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

                                   FORM 20F

            ANNUAL REPORT PURSUANT TO SECTION 12(g) OF THE SECURITIES
                  EXCHANGE ACT OF 1934 OF A FOREIGN CORPORATION

                                 March 31, 2000

                        LEADER MINING INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

                          Commission File no 000-26447

                     Alberta, Canada                        (N/A)
             (State or other jurisdiction              (I.R.S. Employer
             of incorporation or organization)         Identification No.)

           400 Fifth Avenue, S.W., Suite 810, Calgary, Alberta T2POL6
               (Address of principal executive offices) (Zip Code)

                                 (403) 234-7501
               Registrant's telephone number, including area code

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

                  Title of each class to be so registered: None

       Name of each exchange on which each class is to be registered: None

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

                  Title of class
                  Common                    Unlimited Shares of Common Stock

A total of  18,118,565  shares of common  stock of  Registrant  were  issued and
outstanding  as of March 31,  2000.  No other  classes of stock were  issued and
outstanding.

Indicated  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      No  X

Indicate by check mark which financial statement item the Registrant has elected
to follow:  Item 17 __X__   Item 18 ______

                                       1
<PAGE>


                                TABLE OF CONTENTS
                                     PART I


                                                                            Page

Item 1.           Description of Business......................................8

Item 2.           Description of Property......................................8

Item 3.           Legal Proceedings...........................................20

Item 4.           Security Ownership of Certain Beneficial Owners
                  and Management (Control of Registrant)......................21

Item 5.           Nature of Trading Market
                  Market Price of and Dividends on
                  Registrants Common Equity and
                  Related Stockholder matters.................................22

Item 6.           Exchange Controls and Other Limitations Affecting Security
                  Holders.....................................................22

Item 7.           Taxation....................................................23

Item 8.           Selected Financial Information..............................24

Item 9.           Management Discussion and Analysis..........................26
                   of Financial Condition and Results of Operations

Item 10.          Directors and Executive Officers ...........................34

Item 11.          Compensation of Officers and Directors......................38

Item 12.          Options to Purchase Securities from Registration or
                  Subsidiaries................................................40

Item 13.          Interest of Management in Certain Transactions..............40

Item 14.          Description of Securities ..................................43

Item 15.          Defaults upon Senior Securities.............................44

Item 16.          Changes in Securities, Changes in Security for Registered
                  Securities..................................................44

Item 17.          Financial Statements........................................44

Item 18.          Financial Statements (Not applicable) ......................44

                                       2
<PAGE>


Item 19.          Financial Statements, Exhibits, and Supplementary Data .....44

                           Exhibit Index......................................46

                           Signatures.........................................45


                                       3
<PAGE>

                                    GLOSSARY

INDUSTRY DEFINITIONS

Alteration Zone:         an  area  of  distinct  mineralization  where  there is
                         evidence of physical or chemical change in the minerals
                         subsequent to their formation.

Anticipated Resources:   expected to  be  found  within  a  specified  property,
                         mining camp,  or other area,  which  is  restricted  by
                         local  geologic  conditions  or  property  boundaries -
                         Canadian  Institute of Mining, Metallurgy and Petroleum
                         (CIM),   Ad  Hoc  Committee  Report  entitled  "Mineral
                         Resource/Reserve      Classification:       Categories,
                         Definitions and Guidelines" - February 1996.

Base Metals:             metals other  then gold,  silver,  mercury and platinum
                         group.

Commercial Production:   Operation of a  mineral prospect or any part thereof as
                         a mine but does not include  milling for the purpose of
                         testing or milling by a pilot plant.

Diamond Drilling:        coring of  rock by  a boring  machine  that uses a ring
                         shaped bit in which chips of diamond  are set to obtain
                         samples for observation or sampling.

Domain:                  A region distinctively marked by some common geological
                         feature.

Electro-magnetic:        Geophysical prospecting  technique that uses the inter-
                         relation of electricity and magnetism.

EM:                      Electro-magnetic

Geochemical Prospecting: The  search    for   mineral   deposits,   particularly
                         metalliferous  deposits,  by  analyzing  rocks,  stream
                         silts, springs, soils,  surface water or  organisms for
                         abnormal concentrations of elements.

Geochemistry:            The study of the abundances of elements and isotopes in
                         the earth,  and the  distribution  and migration of the
                         individual elements in the  various  parts of the earth
                         (the  atmosphere,  hydrosphere,  crust, etc.) with  the
                         object   of  discovering  principles   governing   such
                         distribution and migration.

Geophysical Prospecting: Advanced prospecting  based on measurement  of physical
                         properties of rocks and minerals.
                                       4
<PAGE>

Geophysics:              The science of  the physics of the earth, including its
                         atmosphere and hydrosphere.

Grade:                   Concentration of  desired  metal contained  within  one
                         tonnne of mineralized rock.

Hypothetical Resources:  those  expected  to  be  present  because of favourable
                         geology and known mineralization  within a general area
                         limited  by   specified   political,  physiographic  or
                         geologic  boundaries  -  Canadian Institute of  Mining,
                         Metallurgy and Petroleum (CIM), Ad Hoc Committee Report
                         entitled   "Mineral  Resource/Reserve   Classification:
                         Categories, Definitions and Guidelines - February 1996.

Indicated Resource:      the estimated quantity  and grade of  part of a deposit
                         for which the continuity  of grade,  together with  the
                         extent  and  shape,  are so  well  established  that  a
                         reliable  grade  and  tonnage  estimate  can  be  made.
                         Fundamental to  the  indicated  resource  class is well
                         established geological information on the continuity of
                         the mineralized  zones - Canadian  Institute of Mining,
                         Metallurgy and Petroleum (CIM), Ad Hoc Committee Report
                         entitled   "Mineral  Resource/Reserve   Classification:
                         Categories,  Definitions  and  Guidelines"  -  February
                         1996.

Inferred Resource:       the estimated  quantity  and  grade of  a deposit, or a
                         part  thereof,  that  is  determined  on  the  basis of
                         limited sampling, but for  which  there  is  sufficient
                         geological information  and a reasonable  understanding
                         of the continuity and distribution of  metal  values to
                         outline  a  deposit   of  potential  economic  merit  -
                         Canadian Institute of Mining,  Metallurgy and Petroleum
                         (CIM),  Ad  Hoc   Committee  Report  entitled  "Mineral
                         Resource/Reserve      Classification:       Categories,
                         Definitions and Guidelines" - February 1996.

Measured Resource:       the estimated  quantity  and  grade of  that  part of a
                         deposit for  which the  size,  configuration, and grade
                         have been  very well  established  by  observation  and
                         sampling of outcrops, drill  holes,  trenches  and mine
                         workings.  -  Canadian  Institute of Mining, Metallurgy
                         and Petroleum (CIM), Ad  Hoc Committee  Report entitled
                         "Mineral Resource/Reserve  Classification:  Categories,
                         Definitions and Guidelines" - February 1996.

Mineral:                 A  naturally occurring  inorganic  element  or compound
                         with a characteristic external structure as a result of
                         a fixed internal arrangement of atoms or ions.

Mineral Deposit:         a  body  of  rock  containing  metals  or  minerals  of
                         commercial  interest  which  has  been  by a sufficient
                         number  of  drill  holes  tested  to support sufficient
                         tonnage  and  average  grade  of  metal(s)  to  warrant
                         further exploration. This deposit does not qualify as a
                         commercially minable ore body,  until  a  comprehensive
                         economic, feasibility study based upon the test results
                         is concluded.

Mineral Prospect:        A mineral occurrence  that has some potential  of being
                         of mineable size and mineral content.

Mineral Resource:        a deposit or concentration of natural, solid, inorganic
                         or fossilized organic substance in such quantity and at
                         such a grade or quality that extraction of the material
                         at  a  profit  is  currently  or potentially possible -
                         Canadian Institute of Mining,  Metallurgy and Petroleum
                         (CIM),  Ad  Hoc  Committee   Report  entitled  "Mineral
                         Resource/Reserve       Classification:      Categories,
                         Definitions and Guidelines" - February 1996.

                                       5
<PAGE>

Net Smelter Royalty:     the  right  to  an  amount equal to a percentage of the
                         gross sales proceeds received from the sale of minerals
                         obtained from a property  less  the  smelting costs and
                         the costs of handling,  transporting  and  insuring the
                         production from the mine to a treatment facility.

Operator:                Party  responsible   for   performing   the  activities
                         necessary or desirable to explore,  develop, or perform
                         work on  a  property  or  any part thereof on behalf of
                         another party.

Ore:                     a natural aggregate of one or more minerals which, at a
                         specified time  and place,  may  be mined and sold at a
                         profit,  or from  which  some  part  may  be profitably
                         separated.

Pegmatite:               Coarsely crystalline  rock  of plutonic  or replacement
                         origin,  generally  forming   dykes,  sills,  or  small
                         irregular masses.

Precious Metals:         Gold and silver only

Prospecting:             Searching and examining outcrops,  soil, and gravel for
                         indications of valuable minerals.

Strata-bound deposit:    A concordant or  transcurrent mineral deposit occurring
                         in stratified  sedimentary,  volcanic,  or  metamorphic
                         rocks, not necessarily formed at  he  same time  as the
                         strata.

Sulphide:                A compound of sulphur with another element.

Tonne:                   a unit of weight measurement equal to 2204 pounds.

Volcanics:               Rock  that solidified  or  crystallized at surface from
                         hot, molten, or partly molten mass or magma.

Volcanogenic Massive
Sulphide Deposit:        Concordant,  strata-bound  sulphide  deposit   commonly
                         associated  with   volcanic  rocks   or   volcanic  and
                         sedimentary rock sequences.

VMS:                     Volcanogenic massive sulphide

                                       6
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

(a)  The Company

Leader Mining  International  Inc.  ("Leader,"  "Company," or "Registrant")  was
incorporated  on June 22,  1987 as Durga  Resources  Ltd.  ("Durga"),  under the
Business  Companys Act (Alberta).  By a Certificate of Amalgamation  dated March
31, 1993 Durga amalgamated with Durvada Resources Ltd. and resulted in new Durga
Resources Ltd. By a Certificate  of Amendment  dated  September 24, 1993,  Durga
changed its name to Leader Mining Company ("LMC"). By a Certificate of Amendment
dated July 18, 1994. It  consolidated  its shares (reverse split) in 1994 by one
for five shares. LMC changed its name to the Leader Mining International Inc.

The Registrant was listed on the Alberta Stock Exchange on December 18, 1987.

Leader is  extraprovincially  registered  in the Province of  Saskatchewan  by a
Certificate  of  Registration  dated  November  21,  1996,  under  The  Business
Corporations Act (Saskatchewan) and in the Province of Manitoba by a Certificate
of Registration  dated November 20, 1996,  under The Business  Corporations  Act
(Manitoba).

The  registered  office of the Company in Alberta is at 400 Fifth Avenue,  S.W.,
Suite 810, Calgary,  Alberta, T2P 0l6. The head office and records office of the
Corporation is at 810, 400-5th Avenue S. W., Calgary, Alberta, T2P 0L6.

The Company is a reporting  company in the  Province of British  Columbia and in
the  Province of  Alberta.  The  Corporation's  shares are listed and posted for
trading on the  Canadian  Venture  Exchange  (CDNX)  under the symbol  "LMN" and
quoted on the NASD under the symbol "LDRMF."

The Company was formed by Mr. Yashvir (Jasi) Nikhanj,  the current President and
a director,  to pursue the principal  business of exploring for gold, silver and
base metal  deposits.  There is no assurance that a commercially  viable mineral
deposit or reserve  exists on any of its property  until further  exploration is
done and a comprehensive  engineering  feasibility evaluation based on such work
is performed which concludes economic and legal viability.

From 1987 to 1999,  the  Company was  engaged in mineral  exploration  for gold,
copper, zinc and diamonds in the Northwest Territories and Saskatchewan, Canada.
The Company was also exploring for gold in the state of Nevada.  The Company had
minimal capitalization during such period, and its activities were very limited.

The  Company's  strategy  with  respect  to  its  mineral   exploration  related
activities  is to identify  geological  areas in which the Company may invest or
participate in non-producing or producing  mineral  prospects or joint ventures,
and where the company may acquire  mineral  prospects  for  exploration  through
staking claims.

                                       7
<PAGE>


During  the last  five (5)  fiscal  years,  the  Company  conducted  exploration
activities on certain mineral prospects as follows:

Voisey's Bay; Labrador,  Canada, 1998.  Approximately  $55,000 expended for land
acquisition  and  prospecting  and ground  geophysics to explore for prospective
nickel deposits. No further work is planned.

Ariel Resources  Ltd.;  Costa Rica,  1998.  Approximately  $250,000  expended to
perform  due  diligence  and  technical  feasibility  studies to  ascertain  the
viability of corporate merger. No further work is planned.

Nighthawk Lake; Ontario, Canada, 1996-1998.  Approximately $275,000 expended for
land acquisition and  prospecting;  ground  geophysics;  and diamond drilling to
test prospective gold targets. No further work is planned.

Bristol;  Ontario, Canada,  1996-1997.  Approximately $125,000 expended for land
acquisition and  prospecting;  ground  geophysics;  and diamond drilling to test
prospective gold targets. No further work is planned.

Steephill Lake;  Saskatchewan Canada, 1997.  Approximately $300,000 expended for
land acquisition and prospecting;  airborne geophysics;  and diamond drilling to
test prospective base metal targets. No further work is planned.

Nettogami Lake; Ontario, Canada, 1996. Approximately $1,278,000 expended on land
acquisition  and  prospecting,  airborne  and  ground  geophysics,  and  diamond
drilling to test prospective base metal targets. No further work is planned.

Merendon Mining Corporation; Honduras, 1996. Approximately $750,000 expended for
land  acquisition,  due  diligence,  and  technical  studies  to  ascertain  the
attractiveness of venture participation. No further work is planned.

Blower  Investments  AVV and Condor  Resources  AVV; Peru,  1996.  Approximately
$430,000 expended for land acquisition,  due diligence, and technical studies to
ascertain  the  attractiveness  of venture  participation.  No  further  work is
planned.

Rioux Lake; Saskatchewan,  Canada, 1994-1995. Approximately $50,000 expended for
geological  and  geochemical   surveys  to  identify   polymetallic  base  metal
opportunity. No further work is planned.

                                       8
<PAGE>


Candle Lake; Saskatchewan, Canada, 1994. Prospective diamond claims acquired. No
further work is planned.

KARMEL,  ORANGE  FREE  STATE,  REPUBLIC  OF SOUTH  AFRICA,  1999.  Approximately
$185,000 was expended for land acquisition, airborne geophysic survey and ground
follow-up to explore prospective diamond bearing kimberlite targets. Prospecting
permits could not be obtained and this prospect has been  abandoned and expenses
written off.

The Company hires  third-party  companies to conduct drilling,  testing,  and to
provide  services and evaluation on a negotiated  contract basis,  except that a
company, Nikhanj and Associates Geo Consulting, owned by the Company's President
and largest shareholder,  Y.S. (Jasi) Nikjanj provides  management,  geological,
and exploration consulting services to the Company for $10,000 per month.

The Company is not carrying any reserve  values on any prospects due to the lack
of any  quantifiable  reserves.  The Company  has not  earned any  revenue  from
operations to date, and it continues to be an exploration stage company.

(b) Current Business

The focus of the Company is to actively  pursue mineral  exploration to find and
outline mineral deposits in under-explored terrain within jurisdictions that are
politically  stable. The Company currently has one major prospect,  which is the
Knife Lake Project (located in Saskatchewan,  Canada). The property is comprised
of a mining lease and 55 mineral claims; of which the Company owns 100% interest
in the mining lease and 44 mineral claims, and can earn up to 90% interest in an
additional 11 mineral claims.

As of December 31, 1998, the Company has spent $7.3 million (Canadian) exploring
for base and  precious  metals  within  the  Scimitar  Complex  of  northeastern
Saskatchewan  and  outline the Knife Lake  copper  deposit.  Over the next three
years  expenditure of an additional  $3.3 million  (Canadian) is anticipated for
geological   reconnaissance   ground  geophysics,   drilling,   and  preliminary
engineering studies.

The Company is always  searching  for high  quality  exploration  opportunities,
which can be  acquired  at low cost.  Identification  of targets of  opportunity
represent  the  Company's  focus for growth,  and annual  expenditures  of $0.25
million  (Canadian) are anticipated for  examination,  acquisition,  and initial
testing of new projects.

Corporate  overhead is held to a minimum.  Expenditure  for office rent,  office
supplies,  travel,  and  administration  are expected to continue at the current
level of $0.7 million (Canadian) per year.

                                       9

<PAGE>
<TABLE>
<CAPTION>
A summary of the Company's proposed expenditures is presented below:

                                            CORPORATE EXPLORATION BUDGET
                                                 ($Canadian x 1000)
<S>                                                         <C>             <C>                 <C>                   <C>
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                Fiscal year, March 31                       2000            2001                2002                  Total
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                  Knife Lake Project
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
              Geological Reconnaissance                      300             100                 50                    450
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                      Geophysics                             300             100                 50                    450
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                       Drilling                              500             800                700                    2000
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                     Engineering                                             100                300                    400
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                      Sub-Total                             1,100           1,100              1,100                  3,300
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                 Opportunity Targets                         250             250                250                    750
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
             Overhead and Administration                     700             700                700                   2,100
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------
                 Grand Total (CAN $)                        2,050           2,050              2,050                  6,150
------------------------------------------------------- -------------- ---------------- --------------------- ---------------------

</TABLE>

The Company  intends to finance its proposed  expenditures  by selling up to 50%
interest in the Knife Lake Project to the Korea  Resources  Corporation for $5.2
million.  Additional cash requirements will be met via private placements of the
Company's  common shares to  sophisticated  investors,  under market  conditions
prevailing at that time. Failure to obtain sufficient funding in a timely manner
could result in delay or indefinite  postponement of further exploration work of
the Company's  prospects with the possible loss of  exploration or  exploitation
permits.

The Company's current business plan is in mineral exploration  including foreign
mineral joint ventures, in Canada, South Africa, and South/Central  America. The
Company has determined that it must build an asset base through exploration; and
acquisition  by  exchange  of stock for other  mineral  companies,  leases,  and
mineral  prospects  for  exploration  if the  opportunity  arises.  The  Company
believes  that debt will rarely be desirable to acquire any mineral  prospect or
company. The Company may acquire other assets by exchange of stock or cash.

The Company  has not  established,  and does not intend to  formally  establish,
criteria for the selection or evaluation of mineral prospects or participations.
When a  mineral  prospect  is  located  which  in  management's  opinion,  shows
favorable data to the Company, an attempt  will be made to secure an  option, or
lease,  for the  prospects.  Shareholder approval will not be sought for mineral
prospect  acquisitions.  Therefore,  shareholders  will be  dependent  upon  the
judgment of management in selecting  mineral  prospects (see  "Management").  If
such an interest is acquired, the Company will then expend funds for preliminary
exploration  and if  warranted  test  sample the mineral  prospect to  determine
whether any mineral deposit could qualify as a resource. Based on the results of
such preliminary testing, the Company will decide, without shareholder approval,
whether to acquire  or abandon  the  mineral  prospect.  A mineral  prospect  or
interest may be acquired by outright  purchase;  by earning an interest  through
participation  with other companies;  or by exchange of the shares for leases or
interests in mineral prospects.

                                       10
<PAGE>

The  Company  may  expend  funds to  explore or test any  mineral  prospects  it
acquires  to  determine  the  economic  feasibility,  if any,  of  such  mineral
prospects.  If, and only if, a mineral deposit appears to have been located will
further funds be expended to delineate the deposit. If a depostit is delineated,
then a  feasibility  analysis  will be conducted  to determine if a  development
attempt is warranted.  The Company will rely on its own  management  and outside
consultants  engaged for specific work on a limited basis,  mineral  prospect by
mineral prospect, to provide competent evaluation and recommendations concerning
mineral  prospects  or  interests  in mineral  prospects  to be  considered  for
acquisition or exploration.  The Company has agreements with several third party
companies for providing  specific limited services related to mineral prospects,
such as mapping,  geochemical,  sampling, or drilling. Based upon the results of
such exploration and tests, as interpreted by management,  the Company will then
determine whether such mineral  prospects should be acquired,  explored further,
sold or  leased  to a third  party,  held  for  possible  later  development  or
abandoned;  and whether  these  activities  should be  attempted  by the Company
either by itself or through joint venture or other  business  arrangements  with
other companies or entities.

The  Company  may agree to assign  rights in  certain  mineral  prospects  to be
explored to the general or managing  partner of a partnership  or joint venture,
which thereby becomes the owner of the working interest in the mineral prospect.
The  Company  may also  agree to  supervise  and manage  all  activities  on the
prospect and to obtain, through  subcontractors,  all necessary related services
and  equipment.  The Company  actively  reviews  mineral  prospects  for putting
together exploration joint ventures.

Parents and Subsidiaries

                  Parent                  LEADER MINING INTERNATIONAL, INC.

                  Subsidiaries            None.

The Company's  principal areas of exploration  are described  herein below under
"Description of Properties."

RISK FACTORS

"Penny Stock" Rule

Leader Mining's common stock is covered by a Securities and Exchange  Commission
rule that imposes  additional sales practice  requirements on broker-dealers who
sell these securities to persons other than established customers and accredited
investors,  generally  institutions  with  assets  in excess  of  $5,000,000  or
individuals  with net worth in excess of $1,000,000  or annual income  exceeding
$200,000 or $300,000 jointly with their spouse. For transactions  covered by the
rule, the  broker-dealer  must make a special suitability  determination for the
purchaser and transaction prior to the sale.  Consequently,  the rule may affect
the ability of  broker-dealers  to sell our  securities  and also may affect the
ability of purchasers of our stock to sell their shares in the secondary market.
It may also cause less broker-dealers willing to make a market and it may affect
the level of news coverage received by the Company.

                                       11
<PAGE>

Risks of Exploration

Resource  exploration  is a  speculative  business and involves a high degree of
risk. The marketability of natural resources which may be acquired or discovered
by the Company will be affected by numerous  factors  beyond its control.  These
factors  include  commodity  price and currency  volatility,  the  proximity and
capacity of natural  resource markets and processing  equipment,  and government
regulations  and  changes  thereto,  including  regulations  relating to prices,
taxes,  royalties,   land  tenure,  importing  and  exporting  of  minerals  and
environmental protection. In addition, few mineral exploration properties become
commercially viable mines, nor can there be any assurances that exploration work
carried out by the Company will be successful. The exact effect of these factors
cannot be accurately predicted,  but the combination of these factors may result
in the Company not receiving an adequate return on invested capital.

Resource Estimates

In  carrying on its mineral  exploration  activities,  the Company may rely upon
calculations  as to  prospective  resources  and  corresponding  grades  on  the
Company's prospects which, by their nature, are not exact. Until ore is actually
mined  and  processed,  ore  resources  and ore  grades  must be  considered  as
estimates  only.  The quantity of resources  will also vary depending on mineral
prices which have  historically been highly cyclical and dependent upon numerous
factors beyond the Company's  control including changes in investment trends and
international  monetary systems,  political events and changes in the supply and
demand for  minerals  on public and private  markets.  Any  material  changes in
reserves, grades or stripping ratios will affect the economic feasibility of any
mineral  prospects  which  might be  developed.  Further,  short term  operating
factors relating to the mineral prospect must be analyzed,  such as fule prices,
water availability,  climate/weather  conditions,  location in relation to labor
forces and transportation facilities.

Fluctuation of Mineral Prices

The Company's  exploration  activities  will be subject to the normal  commodity
risks that are subject to  fluctuations  in mineral  prices,  in particular  the
market price of the mineral to be sought.  The price of minerals has  fluctuated
widely in recent years and is affected by numerous  factors beyond the Company's
control including  international economic and political trends,  expectations of
inflation, interest rates, global or regional consumptive patterns,  speculative
activities and increased  production due to new mine  developments  and improved
mining  and  production  methods.  The  effect of these  factors on the price of
minerals cannot be accurately predicted.

Competition

The Company  competes  with major mining  companies  and other  smaller  natural
resources companies in the acquisition,  exploration,  financing and development
of new properties and projects.  Some of these  companies are more  experienced,
larger  and better  capitalised  than the  Company.  The  Company's  competitive
position will depend upon its ability to successfully and  economically  explore
acquire new and existing mineral resource properties or projects.  Factors which
allow  producers to remain  competitive in the market over the long term are the
quality  and  size of the  mineral  deposit,  if any,  cost of  production,  and
proximity to market.  Because of the number of companies and variables involved,
no  individual  or group  of  producers  can be  pointed  to as being in  direct
competition with the Company.

                                       12
<PAGE>

Capitalization and Commercial Viability

The Company has  limited  financial  resources  and there is no  assurance  that
additional funding would be available to the Company for further  exploration of
its properties or to fulfill its obligations  under any  applicable  agreements.
Although  the Company has been  successful  in the past in  obtaining  financing
through  the sale of  equity  securities,  there  can be no  assurance  that the
Company  will be able to obtain  adequate  financing  in the  future or that the
terms of such financing will be  favourable.  Failure to obtain such  additional
financing   could  result  in  delay  or  indefinite   postponement  of  further
exploration of the Company's  prospects with the possible loss of exploration or
exploitation permits.

The commercial  viability of a particular  mineral  prospect will be affected by
factors  that  are  beyond  the  Company's  control,  including  the  particular
attributes  of the deposit,  the  fluctuation  in mineral  prices,  the costs of
constructing and operating a mine,  processing  facilities,  the availability of
economic  sources  of  energy,   government  regulations  including  regulations
relating to prices, royalties, restrictions on production, quotas on exportation
of  minerals,  as  well  as the  costs  of  protection  of the  environment  and
agricultural lands.

It is impossible to assess with certainty the impact of these factors.

Uninsurable Risks

Exploration  generally involve a high degree of risk. Hazards such as unusual or
unexpected formations, power outages,  labour disruptions, flooding, explosions,
cave-ins,  landslides,  inability  to  obtain  suitable  or  adequate  machinery
equipment or labour and other risks are involved. The Company may become subject
to liability for pollution,  cave-ins or hazards  against which it cannot insure
or against which it may elect not to insure. The payment of such liabilities may
have a material, adverse effect on the Company's financial position.

Compliance with Governmental Regulations

The Company's  exploration  activities are subject to natural resource,  health,
labour  and  environmental  regulations,   changes  in  which  could  result  in
additional   expenses  and  capital   expenditures,   availability  of  capital,
competition, resource uncertainty, potential conflicts of interest, title risks,
dilution and restrictions  and delays in operations,  the extent of which cannot
be predicted.

Currency

All  transactions  are in  Canadian  dollars.  The  company  converts  any other
currency  used in a  transaction  into  Canadian  dollars as required to conduct
local  activities.  Accordingly,  the company maybe subject to foreign  currency
fluctuations,   and  such  fluctuations  may  materially  affect  the  Company's
financial position.

                                       13
<PAGE>

Location of Mineral Prospects

There are certain  political and economic risks inherent in the fact the Company
carries on business in foreign jurisdictions.  These include the risk of foreign
currency  restrictions  and  currency  fluctuations  as  well  as  the  risk  of
governmental intervention by way of expropriation of the Company's properties or
nationalization of the mining industry.  While the Company  pursue opportunities
in stable political climates in there is a risk that political instability could
adversely affect the Company's  operations.  In the Republic of South Africa the
marketing and sale of diamonds  recovered during exploration is regulated by the
Diamonds  Act  1986,  and the  impact  cannot  be  predicted  with any  absolute
certainty.

Conflicts of Interest

None of the directors and officers of the Company are also directors,  officers,
and  shareholders  of  other  companies  engaged  in  mineral   exploration  and
development. However, Manish Bindal is also a director of Canex Energy, Inc. and
Aspen Energy Corp., both of them are oil and gas exploration companies.

                                       14
<PAGE>


ITEM 2:  DESCRIPTION OF PROPERTIES

The Company owns no properties. It has mineral prospects which consist of mining
claims or contractual exploration agreements which may be evolved to development
if the Company so decides.  It holds such contracts in the name of Leader Mining
INternational, Inc. For all purposes in this description, Registrant is referred
to as "Leader."

Knife Lake Prospect, Saskatchewan, Canada

Location and History

The Knife Lake  Prospect is located in  northeastern  Saskatchewan  close to the
Manitoba border. Knife Lake itself is located in the southeastern portion of the
project area at latitude 55 degrees 54' N and  longitude  102 degrees 43' W. The
project  is  operated  from a  well-equipped  bush  camp on Knife  Lake,  136-km
north-northwest of Flin Flon, Manitoba (approximate population 7,600) and 180 km
northeast  of La Ronge,  Saskatchewan.  The  property,  whose NTS  reference  is
63-M-15E,  can be found on the Gilbert  Lake,  63M15 claim map,  available  from
Saskatchewan Energy, Mines and Resources in Regina.

Leader is the operator in all the option  agreements  covering all claims in the
project  area. It is currently  proceeding  with,  or making  preparations  for,
exploration it has planned or is required to do under the option agreements. All
the field exploration,  on all mineral lands in which Leader has, or is earning,
an interest and which are described in this summary is carried out for Leader by
its own field staff or contractors directly under its control.

The Knife Lake  prospect,  optioned by Leader from  CopperQuest,  Inc. in March,
1996,  initially  consisted  of mining  lease ML 5269.  It is 648 ha in size and
covers the known  copper  showing and soil  geochemistry  anomaly as well as the
projected extensions. During 1996 and 1997, additional claims were staked by the
Company.

In 1997, the Company fulfilled all of the earn-in requirements and acquired 100%
interest in the mining lease and staked claims.  CopperQuest  Inc.  retains a 2%
net smelter  royalty;  which becomes payable if and when  commercial  production
occurs from the aforesaid  claims.  Leader has the right to purchase one half of
this net  smelter  royalty  at any time for  $1,000,000.

In 1997, the Company optioned eleven claims from  Consolidated Pine Channel Gold
Corp.  The terms of the agreement were amended in 1999 so that Leader can earn a
90%  interest in these  claims by  spending  $500,000  over 6 years;  and paying
$1,000,000 in cash and 10,000 common shares of Leader.

                                       15
<PAGE>

Consolidated  Pine Channel  Gold Corp.  retains a 2% net smelter  royalty  which
becomes  payable if and when  commercial  production  occurs  from these  eleven
claims. Leader has the right to purchase one half of this net smelter royalty at
any time for $2,000,000.00.

All transactions  involving  Leader,  CopperQuest  Inc., and  Consolidated  Pine
Channel Gold Corp. have been arms-length.

On November 10, 1999 Leader  entered into a joint venture  agreement  with Kores
Canada Corp. a wholly owned  subsidiary of the Korea Resources  Corporation,  to
further  explore the Knife Lake Project.  Under the terms of the agreement Kores
Canada  Corp.  has the right to earn up to 50%  interest  by funding  $4,000,000
exploration  work over 4 years,  and making  cash  payments  to Leader  totaling
$1,200,000.  Leader will act as operator for the joint venture,  and Leader will
receive  an  additional  $300,000  bonus  payment  upon the start of  commercial
production.

To earn the Interest set forth below,  Kores must make the following payments to
Leader on or before the dates  indicated and fund the following  Expenditures by
the dates indicated:

<TABLE>
<CAPTION>
<S>                     <C>             <C>                             <C>             <C>
                                                                        Cumulative      Interest
Payment Date            Payment         Expenditures by Date            Amount Spent    Earned
------------            -------         --------------------            ------------    --------
Effective Date          $300,000        $1,000,000 on or before         $1,300,000      20.00%
                                        1st Anniversary Date

1st Anniversary Date    $300,000        $1,000,000 on or before         $2,600,000      33.33%
                                        2nd Anniversary Date

2nd Anniversary Date    $300,000        $1,000,000 on or before         $3,900,000      42.86%
                                        3rd Anniversary Date

3rd Anniversary Date    $300,000        $1,000,000 on or before         $5,200,000      50.00%
                                        4th Anniversary Date
</TABLE>

The  Expenditures  will be funded  according to Cash Calls received by Kores and
are  cumulative  such that any  excess of  Expenditures  in one  period  will be
carried  over  into  the  next  period.  Any  payment  or  Expenditures  may  be
accelerated at the option of Kores.

     For greater certainty:

        (a)   upon the date that Kores has made payments and funded Expenditures
        in a cumulative amount and  on  time  as  set  forth in the table above,
        Kores will be vested with the interest specified for such amount; and

        (b)   for  the maximum  Interest  of 50%,  Kores must  make  payments to
        Leader  totalling $1,200,000  on or before the  3rd anniversary Date and
        fund Expenditures totalling $4,000,000 on  or before the 4th Anniversary
        Date.

The  Effective  Date of the  Joint  Venture  between  the  Company  and KORES is
December 22, 1999. As of June 30, 2000; KORES has made the $300,000 cash payment
to Leader and incurred $650,202 in exploration expenditures.

                                       16
<PAGE>

Termination During First Year

If Kores fails to make the payment  required on the  Effective  Date,  then this
Agreement  will  terminate  on the  Effective  Date.  If Kores fails to fund the
Expenditures  required by the first  Anniversary  Date, then this Agreement will
terminate on the first Anniversary Date. Upon such termination,  Kores will have
no Interest  nor any right to acquire an Interest,  and neither  party will have
any further obligation or liability hereunder except as may have arisen prior to
such termination.

Leader  Mining  developed  a land  position  in  the  area,  conducted  numerous
geophysical  surveys and  collected  extensive  geological  data.  The data sets
consist of two airborne surveys,  a regional gravity survey,  extensive drilling
and mapping with accompanying lithogeochemical sampling. To further evaluate the
area, it was necessary to synthesize Leader's geophysical data and known geology
with the aim to identify  areas on the  property  with the highest  potential to
host various Volcanogenic Massive Sulphide (VMS) style sulphide deposits.

At Knife Lake,  Leader now  possesses or controls 108 mining claims and 1 mining
lease with a total land area of approximately  85,113  hectares.  The claims are
held  directly by Leader and other  companies,  which have  optioned the mineral
prospects to Leader.

Mineral  exploration and production in the Flin Flon Mining area has been active
for 80 years.  Only recently has new  geological  modeling  recognized  that the
favorable  Amisk  Volcanics  extend to the north  from the Flin Flon  Domain and
includes  the former  Hanson,  Glennie,  Scimitar and  Kissenew  Domains.  These
domains have been explored  intermittently  by Hudson Bay Mining,  Noranda,  and
Cominco.  With the current  geological  understanding,  these domains are highly
prospective  for VMS style  mineralization.  Leader's  Knife  Lake  Volcanogenic
Massive  Sulphide  Deposit conforms well within the context of the newly defined
model for the Flin Flon-Glennie Domain.  Recent government mapping has shown the
Knife Lake property to lie within the newly recognized Flin Flon-Glennie Domain,
which hosts the Flin Flon/Snow Lake VMS deposits.

The claims have  received  little  mineral  exploration  and have no  production
history,  but appear to be an extension of the volcanic  terrain which hosts the
base metal  mineralization  of the Flin Flon mining area. The Amisk Volcanics in
Flin  Flon  are  host  to  Volcanogenic   Massive  Sulphide  style,  base  metal
mineralization.

Since 1968,  prospecting and mapping in the area of Knife Lake and Scimitar Lake
has resulted in the  discovery  of several  copper  occurrences.  The largest of
these occurrences is the Knife Lake copper-gold  deposit.  The mineralization is
located on the west side of the Knife  Lake,  less than 100  metres  west of the
shoreline, in the southern portion of Leader's property.

Infrastructure on the Knife Lake property is limited to the bush camp and winter
road  access.  Water for  mineral  processing  and other needs is  available  in
abundance in the project area. The Island Falls  hydroelectric  power generating
station  is located  on the  Churchill  River at Sandy  Bay.  This  station  was
constructed  to  provide  power to the town of Flin  Flon.  However,  in the mid
1990's, the Government of Saskatchewan constructed a new high-tension power line
to deliver the power to the  uranium  mines of the  Athabasca  Basin in northern
Saskatchewan  and all of the  station's  power  output  is now  devoted  to this
purpose.  The transmission line comes within 20km of the southwestern  corner of
the Knife Lake property.

                                       17
<PAGE>

While  the Sandy  Bay-Flin  Flon area has been  explored  for base and  precious
metals at various times over the past 80 years,  the earliest records of work in
the  immediate  area of Knife Lake are dated October  1968.  From 1968,  through
1972, Straus Exploration  conducted  extensive  exploration work,  consisting of
horizontal loop, vertical loop and Turam EM ground geophysical  surveys,  ground
magnetometer surveys, geochemical soil sampling,  geological mapping, trenching,
sampling and diamond drilling,  over a copper-gold  showing on the western shore
of Knife Lake.  Approximately 4.7 square km of grid was geologically mapped at a
scale of 1:6,000  over the copper  prospect  area.  A slightly  smaller area was
covered by geochemical and geophysical  surveys.  D.E.  Pearson,  as part of his
1971  mapping  project,  mapped in  detail a  portion  of the grid on a scale of
1:7,200.  A diamond  drill  program  consisting  of 87 holes (2 Winkie and 85 XT
sized core), totaling  approximately  8,484m, was completed.  As a result of the
exploration  work, a mining lease was taken out, covering the copper showing and
surrounding geochemical anomaly.

Hudson Bay Exploration and Development, the wholly-owned exploration division of
Hudson Bay Mining and Smelting,  conducted a regional airborne EM survey in 1980
and 1982.  During 1989 and 1990 Cominco  performed line cutting,  geological and
geochemical surveys, on property approximately 2 km north of Knife Lake. Results
of these programs are not available.

The  Knife  Lake  copper  showing  remained   inactive  until  early  1989  when
CopperQuest  was  formed.  CopperQuest  commissioned  Standing  Geophysics  Ltd.
(Standing) to  re-establish  Staus' grid over the copper prospect and to conduct
horizontal-loop EM and magnetometer surveys.  Standing Geophysics completed 77.6
line-km of magnetic  surveying and 101 line-km of EM surveying in February 1989.
In completing  the EM surveying,  Standing  used  different  cable lengths (coil
separations)  over the copper  prospect in an attempt to locate  areas where the
copper  mineralization may have been thickened due to folding.  Three such areas
were located and  recommended  for diamond  drilling.  In addition,  three other
conductive zones were identified  outside of the immediate copper prospect area.
A total of 1,829m of drilling in 24 holes was recommended but never carried out.

In March 1996, Leader Mining acquired the mining leases,  after entering into an
agreement with  CopperQuest.  Leader has access to the CopperQuest,  and most of
the Straus, exploration data. A summary of Leader's expenditures on the prospect
is presented below:

                                       18
<PAGE>
<TABLE>
<CAPTION>


--------------------------------------------------------------------------------------------------------------------
Summary of Exploration Expenditures (June 1996 to December 1998)
---------------------------------------- ------------------------------------- -------------------------------------
<S>                                      <C>                                                               <C>
Prospecting and                          1,172 man days                                                    $342,600

Geological Mapping
---------------------------------------- ------------------------------------- -------------------------------------
Line Cutting                             313 line km                                                       $119,400

--------------------- ------------------ ------------------------------------- -------------------------------------
Geophysics            Airborne           12,689 line km                                                    $753,700
--------------------- ------------------ ------------------------------------- -------------------------------------
                      Ground             427 line km                                                       $243,300


--------------------- ------------------ ------------------------------------- -------------------------------------
Geochem               Soil               2,374                                                              $23,300
--------------------- ------------------ ------------------------------------- -------------------------------------
                      Assay              8597 (588 whole rock)                                             $164,200
---------------------------------------- ------------------------------------- -------------------------------------
Trenching                                180m3                                                              $48,400
---------------------------------------- ------------------------------------- -------------------------------------
Drilling                                 30,866 m                                                        $2,960,500
---------------------------------------- ------------------------------------- -------------------------------------
Other (staking, logistics,                                                                               $2,656,200
transportation)
--------------------------------------------------------------------------------------------------------------------
                                                                                              TOTAL =    $7,311,000
--------------------------------------------------------------------------------------------------------------------

</TABLE>

The Knife  Lake  Deposit  is  interpreted  by the  Company  to be a  remobilized
fraction  of a larger  primary  VMS  deposit.  It is hosted  within  an  altered
pegmatite,  high in Na, K, Sr,  and Ba which  geochemistry  has shown is derived
from alkali rich sedimentary rocks. To date, a total of 26,397 metres of diamond
drilling among 308 drill holes have been completed on the Knife Lake Deposit and
a digital geological model has been constructed.  The mineralization is outlined
over a  distance  of  4,300  metres  and to a  depth  of  100  metres.  Internal
Geological modeling has generated sufficient indications to cause the Company to
continue exploration work.

GEOLOGICAL DESCRIPTION

Volcanogenic  massive  sulphide  deposits occur in geological  terraces that are
dominated by volcanic  rocks.  Individual  deposits may be hosted by volcanic or
sedimentary  strata which  compromise the volcanic  complex.  These deposits are
formed as sygentic  accumulations  of sulphide and sulphate  minerals  deposited
from  fluids  exiting  hydrothermal  vents  at or near  the sea  floor.  Copper,
typically  present as chalcopyrite,  and zinc,  typically  present as sphalerite
constitute the primary economic constituents; and gold and silver can contribute
by-product values.

ITEM 3.  LEGAL PROCEEDINGS

The Company is currently  involved in only one  contractual  dispute,  involving
legal proceedings,  with a private Saskatchewan company, and the outcome of such
proceeding,  if adverse to the Company, would not be material and involves money
damages only less than $25,000.

                                       19
<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT  (CONTROL
OF REGISTRANT)

         (a)  Beneficial  owners  of  five  percent  (5)  or  greater,   of  the
Registrant's Common Stock and Warrants: No Preferred Stock is outstanding at the
date of this  offering.  The following  sets forth  information  with respect to
ownership  by holders of more than five  percent  (5%) of the  Company's  Common
Stock known by the Company based upon 18,118,656  shares  outstanding at May 20,
2000.

<TABLE>
<CAPTION>
<S>                      <C>                                <C>                                 <C>
------------------------ ---------------------------------- ----------------------------------- ----------------------
Title of Class           Name Beneficial of Owner           Amount and Nature of Beneficial     Percent of Class
                                                            Ownership
------------------------ ---------------------------------- ----------------------------------- ----------------------
Common Stock             Y.S. Jasi Nikhanj                  2,390,000 Shares (1)(2)             8.1%
                         320 Pumphill Cr. S.W. Calgary,
                         Alta T2V 4M1
------------------------ ---------------------------------- ----------------------------------- ----------------------
</TABLE>

         (1) Includes 532,000 shares owned by spouse, Aski Nikhanj.
         (2) Includes 120,000 share option includable under Sec. 13d.

     b) The  following  sets forth  information  with  respect to the  Company's
Common Stock beneficially owned by each Officer and Director,

<TABLE>
<CAPTION>
<S>                    <C>                                 <C>                                  <C>
---------------------- ----------------------------------- ------------------------------------ ----------------------
Title of Class         Name Beneficial of Owner            Amount and Nature of Beneficial      Percent of Class
                                                           Ownership
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Y.S. Jasi Nikhanj (1) Pres/Director 2,390,000 shares (1)(5)              11.0%
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Ueli Schurch Director               650,000 shares                       4.0%
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Manish Bindal Secretary/Director    225,000 shares (2)(5)                0.1%
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Roland Kesselring V.P.              690,000 shares (3)(5)                3.2%
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Raymond Lai V.P.                    412,500 shares (4)(5)                1.94%
---------------------- ----------------------------------- ------------------------------------ ----------------------

Total amount owned by officers and directors as a group.

---------------------- ----------------------------------- ------------------------------------ ----------------------
Title of Class         Name Beneficial of Owners           Amount and Nature of Beneficial      Percent of Class
                                                           Ownership
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Directors                           3,265,000 shares (5)                 18.00%
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Officers                            2,902,500 shares (5)                 17.00%
---------------------- ----------------------------------- ------------------------------------ ----------------------
Common                 Combined                            4,367,500 shares (5)                 23.00%
---------------------- ----------------------------------- ------------------------------------ ----------------------
</TABLE>
(1)      Includes 532,000 shares owned by spouse, Aski Nikhanj.
(2)      Includes 75,000 shares owned by spouse Sehra Bindal.
(3)      Includes 590,000 shares owned by spouse Manuela Kesselring.
(4)      Includes 222,500 shares owned by spouse, Amanda Lai.
(5)      Includes option shares includable under Section 13d.

                                     20
<PAGE>
ITEM 5. (a) MARKET  PRICE OF AND  DIVIDENDS  ON  REGISTRANTS  COMMON  EQUITY AND
RELATED STOCKHOLDER MATTERS

The Company's  common stock is listed and traded on the Alberta  Stock  Exchange
and is quoted in the National  Quotation  Bureau  "Pink  Sheets" when trades are
made. The Company has applied to OTC BB for quotation privileges in the U.S. and
such listing is pending  completion  of Form 20f comments.  The following  table
sets forth high and low closing  prices of the  Company's  common  stock for the
three (3) years ended March 31, 2000,  1999, 1998, and 1997 on the Alberta Stock
Exchange as follows:

                                                      Closing
                                                     (Canadian $)
                                                High             Low

2000     First Quarter                          2.00              0.85
         Second Quarter                         1.00              0.65

1999
         First Quarter                          1.19              0.50
         Second Quarter                         1.05              0.65
         Third Quarter                          0.89              0.57
         Fourth Quarter                         1.60              0.75

1998
         First Quarter                          5.10              3.40
         Second Quarter                         4.00              2.95
         Third Quarter                          3.15              0.54
         Fourth Quarter                         0.85              0.30

1997
         First Quarter                          9.45              4.00
         Second Quarter                         7.45              5.25
         Third Quarter                          6.20              2.80
         Fourth Quarter                         3.85              3.30

The Company has been unable to obtain a reliable history of pink sheet activity.

(b) As of April 30,  2000,  the Company had an  estimated  900  shareholders  of
record of the common  stock,  including  those  held in  brokerage  accounts  in
"street name."

(c) No dividends on outstanding  common stock have been paid within the last two
fiscal years,  and interim  periods.  The Company does not  anticipate or intend
upon paying dividends for the foreseeable future.

The  Company  estimates  that 5% of the  shareholders  of the  Company  are U.S.
shareholders.

                                       21
<PAGE>

ITEM 6.  EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There are  currently no  limitations  imposed by Canadian  federal or provincial
laws on the rights of non-resident  or foreign owners of Canadian  securities to
hold or vote the securities held. There are also no such limitations  imposed by
the  Company's  articles  and bylaws  with  respect to the common  shares of the
Company.

Under the  Investment  Canada Act, the  acquisition of certain  "businesses"  by
"non-Canadians"  or "Americans"  are subject to review by Investment  Canada,  a
federal  agency,  and will not be allowed  unless they are found likely to be of
"net benefit" to Canada.  An acquisition will be reviewable by Investment Canada
only if the value of the assets of the Canadian  business  being acquired is CDN
$5 million or more in the case of a "direct"  acquisition  or CDN $50 million or
more in the case of an "indirect"  acquisition.  Under the Free Trade  Agreement
between  Canada  and  the  United  States,  an  acquisition  by an  American  is
reviewable  only if it involves the direct  acquisition  of a Canadian  business
with assets of CDN $160 million or more.  If the  foregoing  thresholds  are not
reached,  the acquisition of a Canadian  business by a non-Canadian  will not be
subject to review  unless it relates to Canada's  cultural  heritage or national
identity.  Even if the transaction is not reviewable,  a non-Canadian must still
give  notice to  Investment  Canada of the  acquisition  of a Canadian  business
within 30 days after its completion.


ITEM 7.  TAXATION

Canadian Federal Income Tax Consequences for Canadian Shareholders

The following  summarizes the material  Canadian federal income tax consequences
applicable  to the holding and  disposition  of a common  share by a holder (the
"Holder") of one or more common  shares who is resident in the United  States of
America and holds the common share as capital property. This summary is based on
the current  provisions  of the Income Tax Act  (Canada)  (the "Tax  Act"),  the
regulations  thereunder and all  amendments to the Tax Act publicly  proposed by
the  government  of  Canada to the date  hereof.  It is  assumed  that each such
amendment will be enacted as proposed and there is no other  relevant  change in
any governing law, although no assurance can be given in these respects.

Every Holder is liable to pay a withholding  tax on every dividend that is or is
deemed  to be  paid  or  credited  to  him  on  his  common  shares.  Under  the
Canada-United  States Income Tax Convention  (1980) (the "Treaty"),  the rate of
withholding tax is 10% of the gross amount of the dividend where the Holder is a
company  that  owns  at  least  10% of the  voting  stock  of  the  Company  and
beneficially  owns the dividend,  and 15% in any other case. A Protocol amending
the Treaty was ratified by the representatives of the Canadian and United States
governments.  Effective in December,  1995 one of the amendments in the Protocol
reduces the 10% withholding rate on dividends to 6% in 1996 and 5% in 1997.

                                       22
<PAGE>

Under the Tax Act, a Holder will not be subject to  Canadian  tax on any capital
gain realised on an actual or deemed disposition of a common share,  including a
deemed  disposition at death,  provided that he did not hold the common share as
capital  property used in carrying on a business in Canada,  and that neither he
nor persons with whom he did not deal at arm's length, alone or together,  owned
25% or more of the issued  shares of any class of the Company at any time in the
five years immediately preceding the disposition.

A Holder who otherwise  would be liable for Canadian tax in respect of a capital
gain  realised  on an actual or deemed  disposition  of a common  share  will be
relieved under the Treaty from such liability unless

         (1)  the  common  share  formed  part  of the  business  property  of a
permanent  establishment  in Canada that the Holder had within the  twelve-month
period  preceding  the  disposition;  or

         (2)      the Holder

     (a) was  resident  in Canada  for 120  months  during  any  20-year  period
preceding the disposition, and

     (b) was  resident  in Canada at any time  during the 10 years  immediately
      preceding the disposition, and

     (c) owned the common share when he ceased to be a resident of Canada

U.S. Tax Consequences

U.S. shareholders will not be impacted by Canada "Flow-through" shares under the
Internal  Revenue Code shares.  U.S.  shareholders who hold shares for less than
one year will be able to take short time capital gain or loss for sales within a
twelve  month  period and be taxed at ordinary  income  rates on  profits.  If a
shareholder  holds shares for one year or more, the shareholder  will be able to
treat profit or loss as long term capital gain or loss,  and, if a gain, the tax
rate is a maximum of 28% unless  Alternative  Minimum Tax  applies,  which could
only be determined on an individual's tax year basis.

ITEM 8.  SELECTED FINANCIAL DATA

The selected  financial  data set forth below are derived from the  accompanying
audited  financial  statements  of the  Company  to March  31,  2000.  Financial
statements  of  the  Company  included   elsewhere  herein  should  be  read  in
conjunction  with those  financial  statements  and the footnotes  thereto.  The
financial  statements have been prepared in accordance  with Canadian  generally
accepted accounting principles ("GAAP").  For United States GAAP reconciliation,
see attached  financial  statements and notes.  Reference should also be made to
"Item 9 Management's Discussion and Analysis of Financial Conditions and Results
of Operations."

                                       23
<PAGE>
<TABLE>
<CAPTION>
                                    Selected Financial Information for 5 Years (in Cdn$)
                                                Fiscal Year Ended March 31st

<S>                 <C>            <C>              <C>               <C>             <C>
                         2000          1999             1998              1997             1996
                         ----          ----             ----              -----           -----
Interest                  6,018        49,044           152,132                 0               0
Mgmt Fees                60,000             0                 0                 0               0

                     ----------       -------          --------           -------          ------
Total Revenue            66,018        49,044           152,132            28,702               0
                     ----------       -------          --------           -------          ------
General &
Admin. Expenses         624,463       898,873         1,358,156           640,625         368,902
Exploration Costs
Written Off             360,858     1,848,313           561,500         1,506,392               0
Amortization              8,405        11,282            27,082            12,182               0
Other Expenses                0       137,723            92,420                 0         100,000
Loss for the Period    (927,708)   (2,847,147)       (1,887,026)       (2,130,497)       (468,902)
                    -----------    -----------       -----------      -----------       ----------

Loss per Share             (.05)        (0.20)            (0.17)            (0.20)          (0.08)
                    -----------    -----------       -----------      -----------       ----------
Weighted average

shares outstanding   17,221,284    14,446,458        13,911,958        10,924,623       5,961,296
                    -----------    -----------        ----------       -----------      ----------
Balance Sheet Data:
Current Assets          245,468       696,996         3,011,601         6,729,786       1,510,715
Capital Assets           24,829        32,579           155,645            68,834          28,326
Deferred Acq. &
Expl. Costs           8,004,148     8,100,426         8,957,965         4,440,824       1,065,975
                     ----------     ---------         ---------         ---------        -------
Exploration Costs

Total Assets          8,274,445     8,830,001        12,125,211        11,239,444       2,605,016
                     ----------    ----------        ----------         ---------        -------
Current Liabilities      55,643       277,590         1,820,664         1,117,428         238,189
Due to Related Parties        0        22,800             8,553           231,243         207,346
Long Term Liabilities         0             0                 0                 0         100,000
Capital Stock        20,963,315    20,346,416        19,265,652        16,973,405       7,011,616
Deficit             (12,744,513)  (11,816,805)       (8,969,658)       (7,082,632)     (4,952,135)
                     ----------    -----------       -----------       -----------     -----------

Total Equity
& Liabilities         8,274,445     8,830,001        12,125,211        11,239,444       2,605,016
                     ----------    ----------        ----------         ---------        -------

</TABLE>
                                       24
<PAGE>

Loss for the period and deficit as determined  in accordance  with Canadian GAAP
differ from those  determined in accordance  with U.S. GAAP, due  principally to
the deferral  under  Canadian  GAAP of  exploration  costs and the  exclusion of
compensation  expense arising from the issue of options at a discount from their
fair value.  Under U.S. GAAP the exploration costs would have been expensed when
incurred, and the compensation expense would have been recorded.

<TABLE>
<CAPTION>
<S>                                         <C>            <C>            <C>
                                                2000          1999            1998
                                                $             $               $
                                                ----          ----            ----
Loss for the Year Following U.S. GAAP        (1,043,486)    (2,418,858)    (7,601,157)
Loss for the Year Following CDN GAAP           (927,708)    (2,847,147)    (1,887,026)
Loss per share under U.S. GAAP                    (0.06)         (0.17)         (0.55)
Loss per share under CDN GAAP                     (0.05)         (0.20)         (0.17)
Deferred Exploration Costs Adjustment          (115,778)       807,539     (4,606,141)
Stock Based Compensations Adjustment                  -       (379,250)    (1,107,980)

</TABLE>


ITEM 9. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND CHANGES
IN FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Differences between Canadian and U.S. generally accepted accounting principles

Significant  differences between Canadian GAAP and U.S. GAAP which would have an
effect on these financial statements, are as follows:

a)   Adjustment to net loss

<TABLE>
<CAPTION>
<S>                                                          <C>                        <C>                     <C>
                                                             2000                       1999                    1998
                                                             $                          $                       $

           Loss for the year following Canadian GAAP         (927,708)               (2,847,147)            (1,887,026)

           Deferred exploration costs (i)                    (115,778)                  807,539             (4,606,141)
           Stock based compensation (iii)                           -                  (379,250)            (1,107,990)
                                                           ----------------------------------------------------------------
           Loss for the year following U.S. GAAP           (1,043,486)               (2,418,858)            (7,601,157)
                                                           ----------------------------------------------------------------
           Loss per share under U.S. GAAP                       (0.06)                    (0.17)                 (0.55)
                                                           ----------------------------------------------------------------
</TABLE>

                                       25
<PAGE>
     i)   For  U.S.  GAAP,   exploration   costs,  net  of  the  tax  effect  of
          flow-through  shares,  related to  projects  are charged to expense as
          incurred.  As such, the majority of costs charged to exploration costs
          written offunder  Canadian GAAP would have been charged to earnings in
          prior  periods  under  U.S.  GAAP.  Property   acquisition  costs  are
          capitalized for both Canadian and U.S. GAAP.

     ii)  Under U.S.  GAAP,  a grant of stock  options  and  warrants to acquire
          shares at a price  below the fair  market  value of the  shares at the
          time of the grant, is  compensatory  under APB No. 25 and is accounted
          for as compensation expense. This has the effect of increasing capital
          stock and deficit under U.S. GAAP.

b)   Adjustments to balance sheet

<TABLE>
<CAPTION>
<S>                                    <C>            <C>              <C>            <C>             <C>           <C>
                                              2000                            1999                      1998
                                    ----------------------------  --------------------------- -----------------------------

                                         Canadian                        Canadian                      Canadian
                                          GAAP        U.S. GAAP            GAAP      U.S. GAAP           GAAP      U.S. GAAP
                                                                       $              $              $              $
           Mineral properties and
           deferred exploration         8,004,148      158,500         8,100,426        169,000      8,957,965        219,000
           costs (a)(i)
           Capital stock(a)(ii)         20,963,315  24,746,233        20,346,416     24,214,334     19,265,652     22,754,320
           Deficit(a)                  (12,744,513)(25,240,459)      (11,816,805)   (23,616,149)    (8,969,658)   (21,197,291)
</TABLE>
<TABLE>
<CAPTION>
c)   Shareholders' equity

           Under U.S. GAAP, shareholders' equity would be as follows:
<S>                                     <C>                    <C>                 <C>
                                        2000                   1999                1998
                                        $                      $                   $
Under Canadian GAAP                     8,218,802              8,529,611           10,295,994
U.S. GAAP adjustment to net loss
Current (a)(i) and (a)(ii)                115,778                428,289           (5,714,131)
Cumulative                            (12,611,724)           (12,227,633)          (6,513,502)
U.S. GAAP adjustment to capital stock
 (a)(ii)                                        -                 379,250           1,244,490
 Cumulative                             3,782,918               3,488,668           2,244,178
                                        -------------------------------------------------------------
                                         (494,226)                598,185           1,557,029
                                        -------------------------------------------------------------
</TABLE>

                                       26
<PAGE>
d)   Income taxes

     Under U.S.  GAAP,  the Company would be required to initially  recognize an
     income tax asset arising from the benefit of losses carried  forward.  This
     asset has been  reduced to $nil  through  the  application  of a  valuation
     allowance of $4,645,000.

e)   Recent accounting pronouncements

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
     "Accounting  for  Derivative  Instruments  and  Hedging  Activities"  which
     standardizes  the  accounting  for  derivative  instruments.  SFAS  133  is
     effective for all fiscal  quarters of all fiscal years beginning after June
     15,  1999.  The  effective  date was  subsequently  changed  to all  fiscal
     quarters of all fiscal years beginning  after June 15, 2000.  Adopting this
     standard  will not have a  significant  impact on the  Company's  financial
     position, results of operations, or cash flows.


RESULTS OF OPERATIONS

The  Company  has no  primary  income  source at this time and has never had any
operating  revenues.  All working capital is obtained from equity financing such
as private placements,  options and warrants exercising. The revenue reported in
FY 1999 and 1998 is from  interest  earned  from  working  capital  invested  in
secured short-term money markets.  The Management Fee income of $60,000 reported
in FY 2000 is for  operating  the Knife  Lake  Joint  Venture  Exp.  Exploration
program.  The major expenditure for the Company is acquiring mineral  properties
and  conducting  exploration  programs on those  properties.  These  exploration
expenditures  are  capitalized as intangible  assets.  If no economical  mineral
resource is found on a certain property after an extensive  exploration program,
the capitalized value is written off as an expense in the income statement.  The
Company also does not have any long-term debt. The only liability of the Company
is accounts payable  incurred during its on-going  exploration  operations.  The
amounts due to related  parties are mainly funds advanced from the Directors and
Officers  to the  Company  when the  Company is short in  funding.  Such debt is
non-interest bearing and has no fixed terms of repayment.

CHANGES IN FINANCIAL CONDITION AS AT MARCH 31, 2000

At year-end  2000,  the Company's  assets  decreased to  $8,274,445  compared to
$8,830,001  at March 31, 1999.  The decrease of $555,556  mainly  consisted of 2
major factors  totaling  $547,806.  The first factor is the decrease of Cash and
Deposit  of  $451,528  from 2000 to 1999 due to  wind-down  of 1998  Knife  Lake
exploration  program.  The second  factor is the decrease of $96,278 in Deferred
Acquisition  and  Exploration  costs  from  2000 to  1999  due to  write  off of
acquisition cost of numerous non-productive mineral claims.

The Current  Liabilities  decreased $244,747 from $300,390 in 1999 to $55,643 in
2000 due to  wind-down  of 1998 Knife Lake  exploration  program  and  resulting
payoff of bills due.

Accumulated  deficit  in 2000 was  $12,744,513  which  increased  $927,708  from
$11,816,805 in 1999. The increase was the Operating Deficit for 2000.

                                       27
<PAGE>

COMPARISON OF RESULTS OF OPERATION FOR THE FISCAL YEARS ENDED MARCH 31, 2000
AND 1999 (UNDER CANADIAN GAAP)

The  Company had  Management  Fees  Revenue of $60,000 in fiscal year 2000.  The
Management  Fees were for the  operatorship  of the  Knife  Lake  Joint  Venture
Exploration  Program in 2000 for Kores and is expected to continue in 2001.  The
interest  income of $6,018 in 2000 decreased  $43,026 from $49,044 in 1999 funds
raised for explorations were used up.

The General and Administrative  expense decreased $274,410 from $898,873 in 1999
to  $624,463  in 2000 due to the  winding  down of 1998 Knife  Lake  exploration
program.  Exploration costs written off decreased  $1,487,455 from $1,848,313 in
1999 to $360,858 in 2000.  The Company had not bought any new mineral  claims in
2000. Loss on write-down of marketable  securities of $139,840  incurred in 1999
was due to marketable  securities which decreased in market value  substantially
when the Company sold them in 1999 and no such activity occurred in 2000.

The Net loss for the year had decreased  $1,919,439  from  $2,847,147 in 1999 to
$927,708 in 2000.  The decrease is mainly due to the decrease of  $1,487,455  in
Exploration  costs  written  off  and  decreases  of  $274,410  in  General  and
Administrative  expense and no further loss on marketable  securities  ($139,480
loss was incurred in 1999).

The Loss per share in 2000 was $0.05  decreased  $0.15 from  $0.20 in 1999.  The
decrease was due to the decrease of $1,919,439 in Net Loss for the year in 2000.


COMPARISON OF RESULTS OF OPERATION FOR THE FISCAL YEARS ENDED MARCH 31, 1999 AND
1998 (UNDER CANADIAN GAAP)

The Company had no operating  revenue in either fiscal years 1999 or 1998 except
interest  income of  $49,044  in 1999 and  $152,132  in 1998.  The  decrease  of
$103,088 was due to the winding down of 1998 Knife Lake exploration  program and
funds raised for that purpose was used up.

The  per-share loss  amounted to ($0.20) at March 31, 1999 as compared to ($.17)
at March 31, 1998.

In the fiscal  year ended March 31,  1999,  the Company  incurred  $898,873 in
general  and  administrative  expenses  as  compared  to the prior year in which
$1,358,156 in general and administrative expenses were incurred.

The General and Administrative expense had decreased $459,283 from $1,358,156 in
1998 to $898,873 in 1999. It was also due to the winding down of 1998 Knife Lake
exploration  program  and  additional  labor and  facilities  had been let go an
closed up. Exploration costs written off had increased  $1,286,813 from $561,500
in 1998 to $1,848,313 in 1999. It was due to the written off  acquisition  costs
of  numerous  non-proving  mineral  claims.  Loss on  write-down  of  marketable
securities of $139,840  incurred in 1999 was due to marketable  securities  that
the Company  invested  had  decreased  in market  value  substantially  when the
Company sold them in 1999. Site  restoration  and  abandonment  costs was nil in
1999  compared to $68,250 in 1998 as the Site  restoration  and clean up job for
Sandy Valley Project was done in 1998.

The Net loss for the year had  increased  $960,121  from  $2,039,158  in 1998 to
$2,847,147  in 1999.  The  increase is largely due to $103,088  less in interest
income and the increase of $1,286,813 in  Exploration  costs written off and one
time loss of $139,840 in  write-down of marketable  securities  offsetting  with
decreases of $459,283 in General and Administrative  expense and $68,250 in Site
restoration cost.

                                       28
<PAGE>

The Loss per share in 1999 was $0.20  increased  $0.03 from  $0.17 in 1998.  the
increase was due to the increase of $960,121 in Net Loss for the year in 1999.

The  increased  losses  were  as a  result  of  increased  expenditures  for the
evaluation and testing of the Knife Lake project in Canada.  The Company expects
that  losses  will  continue  because the Knife Lake  project  requires  further
evaluating, and no production exists or can be predicted. The Company is not now
conducting any mining operations.


                                       29
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The  following  chart  summarizes  all capital  funding  raised in the past five
years.

<TABLE>
<CAPTION>
                                                  FUNDING SUMMARY
                                            FROM APRIL 1995 TO MAY 2000

<S>                          <C>                                          <C>                    <C>               <C>
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
        Year                                                Total Shares Issued          Share Price        Total Amount
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------

         1995                 Private Placement                           1,150,000              $1.65             $1,900,000
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                             Exercise of Options                            543,000              $0.47               $255,750
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                                 1995 Total                               1,693,000              $1.27             $2,155,750
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------

----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
         1996                 Private Placement                           1,000,000              $3.90             $3,900,000
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                                Flow Through                                425,000              $4.70             $1,997,500
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                             Exercise of Options                            628,000              $2.63             $1,652,200
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                            Exercise of Warrants                            950,000              $1.58             $1,502,500
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                                 1996 Total                               3,003,000              $3.01             $9,052,200
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------

----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
        1997                  Private Placement                           1,288,000              $3.90             $5,023,200
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                              Private Placement                             472,000              $4.55             $2,147,600
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                             Exercise of Options                            195,000              $3.90               $760,500
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                            Exercise of Warrants                             75,000              $4.12               $309,000
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                                 1997 Total                               2,030,000              $4.06             $8,240,300
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------

----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
        1998                  Private Placement                             260,000              $3.40               $884,000
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                                 1998 Total                                 260,000              $3.40               $884,000
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------

----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
        1999                  Private Placement                           2,000,000              $0.35               $700,000
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                              Exercise of Options                           687,000              $0.43               $295,410
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                                 1999 Total                               2,687,000              $0.37               $995,410
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
        2000                  Private Placement                             400,000              $0.52               $208,000
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
(Up to May 1, 2000)           Exercise of Options                           690,000              $0.43               $296,700
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                              Exercise of Options                           210,000              $0.45               $ 94,500
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
                                  2000 Total                                                                         $599,200
----------------------- ------------------------------ ----------------------------- ------------------ ----------------------
</TABLE>
                                       30
<PAGE>

The principal  sources of funding for the  Company's  operation in the past five
years have been issuance of securities through private placements,  flow through
shares,  exercise  of  director  and  employee  stock  options,  and loans  from
directors and officers for cash and as consideration for certain acquisitions.

The company currently has $250,000 in cash at July 31, 2000.

The  principal  uncertainty  that could  affect the  Company's  liquidity is the
Capital Markets  interest or lack thereof in Mining Industry which is beyond the
control of the Company.

On a short term  basis,  the  Company is  planning  to raise $1 million  through
private  placements  and the  exercise  of  options  and  warrants  to cover the
operating budget for 2000. The Knife Lake project 2000 exploration  program will
be  funded  by the Joint  Venture  partner,  Kores  Canada.  The  Joint  Venture
Agreement has paid the Company a $300,000 option fee and management fee for 2000
of $75,000. Capital Expenditures are budgeted at $1,000,000 for Knife Lake which
will be paid by Kores Canada.

On a long-term  basis,  the Company does not have any assured  certain source of
additional  working capital and the continuation of operations is subject to its
ability to raise more  equity  money and its success in the  exploration  of the
Knife Lake and Karmel Projects.

Flow Through Shares

The Company has raised 2 million  dollars  through Flow Through  Shares in 1996.
The mechanism of Flow Through Shares is as follows:

The Canadian  Income Tax Act contains  provisions  whereby a principal  business
corporation  that incurs  Qualifying  Expenditures  with funds  received  from a
subscriber under an agreement for the issue of shares of the Company, other than
prescribed shares, will be entitled to renounce such Qualifying  Expenditures to
the  purchaser  of such shares  within  certain  parameters  set by the Act. The
Company has undertaken that it is and at all material times will be, a principal
business  corporation and that the flow through Common Shares, when issued, will
not be prescribed shares, all within the meaning of the Act.

It is a condition of entitlement of a subscriber to Qualifying Expenditures that
the  Company   complete  certain  filings  in  respect  of  the  prospectus  and
renunciation of Qualifying  Expenditures.  The Company has  represented  that it
will complete such filings and will provide each  subscriber  with the necessary
information with respect to renounced  Qualifying  Expenditures for the purposes
of enabling the  subscriber  to claim  deductions  in respect of the  Qualifying
Expenditures so renounced.  The preparation and filing of all income tax returns
will be the responsibility of each subscriber.

The funds received from the issue of the flow through  shares offered  hereunder
will be used by the Company on its own account to incur Qualifying  Expenditures
which the Company will renounce to subscribers to the extent permitted by and in
accordance with the Act. Such Qualifying  Expenditures as are properly renounced
to a subscriber  will be deemed to have been  incurred by the  subscriber on the
effective date of the renunciation.

                                       31
<PAGE>

Provided  that certain  conditions  are met,  the Act  currently  provides  that
Qualifying Expenditures incurred within 60 days after the end of a calendar year
under a flow-through share arrangement may be treated as if incurred on the last
day of the preceding  calendar year. The March 6, 1996 Federal Budget  announced
certain  proposals in respect of flow through  shares (the "Budget  Proposals"),
including an extension of the 60 day look back rule for renunciations made after
1996. The following is based on counsel's understanding of the Budget Proposals,
which is  subject  to some  uncertainty  pending  availability  of the  detailed
legislation.  There is no assurance  that the Budget  Proposals  will be enacted
into law as proposed or at all.

Under the Budget Proposals, Qualifying Expenditures, which are anticipated to be
expended by the end of a calendar  year may be renounced in the first 90 days of
the calendar  year  effective as of the end of the preceding  calendar  year. If
such renounced  expenditures  are not in fact incurred by the Company by the end
of the calendar year,  the  renunciations  made by  subscribers  will be reduced
accordingly.  Subscribers  will not be required to pay interest on any resulting
increase in tax payable as a result of such  reduction  of  renunciations  until
after April of the calendar year following the renunciation. The Company will be
required to pay to Revenue Canada  deductible  monthly  charges equal to 1/12 of
the  interest  rate  prescribed  under  the  Act in  respect  of  renounced  and
unexpended  funds. The Company will also be required to pay a deductible  charge
at the end of the year of 10% of any unexpended funds.

To the  extent  permitted  by the Act,  the  Company  has agreed to use its best
efforts  to incur  Qualifying  Expenditures  in an amount  equal to the funds it
receives for the flow through  shares on or before March 1, 1997 and to renounce
such Qualifying  Expenditures  effective no later than December 31, 1996. In the
event that the Company is unable to incur Qualifying  Expenditures equal to such
amount on or before March 1, 1997, the Company has agreed (to incur and renounce
the  Qualifying  Expenditures  effective no later than December 31, 1997) or (to
incur no later than December 31, 1997, and renounce  effective December 31,1996,
assuming the Budget Proposals are passed into law).

Generally  speaking,  the Company will be entitled to renounce to subscribers of
the amount of otherwise deductible.  Qualifying  Expenditures incurred by it for
up to 24 months after the end of the month in which the  subscriptions  for flow
through Common Shares are accepted less any previous  renunciations with respect
to such Qualifying  Expenditures,  any portion of those Qualifying  Expenditures
which are  prescribed by  regulations  to relate to overhead and any  assistance
that the Company has  received  or is entitled to receive or may  reasonably  be
expected to receive from a government authority or other person relating to such
Qualifying Expenditures.

The Company may not  renounce to  subscribers  an amount in excess of the amount
paid by subscribers for the flow through shares offered hereunder.  Further, the
Company will not be entitled to renounce  Qualifying  Expenditures to the Extent
that such renunciation,  in effect, would cause the Company's own cumulative CEE
("CCEE"), to be a negative amount.

The Company has agreed to refrain from  transactions or the taking of deductions
which  would  otherwise  reduce  its CCEE to an extent  which  would  preclude a
renunciation of Qualifying Expenditures.

Qualifying  Expenditures which are renounced by the Company to a subscriber will
be  added  to the  subscriber's  cumulative  CEE  account  for the  subscriber's
taxation year in which the renunciations  effective. A subscriber may deduct all
or any portion of the balance in his  cumulative  CEE may be carried  forward to
subsequent years.

                                       32
<PAGE>

In the event that the  Company  failed to comply with the  Canadian  regulations
regarding  Canadian  Exploration  Expenditures,  the Company would be subject to
civil  penalties  under  Revenue  Canada  regulations  and would be  subject  to
lawsuits  for damages by  shareholders  for loss of tax benefits of flow through
shares.

Impact of the Year 2000

The year 2000 issue  arises from  computer  systems  using two digit date fields
rather  that four to refer to a  particular  year.  This  means  that a computer
system might not properly  recognize  "00" as the Year 2000,  but instead as the
Year 1900,  which could result in  operational  and  financial  disruption,  and
possibly systems failures.  The Company is taking  appropriate steps to identify
and  remediate  the Year 2000 issue before the end of 1999,  and does not expect
the costs of these  efforts to be  material.  The Company  does not believe that
there will be an adverse effect on its business,  operating results or financial
position as a result of the Year 2000 Issue. However,  there can be no assurance
that the Year 2000  readiness  efforts by the  Company's  suppliers and business
partners will be successful,  therefore it remains  uncertain to what extent, if
any, the Company may be affected.  So far, the Company has not  experienced  any
difficulties relating to the year 2000.

ITEM 10. DIRECTORS AND OFFICERS OF THE COMPANY

Foreign Currency Adjustments

Other  than  adjustments  between  Canadian  dollars  and US  dollars  which are
reflected in its financial statements,  the Company does not denominate expenses
in any other foreign  currency.  The Company recorded any South African expenses
in Canadian currency. South African currency has occasionally been volatile, and
there are strict  currency  controls to prevent the export of capital.  To date,
the Company has only expended money in South Africa, and since it terminated its
exploration venture,  does not anticipate export of capital from South Africa at
any time.

Hedging Activities

The Company does not engage in any hedging activities.

The names, residences,  terms, and periods of service within the past five years
of each of the directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
<S>                                      <C>                      <C>                 <C>
                                         Position
Name                                     Within                                       Period of Service
                                         the Company              Term

Yashvir (Jasi) Nikhanj (1,2)             President and Director   Annual              1987 to date
Calgary, Alberta

Ulrich Schurch                           Director                 Annual              1996 to date
Switzerland

Manish Bindal (2)                        Secretary and director   Annual              1996 to date
Calgary, Alberta

Raymond Lai                              Vice president Finance   Annual              1996 to date
Calgary, Alberta

Roland Kesselring (2)                    Vice president           Annual              1997
Switzerland                              Corporate Affairs


(1)    Member of the audit committee.
(2)    Member of Nomination and Compensation Committee.
</TABLE>
                                       33
<PAGE>

Yashvir Nikhanj, age 53, has been President and director of the Registrant since
1987.  He  obtained a Bachelor  of Science in Geology  from  Ranchi  University,
Bikar,  India in 1968. He received a MSc in Earth  Sciences  from  Massachusetts
Institute  of  Technology  in 1970  and a MSc in  Applied  Geology  from  McGill
University in 1972. He also has been  President  and  principal  shareholder  of
Nikhanj and Associates Consulting of Calgary, Canada since 1975.

Ulrich  Schurch,  age  37,  is a  director  of the  Registrant.  He  received  a
Commercial  Diploma as a banker in 1981 in  Switzerland.  In 1993, he received a
"Diplomaster"  betribsokonom  BVS" in Switzerland at St.  Grallen.  From 1992 to
1996,  he  was  Vice  President  and a  partner  at  Moscom  Finary  in  Zurich,
Switzerland.  From 1996 to 1998,  he was  President and Partner of Schwich Asset
Management  BmDH,  St  Gallen,  Switzerland.  From 1998 to date he has been with
Credit Swisse Zurich as a Portfolio Manager - Special Mandates.

Manish  Bindal,  age 35, is a director and General  Counsel to the Company.  Mr.
Bindal received a Bachelor of Science in 1984 and a Bachelor of Law in 1987 from
Kurukashetra  University  in India.  From August 1987 to May 1991 Mr. Bindal was
engaged  in  private  practice  of law at  Chandigarh,  India.  From May 1991 to
September 1994 Mr. Bindal was a law student in Calgary,  Canada. He was employed
as a  student-at-law  at the firm of  Howard  Mackie,  Nova  Corp.  and  Alberta
Securities  Commission from October 1994 to October 1995. He has been in private
law practice since November,  1995.  Other than the  Registrant,  Mr. Bindal has
been a director of Canex Energy,  Inc. and Aspen Energy Corp.,  both oil and gas
companies listed on the Albert Stock Exchange.

                                       34
<PAGE>

Raymond Lai, age 48, is Vice  President  of Finance and  Administration  for the
Registrant  and has been since 1995.  Mr. Lai received his B.Sc.  degree in 1971
from the University of Calgary. He became a Certified  Management  Accountant in
1979.  From 1993 to 1995, Mr. Lai was controller of Mission  Packaging,  Inc. in
Calgary.

Ronald  Kesselring,  age 36, is V.P  Corporate  Affairs - Europe since 1996.  He
completed  Banking School in  Switzerland in 1982. He is CEO of Mascon  Finance,
Ltd. of  Ermatingen,  Switzerland  and has been since 1995 a Managing  Director.
From April 1992 to 1995, he was a Managing Director at the  institutional  sales
desk of Swiss Bank Corp. Zurich, Switzerland.

The  directors  of the Company are  elected by the  shareholders  at each annual
general  meeting and typically hold office until the next annual general meeting
at which time they may be re-elected or replaced.  Casual vacancies on the board
are filled by the remaining  directors and the persons  filling those  vacancies
hold  office  until the next  annual  general  meeting at which time they may be
re-elected or replaced.  The senior officers are appointed by the board and hold
office indefinitely at the pleasure of the board.

Within the five years proceeding the date of this filing  document,  none of the
directors, officers or promoters of the Company have been a director, officer or
promoter of other reporting companies other than as follows:

         Mr. Bindal has been a director  of Canex Energy,  Inc. and Aspen Energy
         Corp., both oil and gas companies listed on the Alberta Stock Exchange,
         since 1996.

                                       35
<PAGE>

No  director,  officer or  promoter  of the  Company  has,  within the ten years
preceding the date of this filing document, been the subject of any penalties or
sanctions by a court or securities  regulatory  authority relating to trading in
securities, the promotion,  formation or management of a publicly-traded company
or involving theft or fraud, other than as follows:

         In  1996,  Mr.  Nikhanj   entered  into  a  Settlement   Agreement  and
         Understanding with the Alberta Securities Commission because he had not
         timely  filed  insider  reports  for  purchases  and sales of shares in
         Leader Mining International with the Alberta Securities Commission. The
         Settlement  resulting  in a  $5,000  penalty  and the  Agreement  to be
         diligent in complying with the responsibility to report trades.

There are no  understandings  or arrangements  pursuant to which any officers or
director was selected or appointed to such position.

         (b)  Identification of Certain Significant Employees.

There are no employees  other than the executive  officers  disclosed  above who
make, or are expected to make, significant  contributions to the business of the
Company, the disclosure of which would be material.

         (c) Family Relationships. Spouses of Yashvir (Jasi) Nikhanj and Raymond
Lai  are  currently   employed  on  a  part  time  basis  with  the  Company  in
non-executive positions.

Conflicts of Interest

The officers of the Company devote full time to the affairs of the Company,  but
they may have other investment interests.  There will be occasions when the time
requirements  of the Company's  business  conflict with the demands of any other
business and investment activities.  Such conflicts may require that the Company
attempt to employ additional personnel.  There is no assurance that the services
of such  persons  will be  available  or that they can be  obtained  upon  terms
favorable to the Company. Several of the Directors, Messrs. Bindal, Schurch, and
Kesslring  are  employed in other  businesses  and devote time to the company at
Director's meetings.

Conflicts of Interest - General.  Certain of the  officers and  Directors of the
Company may be Directors and/or principal  shareholders of other companies,  and
therefore,   could  face   conflicts  of  interest  with  respect  to  potential
acquisitions.  A policy has been adopted whereby officers and Directors will not
participate  in business  ventures  which could be deemed to complete  directory
with  the  Company.   Additional  conflicts  of  interest  and  non-arms  length
transactions may also arise in the future in the event the Company's officers or
Directors  are involved in the  management  of any firm with which they or their
family members own or hold a controlling ownership interest.  Although the Board
of Directors  could elect to change this policy,  the Board of Directors has not
present intention to do so.

                                       36
<PAGE>

ITEM 11.   COMPENSATION OF OFFICERS AND DIRECTORS

     (a)  Cash Compensation.

Compensation  paid by the Company for all  services  provided  during the fiscal
year  ended  March 31,  2000,  (1) to each of the  Company's  five  most  highly
compensated  executive officers whose cash compensation exceeded $30,000 and (2)
to all officers as a group is set forth below under directors.
<TABLE>
<CAPTION>
                                     SUMMARY COMPENSATION TABLE OF EXECUTIVES
                                            Annual Compensation                         Awards
<S>                        <C>         <C>            <C>          <C>                     <C>                <C>
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Name and Principal         Year        Salary ($)     Bonus ($)    Other Annual            Restricted Stock   Securities Underlying
Position                                                           Compensation ($)        Award(s)($)        Options/SARs(#)
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Y.S. Jasi Nikhanj          2000        0              0            120,000 (1)             0                  265,000 shares
President and Director     ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1999        0              0            120,000 (1)             0                  840,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1998        0              0            120,000 (1)             0                  250,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1997        0              0            120,000 (1)             0                  355,000 shares
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Manish Bindal              2000        0              0            37,000 (2)              0                  25,000 shares
Secretary and Director     ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1999        0              0            37,000 (2)              0                  25,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1998        0              0            37,200 (2)              0                  50,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1997        0              0            37,200 (2)              0                  25,000 shares
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Raymond Lai                2000        60,000         0            0                       0                  50,000 shares
V.P. Finance &             ----------- -------------- ------------ ----------------------- ------------------ ======================
Administration             1999        60,000         0            0                       0                  85,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1998        60,000         0            0                       0                  50,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1997        60,000         0            0                       0                  25,000 shares
========================== ----------- -------------- ------------ ----------------------- ------------------ ======================
Roland Kesselring          2000        0              0            0                       0                  100,000 shares
V.P. Corporate             ----------- -------------- ------------ ----------------------- ------------------ ======================
Affairs-Europe             1999        0              0            0                       0                  100,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1998        0              0            0                       50,000 shares      75,000 shares
                           ----------- -------------- ------------ ----------------------- ------------------ ======================
                           1997        0              0            0                       $175,000           175,000 shares
========================== =========== ============== ============ ======================= ================== ======================

         (1) Paid as consulting  fees to Nikhanj and  Associates  Geoconsulting.
         (2) Paid as legal fees for services.
</TABLE>
                                       37
<PAGE>

     (b)  Compensation Pursuant to Plans.

None.

     (c)  Other Compensation.

None. No stock appreciation rights or warrants exist to management

     (d)  Compensation of Directors.

Each member of the Board of  Directors  of the  Company  receives  $500.00  plus
reasonable  outside  travel  expenses for each Board  meeting he attends and for
each Committee meeting he attends during the fiscal year. Directors who are also
officers of the Company receive no compensation for services as a director.

Compensation  paid by the Company for all  services  provided  during the fiscal
year ended March 31, 2000,  (1) to each of the  Company's  directors  whose cash
compensation  exceeded  $30,000 and (2) to all directors as a group is set forth
below:

<TABLE>
<CAPTION>

                  DIRECTOR'S COMPENSATION FOR LAST FISCAL YEAR

(Except for  compensation of Officers who are also Directors whose  Compensation
is listed in Summary Compensation Table of Executives)
<S>                     <C>                   <C>                <C>                   <C>               <C>
                                    Cash Compensation                  Security Grants
======================= --------------------- ------------------ --------------------- ----------------- =========================
         Name                                                                                            Number of Securities
                        Annual Retainer       Meeting Fees       Consulting Fees/      Number of         Underlying Options/SARs
                        Fees ($)              ($)                Other Fees ($)        Shares (#)        (#)
======================= --------------------- ------------------ --------------------- ----------------- =========================
A. Director                      0                     0                  0                60,000                 320,000 shares
Ulrich Schurch
======================= --------------------- ------------------ --------------------- ----------------- =========================
B. Director                      0                     0                  0                     0                 0
Y.S. Nikhanj
----------------------- --------------------- ------------------ --------------------- ----------------- -------------------------
C. Director                      0                     0                  0                     0                 0
Manish Bindal
----------------------- --------------------- ------------------ --------------------- ----------------- -------------------------
</TABLE>

     (e)  Termination of Employment and Change of Control Arrangements.

None

     (f)  Stock Option Plan

The Company has adopted a stock option plan covering officers,  consultants, key
employees.  The plan is administered by the Board of Directors and is limited to
10% of the total  outstanding  shares,  in the aggregate,  except if approval is
granted by the Alberta Stock Exchange (the  "Exchange).  Option prices shall not
be lower than the market  price of the shares on the date of grant of the option
less the  maximum  discount  permitted  under the  By-Laws  and  policies of the
Alberta Stock Exchange. The options may be granted by the Board under provisions
which may be  established  by the  Board of  Directors  from  time to time.  The
options may not be granted for an exercise period of more than five years.

                                       38
<PAGE>

ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT

Stock Options

The Company has, from time to time,  granted  stock  options to purchase  common
shares to its directors and employees.  The options have been granted on various
terms  resulting from  negotiation  between the Company and such persons and the
exercise price per share was based on the average trading price of the Company's
shares pursuant to the policies of the Alberta Stock Exchange (the  "Exchange").
The exercise price for all options  currently  issued by the Company is equal to
or in excess of the market price of the Company's  stock at the date of issuance
less the maximum discount permitted under the by-laws and polices of The Alberta
Stock Exchange (or any stock exchange on which the Shares are then listed).  The
options are  non-assignable  and have been granted as incentives and not in lieu
of any  compensation  for  services.  As at May 15, 1999 the Company has granted
outstanding  options to its  directors and employees to purchase an aggregate of
1,675,000 common shares as follows:

<TABLE>
<CAPTION>
<S>                                             <C>              <C>             <C>             <C>
                                                Share              Price          Amount         Expiry Date
------------------------------------------ ----------------      ----------     -----------    ---------------
Outstanding Options                             830,000          $1.00             $830,000      July 31, 2003
------------------------------------------ --------------- ------------------ ----------------   ---------------
                                                 80,000          $0.43              $34,400      Oct. 15, 2000
------------------------------------------ --------------- ------------------ ----------------   ---------------
                                                105,000          $0.35              $36,750      Nov. 4, 2001
------------------------------------------ --------------- ------------------ ----------------   ---------------
                                                600,000          $0.54             $324,000      Mar. 18, 2002
------------------------------------------ --------------- ------------------ ----------------   ---------------
Total Options                                   1,615,000                        $1,225,150
------------------------------------------ --------------- ------------------ ----------------   ---------------
Outstanding Warrants                            837,500          $0.45             $376,875      Jan. 18, 2001
------------------------------------------ --------------- ------------------ ----------------   ---------------
Outstanding Warrants                            152,500          $0.65             $99,125       Oct. 25, 2001
------------------------------------------ --------------- ------------------ ----------------   ---------------
Total Options & Warrants                         2,125,000                       $1,022,150
------------------------------------------ --------------- ------------------ ----------------   ---------------
</TABLE>

ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

The directors, senior officers, holders of greater than 10% of the common shares
of the Company and any  associate  or  affiliate  of such persons of the Company
have no other  interest in any  material  transactions  in which the Company has
participated  in the preceding year or intends to  participate in at  this time,
except as follows:

     a)   Due to related parties

<TABLE>
<CAPTION>
<S>                                                        <C>              <C>                <C>
                                                           2000               1999             1998
                                                           $                  $                $

i)       The Company's president and his wife               -               22,800                4,055
ii)      Other shareholders, directors                      -                    -                4,498
                                                        =======            ========            ========
</TABLE>
                                       39
<PAGE>
The  shareholders'  loans have no fixed  terms of  repayment,  are  non-interest
bearing and are unsecured.

     b)   During fiscal year 2000,  the following  transactions  were  conducted
          with related parties and recorded at the exchange amounts:

         i) The President made expenditures on behalf of the Company of $194,105
         and made net  advances to the Company of $21,167.  These  amounts  were
         repaid in full with no interest or fees charged.

         ii) The President's wife exercised options for 325,000 shares at a cost
         of $147,750. This amount was settled from amounts owed by the Company.

         iii) A  company  owned  by the  President  was  paid  $120,000  (1999 -
         $120,000;  1998 - $135,000) for geological consulting services provided
         during the year.

         iv) A director's law firm was paid $33,150 for legal services  provided
         during the year (1999 - $36,000; 1998 - $40,422).

         v) A company owned by a Vice-President  was paid $72,000 for geological
         consulting  services  provided during the year (1999 - $72,000;  1998 -
         $72,000).

         vi) A company  owned by a  Vice-President  was paid  $35,000  in public
         relations fees during the year (1999 - $Nil; 1998 - $Nil).

     c)   During fiscal year 1999,  the following  transactions  were  conducted
          with related parties and recorded the exchange amounts:

         i) The President  assumed Company debts of $389,622,  made expenditures
         on behalf of the  Company of  $78,120  and  received  net  advances  of
         $157,887.  These  amounts  were  subsequently  repaid  in full  with no
         interest or fees charged.

         ii) The President and his wife exercised  options for 677,000 shares at
         a cost of  $291,110.  This amount was settled  from amounts owed by the
         Company.

     d)   During fiscal year 1998,  the following  transactions  were  conducted
          with related parties and related parties at the exchange amounts:

         i) The Company  advanced the President  $348,225 as a short-term  loan.
         Interest was charged on the loan at bank prime plus one percent.  These
         advances were repaid in full during the fiscal year 1998.

                                       40
<PAGE>

         ii) The President sold a mobile home,  previously used in the Company's
         operations,  to Durvada Resources Inc.  for proceeds of $34,648,  which
         equaled  the  balance of  the  mortgage  owed by the  President  on the
         mobile home.


The terms of  transactions  that the  Company  entered  into with any  director,
senior officer,  or other management  member were term that were as favorable as
those that the Company could have obtained from an unaffiliated party.


                                       41
<PAGE>

                                     PART II

ITEM 14. DESCRIPTION OF SECURITIES

The Company is authorized to issue an unlimited  number of Common Shares without
nominal or par value, and an unlimited number of Preferred  Shares,  issuable in
series,  of  which,  as at the date  hereof,  16,818,565  Common  Shares  and no
Preferred Shares are issued and outstanding as fully-paid and non-assessable.

Common Shares

The holders of Common  Shares are entitled to dividends if, as and when declared
by the directors, to one (1) vote per share at meetings of the holders of Common
Shares of the  Company  and,  upon  liquidation,  to receive  such assets of the
Company as are  distributable  to the holders of the Common  Shares.  All of the
Common  Shares  to be  outstanding  upon  completion  of this  offering  will be
fully-paid and non-assessable.

Preferred Shares

The Preferred Shares may be issued from time to time in one or more series. each
series  consisting of a number of Preferred Shares as determined by the board of
directors of the Company who may also fix the designation,  rights,  privileges,
restrictions and conditions  attaching to the shares of each series of Preferred
Shares. There are no Preferred Shares issued and outstanding.

The Preferred Shares of each series shall,  with respect to payment of dividends
and  distribution  of  assets  in  the  event  of  liquidation,  dissolution  or
winding-up  of the  Company,  whether  voluntary  or  involuntary,  or any other
distribution of the assets of the Company among its shareholders for the purpose
of winding-up its affairs,  rank on a parity with the Preferred  Shares of every
other series and shall be entitled to preference  over the Common Shares and the
shares of any other class ranking junior to the Preferred Shares.

                                       42
<PAGE>

TRANSFER AGENT

The transfer agent for the company shares is Montreal Trust, 600, 530-8th Avenue
SW, Calgary, Alberta T2P3S8 (403) 267-6872.

                                    PART III

ITEM 15. DEFAULTS UPON SENIOR SECURITIES

There have been no  defaults by the Company  upon Senior  Securities  during the
fiscal year 1998 to date of this Annual Report.

ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED SECURITIES

There  have been no  changes  in  securities  or  changes  in  security  for the
registered securities to date of this Annual Report.


                                     PART IV

ITEM 17. FINANCIAL STATEMENTS

The following documents are filed as a part of this report:

     1)   Financial   Statements:   (See  Financial  Exhibits  Index  below  and
          Financial Exhibits furnished as Pages F-1 through F-19).


     2)   Financial Statement Schedules: None

ITEM 18.  NOT APPLICABLE.


ITEM 19.  FINANCIAL STATEMENTS AND EXHIBITS

         a)       INDEX TO FINANCIAL STATEMENTS
                  AND SUPPORTING SCHEDULES

                                                                            Page

         Reports of Independent Public Accountants                           F-2

         I.  Financial Statements:

                  Consolidated Balance Sheets at March 31,
                   2000, 1999, 1998                                          F-3
                  Consolidated Statements of Loss & Deficit for
                   the period ended March 31, 2000, 1999, 1998               F-4
                  Statement of Cash Flows for the period ended
                   March 31, 2000, 1999, 1998                                F-5
                  Notes to Consolidated Financial Statements          F-6 - F-19

                                       43
<PAGE>
                                   SIGNATURES

Pursuant to the  requirements  of Section 12 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.

DATED: October 31, 2000

                                             LEADER MINING INTERNATIONAL, INC.

                                            By:  Y.S. Nikhanj
                                                ------------------------------
                                                 President


                                             Directors:


                                             /s/ Manish Bindal
                                             ---------------------------------
                                             Secretary and Director



                                             /s/ Ulrich Schurch
                                             ---------------------------------
                                             Director



                                             /s/ Y.S. Nikhanj
                                             ---------------------------------
                                             Director



                                             /s/ Raymond Lai
                                             ---------------------------------
                                             Vice President of Finance



                                             /s/ Roland Kesselring
                                             ---------------------------------
                                             Vice President of Corporate Affairs
                                       44
<PAGE>

                        LEADER MINING INTERNATIONAL INC.

                              FINANCIAL STATEMENTS

                         MARCH 31, 2000, 1999, AND 1998



                                      F-1
<PAGE>


AUDITORS' REPORT

TO THE SHAREHOLDERS OF LEADER MINING INTERNATIONAL INC.

We have  audited the balance  sheet of Leader  Mining  International  Inc. as at
March 31,  2000,  and the  statement  of loss and deficit and cash flows for the
year then  ended.  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 audit.

We conducted our audit in accordance with Canadian  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,  these  financial  statements  present  fairly,  in all material
respects,  the financial  position of the Company as at March 31, 2000,  and the
results of its  operations  and the  changes in its cash flows for the year then
ended in accordance with Canadian generally accepted accounting principles.

The consolidated financial statements as at March 31, 1999 and 1998 were audited
by another firm of Chartered Accountants (PricewaterhouseCoopers LLP) who issued
unqualified reports dated June 25, 1999 and June 12, 1998 respectively.

                                                              ]
                                            (Signed)  "Coakwell Crawford Cairns"

JUNE 19, 2000                                        CHARTERED ACCOUNTANTS

                                      F-2
<PAGE>
<TABLE>
<CAPTION>

LEADER MINING INTERNATIONAL INC.
Balance Sheets
as at March 31
<S>                                                  <C>                     <C>                    <C>
                                                            2000                    1999                  1998
                                                              $                      $                      $
                                                     --------------------    -------------------    ------------------

ASSETS

CURRENT ASSETS

Cash and short-term deposits                                     211,125                456,425             2,724,319
Accounts receivable                                               20,724                  3,214                15,214
Marketable securities - at market                                      -                 22,942                     -
Goods and Services Tax receivable                                      -                 34,642               136,662
Deposits and prepaid expenses                                     13,619                179,773               135,406
                                                     --------------------    -------------------    ------------------

                                                                 245,468                696,996             3,011,601

CAPITAL ASSETS (Note 4)                                           24,829                 32,579               155,645

MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS

(Note 5)                                                       8,004,148              8,100,426             8,957,965
                                                     --------------------    -------------------    ------------------

                                                               8,274,445              8,830,001            12,125,211
                                                     ====================    ===================    ==================

LIABILITIES

CURRENT LIABILITIES

Accounts payable and accrued liabilities                          55,643                277,590             1,820,664
Due to related parties (Note 6)                                        -                 22,800                 8,553
                                                     --------------------    -------------------    ------------------

                                                                  55,643                300,390             1,829,217
                                                     --------------------    -------------------    ------------------

SHAREHOLDERS' EQUITY

CAPITAL STOCK (Note 7)                                        20,963,315             20,346,416            19,265,652

DEFICIT                                                      (12,744,513)           (11,816,805)           (8,969,658)
                                                     --------------------    -------------------    ------------------

                                                               8,218,802              8,529,611            10,295,994
                                                     --------------------    -------------------    ------------------

                                                               8,274,445              8,830,001            12,125,211
                                                     ====================    ===================    ==================


APPROVED BY THE BOARD OF DIRECTORS                   _________________________  Director
                                                     (Signed)  "Jasi Nikhanj"
                                                     _________________________  Director
                                                     (Signed)  "Manish Bindal"

</TABLE>
                                      F-3
<PAGE>
<TABLE>
<CAPTION>
LEADER MINING INTERNATIONAL INC.
Statements of Loss and Deficit
for the years ended March 31
<S>                                                       <C>                   <C>                  <C>
                                                                2000                  1999                 1998
                                                                 $                     $                    $
                                                          -----------------     -----------------    -----------------

REVENUE

MANAGEMENT FEES (NOTE 5 D (II))                                     60,000                     -                    -
Interest                                                             6,018                49,044              152,132
                                                          -----------------     -----------------    -----------------
                                                                    66,018                49,044              152,132
                                                          -----------------     -----------------    -----------------

EXPENSES

General and administrative                                         624,463               898,873            1,358,156
Exploration costs written off (Note 5(a))                          360,858             1,848,313              561,500
Amortization                                                         8,405                11,282               27,082
Loss (gain) on disposal of capital assets                                -                (2,117)              24,170
Loss on write-down of marketable securities                              -               139,840                    -
Site restoration and abandonment costs                                   -                     -               68,250
                                                          -----------------     -----------------    -----------------

                                                                   993,726             2,896,191            2,039,158
                                                          -----------------     -----------------    -----------------

NET LOSS FOR THE YEAR                                              927,708             2,847,147            1,887,026

DEFICIT - BEGINNING OF YEAR                                     11,816,805             8,969,658            7,082,632
                                                          -----------------     -----------------    -----------------
DEFICIT - END OF YEAR                                           12,744,513            11,816,805            8,969,658
                                                          =================     =================    =================
LOSS PER SHARE                                                       (0.05)                (0.20)               (0.17)
                                                          =================     =================    =================


</TABLE>
                                      F-4
<PAGE>
<TABLE>
<CAPTION>
LEADER MINING INTERNATIONAL INC.
Statements of Cash Flows
for the years ended March 31
<S>                                                                  <C>                 <C>                  <C>
                                                                          2000                1999                 1998
                                                                           $                    $                    $
                                                                     ---------------     ----------------     ----------------
CASH PROVIDED BY (USED IN)

OPERATING ACTIVITIES

Loss for the year                                                        (927,708)         (2,847,147)          (1,887,026)
Items not affecting cash
Exploration costs written off                                             360,858           1,848,313              561,500
Amortization                                                                8,405              11,282               27,082
Loss (gain) on disposal of capital assets                                       -              (2,117)              24,170
Write-down on marketable securities                                             -             139,840                    -
Provision for site restoration & abandonment costs                              -                   -               68,250
Employee bonuses paid in shares                                                 -            (113,700)             529,500
                                                                   ---------------     ---------------      ---------------

                                                                         (558,445)           (963,529)            (676,524)

Net change in non-cash working capital                                    (38,661)         (1,246,021)             689,601
                                                                   --------------     ----------------     ----------------

                                                                         (597,106)         (2,209,550)              13,077
                                                                   --------------     ----------------     ----------------

FINANCING ACTIVITIES

Issuance of common shares, net of issue costs                             358,349             675,954            1,637,998
Payments made from (to) related parties                                   235,750             305,357             (222,690)
                                                                   ---------------     ---------------      ---------------

                                                                          594,099             981,311            1,415,308
                                                                   --------------     ----------------     ----------------

INVESTING ACTIVITIES

Mineral properties and deferred exploration costs                        (264,580)           (990,774)          (4,816,392)
Purchase of capital assets                                                   (655)             (2,599)            (145,163)
Proceeds on disposal of capital assets                                          -             116,500                7,100
Sale (purchase) of marketable securities                                   22,942            (162,782)                   -
                                                                   ---------------     ---------------      ---------------

                                                                         (242,293)         (1,039,655)          (4,954,455)
                                                                   --------------     ----------------     ----------------

DECREASE IN CASH FOR THE YEAR                                            (245,300)         (2,267,894)          (3,526,070)

CASH AND SHORT-TERM DEPOSITS, BEGINNING OF YEAR                           456,425           2,724,319            6,250,389
                                                                   --------------     ----------------     ----------------

CASH AND SHORT-TERM DEPOSITS, END OF YEAR                                 211,125             456,425            2,724,319
                                                                   ==============     ================     ================


</TABLE>
                                      F-5
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

1.       NATURE OF OPERATIONS

     Leader  Mining  International  Inc.  (the  "Company")  is in the process of
     exploring its mineral  properties and has not yet determined  whether these
     properties contain mineral reserves that are economically recoverable.  The
     recoverability  of  amounts  shown  for  mineral  properties  and  deferred
     exploration   costs  is  dependent  upon  the  existence  of   economically
     recoverable  reserves,   securing  and  maintaining  title  and  beneficial
     interest in the  property,  the ability of the Company to obtain  necessary
     financing  to  complete  the  development,   and  upon  future   profitable
     production or proceeds from  disposition of the mineral  properties.  There
     are no guarantees  that such  conditions  will be met. The amounts shown as
     mineral  properties and deferred  exploration  costs represent net costs to
     date, less amounts written-off and do not necessarily  represent present or
     future values.

2.       SIGNIFICANT ACCOUNTING POLICIES

     ACCOUNTING PRINCIPLES

     These  financial  statements  are prepared in  accordance  with  accounting
     principles  generally  accepted in Canada  ("Canadian  GAAP").  Significant
     differences  from accounting  principles  generally  accepted in the United
     States ("US GAAP") are described in Note 10.

     BASIS OF PRESENTATION

     These  1999  and  1998  comparative  figures  include  the  results  of the
     Company's  wholly  owned  United  States  inactive  subsidiaries,   Durvada
     Resources  Inc. and Durga  Resources  Inc. The  subsidiaries  were wound up
     effective April 1, 1998.

     USE OF ESTIMATES

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported  amount of assets and liabilities and
     disclosure  of  contingent   liabilities  at  the  date  of  the  financial
     statements,  and the reported  amounts of revenues and expenses  during the
     reporting  period.  The  most  significant  estimates  are  related  to the
     recoverability  of amounts  recorded  for mineral  properties  and deferred
     exploration costs. Actual results could differ from those reported.

                                      F-6
<PAGE>

LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

     MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS

     Acquisition  and  exploration  costs  relating  to mineral  properties  are
     deferred until the properties  are brought into  production,  at which time
     they are amortized on a unit of production  basis,  or until the properties
     are abandoned or sold or management  determines that a mineral  property is
     no  longer  economically  viable,  at which  time the  deferred  costs  are
     written-off.  Where the Company's  exploration  commitments  for an area of
     interest are  performed  under option  agreements  with a third party,  the
     proceeds of any option  payments are applied to the area of interest to the
     extent of costs incurred. The excess, if any, is credited to operations.

     CASH AND SHORT TERM DEPOSITS

     Cash and short-term  deposits mature within 90 days of the original date of
     acquisition. In order to limit its exposure, the Company deposits its funds
     with large financial institutions.

     CAPITAL ASSETS

     Capital  assets  are  recorded  at  cost.  Amortization  is  provided  on a
     declining  balance basis based on the  estimated  useful life of the assets
     from the year of acquisition up to, and excluding, the year of disposal, at
     the following annual rates:

                  Computer equipment                          30%
                  Furniture and fixtures                      20%
                  Vehicles                                    30%
                  Camp equipment                              20%
                  Field office building                       4%

     FOREIGN CURRENCY TRANSLATION

     The Company follows the temporal method of translation whereby all monetary
     assets and  liabilities  denominated  in a foreign  currency are translated
     into  Canadian  dollars at the rate of  exchange  in effect at the  balance
     sheet date. Non-monetary assets and exploration expenditures are translated
     at the rates prevailing when they are acquired or incurred.  Exchange gains
     or losses are included in net loss for the year.

     LOSS PER SHARE INFORMATION

     Per share amounts are  calculated  based on the weighted  average number of
     shares   outstanding   during  the  year,  which  was  17,221,284  (1999  -
     14,446,458;  1998 - 13,911,958).  Fully dilutive  amounts per share are not
     shown, as there are no material dilutive factors.

     MARKETABLE SECURITIES

     Marketable securities are recorded at the lower of cost or market.

                                      F-7
<PAGE>

LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

2.  SIGNIFICANT ACCOUNTING POLICIES (continued)

     FINANCIAL INSTRUMENTS

     The Company's financial instruments recognized in the balance sheet consist
     of  cash  and  short-term   deposits,   accounts   receivable,   marketable
     securities,  accounts payable and accrued  liabilities,  and amounts due to
     related parties. The fair values of all financial  instruments  approximate
     their carrying values due to their short-term maturity.

     FUTURE INCOME TAXES

     In providing for corporate income taxes,  temporary differences between the
     tax basis of assets or liabilities and their carrying amounts are reflected
     as future income taxes.  Tax rates  anticipated  to be in effect when these
     temporary differences reverse are used to calculate future income taxes.

      STOCK-BASED COMPENSATION PLAN

      The Company has stock-based compensation plans which are described in Note
      7. No  compensation  expense  is  recognized  for these  plans  when stock
      options are issued to directors, officers, or employees. Any consideration
      paid by directors,  officers, or employees on exercise of stock options or
      purchase of stock is credited to share capital.  If stock or stock options
      are repurchased from directors,  officers, or employees, the excess of the
      consideration  paid over the carrying  amount of the stock or stock option
      canceled is charged to retained earnings.

3.       CHANGE IN ACCOUNTING POLICY

      The Company has  retroactively  changed its method of reporting  corporate
      income  taxes to  conform  with the new  recommendations  of the  Canadian
      Institute  of  Chartered  Accountants.  Previously,  the Company  used the
      deferral  method of reporting  corporate  income taxes and now follows the
      future tax method as described in Note 2. This change in accounting policy
      has caused no change to previously reported income, retained earnings, and
      income tax payable in the Company.

<TABLE>
<CAPTION>
4.   CAPITAL ASSETS

                                                                              2000

                                                   --------------------------------------------------------------
<S>                                                <C>                 <C>                 <C>
                                                                           ACCUMULATED
                                                               COST       AMORTIZATION      NET BOOK VALUE

                                                                  $                  $                   $

      Computer equipment                                       38,425             26,126              12,299
      Furniture and fixtures                                   31,952             23,219               8,733
      Camp equipment                                            9,029              5,232               3,797
                                                   ------------------- ------------------  ------------------

                                                               79,406             54,577              24,829
                                                   =================== ==================  ==================
</TABLE>
                                      F-8
<PAGE>
<TABLE>
<CAPTION>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

4.       CAPITAL ASSETS (continued)

                                                                               1999

                                                   --------------------------------------------------------------
<S>                                                <C>                 <C>                 <C>
                                                                            ACCUMULATED
                                                               COST        AMORTIZATION      NET BOOK VALUE

                                                                  $                   $                   $

      Computer equipment                                     38,425              20,855              17,570
      Furniture and fixtures                                 31,297              21,035              10,262
      Camp equipment                                          9,029               4,282               4,747
                                                   =================== =================== ======================

                                                             78,751              46,172              32,579

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


                                                                               1998

                                                  ---------------------------------------------------------------

                                                                            ACCUMULATED
                                                               COST        AMORTIZATION    NET BOOK VALUE
                                                                  $                   $                 $

      Computer equipment                                     38,424              13,324              25,100
      Vehicle                                                21,843              11,140              10,703
      Furniture and fixtures                                 29,128              18,471              10,657
      Camp equipment                                          8,600               3,095               5,505
      Field office building                                 108,000               4,320             103,680
                                                   ------------------- ------------------- ----------------------
                                                            205,995              50,350             155,645
                                                   =================== =================== ======================
</TABLE>
<TABLE>
<CAPTION>
5.    MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS

      a) Summary
<S>                                              <C>                   <C>                <C>
                                                        2000                1999                  1998
                                                         $                    $                    $

         Balance - beginning of year                    8,100,426             8,957,965          4,440,824
                                                 --------------------- ------------------ ----------------------

         Expenditures capitalized in the year
          Acquisition of mineral properties                19,500                30,000             70,000
          Explorations costs                              245,080               960,774          5,008,641
                                                 --------------------- ------------------ ----------------------

                                                          264,580

          Less:  Exploration costs written off           (360,858)           (1,848,313)          (561,500)
                                                 --------------------- ------------------ ----------------------

                                                          (96,278)             (857,539)         4,517,141

                                                 --------------------- ------------------ ----------------------

         Balance - end of year                          8,004,148             8,100,426          8,957,965
                                                 ===================== ================== ======================


</TABLE>
                                      F-9
<PAGE>
<TABLE>
<CAPTION>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

5.       MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS (continued)

b)       The breakdown of mineral properties and deferred exploration costs by property is as
         follows:
                                                                              2000

                                                 ----------------------------------------------------------------
<S>                                              <C>                   <C>                  <C>
                                                      MINERAL              DEFERRED
                                                      PROPERTIES           EXPLORATION            TOTAL
                                                                           COSTS
                                                          $                    $                    $

         Knife Lake, Saskatchewan                          85,000             7,845,648           7,930,648
         Pistol Lake, Saskatchewan                         54,000                     -              54,000
         Baby Township, Quebec                             19,500                     -              19,500
                                                 --------------------- ------------------- ----------------------

                                                          158,500             7,845,648           8,004,148
                                                 ===================== =================== ======================



                                                                               1999

                                                 ----------------------------------------------------------------
                                                      MINERAL              DEFERRED
                                                      PROPERTIES           EXPLORATION            TOTAL
                                                                           COSTS
                                                          $                    $                    $

         Knife Lake, Saskatchewan                          85,000             7,846,179           7,931,179
         Karmel, South Africa                              30,000                85,247             115,247
         Pistol Lake, Saskatchewan                         54,000                     -              54,000
                                                 --------------------- ------------------- ----------------------
                                                          169,000             7,931,426           8,100,426
                                                 ===================== =================== ======================

                                                                             1998

                                                 ----------------------------------------------------------------
                                                      MINERAL              DEFERRED
                                                      PROPERTIES           EXPLORATION            TOTAL
                                                                           COSTS
                                                          $                    $                    $

         Knife Lake, Saskatchewan                          85,000             7,093,516            7,178,516
         Nettogami Lake, Ontario                           65,000             1,277,978            1,342,978
         Cody Township, Ontario                                 -               224,354              224,354
         Other                                             69,000               143,117              212,117
                                                 --------------------- -------------------  ---------------------
                                                          219,000             8,738,965            8,957,965
                                                 ===================== ===================  =====================


</TABLE>
                                      F-10
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

5.   MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS (continued)

c)   During fiscal year 2000, the Company wrote off $360,858 (1999 - $1,848,313;
     1998 - $561,000) of  exploration  costs  relating to properties on which no
     further exploration activities are planned.

d)   On November 5, 1999,  the Company  signed a Joint  Venture  Agreement  with
     Kores Canada Corp.  ("Kores") in respect of the Knife Lake property.  Under
     the terms of the  agreement,  the Company  has  granted  Kores the right to
     acquire  up to a 50%  working  interest  in this  property  by making  both
     payments  to  the  Company  and  funding  exploration  expenditures  on the
     property.

         To fully earn the 50% working  interest,  Kores must make the following
payments:

i)       To the Company

                           $300,000 upon signing of the Agreement
                           $300,000 by December 22, 2000
                           $300,000 by December 22, 2001
                           $300,000 by December 22, 2002

ii)      Exploration expenditures on the project

                           $1,000,000 before December 22, 2000
                           $1,000,000 before December 22, 2001
                           $1,000,000 before December 22, 2002
                           $1,000,000 before December 22, 2003

         If  Kores  fails  to fund  the  required  exploration  expenditures  by
         December 22, 2000, then the agreement terminates. Assuming payments are
         made as detailed above,  the working interest will be earned at the end
         of each year as follows:

                           December 22, 2000-        20.00%
                           December 22, 2001-        33.33%
                           December 22, 2002-        42.86%
                           December 22, 2003-        50.00%

         Under the terms of the  Agreement,  the Company  granted  Kores a stock
         option to purchase 500,000 common shares at a price of $1.00 per share,
         up to December 22, 2001. In addition, the Company is entitled to charge
         Kores a 10%  management fee based on  exploration  expenditures  on the
         project.

e)   The Company has an obligation  to pay a 2% net smelter  return on its Knife
     Lake property to Copper Quest,  Inc. and has an option to purchase a 1% net
     smelter return for $1 million.

                                      F-11
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

5.   MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS (continued)

     The Company has an option to spend  $500,000 on its Pistol Lake property to
     earn an 80% working  interest  from  Consolidated  Pine  Channel Gold Corp.
     (Consolidated  Pine). The Company has an additional  obligation to pay a 2%
     net smelter return on its Pistol Lake properties to  Consolidated  Pine and
     has an option to purchase an additional 10% working interest for $1 million
     and an option to purchase a 1% net smelter return for $2 million.

f)   In March 1998,  to  consolidate  a strategic  land  position in Voisey Bay,
     Labrador,  the Company  entered into three  separate  agreements to acquire
     interests in certain  mineral claims.  In 1999, the Company  terminated the
     above agreements at no further cost to the Company.

g)   On January 28, 1999,  the Company  signed an option  agreement  with Karmel
     Diamond Holdings (Pty.) Ltd. (Karmel) and Poplar Resources Ltd. (Poplar) to
     acquire a 75% right,  title and  interest in the Karmel  Diamond  property.
     During the year ended  March 31,  2000,  the Company  terminated  the above
     agreements at no further cost to the Company.

<TABLE>
<CAPTION>
6.       RELATED PARTY TRANSACTIONS

a)   Due to related parties

<S>                                                       <C>               <C>                 <C>
                                                                   2000                1999               1998
                                                                      $                   $                  $

       i)   The Company's president and his wife                        -            22,800               4,055
       ii)  Other shareholders, directors                               -                 -               4,498
                                                          ---------------- ------------------- ---------------------

                                                                        -            22,800               8,553
                                                          ================ =================== =====================
</TABLE>

     The shareholders' loans have no fixed terms of repayment,  are non-interest
bearing and are unsecured.

b)   During fiscal year 2000,  the following  transactions  were  conducted with
     related parties and recorded at the exchange amounts:

     i)   The President made  expenditures  on behalf of the Company of $194,105
          and made net  advances to the Company of $21,167.  These  amounts were
          repaid in full with no interest or fees charged.

     ii)  The President's wife exercised options for 325,000 shares at a cost of
          $147,750. This amount was settled from amounts owed by the Company.

     iii) A company owned by the  President was paid $120,000  (1999 - $120,000;
          1998 - $135,000) for geological  consulting  services  provided during
          the year.


                                      F-12
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

6.       RELATED PARTY TRANSACTIONS (continued)

     iv)  A  director's  law firm was paid $33,150 for legal  services  provided
          during the year (1999 - $36,000; 1998 - $40,422).

     v)   A company owned by a  Vice-President  was paid $72,000 for  geological
          consulting  services provided during the year (1999 - $72,000;  1998 -
          $72,000).

     vi)  A  company  owned by a  Vice-President  was  paid  $35,000  in  public
          relations fees during the year (1999 - $Nil; 1998 - $Nil).

c)   During fiscal year 1999,  the following  transactions  were  conducted with
     related parties and recorded the exchange amounts:

     i)   The President assumed Company debts of $389,622,  made expenditures on
          behalf  of the  Company  of  $78,120  and  received  net  advances  of
          $157,887.  These  amounts  were  subsequently  repaid  in full with no
          interest or fees charged.

     ii)  The President and his wife  exercised  options for 677,000 shares at a
          cost of  $291,110.  This amount was settled  from  amounts owed by the
          Company.

d)   During fiscal year 1998,  the following  transactions  were  conducted with
     related parties and related parties at the exchange amounts:

     i)   The Company  advanced the  President  $348,225 as a  short-term  loan.
          Interest was charged on the loan at bank prime plus one percent. These
          advances were repaid in full during the fiscal year 1998.

     ii)  The  President  sold a mobile home,  previously  used in the Company's
          operations,  to Durvada Resources Inc. for proceeds of $34,648,  which
          equaled  the  balance of the  mortgage  owed by the  President  on the
          mobile home.

7.   CAPITAL STOCK

a)   AUTHORIZED

         The  authorized  share  capital  of  the  Company  is  comprised  of an
         unlimited number of common and preferred shares.

                                      F-13
<PAGE>
<TABLE>
<CAPTION>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

7.  CAPITAL STOCK (continued)

b)   COMMON SHARES ISSUED
<S>                                                                       <C>                      <C>
                                                                            NUMBER OF SHARES             AMOUNT

                                                                                                            $

     BALANCE - MARCH 31, 1997                                                       13,213,229              16,973,405
                                                                          ---------------------    --------------------

     Shares issued
         Subscriptions received                                                         35,256                 136,500
         Exercise of options                                                            85,000                 331,500
         Director and employee bonuses                                                 157,000                 529,500
         Private placement for cash                                                    500,000               1,889,500
         Finder's fees                                                                  66,080                 262,249
     Less:  Share issue costs                                                                -                (857,002)
                                                                          ---------------------    --------------------

                                                                                       843,336                 229,224
                                                                          ---------------------    --------------------
     BALANCE - MARCH 31, 1998                                                       14,056,565              19,265,652
                                                                          ---------------------    --------------------

     Shares issued
         Director and employee bonus shares cancelled                                 (157,000)               (529,500)
         Director and employee bonus shares reissued                                   157,000                 418,200
         Exercise of options                                                           687,000                 295,410
         Legal settlement for Blower & Condor                                           75,000                 225,000
         Private placement for cash                                                  2,000,000                 700,000
     Less:  Share issue costs                                                                -                 (28,346)
                                                                          ---------------------    --------------------

                                                                                     2,762,000               1,080,764
                                                                          ---------------------    --------------------

     BALANCE - MARCH 31, 1999                                                       16,818,565               20,346,416
                                                                          ---------------------    --------------------

     Shares issued
         Exercise of options                                                           680,000                  298,099
         Exercise of warrants                                                          210,000                  104,000
         Private placement for cash                                                    200,000                  104,000
         Settlement for debt                                                           210,000                  110,800
                                                                          ---------------------    --------------------

                                                                                     1,300,000                  616,899
                                                                          ---------------------    --------------------

     BALANCE - MARCH 31, 2000                                                       18,118,565               20,963,315
                                                                          =====================    ====================


</TABLE>
                                      F-14
<PAGE>
<TABLE>
<CAPTION>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

7.       CAPITAL STOCK (continued)

C)       SHARE OPTIONS

         The Company has established a directors,  officers, and employees stock
         option  plan.   Options  issued  and  exercised  under  this  plan  are
         summarized below:

<S>                                            <C>                     <C>
                                                                       WEIGHTED AVERAGE
                                               NUMBER OF SHARES        EXERCISE PRICE
                                                                             $

          As at March 31, 1998                            847,000           1.66
          Granted                                         195,000           2.08
          Granted                                         615,000           1.47
          Exercised                                       (85,000)          1.34
          Cancelled                                      (215,000)          0.93
                                             -----------------------  --------------------

          As at March 31, 1998                          1,247,000           0.93
          Granted                                         950,000           0.77
          Granted                                         250,000           0.73
          Exercised                                        (687,000)        0.84
          Granted                                          (195,000)        0.48
                                             -----------------------  --------------------

          As at March 31, 1999                          1,675,000           0.48
          Exercised                                      (680,000)          0.51
                                             -----------------------  --------------------

          As at March 31, 2000                             995,000          0.51
                                             =======================  ====================

         As at March  31,  2000,  the  options  outstanding  under the plan have
         prices  between  $0.35 and  $0.54,  and a  weighted  average  remaining
         contractual life of 1.46 years.
</TABLE>
<TABLE>
<CAPTION>

     D) SHARE PURCHASE WARRANTS

         The  number  of  share  purchase  warrants  issued  during  the year in
         conjunction  with the private share  placements and  outstanding at the
         year-end were as follows:

                                                                          NUMBER OF WARRANTS
<S>                                            <C>                      <C>                      <C>
                                                       2000                     1999                       1998
                                               ------------------------ -----------------------  ----------------------

         Balance - Beginning of year                  1,000,000                  130,000                  637,500

         Granted in the year                            200,000                1,000,000                  322,000
         Expired in the year                           (210,000)                (130,000)                (829,500)
                                               ------------------------ -----------------------  ----------------------

         Balance - End of year                          990,000                1,000,000                  130,000
                                               ======================== =======================  ======================
</TABLE>
                                      F-15
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

D)   SHARE PURCHASE WARRANTS (continued)

         The warrants expire as follows:

                                                              NUMBER OF WARRANTS

                                                              ------------------

         Exercisable at $0.45 expiring January, 2001                    790,000
         Exercisable at $0.65 expiring October, 2001                    200,000
                                                              ------------------

                                                                        990,000

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

8.   COMMITMENTS AND CONTINGENCIES

     Pursuant  to an  agreement  relating  to a lease for office  premises,  the
     Company is  obligated  to pay $32,950 per annum until June 2001 and $50,900
     thereafter to November 2005.

     While the Company was successful in defending a 1998 legal action,  and was
     also successful in defending the appeal.

     The Company is currently defending another legal action, and the Company is
     countersuing the claimant for damages. The outcome of these proceedings are
     not determinable at this time.

<TABLE>
<CAPTION>
9.   INCOME TAXES

     The provision for income taxes recorded in the financial  statements differ
     from the amount  which would be obtained by applying the  statutory  income
     tax rate to the loss for the years as follows:

<S>                                              <C>                    <C>                     <C>
                                                         2000                   1999                    1998
                                                         $                      $                       $

    Loss for the year                                       (927,708)            (2,847,147)             (1,887,026)
    Statutory Canadian corporate tax rate                         45%                    45%                     45%
    Anticipated tax provision                               (417,468)            (1,281,216)               (849,162)
    Tax benefit of loss not recorded                         417,468              1,281,216                 849,162
                                                 ---------------------  ---------------------   ---------------------

    Income tax provision                                           -                      -                       -
                                                 =====================  =====================   =====================



</TABLE>
                                      F-16
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

9.  INCOME TAXES (continued)

     The Company has non-capital losses for income tax purposes of approximately
     $4,645,000  which are  available for  application  against  future  taxable
     income. These losses expire as follows:

                             YEAR                                  $

                             2001                                    289,000
                             2002                                    164,000
                             2003                                    320,000
                             2004                                    674,000
                             2005                                  1,455,000
                             2006                                  1,064,000
                             2007                                    679,000


      The Company has unclaimed  mining  expenditures  of  $11,325,000 to reduce
future years taxable income.

<TABLE>
<CAPTION>
10.  DIFFERENCES   BETWEEN  CANADIAN  AND  U.S.  GENERALLY  ACCEPTED  ACCOUNTING
     PRINCIPLES

     Significant  differences  between  Canadian GAAP and U.S. GAAP, which would
     have an effect on these financial statements, are as follows:

A)       ADJUSTMENT TO NET LOSS

<S>                                                            <C>                  <C>                 <C>
                                                                     2000                 1999                1998
                                                                       $                   $                   $
                                                               ------------------    ---------------     ---------------

     Loss for the year following Canadian GAAP                          (927,708)        (2,847,147)         (1,887,026)
     Deferred exploration costs (i)                                     (115,778)           807,539          (4,606,141)
     Stock based compensation (iii)                                             -          (379,250)         (1,107,990)
                                                               ------------------    ---------------     ---------------

     Loss for the year following U.S. GAAP                            (1,043,486)        (2,418,858)         (7,601,157)
                                                               ==================    ===============     ===============

     Loss per share under U.S. GAAP                                        (0.06)             (0.17)              (0.55)
                                                               ==================    ===============     ===============


</TABLE>
                                      F-17
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

10.  DIFFERENCES   BETWEEN  CANADIAN  AND  U.S.  GENERALLY  ACCEPTED  ACCOUNTING
     PRINCIPLES (continued)

     i)   For  U.S.  GAAP,   exploration   costs,  net  of  the  tax  effect  of
          flow-through  shares,  related to  projects  are charged to expense as
          incurred.  As such, the majority of costs charged to exploration costs
          written off under Canadian GAAP would have been charged to earnings in
          prior  periods  under  U.S.  GAAP.  Property   acquisition  costs  are
          capitalized for both Canadian and U.S. GAAP.

     ii)  Under U.S.  GAAP,  a grant of stock  options  and  warrants to acquire
          shares at a price  below the fair  market  value of the  shares at the
          time of the grant, is  compensatory  under APB No. 25 and is accounted
          for as compensation expense. This has the effect of increasing capital
          stock and deficit under U.S. GAAP.

<TABLE>
<CAPTION>
B)   ADJUSTMENTS TO BALANCE SHEET

<S>                            <C>                            <C>                           <C>
                                        2000                            1999                           1998
                               ------------------------       -------------------------     ---------------------------

                                 CANADIAN          U.S.         CANADIAN         U.S.         CANADIAN          U.S.
                                   GAAP            GAAP           GAAP           GAAP           GAAP            GAAP
                                     $              $               $              $              $              $

   Mineral properties and
   deferred exploration
   costs (a) (i)                   8,004,148         158,500      8,100,426        169,000      8,957,965         219,000
   Capital stock (a) (ii)         20,963,315      24,746,233     20,346,416     24,214,334     19,265,652      22,754,320
   Deficit (a)                   (12,744,513)    (25,240,459)   (11,816,805)   (23,616,149)    (8,969,658)    (21,197,291)

</TABLE>
<TABLE>
<CAPTION>
C)   SHAREHOLDERS' EQUITY

         Under U.S. GAAP, shareholders' equity would be as follows:

<S>                                                           <C>                  <C>                 <C>
                                                                   2000                 1999                1998
                                                                     $                    $                   $
                                                              ----------------     ----------------    ----------------

     Under Canadian GAAP                                            8,218,802            8,529,611          10,295,994
     U.S. GAAP adjustment to net loss
         Current (a)(i) and (a)(ii)                                   115,778              428,289          (5,714,131)
         Cumulative                                               (12,611,724)         (12,227,633)         (6,513,502)
     U.S. GAAP adjustment to capital stock
         Current (a)(ii)                                                    -              379,250           1,244,490
         Cumulative                                                 3,782,918            3,488,668           2,244,178
                                                              ----------------     ----------------    ----------------

                                                                     (494,226)             598,185           1,557,029
                                                              ================     ================    ================
</TABLE>
D)   INCOME TAXES

         Under U.S. GAAP,  the Company would be required to initially  recognize
         an income tax asset arising from the benefit of losses carried forward.
         This  asset has been  reduced  to $nil  through  the  application  of a
         valuation allowance of $4,645,000.

                                      F-18
<PAGE>
LEADER MINING INTERNATIONAL INC.
Notes to Financial Statements
MARCH 31, 2000, 1999, AND 1998

10.  DIFFERENCES   BETWEEN  CANADIAN  AND  U.S.  GENERALLY  ACCEPTED  ACCOUNTING
     PRINCIPLES (continued

E)       RECENT ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial  Accounting Standards Board issued SFAS No.
         133,  "Accounting for Derivative  Instruments  and Hedging  Activities"
         which standardizes the accounting for derivative instruments.  SFAS 133
         is  effective  for all fiscal  quarters of all fiscal  years  beginning
         after June 15, 1999. The effective date was subsequently changed to all
         fiscal  quarters of all fiscal  years  beginning  after June 15,  2000.
         Adopting  this  standard  will not  have a  significant  impact  on the
         Company's financial position, results of operations, or cash flows.

11.  SUBSEQUENT EVENTS

a)   On June 5, 2000 the  Company  signed an option to purchase  agreement  with
     Imperial Metals  Corporation  ("Imperial")  and HML Mining Inc. to purchase
     all of the issued and  outstanding  shares of Similco  Mines Ltd. (a wholly
     owned  subsidiary  of Imperial),  and the mineral  claims and crown granted
     claims related to the Invermay property.  Consideration includes $1,000,000
     cash and warrants to purchase up to 2,000,000  common shares of the Company
     at a price of $1.00 per share,  exercisable by Imperial for a period of two
     years after the date of the agreement.

           The cash payments are due as follows:

                  $150,000 upon signing of the  Agreement
                  $150,000 on or before September 1, 2000
                  $700,000 on or before December 1, 2000.

     The option is deemed to be  exercised  upon making the final cash  payment.
     Under the terms of the Agreement, Imperial will be granted a 3% net smelter
     return and the  Company  has the right to  purchase  2% of the net  smelter
     return for $2,000,000.  In addition, the Company has the option to purchase
     from Imperial,  the Ball Mill for $750,000, at any time, up to December 31,
     2001.

b)   On  June  5,  2000,  the  Company  entered  into a  twelve-month  financial
     consulting and investment  banking  services  agreement with Wavecount Inc.
     (Wavecount  Inc. is the parent  company of Dupont  Securities  Group Inc. a
     broker-dealer  firm based in New  York).  The  Company  has agreed to issue
     Wavecount  Inc.  200,000  common shares  (100,000 free trading)  subject to
     regulatory approval.

c)   Subsequent  to year end, the Company has  reserved  820,000  common  shares
     under option to  directors,  officers,  and  employees.  These  options are
     subject to regulatory  approval and are exercisable at $1.00 per share over
     a 24-month period.



                                      F-19