MEET ITS
EXPECTATIONS AND OTHER FORWARD LOOKING STATEMENTS HEREIN.

The terrorist attacks in the United States on September 11, 2001 caused
instability in the world's markets. There can be no assurance that these
terrorist attacks, or the responses to them, will not lead to further acts of
terrorism in the United States, Canada or elsewhere, which may contribute to
economic instability in the United States, Canada and other geographic areas in
which Echo Bay is active. Specifically, such instability could adversely affect
production or exploration activities.

                                       32
<PAGE>

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.

<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                 ----------------------------------------------------------------
                                           2003*       2002         2001         2000         1999           1998
                                   ------------- ----------  -----------  -----------  -----------   ------------
<S>                                    <C>          <C>          <C>          <C>          <C>           <C>
High                                   $   382      $   349      $   293      $   313      $   326       $   313
Low                                        329          278          256          264          253           273
Average                                    353          310          271          279          279           294
End of Period                              330          343          277          274          290           286

* Through March 26, 2003


SILVER PRICES
The following table sets forth annual high, low, average and end of period daily
fixing silver prices in U.S. dollars per troy ounce on the London Bullion
Market.

                                                                     Year ended December 31,
                                                 ----------------------------------------------------------------
                                           2003*       2002         2001         2000         1999           1998
                                   ------------- ----------  -----------  -----------  -----------   ------------
High                                   $  4.91      $  5.10      $  4.82      $  5.45      $  5.75       $  7.81
Low                                       4.38         4.24         4.07         4.57         4.88          4.69
Average                                   4.68         4.60         4.37         4.95         5.22          5.55
End of Period                             4.38         4.67         4.52         4.58         5.33          5.01

* Through March 26, 2003

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,
                                  ------------------------------------------------------------------------------------
                           2003*             2002             2001            2000             1999             1998
                 ---------------  ---------------  --------------- ---------------  ---------------  ---------------
High                   C$ 1.5747        C$ 1.6132        C$ 1.4936       C$ 1.4341        C$ 1.4433        C$ 1.4075
Low                       1.4656           1.5110           1.6012          1.5593           1.5514           1.5765
Average                   1.5123           1.5703           1.5482          1.4852           1.4864           1.4823
End of Period             1.4710           1.5796           1.5956          1.5002           1.4433           1.5512
</TABLE>

* Through March 26, 2003

                                       33
<PAGE>

                            ITEM 3-LEGAL PROCEEDINGS

SUMMA
In September 1992, Summa Corporation ("Summa") commenced a lawsuit against Echo
Bay Exploration Inc. and Echo Bay Management Corporation, (together, the
"Subsidiaries"), indirect subsidiaries of the Company, alleging improper
deductions in the calculation of royalties payable over several years of
production at McCoy/Cove and another mine, which is no longer in operation. 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, judgment was rendered
for the Subsidiaries. The decision was appealed by Summa to the Supreme Court of
Nevada, which in April 2000 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 Subsidiaries 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
Subsidiaries. The Subsidiaries filed a petition for a hearing before the full
Supreme Court and on December 22, 2000, the Court recalled its previous
decision. Both the Subsidiaries and their counsel believe that grounds exist to
modify or reverse the decision. The Company has $1.5 million accrued related to
this litigation. If the appellate reversal of the trial decision is maintained
and the trial court, on remand, were to dismiss all of the Subsidiaries'
defenses, the royalty calculation at McCoy/Cove would change and additional
royalties would be payable. Neither the Company, nor counsel to the
Subsidiaries, believe it is possible to quantify the precise amount of liability
pursuant to a revised royalty calculation.

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 filed a
claim for gold and silver accounts at this refining facility with an estimated
market value of approximately $2.2 million at the time the shipments were made.
The Company has fully provided for this amount as unrecoverable. Further, in
March 2002, the liquidating trustee for Handy & Harman commenced a series of
adversary proceedings against numerous creditors, including two Company
subsidiaries, alleging that certain creditors received preferential payments in
metal or otherwise. The preferential payment claims against the Company's
subsidiaries approximate $9.0 million. The ultimate amount recoverable or
payable will depend on the success or failure of the liquidating trustee in
prosecuting these claims. The ultimate percentage payout by the liquidating
trustee will also be affected by the success or failure of the trustee in
prosecuting preferential payment claims against all creditors. The trustee
currently projects the ultimate distribution of funds to be 50% to 60% of
amounts owed to creditors. Based on this range, the maximum liability to the
Company would be $3.4 million assuming a 50% payout to creditors and no success
in defending any of the preferential payment claims while the maximum amount
recoverable would be $1.3 million assuming a 60% payout to creditors and success
in defending itself against all of the preferential payment claims. The Company
intends to oppose the preferential payment claims vigorously. The outcome of
these proceedings is uncertain at this time. As such, the Company has not made
any provision with respect to the preferential payment claims.

OTHER
In November 2001, two former employees of the Corporation brought a claim
against the Company pursuant to the CLASS PROCEEDINGS ACT (British Columbia) as
a result of the temporary suspension of operations at the Company's Lupin mine
in the spring of 1998 and the layoff of employees at that time. The Company does
not know at this time the amount being claimed by the former employees nor
whether the claim is appropriate for certification as a class action. On August
12, 2002, the Supreme Court of British Columbia decided it had such
jurisdiction. The Company is appealing the decision. No

                                       34
<PAGE>

determination has been made by this Court as to whether this action is suitable
for certification as a class action and no decision has been rendered with
respect to the merits of the action.

The Company is also subject to a number of third party claims, which the Company
believes are routine and incidental to the normal course of its business. The
Company does not believe that the outcome of these claims will have a material
adverse impact on the financial condition or results of operations of the
Company.

While the outcome of any particular claim is not certain, the Company believes
it has substantive defenses and intends to vigorously defend all claims.


           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 2002.

On January 31, 2003, the Company's common shareholders passed a special
resolution approving a plan of arrangement whereby Echo Bay Mines Ltd., Kinross
Gold Corporation and TVX Gold Inc. would combine their respective businesses.
Court approval of the plan of arrangement was obtained and effective January 31,
2003, the Company became a wholly-owned subsidiary of Kinross Gold Corporation.

                                       35
<PAGE>

                                     PART II

          ITEM 5-MARKET FOR THE REGISTRANT'S COMMON SHARES AND RELATED
                               SHAREHOLDER MATTERS

MARKET INFORMATION
As a result of the consummation of the plan of arrangement on January 31, 2003,
the Company became a wholly-owned subsidiary of Kinross and its common shares no
longer trade. Prior to that time, the common shares traded primarily on the
Toronto Stock Exchange and the American Stock Exchange. The warrants issued by
the Company, which now represent the right to acquire common shares of Kinross,
will continue to trade on the Toronto and American Stock Exchanges until their
expiry on November 14, 2003. They are exercisable at a price of U.S. $0.90 into
0.1733 of a post-consolidated Kinross common share.

The following table sets forth for the period from January 1, 2001 through
February 5, 2003 the high and low reported prices and trading volume of the
common shares on the Toronto Stock Exchange and the American Stock Exchange.

<TABLE>
<CAPTION>
                                      THE TORONTO STOCK EXCHANGE               AMERICAN STOCK EXCHANGE
                                  High           Low        Volume          High             Low      Volume
                                  (Canadian Dollars)     (shares in             (U.S. Dollars)      (shares in
                                                         thousands)                                 thousands)
----------------------------------------------------------------------------------------------------------------
<S>                                <C>           <C>          <C>            <C>             <C>        <C>
2001
----
First Quarter                     1.49          0.59         4,307          0.95            0.38       6,842
Second Quarter                    2.00          0.89         3,800          1.24            0.51      11,026
Third Quarter                     1.60          0.79         2,860          1.04            0.51       7,122
Fourth Quarter                    1.12          0.81         2,030          0.73            0.50       5,575
2002
----
First Quarter                     1.60          0.82         4,873          0.98            0.50      15,994
Second Quarter                    2.18          1.01       120,409          1.39            0.66      69,816
Third Quarter                     1.91          1.08        68,986          1.22            0.70      30,865
October                           1.75          1.25        17,327          1.13            0.80       6,844
November                          1.60          1.30        10,780          1.02            0.82       6,335
December                          2.06          1.30        24,313          1.30            0.83      11,600
2003
----
January (1)                       2.11          1.76        11,964          1.39            1.15      11,591
February (1)                      2.10          1.76           678            --              --          --
</TABLE>

(1) The last day of trading of the Company's common shares in Canada was
February 5, 2003 where they closed at C$2.00. This price approximated the
closing price of Kinross common shares on that date multiplied by the exchange
ratio of 0.1733 of a post-consolidated Kinross common share for each Echo Bay
common share. The last day of trading of the Company's common shares in the
United States was January 31, 2003 where they closed at U.S.$1.23.

DIVIDENDS
The Company suspended payment of dividends beginning in 1997. Future dividends,
if any, will be payable to Kinross, the Company's sole shareholder and parent.

                                       36
<PAGE>

                         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 13 to
the Company's consolidated financial statements). This information should be
read in conjunction with the audited consolidated financial statements and the
notes thereto.

<TABLE>
<CAPTION>

SELECTED FINANCIAL DATA (1)
Year ended December 31
(millions of U.S. dollars except
for gold price and per share data)                                  2002         2001         2000         1999          1998
                                                           -------------------------------------------------------------------
<S>                                                           <C>          <C>          <C>          <C>           <C>
STATEMENT OF OPERATIONS DATA
Revenue                                                       $    206.5   $    237.7   $    281.0   $    210.4    $    232.2
Average gold price realized per ounce                         $      361   $      305   $      319   $      325    $      333
Earnings (loss) before taxes (2)                              $     (7.5)  $     (8.8)  $     16.8   $    (37.1)   $    (19.8)
Effective tax rate                                                 (2.0%)       35.7%       (10.4%)       (0.6%)        (1.8%)
Net earnings (loss) (2)                                       $     (7.7)  $     (5.7)  $     18.6   $    (37.3)   $    (20.1)
Net earnings (loss) attributable to common  shareholders(2)   $   (144.6)  $    (23.0)  $      3.2   $    (51.0)   $    (32.6)
(3)
Net earnings (loss) per common share (2) (3)                  $    (0.34)  $    (0.16)  $     0.02   $    (0.36)   $    (0.23)
Weighted average common shares outstanding (millions)              429.8        140.6        140.6        140.6         140.1
BALANCE SHEET DATA
Working capital (deficiency)                                  $     23.9   $      1.6   $      2.7   $      4.0    $     (0.5)
Current ratio                                                       1.72         1.03         1.04         1.07          0.99
Total assets                                                  $    223.7   $    260.8   $    313.6   $    340.2    $    368.1
Debt                                                          $       --   $     23.7   $     32.5   $     56.7    $     52.8
Deferred income taxes                                         $      0.9   $      0.9   $      4.7   $      7.4    $      7.5
Shareholders' equity                                          $    136.7   $    106.8   $    116.8   $    101.1    $    133.8
Common shares outstanding (millions)                               541.3        140.6        140.6        140.6         140.6
OTHER DATA
Dividends paid on common shares     - total                   $       --   $       --   $       --   $       --    $       --
                                    - per share               $       --   $       --   $       --   $       --    $       --
Net cash flows provided from operating activities             $     19.1   $     31.6   $     46.5   $     29.6    $     12.1
Activities
Net cash flows used in investing activities                   $    (14.0)  $    (24.0)  $    (10.9)  $    (33.6)   $     (2.3)
Activities
Net cash flows provided from (used in) financing activities   $      5.5   $     (9.5)  $    (24.7)  $     (0.6)   $    (18.8)
Activities
Capital and exploration spending                              $     21.1   $     26.2   $     16.5   $     14.7    $     24.1
</TABLE>

(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 17 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 13 to
     the Company's consolidated financial statements.

<TABLE>
<CAPTION>
                                                   2002          2001         2000          1999         1998
                                          ---------------------------------------------------------------------
<S>                                          <C>           <C>          <C>           <C>          <C>
     Net earnings (loss)                     $   (143.5)   $    (29.1)  $      2.3    $    (48.3)  $    (40.8)
     Net earnings (loss) per common share    $    (0.33)   $    (0.21)  $     0.02    $    (0.34)  $    (0.29)
     Total assets                            $    225.4    $    234.4   $    314.5    $    341.3   $    370.1
     Debt                                    $       --    $    117.0   $    126.5    $    151.3   $    144.9
     Accrued interest on capital securities  $       --    $     64.2   $     46.1    $     30.0   $     15.7
     Deferred income taxes                   $      0.9    $      0.9   $      4.7    $      7.4   $      7.5
     Shareholders' equity (deficit)          $    144.8    $    (29.8)  $    (19.5)   $    (19.6)  $     24.2
</TABLE>

 (2) In 2002, the Company recorded a $7.0 million provision for impaired assets
     ($0.02 per share). In 2001, the Company recorded a $4.4 million provision
     for impaired assets ($0.03 per share). See note 9 to the consolidated
     financial statements.

(3)  After interest expense on the equity portion of the capital securities,
     issued in 1997. See note 7 to the consolidated financial statements.

                                       37
<PAGE>

     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 2000 through 2002 should be read in conjunction with the selected
financial data set forth above 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 13 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 $7.7 million ($0.34 loss per share attributable to
common shareholders after adjustment for the retirement of the Company's
subordinated debentures) in 2002 compared with a net loss of $5.7 million ($0.16
loss per share attributable to common shareholders) in 2001 and net earnings of
$18.6 million ($0.02 earnings per share) in 2000. The 2002 results compared to
the 2001 results reflect 18% lower gold and 71% lower silver sales volumes
respectively, higher administrative, exploration and development costs, a loss
on the retirement of capital securities, a provision against the Lupin mine and
the recognition of net deferred hedging losses, offset by higher realized gold
prices. 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 Company produced 538,709 ounces of gold during the year, a decrease of 18%
from 2001 and 1.5 million ounces of silver during the year, a decrease of 77%
from 2001. Production targets for 2003 are 500,000 ounces of gold and no 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 2002 was $361 per ounce. This
was above the average market price of $310 per ounce in 2002, and higher than
the $305 per ounce average price realized in 2001. The Company intends to
deliver all of its production at spot gold prices in 2003.

In 2002, operating activities provided net cash flows of $19.1 million.

RESULTS OF OPERATIONS
REVENUE
Revenue decreased to $206.5 million in 2002 from $237.7 million in 2001,
reflecting 18% lower gold volume ($36.6 million) and 71% lower silver sales
volume ($24.1 million), resulting primarily from the completion of mining and
processing activities at McCoy/Cove and Kettle River. Revenues were positively
affected by higher gold prices realized ($30.3 million) while lower silver
prices realized decreased revenue marginally ($0.8 million). 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 from McCoy/Cove.
Revenues were also affected by lower gold prices realized ($9.2 million) and
silver prices realized ($4.2 million).

                                       38
<PAGE>

OPERATING COSTS
Consolidated cash operating costs per ounce of gold produced were $221 in 2002,
$223 in 2001 and $193 in 2000. 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 marginally lower in 2002 compared to 2001 due to
a reduction in the amortization of deferred mining costs at Round Mountain as
the deferred mining ratio dropped from 112 tons in 2001 to 95 tons in 2002. This
was offset by higher mining costs at Lupin. 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.

The Company's cash operating cost target for 2003 is $211 per ounce of gold
produced.

Cash operating costs are a non-GAAP measure that is 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. See the disclosure under "Business and
Properties - Calculation of Cash Operating Costs and Total Production Costs" for
further information concerning the calculation of this measure.

ROYALTIES
Royalties increased from $7.6 million in 2001 to $7.8 million in 2002 due to an
increase in the price of gold. 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. The
Company's royalty expense target for 2003 is approximately $9 million. See note
17 to the consolidated financial statements.

DEPRECIATION AND AMORTIZATION
Depreciation expense was $27.6 million in 2002, $31.1 million in 2001 and $32.5
million in 2000. Depreciation expense decreased in each of 2002, 2001 and 2000
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
$47 in 2002, $41 in 2001 and $35 in 2000.

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 $7.7 million in 2002
compared to $11.0 million in 2001 and $18.2 million in 2000 primarily reflects
changes in production levels. Amortization per ounce was $14 in 2002, $14 in
2001 and $20 in 2000.

For 2003, the Company expects depreciation and amortization expense to be
approximately $42 million, compared to $35.3 million in 2002.

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 $1.0 million in 2002 compared to 2001, due
to lower production. The decrease of $4.5 million in 2001 compared to 2000 is a
result of McCoy/Cove being fully accrued by the end of 2000. For 2003, the
Company expects this expense to be approximately $7 million.

GENERAL AND ADMINISTRATIVE
General and administrative costs in 2002 were $3.5 million higher than 2001.
This was due to costs associated with the Kinross Combination. General and
administrative costs in 2001 were at the same

                                       39
<PAGE>

level as in 2000. For 2003, the Company expects general and administrative costs
will decrease significantly with a reduction in corporate staff as a result of
the business combination.

EXPLORATION AND DEVELOPMENT
Exploration and development expense was $8.6 million in 2002 up from $3.5
million in 2001 and down marginally from $10.3 million in 2000. Exploration in
2002 increased $1.7 million at Lupin, $0.3 million at Round Mountain and $3.0
million at Kettle River over 2001 spending. Exploration and development expense
in 2000 includes Lupin costs relating to the recommencement of operations of
$4.8 million. For 2003, the Company expects exploration and development
expenditures to total approximately $4 million.

PROVISION FOR IMPAIRED ASSETS
In 2002, due to rising operating costs resulting from unexpected development
challenges and changes in future expectations of the strength of the Canadian
dollar relative to the United States dollar, a $7.0 million provision was made
for impaired assets at Lupin. The Company also recorded a further $1.5 million
reserve against receivables owing from Handy and Harman. These receivables are
now fully provided for. In 2001, due to an unexpected reduction in reserves, a
$4.4 million provision was made for impaired assets at Kettle River.

PROVISION FOR DEFERRED GAINS AND LOSSES ON MODIFIED HEDGE CONTRACTS
In 2002, deferred gains and losses arising from certain terminated gold hedging
contracts applicable to anticipated production from the Lupin mine in the period
2005 to 2008, were included in earnings. The gains and losses had been deferred
based on the expectation that the anticipated future production originally
designated in the hedge arrangements was expected to occur. In view of recent
increasing uncertainties of production at the Lupin mine in the period 2005 to
2008, deferred gains of $5.0 million relating to 2005 and 2006 and deferred
losses of $8.1 million relating to 2005 to 2008 were included in earnings in
2002.

LIQUIDITY AND CAPITAL RESOURCES
In 2002, the market price of gold averaged $310 per ounce. An increasing gold
price aids the Company's ability to proceed with construction of development
projects, 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 $19.1 million compared to
$31.6 million in 2001 and $46.5 million in 2000. The decrease in 2002 cash flow
reflects the decrease in production due to the completion of mining and
processing activities at McCoy/Cove and Kettle River.

Net cash used in investing activities in 2002 totaled $14.0 million, largely
related to investments in mining properties, plant and equipment at Round
Mountain ($8.6 million), Lupin ($2.4 million) and Kettle River ($1.6 million).
Cash used for long-term investments was $4.5 million in 2002, primarily for
reclamation and other long-term deposits. Net cash provided by financing
activities was $5.5 million in 2002 reflecting proceeds from a unit offering of
$25.5 million net of debt repayments and retirement of capital securities of
$17.0 million and $3.0 million respectively.

At December 31, 2002, the Company had $23.0 million in cash and cash equivalents
and $7.2 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, 2002 was
$24.3 million.

At December 31, 2002, the Company had no long-term debt outstanding.

The Company currently has a $4 million letter of credit facility with HSBC Bank
USA which has been cash collateralized. This credit facility, which expired in
September 2002, was extended to March 27, 2003. The facility and cash
collateralization was necessary in connection with financial assurance

                                       40
<PAGE>

required by regulatory authorities for future reclamation activities. The
Company expects to cancel this facility and have the cash deposit released in
connection with steps undertaken by Kinross, the Company's parent, to issue
letters of credit for reclamation security under the new syndicated credit
facility described below. At present, the Company has the support of its parent
in the event that unforeseen cash requirements arise. Following the Kinross
Combination, issues of liquidity and capital resources are managed on a
consolidated basis by Kinross, the Company's parent.

On February 27, 2003, Round Mountain Gold Corporation, a wholly-owned subsidiary
of the Company along with Kinross and two of its wholly-owned subsidiaries "the
Borrowers", entered into a new syndicated credit facility. The new syndicated
credit facility has a maturity date of December 31, 2005 and a total committed
amount of $125.0 million. The primary purpose of the credit facility is to
enable the Borrowers to issue letters of credit to various regulatory agencies
to satisfy financial assurance requirements. Shares of Round Mountain Gold
Corporation along with various other assets of Kinross are pledged as collateral
for this facility.

At December 31, 2002, the estimated fair value of the Company's hedge portfolio
was $0.1 million relating entirely to foreign currency contracts.

On April 3, 2002 the Company's issued 361,561,230 common shares in exchange for
all of its capital securities (see note 7 to the Company's consolidated
financial statements).

The Company expects to spend approximately $19 million for capital expenditures
in 2003 funded by its operating cash flow. These expenditures will be mainly in
respect of the Round Mountain mine and development of the Emanuel Creek project.
The Company will continue to monitor its discretionary spending, the cost
structure of its operating mines and the availability of additional credit and
will modify or reduce its discretionary spending where necessary.

COMMITMENTS AND CONTINGENCIES
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 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 Company is not
currently party to any derivative financial instruments relating to precious
metals. Previously, the gold-related instruments used in these transactions
included forward sales contracts and options. 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. Any future use of call options will require the
Company to recognize unrealized gains and losses on those options in current
period earnings. 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

                                       41
<PAGE>

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 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.

Credit risk is the risk that a counterparty might fail to fulfill its
performance obligations under the terms of a derivative contract. The Company's
credit risk related to all hedging activities is limited to the unrealized gains
on outstanding contracts based on current market prices. The Company minimizes
its credit risk by entering into transactions with large credit-worthy financial
institutions, limiting the amount of its exposure to each counterparty, and
monitoring the financial condition of its counterparties. 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, 2002, the estimated fair value of the Company's hedge portfolio
was $0.1 million. The Company's current counterparties do not require margin
deposits. Sensitivity to various market factors underlying these contracts are
shown in note 16 to the consolidated financial statements.

In 2002, the Company delivered approximately 21% of gold production against
forward sales and call options at an average commitment price of $292 per ounce.
This compares with 19% of gold production at $317 per ounce in 2001 and 37% of
gold production at $313 per ounce in 2000. No silver production was delivered
against forward sales or put options in 2002. This compares to 21% at $5.86 per
ounce in 2001 and 35% at $5.71 per ounce in 2000.

The Company's foreign currency contracts as of December 31, 2002 are shown in
note 16 to the consolidated financial statements. All positions held by the
Company relating to precious metals were delivered into or expired in 2002. The
Company did not enter into any new positions given the rise in spot gold prices
and low forward premiums.

The Company's hedging commitments are described in note 16 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. The McCoy/Cove complex and the associated
reclamation obligation was conveyed to a subsidiary of Newmont on February 7,
2003. The BLM request, relevant to operations at Round Mountain, seeks
replacement security of approximately $16 million to bring the total to
approximately $22 million, the Company's 50% share. The Company disagrees with
the regulators' position and believes that the subsidiary qualifies 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."

                                       42
<PAGE>

The Company's operations are subject to certain royalty obligations as described
in note 17 to the Company's consolidated financial statements. Lease commitments
are described in note 17 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 16 and 17 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 2002, due to rising operating costs resulting from
unexpected development challenges and changes in future expectations of the
strength of the Canadian dollar relative to the United States dollar, a $7.0
million provision was made for impaired assets at Lupin. In 2001, due to an
unexpected reduction in reserves, a $4.4 million provision was made for impaired
assets at Kettle River.

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 $61.6
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, 2002 about the
Company's derivative financial instruments and other financial instruments that
are sensitive to changes in commodity prices, interest rates and exchange rates.

<TABLE>
<CAPTION>

(Amounts in millions of U.S.                              Expected Year of Maturity
                                      -------------------------------------------------------------------  Fair Value
dollars,  except  amounts  per ounce                                                              There-  of Financial
or unless otherwise noted)                 2003       2004       2005        2006       2007       After  Instruments
                                      ---------- ---------- ----------- ---------- ----------- ---------- -------------
<S>                                   <C>          <C>          <C>        <C>         <C>       <C>        <C>
Assets:
   Short-term investments                    --         --         --          --         --          --    $    24.3
Derivative financial instruments:
   Foreign currency contracts                                                                               $     0.1
     Canadian dollars (000's)            45,100         --         --          --         --          --
     Exchange rate (C$ to US$1.00)         1.61         --         --          --         --          --
</TABLE>

                                       43
<PAGE>

               ITEM 8-FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEX TO FINANCIAL STATEMENTS
                                                                           PAGE

Management's Responsibility For Financial Reporting..........................45
Report Of Independent Chartered Accountants..................................46
Consolidated Balance Sheets..................................................47
Consolidated Statements Of Operations........................................48
Consolidated Statements Of Deficit...........................................48
Consolidated Statements Of Cash Flow.........................................49
Notes to Consolidated Financial Statements...................................50


                                       44
<PAGE>

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 M. Buchan
                                          Chief Executive Officer



                                          /s/
                                          --------------------------------------
                                          Brian W. Penny
                                          Vice President and Director

February 7, 2003


                                       45
<PAGE>

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, 2002 and 2001 and the consolidated statements of operations,
deficit and cash flow for each of the years in the three-year period ended
December 31, 2002. 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 Canadian and United States generally
accepted auditing standards. 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, 2002 and 2001 and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 2002 in
accordance with Canadian generally accepted accounting principles.



Edmonton, Canada                                /s/ Ernst & Young LLP
February 7, 2003, except for note 18(c),        Chartered Accountants
as to which the date is March 26, 2003


                                       46
<PAGE>
<TABLE>
<CAPTION>

                                               ECHO BAY MINES LTD.

                                           CONSOLIDATED BALANCE SHEETS

                                                   December 31

 (thousands of U.S. dollars)                                                     2002                   2001
 --------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                    <C>
 ASSETS
 Current assets:
    Cash and cash equivalents                                             $    22,967            $    12,351
    Short-term investments                                                      7,183                  1,910
    Interest and accounts receivable                                            4,177                  3,645
    Inventories (note 2)                                                       20,834                 29,506
    Prepaid expenses and other assets                                           1,954                  3,725
 --------------------------------------------------------------------------------------------------------------
                                                                               57,115                 51,137

 Plant and equipment (note 3)                                                 100,576                120,969
 Mining properties (note 3)                                                    29,017                 32,903
 Long-term investments and other assets (note 4)                               36,982                 55,795
 --------------------------------------------------------------------------------------------------------------
                                                                          $   223,690            $   260,804
 ==============================================================================================================

 LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
    Accounts payable and accrued liabilities                              $    24,813            $    24,284
    Income and mining taxes payable                                             3,793                  3,570
    Debt and other financings (note 5)                                             --                 17,000
    Reclamation and mine closure liabilities (note 8)                           4,560                  3,841
    Deferred income (note 6)                                                       --                    876
 --------------------------------------------------------------------------------------------------------------
                                                                               33,166                 49,571

 Debt and other financings (note 5)                                                --                  6,714
 Deferred income (note 6)                                                       6,393                 47,042
 Reclamation and mine closure liabilities (note 8)                             46,512                 49,726
 Deferred income taxes                                                            945                    925

 Commitments and contingencies (notes 8, 16 and 17)

 Shareholders' equity:
    Capital stock (note 12), no par value, unlimited number
 authorized; issued and outstanding - 541,272,675 shares                    1,042,571                713,343
    Capital securities (note 7)                                                    --                157,453
    Deficit                                                                  (879,238)              (734,665)
    Foreign currency translation                                              (26,659)               (29,305)
 --------------------------------------------------------------------------------------------------------------
                                                                              136,674                106,826
 --------------------------------------------------------------------------------------------------------------
                                                                          $   223,690            $   260,804
 ==============================================================================================================
</TABLE>

See accompanying notes.


                                                       47
<PAGE>
<TABLE>
<CAPTION>

                                               ECHO BAY MINES LTD.

                                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                             Year ended December 31

 (thousands of U.S. dollars,
 except for per share data)                                                   2002             2001            2000
 --------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>             <C>
 Revenue                                                             $     206,529    $     237,684   $     280,976
 --------------------------------------------------------------------------------------------------------------------
 Expenses:
    Operating costs                                                        128,136          175,341         173,435
    Royalties (note 17)                                                      7,799            7,597           8,034
    Production taxes                                                         1,222              177           2,460
    Depreciation and amortization                                           35,271           42,101          50,664
    Reclamation and mine closure                                             5,066            6,098          10,572
    General and administrative                                               9,141            5,623           5,650
    Exploration and development                                              8,554            3,466          10,336
    Interest and other (note 9)                                             13,420            6,106           3,012
    Loss on retirement of capital securities (note 12)                       5,461               --              --
 --------------------------------------------------------------------------------------------------------------------
                                                                           214,070          246,509         264,163
 --------------------------------------------------------------------------------------------------------------------
 Earnings (loss) before income taxes                                        (7,541)          (8,825)         16,813
 Income tax expense (recovery) (note 10)                                       149           (3,147)         (1,748)
 --------------------------------------------------------------------------------------------------------------------
 Net earnings (loss)                                                 $      (7,690)   $      (5,678)  $      18,561
 ====================================================================================================================

 Net earnings (loss) attributable to common shareholders (note 7)    $    (144,573)   $     (22,985)  $       3,164
 ====================================================================================================================

 Earnings (loss) per share - basic and fully diluted                 $       (0.34)   $       (0.16)  $        0.02
 ====================================================================================================================
 Weighted average number of shares outstanding (thousands)
    - basic and diluted                                                    429,783          140,607         140,607
 ====================================================================================================================


                                       CONSOLIDATED STATEMENTS OF DEFICIT

                                             Year ended December 31


 (thousands of U.S. dollars)                                                  2002             2001            2000
 --------------------------------------------------------------------------------------------------------------------
 Balance, beginning of year                                          $    (734,665)   $    (711,680)  $    (714,844)
 Net earnings (loss)                                                        (7,690)          (5,678)         18,561

 Loss on retirement of capital securities, net of nil tax effect          (132,302)              --              --
 (note 7)
 Interest on capital securities, net of nil tax effect (note 7)             (4,581)         (17,307)        (15,397)
 --------------------------------------------------------------------------------------------------------------------
 Balance, end of year                                                $    (879,238)   $    (734,665)  $    (711,680)
 ====================================================================================================================
</TABLE>

See accompanying notes.

                                                       48
<PAGE>
<TABLE>
<CAPTION>

                                                      ECHO BAY MINES LTD.

                                             CONSOLIDATED STATEMENTS OF CASH FLOW

                                                    Year ended December 31

(thousands of U.S. dollars)                                                           2002            2001            2000
-----------------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>             <C>             <C>
CASH PROVIDED FROM (USED IN):
OPERATING ACTIVITIES
Net earnings (loss)                                                            $    (7,690)    $    (5,678)    $    18,561
Add (deduct):
   Depreciation                                                                     27,572          31,093          32,457
   Amortization                                                                      7,699          11,008          18,207
   Amortization of mining costs                                                      2,328           6,118           4,202
   Loss on retirement of capital securities                                          5,461              --              --
   Deferred income included in revenue (note 6)                                    (30,733)        (18,609)        (24,473)
   Deferred income included in operating costs (note 6)                                 --          (2,846)         (3,149)
   Deferral of gains on restructuring of hedge commitments                              --              --           4,287
   Deferred income taxes                                                                --          (3,358)         (2,400)
   Net gain on sale of other assets (note 9)                                        (1,242)           (700)           (432)
   Unrealized losses on share investments                                               --             150              28
   Provision for impaired assets (note 9)                                            7,000           4,384              --
   Provision for deferred gains and losses on modified hedge contracts               3,098              --              --
(note 9)
   Allowance for bad debts (note 9)                                                  1,509              --              --
   Other                                                                               245             588          (1,084)
Change in cash invested in operating assets and liabilities:
   Interest and accounts receivable                                                 (2,035)           (648)            (85)
   Inventories                                                                       6,884           8,780          (2,869)
   Prepaid expenses and other assets                                                   (56)            166             (31)
   Accounts payable and accrued liabilities                                         (1,174)          3,304             496
   Income and mining taxes payable                                                     266          (2,174)          2,790
-----------------------------------------------------------------------------------------------------------------------------
                                                                                    19,132          31,578          46,505
-----------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Mining properties, plant and equipment                                             (12,581)        (22,817)        (11,589)
Long-term investments and other assets                                              (4,518)         (1,879)           (524)
Proceeds on sale of plant and equipment                                              1,872             943             332
Other                                                                                1,194            (243)            894
-----------------------------------------------------------------------------------------------------------------------------
                                                                                   (14,033)        (23,996)        (10,887)
-----------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Debt repayments                                                                    (17,000)         (9,500)        (36,750)
Debt borrowings                                                                         --              --          12,000
Units offering, net of issuance costs (note 12 )                                    25,513              --              --
Warrants exercised                                                                       4              --              --
Costs of capital securities retirement                                              (3,000)             --              --
-----------------------------------------------------------------------------------------------------------------------------
                                                                                     5,517          (9,500)        (24,750)
-----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                                10,616          (1,918)         10,868
Cash and cash equivalents, beginning of year                                        12,351          14,269           3,401
-----------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of year                                         $    22,967     $    12,351     $    14,269
=============================================================================================================================
</TABLE>

See accompanying notes.

                                                              49
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     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. ("Echo Bay" or the "Company") is engaged in the production
of gold and silver and related activities including exploration, development,
mining and processing. These activities are conducted principally in the United
States and Canada. Gold accounted for 96% and silver 4% of 2002 revenue
respectively. The Company has two operating mines: Round Mountain in Nevada,
United States and Lupin in Nunavut Territory, Canada. The Company's Kettle River
mine in Washington, United States was placed on care and maintenance in October
2002. The Company operated a fourth mine, McCoy/Cove in Nevada, United States,
until March 31, 2002, at which date mining and processing activities were
completed. The Company holds a 100% interest in its Kettle River and Lupin mines
and a 50% interest in its Round Mountain, which it operates, with the remaining
50% interest held by affiliates of Barrick Gold Corporation. The Company's
McCoy/Cove mine was conveyed to a subsidiary of Newmont Mining Corporation
effective February 7, 2003 as described in note 18.

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 13. 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 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.

                                       50
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

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 and loss on conversion 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. Plant and equipment that have useful
lives shorter than the mine life are depreciated using the straight-line method
over each asset's estimated remaining economic life to a current maximum of 4
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 support a conclusion 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.

                                       51
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

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.

                                       52
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

INCOME TAXES
The Company uses the liability method of accounting for income taxes whereby
deferred income taxes are based on applying statutory tax rates to the
differences between the carrying amounts of assets and liabilities for
accounting and tax purposes. A valuation adjustment is provided against deferred
income tax assets unless they are considered more likely than not to be
realized.

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, 2002, 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.

                                       53
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

CAPITALIZATION OF INTEREST
Interest cost is capitalized on construction programs until the facilities are
ready for their intended use.

EMPLOYEE BENEFIT 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 12. 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
                                                       2002              2001
--------------------------------------------------------------------------------
Precious metals bullion                        $      5,239      $     12,215
In-process                                            4,332             5,720
Materials and supplies                               11,263            11,571
--------------------------------------------------------------------------------
                                               $     20,834      $     29,506
================================================================================


                                       54
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

<TABLE>
<CAPTION>

3.     PROPERTY, PLANT AND EQUIPMENT
NET BOOK VALUE                                                                             2002             2001
-------------------------------------------------------------------------------------------------------------------
                                                  Plant and            Mining          Net Book         Net Book
Property and percentage owned                     Equipment        Properties             Value            Value
-------------------------------------------------------------------------------------------------------------------
<S>                                            <C>               <C>               <C>              <C>
Round Mountain (50%)                           $     48,868      $     14,149      $     63,017     $     76,001
McCoy/Cove (100%)                                     7,507                --             7,507           10,104
Lupin (100%)                                         13,914             1,925            15,839           22,193
Aquarius (100%)                                      29,994            12,943            42,937           43,680
Other                                                   293                --               293            1,894
-------------------------------------------------------------------------------------------------------------------
                                               $    100,576      $     29,017      $    129,593     $    153,872
===================================================================================================================

PLANT AND EQUIPMENT                                                      2002                               2001
-------------------------------------------------------------------------------------------------------------------
                                                                     Net Book                           Net Book
                                                       Cost             Value              Cost            Value
-------------------------------------------------------------------------------------------------------------------
Land improvements and utility systems          $     69,062      $      2,047      $     72,977     $      3,220
Buildings                                           157,597            20,496           153,779           25,466
Equipment                                           391,157            47,029           385,086           53,371
Construction in progress                             37,005            31,004            43,337           38,912
-------------------------------------------------------------------------------------------------------------------
                                               $    654,821      $    100,576      $    655,179     $    120,969
===================================================================================================================

MINING PROPERTIES                                                                          2002             2001
-------------------------------------------------------------------------------------------------------------------
Producing mines' acquisition and development costs                                 $    283,641     $    280,545
Less accumulated amortization                                                           267,567          260,365
-------------------------------------------------------------------------------------------------------------------
                                                                                         16,074           20,180
Development properties' acquisition and development costs                                12,943           12,723
-------------------------------------------------------------------------------------------------------------------
                                                                                   $     29,017     $     32,903
-------------------------------------------------------------------------------------------------------------------

During 2002, the Company wrote down the carrying values of the Lupin mine.
During 2001, the Company wrote down the carrying values of the Kettle River mine
(note 9).

4.     LONG-TERM INVESTMENTS AND OTHER ASSETS
                                                                              2002                2001
----------------------------------------------------------------------------------------------------------
Modification of hedging contracts                                     $     16,291        $     29,305
Deferred mining costs                                                       10,362              15,648
Reclamation and other deposits                                              10,144              10,485
Premiums paid on gold and silver option contracts                               --               1,871
Other                                                                          185                 357
----------------------------------------------------------------------------------------------------------
                                                                            36,982              57,666
Less current portion included in prepaid expenses and other assets              --               1,871
----------------------------------------------------------------------------------------------------------
                                                                      $     36,982        $     55,795
----------------------------------------------------------------------------------------------------------
</TABLE>

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. The remaining deferred losses relate to gold to be produced at the
Lupin mine and are expected to be recognized as follows: $5.2 million in 2003
and

                                       55
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

$11.1 million in 2004. Refer to note 6 for a discussion of the deferral of gains
on the modification of hedging contracts and note 9 for a discussion on the
provision for deferred losses previously relating to 2005 to 2008.

DEFERRED MINING COSTS
Deferred mining costs include $10.4 million (2001 - $13.8 million) in respect of
deferred stripping at the Round Mountain mine and $nil (2001 - $1.9 million) in
respect of underground costs at the Lupin mine. The deferred mining ratio for
the Round Mountain mine in 2002 was 95 tons per ounce recovered (2001 - 112
tons, 2000 - 127 tons). During 2002, the Company wrote off the remaining
deferred mining costs for the Lupin mine (note 9).

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 were 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
                                                    2002              2001
----------------------------------------------------------------------------
Revolving credit facility                   $         --      $     17,000
Capital securities (note 7)                           --             6,714
----------------------------------------------------------------------------
                                                      --            23,714
Less current portion                                  --            17,000
----------------------------------------------------------------------------
                                            $         --      $      6,714
============================================================================

CURRENCY LOANS
In May 2002, the Company repaid the remaining $17.0 million on its revolving
credit facility.

OTHER INFORMATION
The Company had $19.2 million in outstanding surety bonds and letters of credit
at December 31, 2002, primarily related to the bonding of future reclamation
obligations. At December 31, 2002, annual fees on the letters of credit range
from 0.5% to 1.25%.

Interest payments were $0.3 million in 2002, $1.8 million in 2001 and $4.3
million in 2000.

<TABLE>
<CAPTION>

6.     DEFERRED INCOME
                                                                     2002              2001
----------------------------------------------------------------------------------------------
<S>                                                          <C>               <C>
Modification of hedging contracts                            $      6,393      $     47,042
Premiums received on gold and silver hedging contracts                 --               876
----------------------------------------------------------------------------------------------
                                                                    6,393            47,918
Less current portion                                                   --               876
----------------------------------------------------------------------------------------------
                                                             $      6,393      $     47,042
==============================================================================================
</TABLE>

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. The remaining deferred gains relate to gold to be
produced at the Lupin mine are expected to be recognized as follows:

                                       56
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

$2.5 million in 2003 and $3.9 million in 2004. Refer to note 4 for a discussion
of the deferral of losses on the modification of hedging contracts and note 9
for a discussion on the provision for deferred gains previously relating to 2005
and 2006.

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
were 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 was 11%, or
12% compounded semi-annually during a period of interest deferral.

On April 3, 2002 the Company issued 361,561,230 common shares in exchange for
all of its capital securities (note 12). Prior to the exchange, the present
value of the capital securities' principal amount was classified as debt (note
5) and the present value of the future interest payments plus deferred accrued
interest was classified within a separate component of shareholders' equity.
Interest on the debt portion of the capital securities was classified as
interest expense on the consolidated statement of earnings and interest on the
equity portion of the capital securities was charged directly to deficit on the
consolidated balance sheet. The loss on conversion of the capital securities was
charged proportionately between earnings and deficit (note 12). For purposes of
per share calculations, the equity portions of interest and the loss on
conversion decreases the earnings attributable to common shareholders. See note
13 for a discussion of differences in treatment of the capital securities under
generally accepted accounting principles in the United States.

8.     RECLAMATION AND MINE CLOSURE LIABILITIES
                                                        2002             2001
--------------------------------------------------------------------------------
Round Mountain                                  $     16,862     $     13,674
McCoy/Cove                                            11,186           17,546
Lupin                                                 11,405            9,584
Kettle River                                           9,251            9,119
Sunnyside                                              2,368            3,644
--------------------------------------------------------------------------------
                                                      51,072           53,567
Less current portion                                   4,560            3,841
--------------------------------------------------------------------------------
                                                $     46,512     $     49,726
================================================================================

At December 31, 2002, the Company's estimate of future reclamation and mine
closure costs is $61.6 million, which it believes will meet current regulatory
requirements. The aggregate obligation accrued to December 31, 2002 was $51.1
million, including accruals of $5.1 million in 2002, $7.4 million in 2001, and
$10.6 million in 2000. Effective February 7, 2003, McCoy/Cove and its associated
reclamation obligation were conveyed to Newmont as described in note 18. Any
unused accrual will be taken into income at that time. Remaining requirements
including $14.5 million at Round Mountain and $3.1 million at Lupin, will be
accrued on the unit-of-production method over the remaining life of each mine.
In addition, the Company has posted bonds, cash deposits and letters of credit
totaling $30.6 million and

                                       57
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

corporate guarantees totaling $33.3 million as required by various regulatory
agencies. 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.

<TABLE>
<CAPTION>
9.     INTEREST AND OTHER
                                                                              2002            2001           2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>             <C>
Interest income                                                       $       (441)    $      (760)    $     (964)
Interest expense                                                               719           2,560          5,194
Gain on sale of plant and equipment                                         (1,242)           (700)          (251)
Reclamation provision (recovery)                                             1,424           1,338         (2,048)
Provision for impaired assets                                                7,000           3,046             --
Provision for deferred gains and losses on modified hedge contracts          3,098              --             --
Allowance for bad debts (note 17)                                            1,509              --             --
Other                                                                        1,353             622          1,081
-------------------------------------------------------------------------------------------------------------------
                                                                      $     13,420     $     6,106     $    3,012
===================================================================================================================
</TABLE>

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 2002, the Company recorded a $7.0 million provision for
impaired assets relating to its Lupin mine including $4.0 million of plant and
equipment and $3.0 million of deferred mining costs due to higher than
anticipated costs resulting from unexpected development challenges and changes
in future expectations of the strength of the Canadian dollar relative to the
United States dollar. In 2001, the Company recorded a $3.1 million provision for
impaired assets and a $1.3 million reclamation provision relating to its Kettle
River mine due to an unexpected decrease in reserves.

PROVISION FOR DEFERRED GAINS AND LOSSES ON MODIFIED HEDGE CONTRACTS
Gains and losses on the early termination or other restructuring of gold hedging
contracts are deferred until the formerly hedged items are recognized in
earnings to the extent that future mine production is available to meet the
original hedge commitments. Should circumstances change such that formerly
hedged anticipated future production is no longer considered likely to occur,
the related deferred gains and losses are recognized in earnings in the period
in which this determination is made. As a result, deferred losses of $4.6
million, $1.9 million, $0.7 million and $0.9 million relating to 2005, 2006,
2007 and 2008 respectively and deferred gains of $3.7 million and $1.3 million
relating to 2005 and 2006 respectively, have been recognized in 2002 with
respect to the Lupin mine.

10.    INCOME TAX EXPENSE

GEOGRAPHIC COMPONENTS
The geographic components of earnings before income tax expense and income tax
expense were as follows.


                                       58
<PAGE>
<TABLE>
<CAPTION>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

                                                                         2002              2001             2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>               <C>              <C>
Earnings (loss) before income taxes:
   Canada                                                        $    (30,583)     $        952     $        637
   United States and other                                             23,042            (9,777)          16,176
-------------------------------------------------------------------------------------------------------------------
                                                                 $     (7,541)     $     (8,825)    $     16,813
===================================================================================================================
Current income tax expense:
   Canada                                                        $        149      $        166     $        201
   United States and other                                                 --                45              451
-------------------------------------------------------------------------------------------------------------------
                                                                          149               211              652
-------------------------------------------------------------------------------------------------------------------
Deferred income tax expense (recovery):
   Canada                                                                  --            (3,358)          (2,400)
   United States and other                                                 --                --               --
-------------------------------------------------------------------------------------------------------------------
                                                                           --            (3,358)          (2,400)
-------------------------------------------------------------------------------------------------------------------
Income tax expense (recovery)                                    $        149      $     (3,147)    $     (1,748)
===================================================================================================================

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 41.2% for 2002 and
43.1% for 2001 and 2000 for the following reasons.
                                                                         2002              2001             2000
-------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes                              $     (7,541)     $     (8,825)    $     16,813
===================================================================================================================
Income tax effect of:
   Expected Canadian federal and provincial corporate
     income taxes                                                $     (8,679)     $     (3,805)    $      7,246
   Utilization of net operating loss                                       --                --           (5,760)
   Operating loss from which no tax benefit is derived                  8,650             3,964               --
   Canadian resource allowance and earned depletion                       304              (172)             113
   Foreign earnings subject to different income tax rates                  --               965           (1,326)
   Other items                                                           (126)           (4,099)          (2,021)
-------------------------------------------------------------------------------------------------------------------
Income tax expense (recovery)                                    $        149      $     (3,147)    $     (1,748)
===================================================================================================================
Effective tax rate (current and deferred)                               (2.0%)            35.7%           (10.4%)
===================================================================================================================
</TABLE>

LOSS CARRYFORWARDS
At December 31, 2002, the Company had U.S. net operating loss carryforwards of
approximately $419 million to apply against future taxable income and $215
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 2003 to 2022. Additionally, the
Company has Canadian non-capital loss carryforwards of approximately $89 million
and net capital loss carryforwards of approximately $204 million. The
non-capital loss carryforwards expire at various times from 2003 to 2009. The
net capital loss carryforwards have no expiration date.

                                       59
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

DEFERRED TAX LIABILITIES AND ASSETS
Significant components of the Company's deferred tax liabilities and assets are
as follows.

<TABLE>
<CAPTION>
                                                                             2002                                 2001
--------------------------------------------------------------------------------- -------------------------------------
                                                                U.S. U.S.
millions of U.S. dollars                          Canada  and other        Total       Canada  and other        Total
--------------------------------------------------------------------------------- -------------------------------------
<S>                                             <C>         <C>         <C>          <C>         <C>         <C>
Deferred tax liabilities:
   Tax over book depreciation and depletion     $     --    $    --     $     --     $    3.3    $    --     $    3.3
   Other tax liabilities                             0.9         --          0.9          2.7         --          2.7
--------------------------------------------------------------------------------- -------------------------------------
Total deferred tax liabilities                       0.9         --          0.9          6.0         --          6.0
--------------------------------------------------------------------------------- -------------------------------------
Deferred tax assets:
   Net operating loss and other carryforwards      120.7       148.7       269.4        120.3       147.9       268.2
   Book over tax depreciation and depletion         36.0        23.7        59.7         33.0        21.3        54.3
   Accrued liabilities                               5.7         8.3        14.0          5.1        17.6        22.7
   Other tax assets                                  3.1         4.7         7.8          1.8         4.7         6.5
--------------------------------------------------------------------------------- -------------------------------------
Total deferred tax assets before allowance         165.5       185.4       350.9        160.2       191.5       351.7
Valuation allowance for deferred tax assets       (165.5)     (185.4)     (350.9)      (155.1)     (191.5)     (346.6)
--------------------------------------------------------------------------------- -------------------------------------
Total deferred tax assets                             --         --           --          5.1         --          5.1
--------------------------------------------------------------------------------- -------------------------------------
Net deferred tax liabilities                    $    0.9    $    --     $    0.9     $    0.9    $    --     $    0.9
================================================================================= =====================================

The net increase in the valuation allowance for deferred tax assets was $4.3
million for 2002 and $6.1 million for 2001.

INCOME TAX PAYMENTS
Income tax payments were $0.1 million in 2002, $0.7 million in 2001 and $0.2
million in 2000.

11.    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.

12.    CAPITAL STOCK

                                                                               Units                     Amount
-----------------------------------------------------------------------------------------------------------------------
COMMON SHARES
Balance, December 31, 2001 and 2000                                      140,607,145             $      713,343
Issued  in  exchange  for  capital   securities  and  accrued            361,561,230                    303,711
interest
Units offering, net of issuance costs                                     39,100,000                     23,236
Issued upon exercise of warrants                                               4,300                          4
-----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2002                                               541,272,675             $    1,040,294
=======================================================================================================================
WARRANTS
Balance, December 31, 2001                                                        --             $           --
Units offering, net of issuance costs                                     39,100,000                      2,277
Warrants exercised                                                            (4,300)                        --
-----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2002                                                39,095,700             $        2,277
=======================================================================================================================
</TABLE>

                                       60
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

CAPITAL SECURITIES RETIREMENT
On April 3, 2002 the Company issued 361,561,230 common shares, representing
approximately 72% of the outstanding common shares after giving effect to such
issuance, in exchange for all of its $100 million aggregate principal amount of
11% junior subordinated debentures due 2027, plus accrued and unpaid interest
thereon (the "capital securities").

Following this issuance of common shares, and as at April 3, 2002, the principal
holders of the Company's common shares and their respective ownership positions
in the Company were Newmont Mining Corporation of Canada Limited ("Newmont
Canada") (48.8%) and Kinross (11.4%). In connection with the completion of the
capital securities exchange, three directors of the Company resigned from the
board of directors. Two of the vacancies created by these resignations were
filled by executive officers of Newmont Canada.

As a result of eliminating the capital securities, the Company recorded an
increase to common shares of $303.7 million, based on their quoted market value
at the date of issue. The quoted market value of the common shares issued
exceeded the book value of the capital securities by $134.8 million. This
difference, along with transaction costs of $3.0 million, were recorded
proportionately between interest expense ($5.5 million) and deficit ($132.3
million) in the second quarter of 2002 based on the debt and equity
classifications of the capital securities.

UNITS OFFERING
In May 2002, the Company sold a total of 39,100,000 units at a price of $0.70
per unit for aggregate gross proceeds of approximately $27.4 million. Each unit
consisted of one common share and one share purchase warrant. The common shares
and the warrants comprising the units separated upon closing and trade
separately on the Toronto Stock Exchange and the American Stock Exchange. As a
consequence of the business combination described in note 18, each warrant,
previously entitling the holder to purchase one common share of the Company, now
entitles the holder to purchase 0.1733 of a post-consolidated Kinross common
share at a price of $0.90, at any time prior to November 14, 2003.

DELISTING OF COMMON SHARES
In connection with the business combination described in note 18, the common
shares of the Company were delisted from the Toronto Stock Exchange on February
5, 2003 and from the American Stock Exchange on January 31, 2003. Consequently,
all of the common shares of the Company are owned by Kinross. The warrants
continue to trade on both these exchanges until November 14, 2003.

DIVIDENDS
The Company has not paid dividends since 1996.

RESTRICTED SHARE GRANT PLAN
Effective February 1997, the Company adopted a restricted share grant plan to
provide incentive to officers of the Company. As at December 31, 2002, the
Company has reserved an aggregate of 750,000 common shares for issuance under
the plan, but no grants are outstanding. In connection with the business
combination described in note 18, no shares will be granted under this plan.

EMPLOYEE SHARE INCENTIVE PLAN AND DIRECTOR EQUITY PLAN
These plans provide for the granting of options to purchase common shares to
officers and employees

                                       61
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

(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.

EFFECT OF BUSINESS COMBINATION ON SHARE OPTIONS
In connection with the business combination described in note 18, no more grants
are to be made under the Employee Share Incentive Plan. All outstanding options
vested effective January 31, 2003, with each being converted into 0.1733 of a
Kinross share option. These Kinross share options are excercisable at prices
disclosed below multiplied by 5.7703 giving effect to the conversion ratio,
described in note 18, into common shares of Kinross. All options outstanding
under the Employee Share Incentive Plan expire on January 31, 2004 while options
outstanding under the Director Equity Plan remain outstanding in accordance with
the original terms of the plan. As at January 31, 2003, there were 584,854
Kinross share options outstanding and exercisable at a weighted average price of
$51.60 under the Employee Share Incentive Plan and 39,409 Kinross share options
outstanding and exercisable at a weighted average price of $66.00 under the
Director Equity Plan. Kinross share option prices are denominated in Canadian
dollars.

Changes in the number of options outstanding during the three years ended
December 31, 2002 were as follows.

<TABLE>
<CAPTION>
                                                EMPLOYEE SHARE INCENTIVE PLAN                 DIRECTOR EQUITY PLAN
                                                                     Weighted                             Weighted
                                                   Number of          Average        Number of             Average
                                                      Shares   Exercise Price           Shares      Exercise Price
--------------------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>               <C>              <C>
Options outstanding, December 31, 1999             5,493,686        C$    8.82         240,450         C$   11.14
2000:   Options granted                                   --                --              --                 --
        Options expired                             (100,458)            12.88              --                 --
        Options forfeited                         (1,021,417)             8.92           (13,000)            5.85
--------------------------------------------------------------------------------------------------------------------
Options outstanding, December 31, 2000             4,371,811        C$    8.71         227,450         C$   11.44
2001:   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
2002:   Options granted                                   --                --              --                 --
        Options expired                              (37,100)             5.75              --                 --
        Options forfeited                           (133,295)             5.10              --                 --
--------------------------------------------------------------------------------------------------------------------
Options outstanding, December 31, 2002             3,470,172        C$    8.89         227,450         C$   11.44
====================================================================================================================
</TABLE>

The number and weighted average price of shares exercisable under the Employee
Share Incentive Plan are 3,270,047 at C$9.27 at December 31, 2002; 3,076,154 at
C$9.80 at December 31, 2001; and 3,389,484 at C$10.41 at December 31, 2000. The
number and weighted average price of shares exercisable under the Director
Equity Plan are 227,450 at C$11.44 at December 31, 2002; 217,700 at C$11.78 at
December 31, 2001; and 196,575 at C$12.40 at December 31, 2000.

                                       62
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted


Options outstanding at December 31, 2002 had the following characteristics.

<TABLE>
<CAPTION>
                                                     Weighted         Weighted                          Weighted
       Number of                             Average Exercise          Average     Number of    Average Exercise
          Shares                 Exercise     Price of Shares      Years Until        Shares     Price of Shares
     Outstanding              Price Range         Outstanding       Expiration   Exercisable         Exercisable
-------------------- ---------------------- ------------------ --------------- --------------- --------------------
 EMPLOYEE SHARE INCENTIVE PLAN
<S>                    <C>        <C>            <C>                     <C>    <C>                 <C>
       1,331,444       C$2.55  -   C$3.59          C$   2.94                6      1,131,319          C$    3.01
       1,391,815         6.75  -    13.75              10.49                4      1,391,815               10.49
         746,913        15.75  -    19.63              16.51                2        746,913               16.51
 DIRECTOR EQUITY PLAN

         143,000       C$3.70  -  C$12.50          C$   8.67                4        143,000          C$    8.67
          84,450        14.63  -    18.25              16.13                2         84,450               16.13
-------------------- ---------------------- ------------------ --------------- --------------- --------------------
</TABLE>

13.    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 was classified as debt within gold and
other financings, while the present value of the future interest payments was
classified as a separate component of shareholders' equity (note 7). The
deferred accrued interest was classified within this equity component as the
Company had 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 had 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. The loss on the
retirement of the capital securities was recorded proportionately between
interest expense and deficit under Canadian GAAP while the entire loss has been
presented as a current period extraordinary item for U.S. GAAP.

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

                                       63
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted


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.

In accordance with U.S. GAAP, gold call options sold would not qualify for hedge
accounting and therefore would be marked to market at each period end. As a
result, the Company recorded a loss of $0.8 million in 2001 and a gain of $3.0
million in 2000 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 and $1.2 million in 2000
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.

<TABLE>
<CAPTION>
                                                                        2002               2001                2000
-----------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                <C>                 <C>
Net earnings (loss) under Canadian GAAP                         $     (7,690)      $     (5,678)       $     18,561
Additional interest expense on capital securities                     (4,739)           (17,307)            (15,397)
Loss on conversion of capital securities                               5,461                 --                  --
Modification of derivative contracts realized in net                     814                 --                  --
earnings
Change in market value of foreign exchange contracts                     384                426                 948
Amortization of deferred financing costs on capital                       --               (634)               (633)
securities
Change in market value of option contracts                                --             (1,291)              2,964
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)
Kettle River amortization expense                                         --              2,103                 163
Provision for impaired Kettle River assets                                --              1,305                  --
-----------------------------------------------------------------------------------------------------------------------
Net earnings (loss) under U.S. GAAP before
   extraordinary loss                                           $     (5,770)      $    (29,096)       $      2,256
Loss on retirement of capital securities, net of nil tax            (137,763)                --                  --
effect
-----------------------------------------------------------------------------------------------------------------------
Net earnings (loss) under U.S. GAAP                             $   (143,533)      $    (29,096)       $      2,256
=======================================================================================================================
Earnings (loss) per share under U.S. GAAP
- basic and diluted
   - before extraordinary loss                                  $      (0.01)      $      (0.21)       $       0.02
   - extraordinary loss                                                (0.32)             (0.21)               0.02
-----------------------------------------------------------------------------------------------------------------------
   - after extraordinary loss                                   $      (0.33)      $      (0.21)       $       0.02
=======================================================================================================================
Weighted average number  of shares outstanding (thousands)
   - basic                                                           429,783            140,607             140,607
   -diluted                                                          429,783            140,607             140,607
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       64
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted


The effects of the GAAP differences on the consolidated balance sheet would have
been as follows.

<TABLE>
<CAPTION>
                                        Canadian     Short-term    Derivative                        U.S.
December 31, 2002                           GAAP    Investments    Contracts       Other             GAAP
------------------------------------------------------------------------------------------------------------
<S>                                   <C>            <C>           <C>           <C>           <C>
Short-term investments                $    7,183     $   17,490    $       --    $       --    $   24,673
Long-term investments and other           36,982             --       (15,766)           --        21,216
assets
Deferred income                            6,393             --        (6,393)           --            --
Common shares                          1,042,571             --            --        36,428     1,078,999
Deficit                                 (879,238)           178        (2,224)      (36,428)     (917,712)
Foreign currency translation             (26,659)            --            --        26,659            --
Accumulated other comprehensive loss          --         17,312        (7,149)      (26,659)      (16,496)
Shareholders' equity (deficit)           136,674         17,490        (9,373)           --       144,791
------------------------------------------------------------------------------------------------------------

                                        Canadian      Capital      Derivative                        U.S.
December 31, 2001                           GAAP     Securities    Contracts       Other             GAAP
------------------------------------------------------------------------------------------------------------
Short-term investments                $    1,910     $       --    $       --    $    2,636    $    4,546
Long-term investments and other           55,795            158       (29,305)          141        26,789
assets
Accounts    payable    and   accrued      24,284             --           691            --        24,975
liabilities
Debt and other financings                 23,714         93,286            --            --       117,000
Deferred income                           47,918             --       (47,918)           --            --
Accrued    interest    on    capital          --         64,167            --            --        64,167
securities
Common shares                            713,343             --            --        36,428       749,771
Capital 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)
------------------------------------------------------------------------------------------------------------
</TABLE>

The continuity of shareholders' equity (deficit) from December 31, 2001 to
December 31, 2002 under U.S. GAAP would have been as follows.

------------------------------------------------------------------------------
Balance, beginning of year                                    $    (29,770)
Net loss                                                          (143,533)
Common shares issued in exchange for capital securities            303,711
Units offering, net of issuance costs                               25,513
Common shares issued upon exercise of warrants                           4
Other comprehensive loss                                           (11,134)
------------------------------------------------------------------------------
Balance, end of year                                          $    144,791
------------------------------------------------------------------------------

                                       65
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted


The following statement of comprehensive income (loss) would be disclosed in
accordance with U.S. GAAP.

<TABLE>
<CAPTION>
                                                                           2002             2001            2000
-------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>             <C>
Net earnings (loss) under U.S. GAAP                               $    (143,533)   $     (29,096)  $       2,256
-------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss), after a nil income tax effect:
   Unrealized gain on share investments arising during period            14,854            1,726             732
   Foreign currency translation adjustments                               2,646           (4,351)         (2,940)
   Transition adjustment on adoption of FAS 133                              --           39,234              --
   Modification of derivative contracts realized in net income          (28,634)         (17,749)             --
-------------------------------------------------------------------------------------------------------------------
Other comprehensive income (loss)                                       (11,134)          18,860          (2,208)
-------------------------------------------------------------------------------------------------------------------
Comprehensive income (loss)                                       $    (154,667)   $     (10,236)  $          48
===================================================================================================================

Additionally, under U.S. GAAP, the equity section of the balance sheet would
present a subtotal for accumulated other comprehensive loss, as follows.
                                                              2002              2001
--------------------------------------------------------------------------------------
Unrealized gain on share investments                  $     17,312      $      2,458
Modification of derivative contracts                        (7,149)           21,485
Foreign currency translation                               (26,659)          (29,305)
--------------------------------------------------------------------------------------
Accumulated other comprehensive loss                  $    (16,496)     $     (5,362)
======================================================================================

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.
                                                                    2002               2001               2000
-----------------------------------------------------------------------------------------------------------------
Net earnings (loss) under U.S. GAAP                         $   (143,533)      $    (29,096)      $      2,256
Pro forma stock compensation expense,
   after a nil income tax effect                                    (323)              (405)              (929)
-----------------------------------------------------------------------------------------------------------------
Pro forma net earnings (loss) under U.S. GAAP               $   (143,856)      $    (29,501)      $      1,327
-----------------------------------------------------------------------------------------------------------------
Pro forma earnings (loss) per share under U.S. GAAP         $      (0.33)      $      (0.21)      $       0.01
=================================================================================================================
</TABLE>

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 2002, 2001 or 2000.

                                       66
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

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 June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"), which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. It applies to legal obligations
associated with the retirement of long-lived assets that result from the
acquisition, construction, development and (or) the normal operation of a
long-lived asset, except for certain obligations of lessees. SFAS 143 amends
SFAS 19, "Financial Accounting and Reporting by Oil and Gas Producing
Companies", and requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, an entity capitalizes the cost by increasing
the carrying amount of the related long-lived assets. Over time, the liability
is accreted to its present value each period, and the capitalized cost is
amortized over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. SFAS 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002 with earlier
application encouraged. The Company will adopt SFAS 143 in 2003. The Company has
not yet determined the impact of this Statement on its financial statements.

In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This pronouncement is effective
for exit or disposal activities that are initiated after December 31, 2002 and
requires these costs to be recognized when the liability is incurred and not at
project initiation. The Company is reviewing the provisions of the Statement,
but has not yet determined the impact of this Statement on its financial
statements.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). FIN 46 clarifies the application of
Accounting Research Bulletin No. 51 - Consolidated Financial Statements to those
entities defined as "Variable Interest Entities" (more commonly referred to as
special purpose entities) in which equity investors do not have the
characteristics of a "controlling financial interest" or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 applies immediately to
all Variable Interest Entities created after January 31, 2003, and by the
beginning of the first interim or annual reporting period commencing after June
15, 2003 for Variable Interest Entities created prior to February 1, 2003. The
Company does not conduct any transactions through variable interest entities and
does not

                                       67
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

expect FIN 46 to have an impact on its financial statements.

In 2002, the CICA Handbook Sections 3063 - Impairment of Long Lived Assets and
3475 - Disposal of Long Lived Assets and Discontinued Operations were harmonized
with SFAS 144. The standards will require an impairment loss to be recognized
when the carrying amount of an asset held for use exceeds the sum of estimated
undiscounted future net cash flows. The impairment loss would be measured as the
amount by which the carrying amount exceeds the fair value of the asset. An
asset held for sale is to be measured at the lower of carrying cost or fair
value less cost to sell. In addition, this guidance broadens the concept of a
discontinued operation and eliminates the ability to accrue operating losses
expected between the measurement date and the disposal date. Section 3063 is
effective for fiscal years beginning on or after April 1, 2003, and Section 3475
applies to disposal activities initiated by an enterprise's commitment to a plan
on or after May 1, 2003. The sections will be applied prospectively with early
adoption encouraged.

In 2002, the Accounting Standards Board of the CICA issued Accounting Guidelines
No. 13 that increases the documentation, designation and effectiveness criteria
to achieve hedge accounting. The guideline requires the discontinuance of hedge
accounting for hedging relationships established that do not meet the conditions
at the date it is first applied. It does not change the method of accounting for
derivatives in hedging relationships. The new guideline is applicable for fiscal
years commencing July 1, 2003. The Company is evaluating the impact this
standard might have on its results of operations and financial position.

In November 2002, the FASB issued Interpretation No. 45 "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" ("FIN 45), which is effective for financial periods
ending after December 15, 2002. FIN 45 defines guarantees to include
indemnifications granted pursuant to contractual arrangements as well as
contingent consideration.

In 2003, the Accounting Standards Board of the CICA issued Accounting Guideline
No. 14 - Disclosure of Guarantee. The guideline requires the disclosure of
guarantees including indemnification pursuant to contractual arrangement. This
guideline is consistent with FIN 45 described above.

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 16 for further disclosure regarding estimated fair values of
financial instruments.


                                       68
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

14.    JOINT VENTURES
Summarized below is the Company's 50% interest in the Round Mountain mine,
accounted for by the proportionate consolidation method.

<TABLE>
<CAPTION>
                                                                 2002                2001                 2000
------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>                 <C>                  <C>
Revenues                                                 $    114,297        $    105,450         $     90,633
Expenses:
   Operating costs                                             68,323              72,049               60,231
   Royalties                                                    7,618               6,881                5,585
   Production taxes                                             1,653                 664                  470
   Depreciation and amortization                               21,579              20,570               18,978
   Reclamation and mine closure                                 3,400               3,361                2,880
   Exploration                                                  1,009                 663                  529
   Other                                                         (440)               (761)                (753)
------------------------------------------------------------------------------------------------------------------
Earnings before income taxes                             $     11,155        $      2,023         $      2,713
==================================================================================================================

                                                                 2002                2001                 2000
------------------------------------------------------------------------------------------------------------------
Current assets                                           $     40,371        $     40,224         $     33,425
Non-current assets                                             96,555              96,376              109,211
Current liabilities                                           (15,487)            (15,154)             (11,244)
Non-current liabilities                                       (19,399)            (15,311)             (18,023)
------------------------------------------------------------------------------------------------------------------
Equity                                                   $    102,100        $    106,135         $    113,369
==================================================================================================================

                                                                 2002                2001                 2000
------------------------------------------------------------------------------------------------------------------
Net cash provided from (used in):
   Operating activities                                  $     15,578        $     15,146         $     10,849
   Investing activities                                        (8,584)            (15,046)              (4,664)
   Financing activities                                            --                  --                   --
------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                          $      6,994        $        100         $      6,185
==================================================================================================================

15.    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 two operating mines: Round Mountain in Nevada, United States and
Lupin in Nunavut Territory, Canada. The Company ceased mining operations at its
Kettle River in Washington, United States in October 2002 and at its McCoy/Cove
mine in Nevada, United States at March 31, 2002. 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.

                                                                 2002                2001                 2000
------------------------------------------------------------------------------------------------------------------
Total gold and silver revenues                           $    206,529        $    237,684         $    280,976
Average gold price realized per ounce                    $        361        $        305         $        319
Average silver price realized per ounce                  $       4.36        $       4.70         $       5.28
------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       69
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

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.

<TABLE>
<CAPTION>

Gold Production (ounces)                                               2002             2001              2000
------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>              <C>               <C>
Round Mountain (50%)                                                377,747          373,475           320,064
Lupin                                                               113,835          139,327           117,729
Kettle River                                                         30,626           50,349            94,086
McCoy/Cove                                                           16,501           94,633           162,784
------------------------------------------------------------------------------------------------------------------
Total gold                                                          538,709          657,784           694,663
------------------------------------------------------------------------------------------------------------------

Silver Production (ounces)                                             2002             2001              2000
------------------------------------------------------------------------------------------------------------------
Total silver-all from McCoy/Cove                                  1,470,094        6,451,425        12,328,297
==================================================================================================================

Operating costs                                                        2002             2001              2000
------------------------------------------------------------------------------------------------------------------
Round Mountain (50%)                                           $     68,323     $     72,049      $     60,501
Lupin                                                                37,194           34,722            22,883
Kettle River                                                          9,166           15,555            20,131
McCoy/Cove                                                           13,453           53,015            69,920
------------------------------------------------------------------------------------------------------------------
Total operating costs per financial statements                 $    128,136     $    175,341      $    173,435
==================================================================================================================

Royalties                                                              2002             2001              2000
------------------------------------------------------------------------------------------------------------------
Round Mountain (50%)                                           $      7,618     $      6,880      $      5,585
Kettle River                                                            140              504             1,221
McCoy/Cove                                                               41              213             1,228
------------------------------------------------------------------------------------------------------------------
Total royalties per financial statements                       $      7,799     $      7,597      $      8,034
==================================================================================================================

Depreciation and amortization                                          2002             2001              2000
------------------------------------------------------------------------------------------------------------------
Round Mountain (50%)                                           $     21,578     $     20,570     $      18,978
Lupin                                                                 5,112            5,226             4,874
Kettle River                                                          2,508            2,011             2,637
McCoy/Cove                                                            4,519           12,638            21,539
Depreciation of non-minesite assets                                   1,554            1,656             2,636
------------------------------------------------------------------------------------------------------------------
Total depreciation and amortization per financial  statements  $     35,271     $     42,101     $      50,664
==================================================================================================================

Total assets                                                           2002             2001
-----------------------------------------------------------------------------------------------
Minesites:
     Round Mountain (50%)                                      $    101,633     $    110,864
     Lupin                                                           24,166           31,199
     Kettle River                                                     1,506            5,351
     McCoy/Cove                                                       7,832           21,256
Development properties:
     Aquarius                                                        43,312           44,048
Non-minesite assets                                                  45,241           48,086
-----------------------------------------------------------------------------------------------
Total assets                                                   $    223,690     $    260,804
===============================================================================================
</TABLE>

                                       70
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

<TABLE>
<CAPTION>

Capital expenditures                                            2002              2001             2000
----------------------------------------------------------------------------------------------------------
<S>                                                      <C>               <C>              <C>
Round Mountain (50%)                                     $     8,589       $    15,033      $     4,620
Lupin                                                          2,443             2,622            4,642
Kettle River                                                   1,584             4,150            1,402
McCoy/Cove                                                        12             1,002              670
----------------------------------------------------------------------------------------------------------

Deferred (applied) mining expenditures                          2002              2001             2000
----------------------------------------------------------------------------------------------------------
Round Mountain (50%)                                     $    (3,419)      $    (5,323)     $       411
Lupin                                                          1,091             1,452              449
McCoy/Cove                                                        --            (2,247)          (5,062)
----------------------------------------------------------------------------------------------------------

Financial information regarding geographic areas is set out below.

                                                                2002              2001             2000
----------------------------------------------------------------------------------------------------------
Revenue:
   Canada                                                $    41,420       $    53,160      $    44,370
   United States                                             165,109           184,524          236,606
----------------------------------------------------------------------------------------------------------
Total revenue                                            $   206,529       $   237,684      $   280,976
==========================================================================================================

                                                                2002              2001
----------------------------------------------------------------------------------------
Assets:
   Canada                                                $    88,679       $   108,824
   United States                                             134,686           150,089
   Other                                                         325             1,891
----------------------------------------------------------------------------------------
Total assets                                             $   223,690       $   260,804
========================================================================================
</TABLE>

16.    HEDGING ACTIVITIES AND COMMITMENTS
The Company periodically 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.

Credit risk is the risk that a counterparty might fail to fulfill its
performance obligations under the terms of a derivative contract. The Company's
credit risk related to all hedging activities is limited to the unrealized gains
on outstanding contracts based on current market prices. The Company minimizes
its credit risk by entering into transactions with large credit-worthy financial
institutions, limiting the amount of its exposure to each counterparty, and
monitoring the financial condition of its counterparties. 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.

                                       71
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted


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
As at December 31, 2002, the Company has no outstanding commitments relating to
precious metals.

CURRENCY POSITION
At December 31, 2002, the Company had an obligation under foreign currency
exchange contracts to purchase C$45.1 million in 2003 at an exchange rate of
C$1.61 to U.S.$1.00.

Shown below are the carrying amounts and estimated fair values of the Company's
outstanding hedging instruments at December 31, 2002 and 2001.

<TABLE>
<CAPTION>
                                                            December 31, 2002                    December 31, 2001
                                            -----------------------------------  ------------------------------------
                                                    Carrying         Estimated           Carrying         Estimated
                                                      Amount  Fair Value                   Amount  Fair Value
-------------------------------------------------------------------------------  ------------------------------------
<S>                                             <C>               <C>                <C>               <C>
   Gold forward sales                           $         --      $         --       $         --      $      2,000
   Gold options - calls sold                              --                --               (630)             (700)
   Foreign currency contracts                             --               100                 --               100
-------------------------------------------------------------------------------  ------------------------------------
                                                                  $        100                         $      1,400
===============================================================================  ====================================

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 a U.S.$ 0.01 change in
the exchange rate for Canadian would be approximately $0.5 million.

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.

                                                                 2002                2001                 2000
------------------------------------------------------------------------------------------------------------------
Revenue:
   Gold loans and swaps                                    $       --          $      703           $    1,289
   Gold forward sales                                           7,119              22,245               25,754
   Silver forward sales                                            --               3,426                3,333
   Gold and silver options                                       (995)               (402)                (506)
Operating costs:
   Foreign currency contracts                                    (824)             (2,113)              (1,179)
------------------------------------------------------------------------------------------------------------------
                                                           $    5,300          $   23,859           $   28,691
==================================================================================================================
</TABLE>


                                       72
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

17.    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. For
the period from the date that the royalty commenced through December 31, 2002,
cumulative royalties of $33.1 million have been paid.

A portion of production from the 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 $1.4 million in rental expense in 2002, net of $1.8 million
in rental income related to office subleases. The Company's commitments under
the remaining terms of the leases are approximately $4.7 million, payable as
follows: $1.6 million in 2003, $1.5 million in 2004, $1.0 million in 2005, $0.1
million in 2006, $0.1 million in 2007 and $0.4 million thereafter.

SUMMA
In September 1992, Summa Corporation commenced a lawsuit against two indirect
subsidiaries of the Company, Echo Bay Exploration Inc. and Echo Bay Management
Corporation (together the "Subsidiaries") alleging improper deductions in the
calculation of royalties payable over several years of production at McCoy/Cove
and another mine, which is no longer in operation. 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, judgment was rendered for the Subsidiaries. The
decision was appealed by Summa to the Supreme Court of Nevada, which in April
2000 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 Subsidiaries
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 defences and arguments put forth by the Subsidiaries. The Subsidiaries
filed a petition for a hearing before the full Supreme Court and on December 22,
2000, the Court recalled its previous decision. Both the Subsidiaries and their
counsel believe that grounds exist to modify or reverse the decision. The
Company has $1.5 million accrued related to this litigation. If the appellate
reversal of the trial decision is maintained and the trial court, on remand,
were to dismiss all of the Subsidiaries' defences, the royalty calculation at
McCoy/Cove would change and additional royalties would be payable. Neither the
Company, nor counsel to the Subsidiaries believe it is possible to quantify the
precise liability pursuant to a revised royalty calculation.

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 filed a
claim for gold and silver accounts at this refining facility with an estimated
market value of approximately $2.2 million at the time the shipments were made.
The

                                       73
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

Company has fully provided for this amount as unrecoverable including a
charge of $1.5 million in 2002. Further, in March 2002, the liquidating trustee
for Handy & Harman commenced a series of adversary proceedings against numerous
creditors, including two Company subsidiaries, alleging that certain creditors
received preferential payments in metal or otherwise. The preferential payment
claims against the Company's subsidiaries approximate $9.0 million. The ultimate
amount recoverable or payable will depend on the success or failure of the
liquidating trustee in prosecuting these claims. The ultimate percentage payout
by the liquidating trustee will also be affected by the success or failure of
the trustee in prosecuting preferential payment claims against all creditors.
The trustee currently projects the ultimate distribution of funds to be 50% to
60% of amounts owed to creditors. Based on this range, the maximum liability to
the Company would be $3.4 million assuming a 50% payout to creditors and no
success in defending any of the preferential payment claims while the maximum
amount recoverable would be $1.3 million assuming a 60% payout to creditors and
success in defending itself against all of the preferential payment claims. The
Company intends to oppose the preferential payment claims vigorously. The
outcome of these proceedings is uncertain at this time. As such, the Company has
not made any provision with respect to the preferential payment claims.

OTHER
In November 2001, two former employees of the Corporation brought a claim
against the Company pursuant to the CLASS PROCEEDINGS ACT (British Columbia) as
a result of the temporary suspension of operations at the Company's Lupin mine
in the spring of 1998 and the layoff of employees at that time. The Company does
not know at this time the amount being claimed by the former employees nor
whether the claim is appropriate for certification as a class action. On August
12, 2002, the Supreme Court of British Columbia decided it had such
jurisdiction. The Company is appealing the decision. No determination has been
made by this Court as to whether this action is suitable for certification as a
class action and no decision has been rendered with respect to the merits of the
action.

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. The McCoy/Cove complex and the associated reclamation obligation was
conveyed to a subsidiary of Newmont on February 7, 2003 as described in note 18.
The regulatory request, relevant to operations at Round Mountain, seeks
replacement security of approximately $16 million to bring the total to
approximately $22 million, the Company's 50% share. The Company disagrees with
the regulators' position and believes that the subsidiary qualifies 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.

18.    SUBSEQUENT EVENTS

(A)  BUSINESS COMBINATION
On June 10, 2002, the Company, Kinross Gold Corporation ("Kinross") and TVX Gold
Inc. ("TVX") announced they had entered into an agreement providing for the
proposed combination of the companies (the "Kinross Combination"). In a
concurrent transaction, TVX agreed to acquire from Newmont Mining

                                       74
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

Corporation ("Newmont") the interest in the TVX Newmont Americas joint venture
that it did not already own. The combination of the companies was conditional
upon the completion of this purchase. On January 31, 2003 the purchase from
Newmont and the proposed combination were completed. As such, shareholders of
Echo Bay (other than Kinross) received 0.1733 of a Kinross common share for each
Echo Bay common share after giving effect to a one-for-three share consolidation
of the outstanding common shares of Kinross immediately prior to the
combination. As a result, the Company and its subsidiaries are now wholly-owned
subsidiaries of Kinross. Common shares of the Company were delisted from the
Toronto and American Stock Exchanges and outstanding warrants are exercisable
for Kinross common stock as described in note 12.

(B)  DISPOSITION OF MCCOY/COVE
On June 9, 2002, Echo Bay Exploration Inc. and Echo Bay Minerals Company, two
subsidiaries of the Company, entered into an asset purchase agreement with
Newmont USA, a subsidiary of Newmont, providing for the conveyance of the
McCoy/Cove complex in Nevada, U.S.A.. The agreement replaces a letter agreement
dated February 13, 2002 related to the conveyance of the McCoy/Cove complex
which called for a payment to the seller of $6 million and the assumption by
Newmont of all reclamation and closure obligations. Under the February 13, 2002
letter agreement, Newmont had no obligation to complete the transaction. Newmont
indicated it was willing to proceed with the conveyance of the McCoy/Cove
complex only if the Kinross Combination was completed and the cash payment was
eliminated. Accordingly, a new agreement was reached expressly containing these
two conditions. The closing of the transaction was subject to, among other
conditions, the completion of the Kinross Combination. The Kinross Combination
was completed January 31, 2003 and the McCoy/Cove assets were conveyed to
Newmont on February 7, 2003. In consideration, Newmont has agreed to assume all
liabilities and obligations relating to the reclamation or remediation required
for the McCoy/Cove complex.

(C)  NEW CREDIT FACILITY
On February 27, 2003, Round Mountain Gold Corporation, a wholly-owned subsidiary
of the Company along with Kinross and two of its wholly-owned subsidiaries ("the
Borrowers"), entered into a new syndicated credit facility. The new syndicated
credit facility has a maturity date of December 31, 2005 and a total committed
amount of $125.0 million. The primary purpose of the credit facility is to
enable the Borrowers to issue letters of credit to various regulatory agencies
to satisfy financial assurance requirements. Shares of Round Mountain Gold
Corporation along with various other assets of Kinross are pledged as collateral
for this facility.

                                       75
<PAGE>

                               ECHO BAY MINES LTD.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2002

     Tabular dollar amounts in thousands of U.S. dollars, except amounts per
                  share and per ounce or unless otherwise noted

                         QUARTERLY FINANCIAL HIGHLIGHTS
                                   (Unaudited)
                (millions of U.S. dollars except per share data)

                                          Net Earnings    Earnings (Loss)
                              Revenue           (Loss)         per Share
----------------------------------------------------------------------------
2002
First quarter               $    55.2        $     5.5         $    0.01
Second quarter (1)               54.6             (1.5)             (0.27)
Third quarter                    52.0              3.7               0.01
Fourth quarter (2)               44.7            (15.4)             (0.09)
----------------------------------------------------------------------------
Total                       $   206.5        $    (7.7)        $    (0.34)
============================================================================

2001
First quarter               $    64.5        $     3.8         $       --
Second quarter                   63.7             (0.4)             (0.03)
Third quarter                    58.5             (0.2)             (0.03)
Fourth quarter (3)               51.0             (8.9)             (0.10)
----------------------------------------------------------------------------
Total                       $   237.7        $    (5.7)        $    (0.16)
============================================================================

(1)  For the purposes of per share calculations, the equity portions of interest
     and the loss on the conversion of capital securities decreases the earnings
     attributable to common shareholders. See notes 7 and 12 to the consolidated
     financial statements.

(2)  The net loss in the fourth quarter of 2002 includes a provision for Lupin
     impaired assets of $7.0 million ($0.02 per share).

(3)  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.

                                       76
<PAGE>

                                    PART III


           ITEM 10-DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


EXECUTIVE OFFICERS AND DIRECTORS OF THE REGISTRANT
The executive officers and directors of the Company are listed below. In
connection with the Kinross Combination completed January 31, 2003, all of the
executive officers and directors of the Company were replaced by officers and
directors of Kinross, the Company's parent.

<TABLE>
<CAPTION>

Name and municipality of     Age    Director   Position with the Company and business experience within the last
residence                           since      five years
---------------------------------------------------------------------------------------------------------------------
<S>                          <C>    <C>        <C>
JOHN A. BROUGH (1)(2)        56     2003       President, Torwest Inc. (real estate development company)
Vero Beach, FL

ROBERT M. BUCHAN             55                Chief Executive Officer of the Company since January 31, 2003;
Toronto, ON                                    Chairman and Chief Executive Officer of Kinross since May 1993.

SCOTT A. CALDWELL (1)        46     2003       President of the Company since January 31, 2003; Executive Vice
Oakville, ON                                   President and Chief Operating  Officer of Kinross since April 2002;
                                               Senior Vice President of Surface Operations of Kinross from June
                                               1998 to April 2002; Vice President of Operations of Echo Bay from
                                               1996 to 1998.

JERRY W. DANNI               50                Vice President of the Company since January 31, 2003; Vice
Oakville, ON                                   President Environmental Affairs of Kinross since July 2000;  Vice
                                               President Environmental Affairs of Cyprus Climax Metals Company
                                               from 1994 to 1999.

CHRISTOPHER T. HILL (1)      42     2003       Treasurer of the Company since January 31, 2003; Vice President
Toronto, ON                                    Treasurer of Kinross since May 1998; Treasury Manager of Barrick
                                               Gold Corporation from 1994 to 1998.

JOHN M. H. HUXLEY (1)(2)     58     2003       Principal, Algonquin Power Corporation Inc. (power company)
Toronto, ON

JOHN A. KEYES (1)(2)         59     2003       Retired Mining Executive
The Woodlands, TX

BRIAN W. PENNY (1)           40     2003       Vice President of the Company since January 31, 2003; Vice President
Markham, ON                                    Finance and Chief Financial Officer of Kinross since May 1993.

SHELLEY M. RILEY             46                Corporate Secretary of the Company since January 31, 2003;
Toronto, ON                                    Corporate Secretary of Kinross since June 1993.
</TABLE>

(1) Director of the Company since January 31, 2003.
(2) Member of the Audit Committee.


                                       77
<PAGE>

                         ITEM 11-EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE
The table below shows the compensation of the Chief Executive Officer and the
next four most highly compensated executive officers for each of the Company's
last three completed fiscal years or, where an individual was not an executive
officer for the last three completed fiscal years, for those years in which the
individual was an executive officer.

<TABLE>
<CAPTION>
----------------------------------- ----------- ----------------------------------- ---------------------------------
Name/Principal Position             Year                 Annual Compensation             All Other Compensation
                                                -----------------------------------             (U.S.$)
                                                      Salary           Bonus
                                                     (U.S.$)          (U.S.$)
----------------------------------- ----------- ---------------- ------------------ ---------------------------------
<S>                                 <C>         <C>              <C>                             <C>
Robert L. Leclerc                   2002        350,000          459,654                         24,400 (1)
Chairman and                        2001        350,000          299,675                         24,000
Chief Executive Officer             2000        350,000          248,535                         23,000
----------------------------------- ----------- ---------------- ------------------ ---------------------------------
Jerry L. J. McCrank                 2002        185,000          306,436                         11,119 (2)
Vice President,                     2001        185,000          170,088                         11,100
Operations                          2000        165,000          144,979                          9,900
----------------------------------- ----------- ---------------- ------------------ ---------------------------------
Tom S. Q. Yip                       2002        185,000          306,436                         11,000 (2)
Vice President, Finance             2001        185,000          170,088                         10,200
and Chief Financial Officer         2000        165,000          144,979                          7,512
----------------------------------- ----------- ---------------- ------------------ ---------------------------------
Lois-Ann L. Brodrick                2002        175,000          306,436                         10,515 (2)
Vice President                      2001        175,000          170,088                         10,558
and Secretary                       2000        150,000          144,088                          9,000
----------------------------------- ----------- ---------------- ------------------ ---------------------------------
David A. Ottewell                   2002        125,000           37,694                          7,394 (2)
Controller                          2001        125,000           40,847                          7,500
                                    2000        105,000           34,233                          6,300
----------------------------------- ----------- ---------------- ------------------ ---------------------------------
</TABLE>

(1)  Represents the annual employer contributions to the Company's retirement
     savings and defined contribution plans ($21,000) and total fees paid for
     attendance at meetings of the Board of Directors ($3,400).

(2)  Represents the annual employer contributions to the Company's retirement
     savings and defined contribution plans.

(3)  There were no share option awards by the Company to any of its directors,
     officers or employees in 2000, 2001 and 2002.


     ITEM 12-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 26, 2003, based upon information available to the Company, the
following shareholder was the beneficial owner of more than five percent of the
common shares:

<TABLE>
<CAPTION>
------------------ -------------------------------------- ---------------------------------------- -------------------
Title of Class     Name and Address of Beneficial Owner   Amount and Nature of Beneficial          Percent of Class
                                                          Ownership
------------------ -------------------------------------- ---------------------------------------- -------------------
<S>                <C>                                    <C>                                      <C>
Common             Kinross Gold Corporation               541,272,675                              100.0 percent
                   52nd Floor, Scotia Plaza,
                   40 King Street West
                   Toronto, Ontario M5H 3Y2
------------------ -------------------------------------- ---------------------------------------- -------------------
</TABLE>

SECURITY OWNERSHIP OF MANAGEMENT
As of March 26, 2003, no equity securities of the Company were owned by any of
the Company's executive officers or directors.

EQUITY COMPENSATION PLANS
As a result of the Kinross Combination that became effective January 31, 2003,
all equity compensation plans of the Company were terminated. The Company does
not currently have any plans to offer equity-based compensation to its
directors, officers and employees.

                                       78
<PAGE>

             ITEM 13-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

INDEBTEDNESS OF MANAGEMENT
The Company had made loans available to certain persons employed by the Company
or an affiliate to assist with employee relocation. The loans were for five
years with an interest rate of nine percent per annum but for the first three
years the interest is rebated to the employee. At the end of three years,
interest at the lower of nine percent or the applicable federal rate for
short-term loans determined pursuant to the U.S. Internal Revenue Code will be
payable monthly until maturity. The three year period covering the interest
rebate ends September 9, 2003. The Company expects that the loan will be repaid
prior to this date.

The following table shows, in United States dollars, the particulars of
indebtedness by officers in excess of U.S.$60,000 for the period January 1, 2002
to March 26, 2003.

<TABLE>
<CAPTION>
----------------- ------------ ------------------ -------------------------- --------------------------- -------------
Name              Capacity     Nature of loan     Maximum balance in period  Balance outstanding at      Interest
                                                                             March 26, 2003              rate
----------------- ------------ ------------------ -------------------------- --------------------------- -------------
<S>               <C>          <C>                <C>                        <C>                         <C>
R. L. Leclerc     Chairman     Housing            $140,134                   $140,134                    9.0 percent
----------------- ------------ ------------------ -------------------------- --------------------------- -------------
</TABLE>

                         ITEM 14-CONTROLS AND PROCEDURES

Within the 90 days prior to the filing of this Form 10-K, an evaluation was
performed under the supervision and with the participation of our management,
including the Chief Executive Officer and the Vice President and Principal
Accounting Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on that evaluation, our management,
including the Chief Executive Officer and Vice President and Principal
Accounting Officer, concluded that our disclosure controls and procedures were
effective. There have been no significant changes in our internal controls and
procedures or in other factors that could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.


                                       79
<PAGE>

                                     PART IV

                ITEM 15-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.

<TABLE>
<CAPTION>
                                                                                    PAGE
<S>                                                                                 <C>
Management's Responsibility For Financial Reporting..................................45
Report Of Independent Chartered Accountants..........................................46
Consolidated Balance Sheets..........................................................47
Consolidated Statements Of Operations................................................48
Consolidated Statements Of Deficit...................................................48
Consolidated Statements Of Cash Flow.................................................49
Notes to Consolidated Financial Statements...........................................51
</TABLE>

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 consolidated financial statements or notes
     thereto.

3.   Exhibits required to be filed by Item 601 of Regulation S-K
     Exhibits 2.2, 3.2, 3.3, 3.4 and 24 are filed herewith. All other exhibits
     are incorporated by reference as indicated below.

     Exhibit
        No.   Exhibit Description
       ---    -------------------

       2.1    Combination Agreement, dated as of the 10th day of June 2002,
              among Kinross Gold Corporation, TVX Gold Inc. and Echo Bay Mines
              Ltd. (incorporated herein by reference to Exhibit 2.1 to the
              report of the Registrant on Form 8-K dated June 11, 2002).

       2.2    Plan of Arrangement, dated January 31, 2003, with respect to the
              Kinross Combination.

       3.1    Restated Articles of Incorporation of the Registrant (incorporated
              herein by reference to Exhibit 3(a) of Registration Statement No.
              2-84687).

       3.2    Articles of Amendment, dated January 31, 2003, to amend the
              location of the registered office.

       3.3    Articles of Arrangement, dated January 31, 2003, with respect to
              the Kinross Combination.

       3.4    By-laws of the Registrant, as amended, dated January 31, 2003.

       4.1    Shelf registration statement, as amended, dated February 12, 1998
              (incorporated herein by reference to Registration Statement
              333-35857 and amendments thereto).

                                       80
<PAGE>

       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).

       4.2    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).

       4.3    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).

       24     Power of Attorney.

       99.1   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
              2002

(b)    Reports on Form 8-K

                                       81
<PAGE>

                                   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 M. Buchan
                                       -----------------------------------------
                                       Robert M. Buchan, Chief Executive Officer

                                     Date:  March 26, 2003

       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.

<TABLE>
<CAPTION>
<S>                        <C>                                                  <C>
Signatures                          Capacity in Which Signed                    Date
----------                          ------------------------                    ----

/s/ Robert M. Buchan       Chief Executive Officer (Principal Executive         March 26, 2003
-----------------------    Officer)
Robert M. Buchan


/s/ Scott A. Caldwell      President and Director                               March 26, 2003
-----------------------
Scott A. Caldwell


/s/ Brian W. Penny         Vice-President (Chief Financial Officer and          March 26, 2003
-----------------------    Principal Accounting Officer) and Director
Brian W. Penny


/s/ Christopher T. Hill    Treasurer and Director                               March 26, 2003
-----------------------
Christopher T. Hill


/s/ John A. Brough         Director                                             March 26, 2003
-----------------------
John A. Brough


/s/ John M. H. Huxley      Director                                             March 26, 2003
-----------------------
John M. H. Huxley


/s/ John A. Keyes          Director                                             March 26, 2003
-----------------------
John A. Keyes
</TABLE>


                                       82
<PAGE>

                                 CERTIFICATIONS
I, Robert M. Buchan, certify that:

1. I have reviewed this annual report on Form 10-K of Echo Bay Mines Ltd.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c)
presented in this annual report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;

5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

March 26, 2003                                     /s/_________________________
                                                   Robert M. Buchan
                                                   Chief Executive Officer


                                       83
<PAGE>

                                 CERTIFICATIONS

I, Brian W. Penny, certify that:

1. I have reviewed this annual report on Form 10-K of Echo Bay Mines Ltd.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

March 26, 2003                                       /s/________________________
                                                     Brian W. Penny
                                                     Vice President

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