Diamonds and Gold



Twin Mining Corporation ("Twin Mining") is
a diamond exploration and gold mine development company.

Twin Mining's focus during the last three years
was on locating and exploring diamond deposits in Canada's eastern Arctic. With the price of gold
having risen well above U.S.$300/ounce, Twin Mining is diversifying its activities by reactivating
and fast-tracking the advanced Atlanta Gold Project without detracting from our diamond
exploration focus.



Diamonds



Jackson Inlet

This 989 sq. km (244,382 acres), 100% owned
property, located on the west coast of the Brodeur Peninsula of Baffin Island, Nunavut, has delivered,
from the Freightrain pipe more than 46 carats of gem quality diamonds from six pit mini-bulk
samples. Diamond Trading N.V., Antwerp, Belgium ("Diamond Trading"), a minority shareholder of
Twin Mining, describes the diamonds extracted as having
"a high colour and purity grading of the sawable and makeable stones and the absence of
boart, rejections, cubes and coated".* The analysis of the kimberlite core established grade and
continuity at depth.



TORNGAT

This 327 sq. km (80,802 acres) 100% owned
property, located on the east coast of the Ungava Peninsula, Quebec, hosts a 1 to 4 meter wide
diamondiferous dyke system which has been traced over 37 km. Grab samples from outcropping
kimberlite delivered encouraging diamond results and identified two dyke segments of 900 meters
and 400 meters respectively with higher stone densities than other sampled parts of the dyke
system. The diamonds extracted are described by SGS Lakefield Research Limited ("Lakefield") as:
"very white, mostly transparent and of high preservation".



Gold



Atlanta Gold Project

("Atlanta")
- this 100% owned property, located in Elmore County, Idaho, U.S.A., consists of 35
patented and 113 unpatented, contiguous mining claims covering 7.4 sq. km (1,840 acres).
Previous studies (1997 Pre-feasibility Study), based on extensive reverse circulation (RC) and
core drilling information, have established a measured mineral resource of 18,042,000 tonnes
at a grade of 1.9 g Au/t and 5.6 g Ag/t. As a result of a gold price at a sustained level well above
U.S.$300/ounce, Twin Mining reactivated the Atlanta Gold Project and has already completed
a 1,284 meter metallurgical drilling program, as part of a program to prepare a bankable
feasibility study. The common shares of the Corporation are listed on the Toronto Stock Exchange ("TSX") under
the symbol TWG and the Berlin/Frankfurt OTC (878341, EDV-Kurzel ATG).



* Description Definition of Rough Diamonds



Sawable Diamond

A rough diamond that can be sawn in two thus
improving polished recovery of 50% rough weight.



Makeable Diamond

A Rough diamond of a shape that is most efficiently
polished without sawing or cleaving and yielding 25 to 50% in polished.



Clivage Diamond

A Rough diamond that has to be split into smaller
stones to rid it of impurities like inclusions or fractures, or of inferior shape. Clivage-1 would
typically yield from 10 to 35% of polished, albeit of smaller size. Clivage-2 yields 10% or less.

---

Highlights



Jackson
Inlet Diamond Project



o
Land acquisition in 2002 at Jackson Inlet

added
32 claims covering 334 sq. km mainly southeast
of the core land position, which covers
the Freightrain pipe. Total land holdings, which
are 100% owned, consist of 111 claims on
989 sq. km.



o
Six pit mini-bulk samples, ranging from 2.5

to
76.3 tonnes and totalling 228 tonnes, were excavated
from the outcropping Freightrain pipe.
The first 1.557 carat gem quality diamond was
recovered as part of a combined parcel of 46.208
carats of which 30 diamonds were between 0.25
and 1.557 carats.



o
Considering the small size of the mini-bulk

samples,
diamond modelling results are very encouraging
and show significantly higher projected
diamond grades, up to 50 CPHT (carat
per hundred tonnes) compared to recovered
grades of up to 34 CPHT.



o
Diamond Trading examined the parcel of

46.208
carats consisting of 869 stones of +0.85
mm size. Diamond Trading stated: "Notable
is the high colour and purity grading of

the
sawable and makeable stones and the absence
of boart, rejection, cubes and coated".



o
Diamond results from kimberlite core samples

from
15 Freightrain pipe core holes, with the deepest
hole drilled to a depth of 206 meter, appear
to be consistent with diamond grades obtained
from the mini-bulk samples.



Atlanta
Gold Project

o
The Annual Report of 2001 stated: "Twin Mining

plans
to resume the development of the Atlanta Gold
Project once a sustained gold price above U.S.$300/ounce
has been reached." With gold

now
at price levels close to U.S.$370, the project economics
of the Atlanta Gold Project have become
very attractive based on the 1998 Behre

Dolbear
& Company Inc. ("Behre Dolbear") Scoping
Study and the 1999 Update, as well as advantages
such as:

- Location
in the mining friendly State of Idaho, U.S.A.
- Easy access via public roads
- Gold resources are located on private property

Therefore,
the project was reactivated mid 2002 by
advancing it toward a bankable feasibility study.



o
As a first step, metallurgical drilling to obtain

representative
ore grade samples from the Monarch
and Idaho deposits was completed early December
2002. A total of 1,284 meter of HQ

core
(63.5 mm diameter) from 13 holes was recovered.
The core from 12 of the holes provides fresh
ore samples for metallurgical testing to

obtain
new gold recovery data. The 13th hole provides
material for geotechnical testing.



o
The acquisition of the outstanding 20% interest

in
the Atlanta Gold Project in December of 2002, made
Twin Mining the 100% owner of this very
attractive asset.



---

Message
to Shareholders



In
2002, Twin Mining created significant value for its
shareholders. The
Company was rewarded in 2002 with exceptional results
for the effort of undertaking an aggressive exploration
program at Jackson Inlet during the "Breakthrough
Year" 2001 which was encouraged by
having successfully located diamondiferous kimberlite
at TORNGAT. Jackson
Inlet is believed to be a new "Kimberlite Province"
that was discovered by Twin Mining.

Senior
exploration companies noted our success and
surround us now with contiguous claims as well
as with multimillion acre exploration permits.

The
diamonds recovered from the Jackson Inlet Freightrain
pipe, more than 50 carats to date, are of
gem quality and are noted by Diamond Trading

for
their high colour, purity grading and absence of
boart, rejection, coated and cubes. These early positive
results from Freightrain and additional

potential
kimberlite targets are an exciting indicator for
our shareholders of the potential of the new kimberlite
province. It is underscored by the location of
the Jackson Inlet property in an arctic desert near
a natural deep water harbour. These attributes contribute
to a lower capital and operating cost
environment. An
additional bonus for our shareholders came with
the increase in the gold price to well above U.S.$300/oz.
The average gold price for the year 2002
was U.S.$310/oz and for the fourth quarter it had
risen to U.S.$322/oz. Twin Mining acquired in December
2002 the remaining 20% of the project,
without cost, to become the 100% owner of
this very attractive asset. Twin Mining moved quickly
to advance the project towards a bankable feasibility
study for purposes of project financing. By
year-end, the metallurgical drilling of 1,284

meter
of core, to obtain 2.9 tonnes of fresh ore for a
leach test program, had been completed. Expenditures
for 2002 totalled nearly $4 million

to
produce the exciting results on Jackson Inlet and
Atlanta. As
in previous years, a high level of quality control was
maintained in the sampling and processing of kimberlite
and the extraction of diamonds. MPH Consulting
Limited ("MPH") and AMEC E
& C Services Limited ("AMEC") conducted regular, independent
procedural audits to accomplish Quality
Assurance/Quality Control ("QA/QC").



Our
Team

To
strengthen and enlarge the skill pool, Twin Mining
established an independent technical advisory
group to guide the diamond program.

Our
advisors have superior knowledge in their field
and are internationally recognized.

Malcolm
McCallum - Independent Consultant



Malcolm
Thurston and
John Linday -AMEC E & C Services Limited



Bruce
Jago - SGS Lakefield Research Limited



Diamond
Trading N.V. Antwerp, Belgium



As
a reflection of the growth of Twin Mining and the
need to increase our in-house capabilities, Rodney
N. Thomas was appointed Vice-President

Exploration.
Rod brings to Twin Mining a wealth of
experience, including arctic exploration, and is responsible
for Twin Mining's diamond and gold

exploration
activities. He has more than 25 years of
domestic and international exploration experience in
various commodities, including gold, and with various
mining and exploration companies, including
16 years with BHP Minerals. He is registered
as a Professional Geologist in Nunavut

and
the Northwest Territories and as a Professional Geoscientist
in the Province of Ontario.



Finances

Twin
Mining is debt free and succeeded in raising $3.3
million in 2002 flow-through funds despite a difficult
financing environment. Twin Mining

sold
6,500,000 flow-through units at a price of $0.50
per unit, with each unit consisting of one flow-through
common share and one half common

share
purchase warrant. Each whole warrant entitles the
holder to purchase one additional common share
at a price of $1.00 for two years.

Twin
Mining enters the year 2003 with a solid balance
sheet and exciting projects to produce results
for our shareholders.



Outlook

During
2003, in view of the extremely encouraging results,
gem quality diamonds in kimberlite and the
potential for commercial quantities at the

Freightrain
pipe, Twin Mining's diamond exploration program
will focus on establishing the geometry of
the Freightrain kimberlite pipe and continue

Phase-1
drill testing of potential kimberlite targets. Twin
Mining's objective on the TORNGAT property
is to advance the project with Joint Venture

partners.
The size of the dyke system and the gem quality
diamonds recovered to date (producing the
"First Diamond of Quebec"), make it an

attractive
exploration target. Our
exploration strategy is to maximize shareholder value
by developing the known kimberlite targets of
commercial potential and to identify and explore new
prospective targets.



*For
2002, (industry) sales of rough diamonds increased
overall with imports into Belgium up by 11.2%
to 6.4billion US$ and to India by 37.8% to

5
billion US$. Polished
diamond consumption increased likewise with
US imports going up by 17.1% to 10 billion US$. (Rapaport
Diamond Report). "The
2003 outlook will be determined by a recurring short
supply of rough (diamonds), in the face of growing
demand from polishing centres on one hand
and the effects of marketing efforts for diamond
jewelry on the other. The latter is currently going
through a revolution as the DTC, the selling arm
of De Beers, applies the Supplier of Choice Strategy
(cf.) which requires its clients, representing 60%
of world production, to actively participate in marketing.
Other major producers, BHP Billiton and
RTZ diamonds, are likely to heed De Beers example.
It therefore seems probable that new productions
from Diavik will be readily absorbed. It
may not even be sufficient to fill the supply demand
gap. The DTC has introduced a 5% price hike
at the start of the year and more may follow. Yet
again the desirability of diamonds and the resilience
of the business have been proven. It is imperative
that new deposits be found to meet future
demand". * The
100% owned Atlanta Gold Project found its

window
of opportunity with gold price levels rising above
U.S.$300 on a sustained level and even surpassing
U.S.$350/oz in January of 2003. As a

result
of these important events the Atlanta Gold Project's
development activities were accelerated and plans
for 2003 are to carry out metallurgical leach testing
to be followed by a bankable feasibility study. Fears
of a war in the Middle East, a weakening U.S. dollar
and moves by gold producers to unravel their hedged
positions, all pushed gold higher. As these trends
are of a longer duration gold is expected to test
the U.S.$400 level during the year 2003. We
are excited about the present and future prospects,
including growth opportunities for Twin
Mining. We thank our shareholders and stakeholders
and look forward to their continuing support
and loyalty. We also thank our employees, directors,
consultants and contractors for their dedication
and excellent work.



/s/ Hermann Derbuch



Hermann
Derbuch, P.Eng.

Chairman,
President & CEO

January,
2003



*
Diamond Trading N.V. of Antwerp, Belgium, Internal Report

---



Jackson
Inlet Diamond Project

Baffin
Island,Nunavut 100%ownership Accomplishments

Twin
Mining has recovered more than 50 carats of gem
quality diamonds from a series of trench and pit
mini-bulk samples obtained from outcropping kimberlite
on the Freightrain pipe. This approach established
the prospectivity of the Freightrain pipe
early in the exploration phase of the project as
well as establishing what is believed to be a new kimberlite
province. Management is encouraged

by
these results and is excited to be at the beginning of
a significant exploration effort. The
first core-drilling program of 1,108 meter

commenced
in 2001 with 17 holes drilled into the Freightrain
pipe. 15 core holes intersected 315 meter of
kimberlite weighing 1,105 kg. The objective to test
the continuity of kimberlite at depth was accomplished.
Diamond analysis data of drill core were
consistent with mini-bulk sample results.  A
two hole, 331 meter, core-drilling program on Cargo-1
intersected 231 meter of kimberlite weighing
925 kg. The analysis of diamond data found
encouraging higher-grade sections along the
length of the holes.



The
ambitious 2001 exploration program delivered the following results in 2002:

Six
mini-bulk samples, ranging from 2.49 to 76.30 tonnes and totalling 228.19 tonnes,
obtained from selected exposures of the Freightrain kimberlite, were delivered
in late 2001 to, and processed by, Lakefield Research Limited's Diamond
Exploration Services DMS (dense media separation) facility
in Lakefield, Ontario. Preliminary results are very encouraging with the
recovery of diamonds of a quality and in quantities that underscore the
potential for commercial quantities at Freightrain and the overall exploration
potential of the Jackson Inlet area. Diamond results from 1,105 kg Freightrain
kimberlite core samples and 925 kg Cargo-1 kimberlite core samples indicate
continuity of diamond grade to pipe depths of 206 meter and 150 meter
respectively. Sampling,
handling and transporting of sample material adhered to industry QA/QC
procedures and were audited by MPH. Diamond extraction and analysis of mini-bulk
samples was provided by Lakefield who are accredited by the Standards Council of
Canada and CAEAL for specific registered tests. AMEC monitored sample handling
and processing procedures at Lakefield on an ongoing basis.











Freightrain
Diamonds Recovered from Mini-Bulk Samples

P

|pit
      sample site | sample
      dry weight
      (tonnes) | total
      carats | largest
      stone, weight (carat)
|--------------------- | -------------------------------------- | ------------------ | -----------------------------------
|JI-1                  | 76.30                                  | 17.309             | 1.557                              
|JI-3                  | 56.86                                  | 7.454              | 0.384                              
|JI-4                  | 41.87                                  | 14.083             | 0.867                              
|JI-5                  | 23.72                                  | 2.525              | 0.936                              
|JI-5S                 | 2.49                                   | 0.302              | 0.133                              
|JI-6                  | 26.95                                  | 4.535              | 0.466                              
|TOTAL                 | 228.19                                 | 46.208            

it
Sample Site Sample Dry Weight (ca

Results
are very encouraging with the recovery of the property's first 1.557 carat gem
quality diamond
as part of a combined parcel of 46.208 carats wherein 30 diamonds are between
0.25 and
1.557 carats.



---

Freightrain
Mini-Bulk Samples Results
by Screen Size and Number of Diamonds

|sample
      number | sample
      weight | +4.75mm        | 3.35
      to 4.75mm | 2.36
      to 3.35mm | 1.70
      to 2.36mm | 1.18
      to 1.70mm | 0.85
      to 1.18mm | total         
|------------------- | ------------------- | -------------- | -------------------- | -------------------- | -------------------- | -------------------- | -------------------- | --------------
|                    | (tonnes)            | #
      stones | #
      stones       | #
      stones       | #
      stones       | #
      stones       | #
      stones       | #
      stones
|JI-1                | 76.30               | 2              | 5                    | 21                   | 40                   | 93                   | 96                   | 257           
|JI-3                | 56.86               |                |                      | 10                   | 21                   | 64                   | 74                   | 169           
|JI-4                | 41.87               |                | 1                    | 15                   | 49                   | 100                  | 108                  | 273           
|JI-5                | 23.72               |                | 1                    | 2                    | 4                    | 16                   | 21                   | 44            
|JI-5S               | 2.49                |                |                      |                      | 2                    | 3                    | 1                    | 6             
|JI-6                | 26.95               |                | 1                    | 1                    | 15                   | 49                   | 54                   | 120           
|TOTAL               | 228.19              | 2              | 8                    | 49                   | 131                  | 325                  | 354                  | 869           



Freightrain
Mini-Bulk Samples Results
by Screen Size and Carat Weight

|sample
      number | sample
      weight | +4.75mm | 3.35
      to 4.75mm | 2.36
      to 3.35mm | 1.70
      to 2.36mm | 1.18
      to 1.70mm | 0.85
      to 1.18mm | total  
|------------------- | ------------------- | ------- | -------------------- | -------------------- | -------------------- | -------------------- | -------------------- | -------
|                    | (tonnes)            | (carat) | (carat)              | (carat)              | (carat)              | (carat)              | (carat)              | (carat)
|JI-1                | 76.30               | 2.346   | 3.050                | 4.224                | 3.377                | 3.107                | 1.205                | 17.309 
|JI-3                | 56.86               |         |                      | 2.734                | 1.735                | 2.066                | 0.919                | 7.454  
|JI-4                | 41.87               |         | 0.868                | 4.132                | 4.411                | 3.359                | 1.313                | 14.083 
|JI-5                | 23.72               |         | 0.936                | 0.538                | 0.260                | 0.484                | 0.307                | 2.526  
|JI-5S               | 2.49                |         |                      |                      | 0.210                | 0.086                | 0.006                | 0.302  
|JI-6                | 26.95               |         | 0.285                | 0.466                | 1.540                | 1.567                | 0.677                | 4.535  
|TOTAL               | 228.19              | 2.346   | 5.139                | 12.094               | 11.532               | 10.669               | 4.427                | 46.208 



Diamonds,
retrieved from the combined mini-bulk samples, were examined by Diamond Trading
who found the quality profile of the diamonds to be promising, with a high
colour and purity grading of the sawable and makeable stones and the absence of
boart. Their findings are extremely encouraging for the project
economics although they are based on a small sample (869 diamonds, all greater
than 0.85 mm square mesh sieve size and, in aggregate 46.208 carats) and
therefore should be considered preliminary only and not necessarily reflective
of future results.

Of
importance are the results of diamond grade modelling, as determined by AMEC,
indicating that projected grades are significantly higher than recovered grades.
The nature of diamond distribution within kimberlite is such that the relatively
small mini-bulk sample size, as compared to feasibility stage bulk samples that
may consist of several thousand tonnes of material, requires
that modelled grades should be considered as indicative rather than absolute and
as such are within a broad range of possible values. Additionally, actual grades
would also be subject to recovery factors based on the overall efficiency of a
commercial processing plant.



---

Jackson
Inlet Diamond Project

Baffin
Island,Nunavut 100%ownership (continued)



Freightrain
Modelled Mini-Bulk Sample Grades

|sample | carat
      weight
      (+0.85mm) | recovered
      grade
      +0.85
      mm
      (ct
      / tonne) | modelled
      grade
      +0.85
      mm
      (ct
      / tonne)
|------ | ---------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------------------------
|name   | dry
      weight
      tonnes     
|JI-1   | 76.3                               | 17.308                                                              | 0.227                                                             
|JI-3   | 56.9                               | 7.454                                                               | 0.131                                                             
|JI-4   | 41.9                               | 14.083                                                              | 0.336                                                             
|JI-5   | 23.7                               | 2.526                                                               | 0.107                                                             
|JI-5S  | 2.5                                | 0.302                                                               | 0.121                                                             
|JI-6   | 26.9                               | 4.535                                                               | 0.169                                                             
|Total  | 228.2                              | 46.207                                                              | 0.202                                                             



Twin
Mining Diamond Project Claim Locations









2002
Exploration Program

Mineral
claim holdings were increased during the year
to secure areas thought to be prospective for kimberlite.
Thirty-two claims (in aggregate 82,640acres
or 334.43 sq. km) were acquired, securing various
targets, within 80 km south and east of the southern boundary of the main Twin Mining
claim
block. Total property holdings now stand at 111
claims covering 244,487 acres or 989 sq. km.

To
advance the Jackson Inlet Project, Twin Mining is
pursuing a multi phase exploration program. The
two main objectives for the 2002 exploration season
were the evaluation of known potential kimberlite
targets by drill testing, and ongoing surface
exploration designed to identify potential targets
for drill testing. Work
started with Phase-1 comprising ground magnetometer
and gravity surveys, soil sampling and
core drilling on known pipes and previously identified
airborne magnetometer anomalies. Soil samples
and drill core samples are presently being processed
at Lakefield. Ground
magnetic surveys (321 sq. km) of 13 target
areas (including Freightrain and Cargo-1), as
defined by 2001 aeromagnetic surveys were designed
to resolve and position magnetic anomalies
believed to be in response to kimberlite prior
to drilling.

Sample

---

Review
and Program Objectives
for 2003

Results
obtained to date are extremely encouraging and
are indicative of the existence of gem quality diamonds
in kimberlite and the potential for

commercial
quantities at Freightrain. Whereas the Freightrain
pipe remains an important exploration target,
the results also serve to highlight the potential of
the entire Jackson Inlet area. These
results clearly support management's decision
to continue exploration on the property in
2003, including:



o
establishing the geometry of the Freightrain

kimberlite
pipe by continued definition drilling,



o
continued Phase-1 drill testing of potential

kimberlite
targets identified on the basis of the 2001
aeromagnetic survey,



o
additional aeromagnetic surveying of selected

claim
blocks acquired in 2001 and 2002, as well as,



o
soil sampling and ground magnetics over selected

claims
and target areas, respectively.



---

TORNGAT
Diamond Project

Nunavik,Northern
Quebec 100%ownership



The
TORNGAT property consists of 3 mine exploration
permits totalling 327 sq. km. Twin Mining's
exploration efforts to date have been

directed
towards a series of 5 diamondiferous kimberlite
dyke systems that strike over a total combined
length of 37 km. In
2002, samples from two anomalously diamon-diferous dyke
segments were processed. Fifteen samples,
ranging in weight from 24 kg to 100 kg were
analyzed for diamonds by caustic fusion (100-micron
cut-off size), with selection and description
being completed by Lakefield and reviewed
by AMEC. The
location of the two dyke segments, consisting of
the 900 meter and 400 meter segment respectively, is
shown in the accompanying figure. Analytical results
are tabulated below.









---

Dyke
Segment Diamond Summary according
to square mesh sieve analysis provided by Lakefield



|sampled
      segment                         | 900m
      dyke segment
      (578.52kg) | 400m
      dyke segment
      (432kg)
|--------------------------------------------- | ---------------------------------------- | -------------------------------------
|sieve
      size
      (mm
      square mesh) | number
      of
      diamonds           | weight
      of diamonds (carats)    
|0.85
      to 1.18                            | 3                                        | 0.042511                             
|0.600
      to 0.850                          | 10                                       | 0.046633                             
|0.425
      to 0.600                          | 27                                       | 0.038755                             
|0.300
      to 0.425                          | 38                                       | 0.020585                             
|0.212
      to 0.300                          | 69                                       | 0.015260                             
|0.150
      to 0.212                          | 99                                       | 0.007448                             
|0.100
      to 0.150                          | 103                                      | 0.002725                             
|Total                                         | 349                                      | 0.173917                             



Samples
listed in this table make up the 900
meter TORNGAT North dyke segment

|sample
      no.   | Sample
      weight
      kg | diamonds
      recovered | total
      diamond weight
      in
      sample (carats)
|------------------ | ---------------------------- | ------------------------ | ---------------------------------------------------------
|GL10               | 101.80                       | 99                       | 0.026835                                                 
|887573             | 24.00                        | 32                       | 0.006175                                                 
|DB09               | 100.00                       | 60                       | 0.017590                                                 
|GL09               | 72.52                        | 47                       | 0.030285                                                 
|887574             | 24.00                        | 14                       | 0.002190                                                 
|DB03               | 100.00                       | 43                       | 0.015010                                                 
|GL08               | 81.25                        | 20                       | 0.032385                                                 
|887575             | 24.00                        | 2                        | 0.000060                                                 
|DU
      character | 50.95                        | 32                       | 0.043387                                                 
|TOTAL              | 578.52                       | 349                      | 0.173917                                                 

Notes:
1) 13 diamonds measure greater than 0.5 mm in three dimensions and

2)
41 diamonds measure greater than 0.5 mm in two dimensions.

Samples listed in this table make up the

400
meter TORNGAT North dyke segment

|sample
      no. | Sample
      weight
      Kg | diamonds
      recovered | total
      diamond weight
      in
      sample (carats)
|---------------- | ---------------------------- | ------------------------ | ---------------------------------------------------------
|DB04             | 100.00                       | 36                       | 0.021595                                                 
|DB01             | 100.00                       | 63                       | 0.029975                                                 
|887587           | 24.00                        | 15                       | 0.021265                                                 
|DB06             | 100.00                       | 53                       | 0.011465                                                 
|GL07             | 84.00                        | 29                       | 0.042070                                                 
|887588           | 24.00                        | 1                        | 0.002570                                                 
|TOTAL            | 432.00                       | 197                      | 0.128940                                                 

Notes:
1) 12 diamonds measure greater than 0.5 mm in three dimensions and

2)
28 diamonds measure greater than 0.5 mm in two dimensions.





Largest
diamonds recovered to date from the 900 meter
and 400 meter dyke sections are 2.90 x 2.50 x
1.80mm (0.065 ct) and 1.85 x 1.25 x 1.07mm(0.0142
ct), respectively. The diamonds are very white,
mostly transparent and of high preservation, as
previously described by Lakefield.

These
results and work to date on the project relate
to exposed dyke intervals that strike roughly at
right angles to stratigraphy. Cross faults, that

are
believed to occupy overburden covered valley floors,
also intersect dykes at right angles and potential
exists for dyke width enhancement

where
dykes and cross structures meet. Additional surveying
and ultimately diamond drilling would be
required to evaluate overburden covered sections of
the dyke. Twin
Mining's diamond project focus in 2003 is directed
towards its large tonnage potential Jackson
Inlet Project. To advance the TORNGAT Project
in the coming year management will pursue
other options, including Joint Venture participation.

---

Atlanta
Gold Project

Elmore
County,Idaho,U.S.A.100%ownership

The
Atlanta Gold Project, 100% owned by Twin Mining,
was reactivated once it became evident that
the price of gold had risen above U.S.$300 on a
sustained basis. The Atlanta Gold Project is now advancing
rapidly toward preparation of a final feasibility
study and a production decision expected by
the first quarter of 2004.



Environmental
Audit

Montgomery
Watson Harza, an environmental consulting
firm experienced in mine permitting, was
retained in May 2002 to conduct a review of

the
existing environmental baseline data and recommend
a program to update our information for
a new Environmental Impact Statement (EIS).

A
Draft Environmental Impact Statement (DEIS) had
been prepared for Atlanta by the U.S.D.A. Forest
Service, Boise, National Forest in l989.

A
great advantage for the project is the extensive amount
of baseline data which currently exists on the
project and can be used to update the existing DEIS.
This should help to reduce the lengthy permitting
process significantly. The existing environmental
resource information is planned to

be
updated during the summer field season of 2003
at an estimated cost of U.S.$380,000.



Metallurgical
Drilling Program

To
confirm extensive previous in-house and third party test work (more than 50
column leach tests) and simulate
conventional heap leach conditions, a metallurgical column testing program is planned
using fresh mineralization representative of the Monarch and the Idaho deposits.
The
metallurgical drilling program was designed by Twin Mining's staff and reviewed
by Behre Dolbear. Drilling
commenced on October 23, 2002. A total of 1,284 meters (4,211 feet) was drilled
on 13 core holes
using HQ size core (63.5mm / 2.5 inch diameter). Nine holes were drilled into
the Monarch ore

body
and four holes were drilled into the Idaho ore body. One of the four holes was a
geotechnical hole, which
was drilled into the south wall of the Idaho ore body. Split
core samples were collected in 3 meter increments and were assayed for gold
using a 500 gram cyanide
bottle roll test as a first step in determining gold recovery characteristics.



Monarch
Deposit

|hole
      # | dip     | mineralized
      interval                                        | core
      length         | assay                        
|------------ | ------- | ----------------------------------------------------------------- | ------------------------- | -----------------------------
|oz/ton       | g/tonne
|D02-14W05    | 50o     | 147'-177'
      227'-267'                                         | 30'
      40'             | 0.103
      0.061            
|D02-10W06    | 54o     | 30'-148'                                                          | 118'                      | 0.061                        
|D02-8W07     | 60o     | 142'-322'
      or
      142'-362'                                | 180'
      220'           | 0.076
      0.066            
|D02-6W08     | 56o     | 90'-158'
      181'-301'
      or
      181'-341'                 | 68'
      120'
      160' | 0.054
      0.059
      0.050
|D02-5W09     | 65o     | 55'-360'
      incl.
      265'-360'                              | 305'
      95'            | 0.065
      0.120            
|D02-1W10     | 68o     | 95'-185'
      285'-409.5'
      425'-465'                        | 90
      124.5'
      40' | 0.029
      0.039
      0.149
|D02-1E11     | 64o     | 196'-282'
      incl.
      246'-282'
      incl.
      256'-266' | 86'
      36'
      10'   | 0.231
      0.481
      1.030
|D02-3W12     | 54o     | 10'-70'                                                           | 60'                       | 0.168                        
|D02-3E13     | 56o     | 100'-290'                                                         | 190'                      | 0.058                        



---

Idaho
Deposit

|hole
      # | dip     | mineralized
      interval | core
      length | assay
|------------ | ------- | -------------------------- | ----------------- | -----
|oz/ton       | g/tonne
|D02-36W01    | 60o     | 0'-280'                    | 280'              | 0.046
|D02-34W03    | 57o     | 10'-310'                   | 300'              | 0.046
|D02-31W04    | 60o     | 10'-305'                   | 295'              | 0.039



Environmental/Geotechnical
Hole for Wall Rock Sample

|Hole
      # | dip     | mineralized
      interval | core
      length | assay
|------------ | ------- | -------------------------- | ----------------- | -----
|oz/ton       | g/tonne
|D02-34W02*   | 58o     | 20'-150'                   | 130'              | 0.014



All
of the holes were drilled as angle holes ranging from
-45 to -60 degrees which cut across the width of
the shear zone (which is 18 to 55 meters wide) to
obtain representative samples of gold mineralization.
Mineralized drill core was sawed lengthwise
with one half of the core saved for metallurgical
testing, one quarter for assaying, and one
quarter was saved for reference.



Metallurgical
Testing Program

The
metallurgical testing program is scheduled to start
early in the first quarter of 2003 and conclude by
the end of the second quarter. The program is designed
to produce up to date gold recovery values
that will be incorporated into the final feasibility
study. Three ore type composites will be made
according to gold recovery characteristics obtained
from the results of the 500 gram cyanide

bottle
roll tests; high gold recovery (> 62%), moderate
gold recovery (34-61%), and low gold recovery
(<34%). Atlanta
ores have undergone extensive metallurgical testing
over the years, including over 50 column leach
tests. However, most of these tests were done in-house,
used primarily coarse crush sizes (38.1to
50.8 mm, 1 1/2 (one-half) to 2 inches) and were leached for relatively
short periods of time (approx. 60 days). A
close examination of the historic metallurgical data
and a limited amount of column test data

from
l998 indicates that finer crushing and a longer leach
time will significantly improve the gold recovery
over what was achieved in previous work, especially
for the moderate and low recovery ores. Hole
# Dip Mineralized Core Length Assay

---



Approximately
fifteen column leach tests are planned
and will be carried out at an independent metallurgical
laboratory. The columns will be operated
for up to 120 days with crush sizes ranging from
9.51 to 38.1mm (3/8 to 11/2 (one-half) inches). A full suite
of metallurgical and environmental data is scheduled
for collection to support both the feasibility
study and the environmental planning and
permitting efforts. Final
Feasibility Study A
final economic feasibility study is scheduled to begin
during the second quarter of the year and is targeted
for completion in the first quarter 2004. Following
the project outline in the l998 Behre Dolbear
Scoping Study, a conventional open pit, cyanide
heap leach operation is planned. The measured
mineral resource, calculated for the two deposits
with a cut-off grade of 0.68 grams per tonne
(0.02 ounce per ton), is 18,042,000 metric tonnes
grading 1.9 grams of gold per tonne. The resource
by deposit is shown. The
feasibility study will incorporate the new gold recovery
information from the metallurgical testing program,
develop final capital and operating costs for
the project, and calculate a mineable reserve from
the measured mineral resource. This new cost
and reserve information will then be used to determine
the most economic mining schedule for
Atlanta and set the stage for construction and gold
production currently targeted for 2005.















Leach
Recovery As A Function of Crush Size







Environmental
Permitting

In
parallel with the metallurgical testing program and
feasibility study, an Environmental Impact Statement (EIS) will be prepared in compliance
with
the United States National Environmental Policy
Act (NEPA). The Atlanta Gold Project has a
tremendous advantage in this area, since it has most
of the baseline environmental data needed for
an EIS and in fact, had previously prepared a Draft
EIS in l989. Most of this information is still valid
for the current project and will be updated during
the summer season of 2003.



Key
components of the process are underway: the preparation
of a Memorandum of Understanding (MOU)
between the U.S. Forest Service and Twin Mining,
an updated Plan of Operations, and a new
Reclamation Plan. The MOU serves to outline
each party's responsibilities and lay out the
procedures and timetable for the EIS process. The
Plan of Operations is a preliminary description

of
the mining operation that is proposed by Twin Mining
and is used as the basis for public scoping and
the development of the data required for the EIS.
Based on the Plan of Operations, a Reclamation Plan
is prepared to outline the proposed methods and
timing to reclaim the mining and processing areas
after the project has ceased production. These
three items are scheduled to be completed

in
the first quarter of 2003. During this time, the independent,
third party contractor will be selected by
the U.S. Forest Service to prepare the EIS.

Current
plans are to complete the DEIS by the second
quarter of 2004 and the final EIS in the first
quarter of 2005. Twin
Mining has maintained close ties with both state
and federal regulatory authorities during the past
several years and has been proactive in

soliciting
support. Meetings have been held with the
Idaho Governor's office, Idaho Department of Lands,
the U.S. Senators from Idaho, and the Environmental
Protection Agency. We strongly believe
that a partnership approach to the permitting process,
where everyone participates, will allow us to
proceed quickly and efficiently to final approval of
our EIS.



Atlanta
Gold Project Mineral Resources by Deposit



|                         | mineral
      resources |  |                         |  |         |  |         |  |           |  | total   | 
|------------------------ | ----------------------- |  | ----------------------- |  | ------- |  | ------- |  | --------- |  | ------- | 
|                         | measured
      resource |  | inferred
      resource |  | total   |  |         |  |           | 
|                         | tonnes                  |  | gold                    |  | tonnes  |  | gold    |  | tonnes    |  | gold    | 
|                         |                         |  | g/tonne                 |  |         |  | g/tonne |  |           |  | g/tonne | 
|monarch                  | 9,959,000               |  | 2.3                     |  |         |  |         |  | 9,959,000 |  | 2.3     | 
|open
      pit           |                         |  |                         |  |         |  |         |  |           |  |         | 
|                         |                         |  |                         |  |         |  |         |  |           |  |         | 
|idaho                    | 8,083,000               |  | 1.3                     |  |         |  |         |  | 8,083,000 |  | 1.3     | 
|open
      pit           |                         |  |                         |  |         |  |         |  |           |  |         | 
|total
      measured     | 18,042,000              |  | 1.9                     |  |         |  |         |  | 18,042,00 |  | 1.9     | 
|mineral
      & inferred |                         |  |                         |  |         |  |         |  | 0         |  |         | 
|                         |                         |  |                         |  |         |  |         |  |           |  |         | 
|resource                 | 40,800                  |  | 11.6                    |  | 670,400 |  | 10.3    |  | 711,200   |  | 10.6    | 
|underground              |                         |  |                         |  |         |  |         |  |           |  |         | 



---

Layuh
Gold Project



Kalimantan,Indonesia

Twin
Mining has an 85% Joint Venture interest in the
Layuh gold exploration project, located on the Island
of Kalimantan with its Indonesian partner

PT
Harita Jayaraya. The project is held by Twin Mining
through its 100% owned subsidiary Twin Gold
Cayman Corporation. The
Layuh Project is located in East Kalimantan and
is being kept on care and maintenance until an
improved political and economic environment allows
a reassessment of Twin Mining's options to advance
the property. Since
the Indonesian government granted Twin Mining
a Seventh Generation Draft C.O.W.

(Contract
of Work) and extensions for the Approval
in Principle, Indonesia introduced new mining
laws that transferred increased powers to

the
provinces, including extensions for Approvals in
Principle. Twin Mining's most recent request (2002)
for an extension for the Approval in

Principle
was filed again with the Central Government
in Indonesia. The Central Government
advised Twin Mining that it has directed
the Governor of Kalimantan, Selatan to grant
the Approval in Principal.



---

MANAGEMENT
DISCUSSION AND ANALYSIS

(The
following discussion and analysis should be read in conjunction with the
consolidated financial statements and the corresponding notes)

Summary

Twin
Mining Corporation the ("Company"), has been an exploration-stage mineral
resource company since inception and has undertaken gold exploration and mine
development activities since 1994. Since June 1999, the Company has focused on
diamond exploration in Canada. In 2002, the Company reactivated development
activities on its Atlanta Gold Property and, also, continued to direct its
efforts towards diamond exploration on its Jackson Inlet Diamond Property.

TORNGAT
Diamond Property

In
1999, the Ministere des Ressources naturelles du Quebec had granted the Company
four contiguous Mine Exploration Permits for a period of five years that cover
an area of 444 sq. km on the eastern coast of Ungava Bay in Northern Quebec. In
2000, a fifth permit covering 62.85 sq. km was granted for five years. In 2001,
the Company renewed three of the permits covering an area of 327 sq. km and
wrote off costs of $218,060 from the two abandoned properties. In 2002, these
three permits were again renewed. In January 2003, the results of the analysis
of 15 grab samples taken in 2001 from its TORNGAT North dyke system reveals that
they are consistent with the results of high quality, high purity and very white
diamonds taken from the mini-bulk sample of 2000. Since the Company's diamond
exploration focus is on its large tonnage potential Jackson Inlet Diamond
Property (see next paragraph), the Company is pursuing several options,
including seeking joint venture participation, to advance the property further.

Jackson
Inlet Diamond Property

On
April 27, 2000, the Company signed a letter agreement with Helix Resources Inc.
("Helix"), a private company based in Niagara Falls, for a second diamond
property covering three mining claims totaling 28.85 sq. km (7,128.5 acres)
staked on the Jackson Inlet Property on the Brodeur Peninsula of Baffin Island ("Jackson
Inlet"). One of the claims, covering 10.03 sq. km (2,480 acres), was
subsequently allowed to lapse. In 2000, the Company staked another 16 claims
covering 106.39 sq. km (26,289.85 acres) close to the claims acquired above by
paying an initial filing fee of $2,629. On December 15, 2000 the Company
exercised its right to the Jackson Inlet mining claims by paying $50,000 in cash
and issuing 30,000 common shares of the Company to Helix. By the end of 2000,
the total area staked in the region was 125.21 sq. km (30,938.35 acres). In
2001, the Company staked another 61 mineral claims in the region covering a
further 529.77 sq. km (130,908.35 acres) by paying initial filing fees of
$13,091. By the end of 2001, the Company held a 100% interest in 79 mineral
claims totaling 654.97 sq. km (161,846.7 acres). During the current year,
another 32 mineral claims covering a further 334.43 sq. km (82,640 acres) were
staked and the Company paid an initial filing fee of $8,264. By the end of 2002,
the Company owned a 100% interest in 111 mineral claims totaling 989.4 sq. km
(244,486.7 acres) within the region. In September 2002, the Company completed
geophysical and core-drilling programs in the region. The Company is expecting
the results from these programs in early 2003. The 2003 exploration programs on
Jackson Inlet will be based on those results.

Atlanta
Gold Property

The
Company's goal has always been to continue the development of the Company's gold
assets, particularly the advanced Atlanta Gold Project ("Atlanta") in Idaho,
USA, with a view to concluding a bankable feasibility study at the earliest
possibility, upon a sustained improvement in gold prices. As the price of gold
consistently exceeded US$300 per ounce in early May 2002, including reaching a
5-year high of US$327 per ounce, the Company reactivated Atlanta by carrying out
an environmental audit of existing environmental baseline data in June 2002 and
completing a 13-hole core drilling program totaling 1,264 metres (4,211 feet) in
early December 2002. In 2003, a metallurgical leach testing program will be
carried out. The results from this test program will provide the input for the
bankable feasibility study leading to a production decision in early 2004. In
December 2002, the Company increased its operating interest in Atlanta from 80%
to 100% (see note 3(c)).

Indonesia
Gold Property

The
Company's Layuh Property, located on the Island of Kalimantan, Indonesia,
remains on care and maintenance, awaiting political and economic stability. In
2001, it was written down to $1,432,298. The Saran Property was transferred to
Indotan Inc. as part of the legal claim that was settled with Indotan Inc. in
October 2001.

Liquidity
and Capital Resources

All
proceeds received from financing activities for 2002 came from two private
offerings. The first offering was completed in December 2002 for gross proceeds
of $3,255,000 by issuing of 6,510,000 flow through common shares of the Company
and warrants to purchase another 3,255,000 common shares of the Company at $1.00
per share. In the second offering, members of management of the Company paid
$45,000 to subscribe for a total of 90,000 flow through common shares of the
Company. Net proceeds from these private offerings totaled $2,939,192, net of
share issue costs of $360,808, including $226,100 paid as underwriting fees to
the agent of the first offering. The agent was also granted purchase warrants to
acquire 586,000 common shares of the Company at $0.50 per share. All warrants
expire within two years from date of grant. The Company is confident it will be
able to raise the additional funds necessary to continue exploring its Jackson
Inlet Diamond project and advancing the development of its Atlanta Gold project
in 2003.



The
working capital of the Company at December 31, 2002 was $1,108,557, a decline of
$830,747 from the 2001 fiscal year, primarily, as a result of costs incurred in
reactivating development of Atlanta.



In
2001, total proceeds received from financing activities of the Company was
$719,143, which consisted of the issuance of 2,625,005 common shares of the
Company upon the exercise of common share purchase warrants and employee stock
options.



The
working capital of the Company at December 31, 2001 was $1,939,304, a decrease
of $4,949,429 from December 31, 2000, as a result of the diamond exploration
programs carried out in 2001 and described in more detail below (see "Results of
Operation-2001").



In
2000, the gross proceeds received from financing activities of the Company
totaled $10,401,852. This consisted of: (a) 7,600,950 flow through common shares
and 2,801,371 common shares issued at $0.85 per share (net of share issue costs
of $1,093,762); (b) 4,897,664 common share purchase warrants exercised for
$1,477,879; and (c) 300,000 employee stock options exercised for $82,000.



The
working capital of the Company at December 31, 2000 was $6,888,733, an increase
of $5,101,966 over December 31, 1999, as a result of the additional financing
completed in 2000.



To
December 31, 2002, the Company has spent $14,237,752 to lease, explore and
develop the Atlanta Gold Property. On February 2, 1999, the Company signed a
Lease/Option to Purchase Agreement with Monarch Greenback, LLC ("Monarch")
relating to Monarch's surface and mineral rights to the Atlanta Gold Property.
During the term of the ten-year lease, the Company has the option to purchase
such surface and mineral rights for the purchase price of US$2,075,000, and
Monarch is entitled to receive minimum annual lease payments and a net smelter
return royalty on any production. The annual lease payments are credited against
the obligation of the Company to make royalty payments. If the purchase option
is exercised, the existing minimum annual lease payments on such surface and
mineral rights will be terminated and replaced by a net smelter royalty of 0.5%
of sales if the average realized gold price is US$365 per ounce or less. For
each US$1 increase in the average realized gold price over US$365 per ounce, the
net smelter royalty will be increased by 0.01% to a maximum rate of 3.5%. Under
this agreement, an amount of US$100,000 held in trust under the terms of a prior
agreement with Monarch was paid to Monarch in February 1999. Commencing in 2001,
the Company will pay US$50,000 annually to Monarch for the remaining eight years
of the term of the lease. The US$800,000 cumulative balance will be added to the
purchase price of the surface and mineral rights. The option price to purchase
the surface and mineral rights will now total US$2,875,000 (see note 3(c)).



Results
of Operations

The
results of operations of the Company reflect the overhead costs incurred during
the acquisition, exploration and mine development stages to keep the Company in
good standing with various regulatory authorities and to provide the
infrastructure to administer these acquisition, exploration, mine development
and financing activities. Also reflected in the loss for the period is the
write-off of deferred mineral costs of properties the Company has acquired,
explored and ultimately abandoned. General and administrative costs can be
expected to increase or decrease in relation to changes in the administrative
activity required as exploration continues on the Jackson Inlet and TORNGAT
diamond properties and development resumes on the Atlanta Gold Property.

2002

General
and administrative expenses for the year ended December 31, 2002 remained
relatively unchanged from similar expenses incurred in 2001, except that no Part
XII.6 tax was incurred in 2002 compared to $135,825 in Part XII.6 incurred in
2001. Conversely, interest income for the year declined by approximately 88% to
$23,767 from $210,655 in 2001 due to lower bank balances reflecting expenditures
being incurred on both Jackson Inlet and Atlanta. In 2003, Part XII.6 tax will,
again, be incurred due to the flow through share financing completed in December
2002.



Property
acquisition, drilling and field exploration, and project administration
expenditures incurred on Jackson Inlet totaled $2,238,288 during 2002 (compared
to $3,946,298 incurred in 2001). These costs relate to ground geophysical
surveys, core drilling program, and soil sample extraction and analysis done in
2002 (compared to a mini-bulk sampling program and a 6,641-line kilometre
air-borne geophysical survey completed in 2001). Costs incurred on TORNGAT
during 2002 totaled $72,779, compared to $622,862 incurred in 2001 (before
writing off $218,060 relating to two abandoned exploration permits, which were
allowed to lapse in 2001). Total mine development expenditures incurred on
Atlanta in 2002 was $475,900 (compared to $12,649 incurred in 2001). Included in
these costs were $310,715 for completing a 13-hole core-drilling program,
$61,091 for risk and sample analysis and $42,397 for consulting fees.

2001

General
and administrative expenses for the year ended December 31, 2001 increased by
approximately 11% to $986,984 from $883,166 in 2000. This increase primarily
reflects: (a) costs relating the Public Offerings in December 1999 and May 2000
which resulted in $135,825 in Part XII.6 tax paid or payable to Canada Custom
and Revenue Agency ("CCRA") (formerly Revenue Canada) prior to March 2002,
whereas no Part XII.6 tax was owing in fiscal 2000; (b) an increase in salary
expenses from fiscal 2000, with the addition of head office personnel during the
year; and (c) a 27% increase in investor relations costs from fiscal 2000, due
primarily to increased investor relations activity during the year. In addition,
interest income for the year declined by approximately 25% to $210,655 from
$280,667 in 2000, due primarily to lower bank balances as funds were expended on
the Jackson Inlet diamond property acquisition and exploration program
undertaken during the year and also due to lower interest rates during 2001.
Offsetting some of this increase in operating expenses in 2001, compared to
fiscal 2000, was a 46% decline in legal fees to $74,797 reflective in part of
the settlement of two legal claims against the Company in the year (see note
4(d)).



During
the year, the May 1999 gold call option contracts expired. The value of these
contracts are marked to market annually, with the resulting gains and losses
included in income for the year. In 2001, the mark to market gain on the gold
call options transaction was $51,450, compared to $75,550 in fiscal 2000 and
$29,188 in fiscal 1999 (see note 5).



Mineral
property costs for the Layuh Gold Properties were written down to $1,432,298.
The $1,158,296 write-down reflects gold exploration and project administration
costs incurred since 1997 and the cost of the two legal claims settled during
the year (see note 4(d)).



Total
diamond property acquisition, drilling and field exploration, and project
administration expenditures on the TORNGAT Property for the year were $32,700
(see note 3(a)), $504,946, and $10,216 respectively, for a total of $547,862
compared to $50,685, $2,689,259, and $21,718 respectively, for a total of
$2,762,259 incurred in 2000. Conversely, similar expenditures for Jackson Inlet
for the year were $129,918, $3,773,516, and $42,864 respectively, for a total of
$3,946,298 compared to $74,376, $415,731, and $28,085 respectively, for a total
of $518,192 incurred in 2000. The primary reason for these changes in 2001 is
because the diamond property acquisition and field exploration activities
focused on the Jackson Inlet Property, whereas, the focus in 2000 was on the
TORNGAT Property. Also, the Company decided that two of the permits in the
TORNGAT Property covering an area of 179.85 sq. km be allowed to lapse in 2001
and $218,060 relating to diamond property acquisition and exploration costs
incurred in prior years in respect of these permit areas was written off in the
year. Net holding and gold exploration and mine development expenditures for
Atlanta Gold for the year were $129,505 compared to $280,583 for fiscal 2000
because annual royalty advances were reduced during the year (see note 3 (c)).
Net project administration and general costs in 2001 in Indonesia were $6,233
compared to $52,129 in 2000 because of a decline in legal fees incurred during
the year.

2000

General
and administrative expenses for the year ended December 31, 2000 increased to
$883,166 from  $703,952 in 1999. This increase primarily reflects costs
relating to changing the Company's name to reflect its focus on diamond and gold
mining and continuing into the Province of Ontario which resulted in: (a) a 41%
increase in legal costs, and (b) 95% increase in investor relations costs. The
increase in interest income for the year, to $280,667 from $3,785 in 1999,
reflects higher bank balances during the year as a result of the Public
Offerings completed in December 1999, and again, in May 2000 (see note 4(d)).
The increase in interest income more than offset the increase in operating
expenses, resulting in an improved net operating position for the fourth
consecutive year.



During
the year, the mark to market gain on the gold call options transaction increased
to $75,550 from $29,188 in 1999.



Mineral
property costs for the Saran Gold Properties were written down to $294,377. The
$2,412,900 write-down reflects exploration and project administration costs
incurred since 1998.



Total
property acquisition, drilling and field exploration, and project administration
expenditures on TORNGAT Property for the year were $50,685 (see note 3(a)),
$2,689,856, and $21,718, respectively for a total of $2,762,259. Similar
expenditures for Jackson Inlet for the year were $74,376, $415,731, and $28,085
respectively, for a total of $518,192.Net holding and exploration expenditures
for Atlanta Gold for the year were $280,583. Net holding costs in Indonesia were
$52,129.

Uncertainties
and Risk Factors

The
Company does not currently hold any interest in a mining property in production
and its future success depends upon its ability to find, develop, exploit and
generate revenue from mineral deposits. Exploration and development of mineral
deposits involve significant financial risks, which even a combination of
careful evaluation, experience and knowledge may not eliminate and there can be
no assurance that any of the Company's current projects will ultimately be
developed into a profitable mining operation. A number of factors beyond the
control of the Company may affect the marketability of any diamonds, gold or any
other minerals discovered. Resource prices have fluctuated widely and are beyond
the Company's control. Revenue and profitability will be determined by the
relationship of the Company's production costs and in respect of diamonds, the
relative quality of the diamonds extracted, to resource prices.  The effect
of these factors cannot accurately be predicted. The Company has limited
financial resources and there is no assurance that additional funding will be
available to it for further exploration and development of its projects or to
fulfill its obligations under 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 and development of the Company's
properties with the possible dilution or loss of such interests. The operations
of the Company require licenses and permits from various governmental
authorities and while the Company currently holds all necessary licenses and
permits required to carry on its activities and believes it is complying with
such licenses, permits and all applicable laws and regulations, such licenses,
permits and laws are subject to change and there can be no assurance that the
Company will in future be able to obtain all necessary licenses and permits.
Furthermore, the cost of complying with changes in governmental laws and
regulations has the potential to reduce the profitability of future operations.
The acquisition of title to mineral projects is a very detailed and
time-consuming process and although the Company has taken precautions to ensure
that legal title and interest to its properties are properly recorded, there can
be no assurance that the interests of the Company in any of its properties may
not be challenged or impugned.



Forward
Looking Statements

Statements
in this report that describe the Company's objectives, estimates, expectation or
predictions and other statements in this report preceded by words such as "should",
"anticipate" or similar expressions may be "forward looking statements" within
the meaning of applicable securities legislation. The Company cautions that such
statements involve risk and uncertainty and that actual results could differ
materially from those expressed or implied. Important factors that could cause
differences include, but are not limited to, global diamond and gold prices and
supply and demand, changes in government regulation, competitive factors,
litigation and other factors including those set out in the annual report on
form 20-F of the Company as filed with securities regulatory authorities.

---

Management's
Report on the Consolidated Financial Statements



The
accompanying consolidated financial statements of Twin Mining Corporation
(formerly Twin Gold Corporation) have been prepared by and are the
responsibility of the Company's management. The consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in Canada and contain estimates based on management's judgement.
Management maintains a system of internal controls adequate to provide
reasonable assurance that transactions are authorized, assets are safeguarded
and records are maintained.



The
Audit Committee comprises three independent directors and meets with management
and the Company's auditors, PricewaterhouseCoopers LLP, to review the
consolidated financial statements before they are presented to the Board of
Directors for approval.



PricewaterhouseCoopers
LLP have examined these consolidated financial statements and their report
follows.



/s/ Hermann Derbuch

/s/ Domenico Bertucci



Hermann
Derbuch, P. Eng.



Domenico Bertucci, CA

Chairman,
President and

Chief
Financial Officer

Chief
Executive Officer



Independent
Auditors' Report to the Shareholders



We
have audited the consolidated balance sheets of Twin Mining Corporation as at
December 31, 2002 and 2001 and the consolidated statements of loss, cash flow,
shareholders' equity and mineral properties for each of the years in the
three-year period ended December 31, 2002. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.



We
conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation.



In
our opinion, these consolidated financial statements present fairly, in all
material aspects, the financial position of the Company as at December 31, 2002
and 2001 and the results of its operations and its cash flow for each of the
years in the three-year period ended December 31, 2002, in accordance with
Canadian generally accepted accounting principles.





/s/ PricewaterhouseCoopers LLP



Chartered
Accountants

Toronto,
Canada



January
10, 2003



---

|TWIN
      MINING CORPORATION                                                                      |                                                |  |                    |          |         |            
|-------------------------------------------------------------------------------------------------- | ---------------------------------------------- |  | ------------------ | -------- | ------- | -----------
|                                                                                                   |                                                |  |                    |          |         |            
|CONSOLIDATED
      BALANCE SHEETS                                                                  |                                                |  |                    |          |         |            
|As
      at December 31, 2002 and 2001                                                             |                                                |  |                    |          |         |            
|(in
      Canadian dollars)                                                                        |                                                |  |                    |          |         | 2002       
|                                                                                                   |                                                |  |                    |          |         |            
|ASSETS                                                                                             |                                                |  |                    |          |         |            
|Current
      assets                                                                               |                                                |  |                    |          |         |            
|                                                                                                   | Cash
      and cash equivalents                |  |                    |          |         | $          
|                                                                                                   | Receivables                                    |  |                    |          |         |            
|                                                                                                   | Prepaid
      expenses                         |  |                    |          |         |            
|                                                                                                   | Supply
      inventory (note 3(b))             |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|Mineral
      properties (note 3)                                                                  |                                                |  |                    |          |         | 25,688,484 
|                                                                                                   |                                                |  |                    |          |         |            
|Capital
      assets                                                                               |                                                |  |                    |          |         | 42,562     
|                                                                                                   |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|LIABILITIES                                                                                        |                                                |  |                    |          |         |            
|Current
      liabilities                                                                          |                                                |  |                    |          |         |            
|                                                                                                   | Accounts
      payable and accrued liabilities |  |                    | $        | 769,063 |            
|                                                                                                   |                                                |  |                    |          |         |            
|Contingency
      and commitments (note 8)                                                         |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|SHAREHOLDERS'
      EQUITY                                                                         |                                                |  |                    |          |         |            
|Capital
      stock                                                                                |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|Accumulated
      deficit                                                                          |                                                |  |                    |          |         | -21,091,550
|                                                                                                   |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|The
      accompanying notes are an integral part of these consolidated financial
      statements |                                                |  |                    |          |        
|                                                                                                   |                                                |  |                    |          |         |            
|Approved
      by the Board                                                                        |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|/s/ Hermann Derbuch                                                                                |                                                |  | /s/ Alfred Powis   |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|                                                                                                   |                                                |  |                    |          |         |            
|Hermann
      Derbuch                                                                              |                                                |  | Alfred
      Powis |          |         |            
|Director                                                                                           |                                                |  |                    | Director |         |            



---

|CONSOLIDATED
      STATEMENTS OF LOSS                                                              |                                 |   |            |        |           |            |        
|-------------------------------------------------------------------------------------------------- | ------------------------------- | - | ---------- | ------ | --------- | ---------- | -------
|For
      the years ended December 31, 2002, 2001 and 2000                                         |                                 |   |            |        |           |           
|                                                                                                   |                                 |   |            |        |           |            |        
|(in
      Canadian dollars)                                                                        |                                 |   |            |        |           | 2002       |        
|                                                                                                   |                                 |   |            |        |           |            |        
|Interest
      income                                                                              |                                 |   |            |        | $         | 23,767     |        
|Other
      income (note 5)                                                                        |                                 |   |            |        |           | -          |        
|                                                                                                   |                                 |   |            |        |           |            |        
|                                                                                                   |                                 |   |            |        |           |            |        
|General
      and administrative expenses                                                          |                                 |   |            |        |           |            |        
|                                                                                                   | Salaries                        |   |            |        |           |            |        
|                                                                                                   | Professional
      fees         |   |            |        |           |            | 99,345 
|                                                                                                   | Investor
      relations        |   |            |        |           |            | 206,797
|                                                                                                   | Travel                          |   |            |        |           |            |        
|                                                                                                   | Interest                        |   |            |        |           |            |        
|                                                                                                   | Administrative
      and office |   |            |        |           |            | 65,778 
|                                                                                                   | Office
      rent               |   |            |        |           |            |        
|                                                                                                   | Depreciation                    |   |            |        |           |            | 19,545 
|                                                                                                   |                                 |   |            |        |           |            |        
|                                                                                                   |                                 |   |            |        |           |            |        
|Mineral
      property costs written off (notes 3(a) and (d))                                      |                                 | - |            |        | 1,376,356 |            |        
|                                                                                                   |                                 |   |            |        |           |            |        
|(Gain)
      loss from foreign translation                                                         |                                 |   |            | -2,435 |           |            | 3,512  
|                                                                                                   |                                 |   |            |        |           |            |        
|Loss
      for the year                                                                            |                                 |   |            |        | $         | 855,658    |        
|                                                                                                   |                                 |   |            |        |           |            |        
|Weighted
      average number of shares outstanding                                                |                                 |   | 74,638,781 |        |           | 72,122,980 |        
|                                                                                                   |                                 |   |            |        |           |            |        
|Loss
      per share - basic and fully diluted                                                     |                                 |   | $0.01      |        |           | $0.03      |        
|                                                                                                   |                                 |   |            |        |           |            |        
|                                                                                                   |                                 |   |            |        |           |            |        
|The
      accompanying notes are an integral part of these consolidated financial
      statements |                                 |   |            |        |          



---

|CONSOLIDATED
      STATEMENTS OF CASH FLOW                                                         |                                                    |                                                      |           |         |           |           
|-------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------------------------------------- | --------- | ------- | --------- | ----------
|For
      the years ended December 31, 2002, 2001 and 2000                                         |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|(in
      Canadian dollars)                                                                        |                                                    |                                                      |           |         |           | 2002      
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|Operating
      activities                                                                         |                                                    |                                                      |           |         |           |           
|                                                                                                   | Loss
      for the year                            |                                                      |           |         |           | $         
|                                                                                                   | Add
      (deduct) items not involving cash:       |                                                      |           |         |           |           
|                                                                                                   |                                                    | Mineral
      property costs written off             |           |         | -         |           
|                                                                                                   |                                                    | Depreciation                                         |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    | Mark
      to market adjustment on gold call options |           | -       |           |           
|                                                                                                   | Net
      change in non-cash working capital       |                                                      |           | -65,055 |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|Financing
      activities                                                                         |                                                    |                                                      |           |         |           |           
|                                                                                                   | Issuance
      of common shares:                   |                                                      |           |         |           |           
|                                                                                                   |                                                    | For
      cash, net of issue costs                   |           |         |           | -         
|                                                                                                   |                                                    | For
      cash, on exercise of warrants              |           |         | -         |           
|                                                                                                   |                                                    | For
      cash, on exercise of options               |           |         | -         |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   | Issuance
      of flow-through shares:             |                                                      |           |         |           |           
|                                                                                                   |                                                    | For
      cash, net of issue costs (note 4(d))       |           |         | 2,939,192 |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|Investing
      activities                                                                         |                                                    |                                                      |           |         |           |           
|                                                                                                   | Mineral
      property expenditures                |                                                      |           |         |           | -2,913,908
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   | Capital
      assets                               |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|(Decrease)
      increase in cash                                                                  |                                                    |                                                      |           |         |           | -895,802  
|                                                                                                   |                                                    |                                                      |           |         |           |           
|Cash
      and cash equivalents, beginning of year                                                 |                                                    |                                                      | 2,546,591 |         |           | 7,047,004 
|Cash
      and cash equivalents, end of year                                                       |                                                    | $                                                    | 1,650,789 |         | $         | 2,546,591 
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   | Net
      change in non-cash working capital items |                                                      |           |         |           |           
|                                                                                                   |                                                    | Receivables                                          |           |         |           |           
|                                                                                                   |                                                    | Prepaid
      expenses                               |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    | Supply
      inventory                               |           |         |           |           
|                                                                                                   |                                                    | Accounts
      payable and accrued liabilities       |           |         | -110,766  |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|                                                                                                   |                                                    |                                                      |           |         |           |           
|The
      accompanying notes are an integral part of these consolidated financial
      statements |                                                    |                                                      |           |         |          
|                                                                                                   |                                                    |                                                      |           |         |           |           



---

|CONSOLIDATED
      STATEMENTS OF MINERAL PROPERTIES                                                |                                                   |  | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------- |  | 
|For
      the years ended December 31, 2002, 2001 and 2000                                         |                                                   |  | 
|                                                                                                   |                                                   |  | 
|(in
      Canadian dollars)                                                                        |                                                   |  | 
|                                                                                                   |                                                   |  | 
|TORNGAT
      Diamond Property                                                                     |                                                   |  | 
|Balance,
      beginning of year                                                                   |                                                   |  | 
|                                                                                                   | Drilling,
      assays and related field work     |  | 
|                                                                                                   | Project
      administration and general          |  | 
|                                                                                                   | Property
      acquisition and holding costs      |  | 
|                                                                                                   | Costs
      recovered during the year (note 3(a)) |  | 
|                                                                                                   | Property
      costs written off (note 3(a))      |  | 
|                                                                                                   | Total
      expenditures during the year          |  | 
|Balance,
      end of year                                                                         |                                                   |  | 
|                                                                                                   |                                                   |  | 
|Jackson
      Inlet Diamond Property                                                               |                                                   |  | 
|Balance,
      beginning of year                                                                   |                                                   |  | 
|                                                                                                   | Drilling,
      assays and related field work     |  | 
|                                                                                                   | Project
      administration and general          |  | 
|                                                                                                   | Property
      acquisition and holding costs      |  | 
|                                                                                                   | Total
      expenditures during the year          |  | 
|Balance,
      end of year                                                                         |                                                   |  | 
|                                                                                                   |                                                   |  | 
|Atlanta
      Gold Property                                                                        |                                                   |  | 
|Balance,
      beginning of year                                                                   |                                                   |  | 
|                                                                                                   | Drilling,
      assays and related field work     |  | 
|                                                                                                   | Project
      administration and general          |  | 
|                                                                                                   | Property
      acquisition and holding costs      |  | 
|                                                                                                   | Costs
      recovered during the year (note 3(c)) |  | 
|                                                                                                   | Total
      expenditures during the year          |  | 
|Balance,
      end of year                                                                         |                                                   |  | 
|                                                                                                   |                                                   |  | 
|Indonesia
      Properties                                                                         |                                                   |  | 
|Balance,
      beginning of year                                                                   |                                                   |  | 
|                                                                                                   |                                                   |  | 
|                                                                                                   | Project
      administration and general          |  | 
|                                                                                                   |                                                   |  | 
|                                                                                                   | Property
      costs written off (note 3(d))      |  | 
|                                                                                                   | Total
      expenditures during the year          |  | 
|Balance,
      end of year                                                                         |                                                   |  | 
|                                                                                                   |                                                   |  | 
|                                                                                                   |                                                   |  | 
|                                                                                                   |                                                   |  | 
|The
      accompanying notes are an integral part of these consolidated financial
      statements |                                                   |  | 
|                                                                                                   |                                                   |  | 



---

CONSOLIDATED
STATEMENTS OF SHAREHOLDER'S EQUITY

|                                                                                                   |           |           |                              |                         |            |                 |   |           |           |             |          |            |             |  |      
|-------------------------------------------------------------------------------------------------- | --------- | --------- | ---------------------------- | ----------------------- | ---------- | --------------- | - | --------- | --------- | ----------- | -------- | ---------- | ----------- |  | -----
|(in
      Canadian dollars)                                                                        |           |           | Shares issued and subscribed | Special Warrants issued
|                                                                                                   |           |           |                              |                         |            | Number
      of |   | Ascribed  | Numberof  |             | Ascribed |            | Accumulated |  |      
|                                                                                                   |           |           |                              |                         |            | shares          |   | value     | shares    |             | value    |            | deficit     |  | Total
|                                                                                                   |           |           |                              |                         |            |                 |   |           |           |             |          |           
|Balance,
      December 31, 1999                                                                   |           |           | 48,644,060                   |                         | 32,843,335 | 6,160,328       |   | 1,906,592 |           | -15,190,198 |          | 19,559,729
|                                                                                                   |           |           |                              |                         |            |                 |   |           |           |             |          |            |             |  |      
|Issue
      of shares for cash                                                                     |           |           |                              |                         |            |                 |   |           |           |             |          |           
|-
      at $0.85 per flow through share,   net
      of share issue costs (note 4(d))              |           |           |                              |                         |            |                 |   |           |           |            
|7,600,950                                                                                          |           | 5,667,047 | -                            |                         | -          |                 |   |           | 5,667,047
|-
      at $0.85 per common share,                                                                 |           |           |                              |                         |            |                 |   |           |           |             |          |           
|net
      of share issue costs (note 4(d))                                                         | 2,801,371 |           | 2,081,165                    | -                       |            | -               |   |           |           | 2,081,165  
|-
      at $0.35 per share on exercise of                                                          |           |           |                              |                         |            |                 |   |           |           |             |         
|broker
      warrants (note 4(d))                                                                  |           |           | 308,016                      |                         | 107,806    | -               |   | -         |           |             |          | 107,806   
|-
      at $0.17 to $0.40 per share                                                                |           |           |                              |                         |            |                 |   |           |           |             |          |           
|on
      exercise of warrants                                                                      |           |           | 4,589,648                    |                         | 1,370,073  | -               |   | -         |           |             |          | 1,370,073 
|-
      at $0.15 to $0.35 per share                                                                |           |           |                              |                         |            |                 |   |           |           |             |          |           
|on
      exercise of options                                                                       |           |           | 300,000                      |                         | 82,000     | -               |   | -         |           |             |          | 82,000    
|Issue
      of shares to Helix Resources                                                           |           |           |                              |                         |            |                 |   |           |           |             |         
|Inc.
      (note 3(b))                                                                             |           |           | 30,000                       |                         | 19,800     | -               |   | -         |           |             |          | 19,800    
|Issue
      of Special warrants (note 4(d))                                                        | 6,160,328 |           | 1,906,592                    | -6,160,328              |            | -1,906,592      |   |           |           | -          
|Loss
      for the year                                                                            |           |           |                              |                         |            |                 |   |           |           | -2,940,947  |          | -2,940,947
|Balance,
      December 31, 2000                                                                   |           |           | 70,434,373                   | $                       | 44,077,818 | -               | $ | -         | $         | -18,131,145 | $        | 25,946,673
|                                                                                                   |           |           |                              |                         |            |                 |   |           |           |             |          |            |             |  |      
|Issue
      of shares for cash                                                                     |           |           |                              |                         |            |                 |   |           |           |             |          |           
|-
      at $0.20 and $0.50 per share                                                               |           |           |                              |                         |            |                 |   |           |           |             |          |           
|on
      exercise of warrants                                                                      |           |           | 2,000,005                    |                         | 569,893    | -               |   | -         |           |             |          | 569,893   
|-
      at $0.17 to $0.35 per share                                                                |           |           |                              |                         |            |                 |   |           |           |             |          |           
|on
      exercise of options                                                                       |           |           | 625,000                      |                         | 149,250    | -               |   | -         |           |             |          | 149,250   
|Issue
      of shares to Helix Resources                                                           |           |           |                              |                         |            |                 |   |           |           |             |         
|Inc.
      (note 3(b))                                                                             |           |           | 45,000                       |                         | 18,000     | -               |   | -         |           |             |          | 18,000    
|Issue
      of shares to Indotan Inc.                                                              |           |           |                              |                         |            |                 |   |           |           |             |          |           
|(note
      3(d))                                                                                  |           |           |                              | 300,000                 |            | 150,000         | - |           | -         |             |          |            | 150,000    
|Voisey
      Bay Resources Inc.                                                                    |           |           |                              |                         |            |                 |   |           |           |             |          |           
|consolidation                                                                                      |           |           | -34                          |                         | -          | -               |   | -         |           |             |          | -         
|Loss
      for the year                                                                            |           |           |                              |                         |            |                 |   |           |           | -2,104,747  |          | -2,104,747
|Balance,
      December 31, 2001                                                                   |           |           | 73,404,344                   | $                       | 44,964,961 | -               | $ | -         | $         | -20,235,892 | $        | 24,729,069
|                                                                                                   |           |           |                              |                         |            |                 |   |           |           |             |          |            |             |  |      
|Issue
      of shares for cash                                                                     |           |           |                              |                         |            |                 |   |           |           |             |          |           
|-
      at $0.50 per flow through share,                                                           |           |           |                              |                         |            |                 |   |           |           |             |         
|net
      of share issue costs (note 4(d))                                                         | 6,600,000 |           | 2,939,192                    | -                       |            | -               |   |           |           | 2,939,192  
|Issue
      of shares to Helix Resources                                                           |           |           |                              |                         |            |                 |   |           |           |             |         
|Inc.
      (note 3(b))                                                                             |           |           | 75,000                       |                         | 27,000     | -               |   | -         |           |             |          | 27,000    
|Loss
      for the year                                                                            |           |           |                              |                         |            |                 |   |           |           | -855,658    |          | -855,658  
|Balance,
      December 31, 2002                                                                   |           |           | 80,079,344                   | $                       | 47,931,153 | -               | $ | -         | $         | -21,091,550 | $        | 26,839,603
|                                                                                                   |           |           |                              |                         |            |                 |   |           |           |             |          |            |             |  |      
|                                                                                                   |           |           |                              |                         |            |                 |   |           |           |             |          |            |             |  |      
|The
      accompanying notes are an integral part of these consolidated financial
      statements |           |           |                              |                         |           



---

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

For
the three years ended December 31, 2002

(Canadian
dollars)



1.

NATURE
OF OPERATIONS AND GOING CONCERN BASIS OF ACCOUNTING



The
Company's two diamond properties, located in Northern Quebec and on Baffin
Island, are currently in the exploration stage. The Atlanta Gold Property ("Atlanta"),
located in Idaho, U.S.A., and which contains measured mineral resources, is in
the feasibility stage currently awaiting financing. The Indonesia Gold Property
remains on care and maintenance.



The
recoverability of exploration and development expenditures is dependent upon the
discovery of economically recoverable reserves, the preservation of the Company's
interest in the underlying mineral claims, the ability to obtain necessary
financing, obtain government approval and attain profitable production, or
alternatively, upon the Company's ability to dispose of its interest on an
advantageous basis.  Changes in future conditions could require material
write-downs of the carrying amounts of deferred exploration expenditure.



2.

SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

(a)

Basis
of presentation

The
consolidated financial statements are presented in Canadian dollars and are
prepared in accordance with accounting principles generally accepted in Canada.



(b)

Use
of estimates

The
preparation of the consolidated financial statements in conformity with Canadian
generally accepted accounting principles (Canadian GAAP) 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
consolidated financial statements and the reported amount of expenses during the
period. Actual results could differ from those reported.



(c)

Cash
and cash equivalents

Cash
and cash equivalents include investments to maturity of less than 90 days after
purchase.



(d)

Supply
inventory

Supply
inventory is recorded at the lower of cost and net realizable value.



(e)

Capital
assets

Capital
assets of the Company are recorded at cost and include office furniture,
fixtures, and equipment and computer hardware and software. The office
furniture, fixtures and equipment are depreciated over ten years and the
computer hardware and software are depreciated over three years. All capital
assets are depreciated on a straight-line basis.



(f)

Mineral
property costs

Direct
exploration and development costs are deferred in the accounts, net of amounts
recovered from third parties, including receipts from options. At production,
these costs will be amortized using the units-of-production method based on
estimated reserves. Costs relating to properties abandoned are written off when
the decision to abandon is made, or earlier if a determination is made that the
property does not have economically recoverable reserves.



The
Company is in the process of exploring and developing its various properties. On
a regular basis, the Company reviews the carrying values of deferred mineral
property acquisition and exploration expenditures with a view to assessing
whether there has been any impairment in value. In the event that reserves are
determined to be insufficient to recover the carrying value of any property, the
carrying value will be written down or written off, as appropriate.



In
March 2000, the Accounting Standards Board of the Canadian Institute of
Chartered Accountants (CICA) issued Accounting Guideline No. 11 entitled,
"Enterprises in the Development Stage" (AcG 11), and subsequently, on
March 12, 2002, issued Emerging Issues Committee (EIC) 126 "Accounting by
Mining Enterprises for Exploration Costs." These guidelines address three
distinct issues: (i) capitalization of costs/expenditures, (ii) impairment and
(iii) disclosure. Prior to their issuance, development stage entities were
exempt from following certain aspects of Canadian generally accepted accounting
principles (GAAP). EIC 126 and AcG 11 require that all companies account for
transactions based on the underlying characteristics of the transactions rather
than the maturity of the enterprise. In addition, EIC 126 and AcG 11 require
specific disclosure of information by development stage companies. These
guidelines were effective for fiscal periods beginning on or

after
April 1, 2000,  which affects the Company's fiscal year ended on or after
June 30, 2001.

EIC
126 and AcG 11 affect mining companies with respect to the deferral of
exploration costs. The appropriate accounting guidance is contained in Section
3061, "Property, Plant and Equipment" of the CICA handbook which
permits, but does not require, exploration costs to be capitalized as part of a
mining property, if the Company considers that such costs have the
characteristics of property, plant and equipment. Under this view, deferred
exploration expenditure would not automatically be subject to regular assessment
of recoverability, unless conditions, such as those discussed in EIC 126
and AcG 11, exists.

There
would need to be an assessment of deferred exploration expenditure. Assessment
of the probability of recoverability of deferred exploration expenditure from
future operations will require the preparation of a projection based on
objective evidence of economic reserves such as a feasibility study.
The status of the Company's operations is such that, like most mining companies
in the exploration stage, it would not be practicable to obtain a feasibility
study or provide other information that could be used to support capitalization
of deferred exploration expenditure under the alternative view.
EIC 126 and AcG 11 did not have a significant impact on the Company's
consolidated financial statements.

(g)

Loss
per share

Basic
loss per share is computed by dividing the loss for the year by the
weighted-average number of common shares outstanding during the year, including
contingently issuable shares which are included when the conditions necessary
for issuance have been met. Diluted loss per share is calculated in a manner
similar to basic loss per share, except the weighted-average shares outstanding
are increased to include potential common shares from the assumed exercise of
options and warrants, if dilutive. The number of additional shares included in
the calculation is based on the treasury stock method for options and warrants.



During
the year ended December 31, 2001, the Company changed its method of accounting
for loss per share to comply with the revised standard issued by the CICA
Handbook, section 3500, "Earnings per share". There was no difference between
the loss per share calculated under the new standard and the amount that would
have been calculated using the previous standard.



(h)

Translation
of foreign currencies

Monetary
assets and liabilities are translated at the exchange rate in effect at the
balance sheet date and non-monetary assets and liabilities at the exchange rates
in effect at the time of acquisition or issue. Revenues and expenses are
translated at exchange rates in effect at the date of the transactions. Exchange
gains or losses arising on translation are included in income or loss for the
year.



(i)

Financial
Instruments

The
carrying amounts of cash, receivables, accounts payable and accrued liabilities
approximate the fair values of those financial instruments due to the short-term
maturity of such instruments. The Company places its cash with high quality
financial institutions.



(j)

Stock
options



The
Company issues stock options from time to time to its employees, officers,
directors and consultants to the Company, as shown in note 4(c). Commencing in
the current year, the Company prospectively adopted new recommendations for
accounting for stock options, whereby required disclosures are presented under
the new accounting standards in note 4(c) to these annual consolidated financial
statements. Since the Company has elected not to use the fair value method of
accounting for stock options, the new recommendations have had no effect on the
consolidated balance sheet, or to the net income of the Company. The new
accounting standards are in accordance with CICA Handbook Section 3870 "Stock-Based
Compensation and Other Stock-Based Payments" ("CICA 3870").



(k)

Income
taxes

The
provision for future income taxes is based on the liability method. Future
income taxes arise from the recognition of the tax consequences of temporary
differences by applying statutory tax rates applicable to future years to
differences between the financial statements' carrying amounts and the tax bases
of certain assets and liabilities. The Company records a valuation allowance
against any portion of those future income tax assets that it believes will,
more likely than not, fail to be realized.

---

3.

MINERAL
PROPERTIES

(a)

TORNGAT
Diamond Property

In
1999, the Company was granted four contiguous Diamond Mine Exploration permits ("the
permits") by the Quebec Ministry of Natural Resources ("Quebec Ministry") for a
period of five years which cover 444 sq. km in the Torngat Mountain region along
the east coast of Ungava Bay in Northern Quebec ("TORNGAT"). In 2000, the
Company was granted a fifth permit, which covers an additional 62.85 sq. km. The
permits are renewable after five years.



In
2001, the Company renewed three of the permits covering 327 sq. km. and for an
annual amount of $32,700 (2000 - $50,685). Total direct exploration costs of
$218,060 for the two abandoned permits were written off during the year.



During
the year, the Company renewed the three permits for $32,700.



In
July 2002, the Company received a Mineral Exploration grant of $75,000 (2001 -
$75,000; 2000 - $50,000) from the Quebec Ministry for exploration expenditures
incurred during the fiscal period ending on March 31, 2002 (March 31, 2001; and
March 31, 2000).



(b)

Jackson
Inlet Diamond Property

On
April 27, 2000, the Company signed a letter agreement ("the Agreement")
with Helix Resources Inc. ("Helix"), a private company based in Niagara Falls,
Ontario, for a second diamond property. The Agreement stated that the Company
had until October 31, 2000, to conduct due diligence concerning three mining
claims totaling 28.85 sq. km (7,128.5 acres) staked on the Jackson Inlet
Property on the Brodeur Peninsula of Baffin Island ("Jackson Inlet"). Fulfilling
the assessment requirements on these mining claims conferred the right to
exercise the Agreement by paying $50,000 and issuing 30,000 common shares of the
Company to Helix. The Agreement was extended to December 15, 2000, and on that
date, the Company exercised its right to acquire Helix's rights in the mineral
claims.



In
order to maintain the Agreement in good standing, the Company was required to
pay Helix $150,000 in the current year ($100,000 - 2001) and issued 75,000
(45,000 - 2001) common shares of the Company to them. Helix accepted payment on
January 2, 2003. The Company can continue to maintain the Agreement in good
standing by paying Helix the following amounts:

Payment

Due
Date

amount         Common shares

December
31, 2003
                                         $
200,000                       
105,000

December
31, 2004
                                         $
250,000                       
120,000

December
31, 2006
                                         $
100,000                                  
-



In
addition, $500,000 is due upon receipt of all development permits and $1,000,000
plus 500,000 common shares is due upon production of 500,000 carats.
Subsequently, a 5% net profits interest and a 1% gross royalty is due after
crediting all previous payments.



In
May 2000, the Company staked another 16 mineral claims covering 106.39 sq. km
(26,289.85 acres) in an area close to the claims acquired above by paying an
initial filing fee of $0.10 per acre (or $2,629). Subsequent to December 15,
2000, one of the claims covering 10.03 sq. km (2,480 acres) was allowed to
lapse. In 2001, the Company staked another 61 mineral claims covering 529.77 sq.
km (130,908.35 acres) and paid an initial filing fee of $13,091. During the
current year, the Company staked another 32 mineral claims covering a further
334.43 sq. km (82,640 acres) and paid an initial filing fee of $8,264. By the
end of the current fiscal year, the Company owned a 100% interest in 111 mineral
claims totaling 989.4 sq. km (244,486.7 acres) within the region.



The
Company has supply inventory of $111,972 as at December 31, 2002 in connection
with fuel and supplies for use in the diamond exploration program expected to
commence in the Spring of 2003.



---



(c)

Atlanta
Gold Property, Idaho, U.S.A.



On
July 22, 1997, the Company and Canadian American Mining Company, LLC ("CAMC")
(formerly Quest International Resources Corporation) ("Quest"), entered into a
joint venture agreement (the "Agreement") whereby the Company is the operator of
Atlanta with an 80% interest, with Quest holding the remaining 20% participating
interest. Quest has subsequently advised the Company that it had elected under
the Agreement not to participate in its contractual share of further property
costs incurred after 1997. In December 2002, CAMC agreed to transfer its 20%
participating interest in the joint venture to the Company. CAMC retains the 2%
Net Smelter Return royalty on Atlanta, as per the Agreement.



On
February 2, 1999, the Company had signed a Lease/Option to Purchase Agreement ("the
Monarch Agreement") with Monarch Greenback, LLC ("Monarch") relating to Monarch's
surface and mineral rights to Atlanta. During the term of the ten-year lease,
the Company has the option to purchase such surface and mineral rights for US$2
million. If this option is exercised, the existing minimum annual rental
payments on such surface and mineral rights will be terminated and replaced by a
net smelter royalty of 0.5% of gold sales if the average realized gold price is
US$365 per ounce or less. For each US$1 increase in the average realized gold
price over US$365 per ounce, the net smelter royalty will be increased by 0.01%
to a maximum rate of 3.5%. In 1999, the Company amended the minimum annual
rental payment to Monarch. U.S.$25,000 owing in 1999, was paid in January 2000
and the U.S.$75,000 unpaid balance was added to the option price. In May 2000,
the Company paid US$100,000 in minimum annual rental payment to Monarch. In
2001, the Monarch Agreement was further amended such that, commencing in 2001,
the Company will pay Monarch US$50,000 per year in minimum annual rental
payments until 2008. The cumulative balance owing to 2008 of US$800,000 will be
added to the option price. By then, the option price to purchase such surface
and mineral rights will be US$2,875,000.



A
net smelter returns royalty is payable on production from Atlanta, subject to
annual payments to the lessors as set forth below. These payments are required
to keep the agreements in good standing. The advance royalty payments will be
terminated if the option to purchase is exercised. In 2000, the Company paid
US$55,000 in advance royalty payments and interest expense of US$1,458 (1999 -
nil). In 2001, the mining lease and option to purchase agreements were amended.
As a result, in 2002, US$17,500 (US$15,000 - 2001) in advance royalty payments
were made to the lessors.



Minimum

Year
ending

annual
rental

Advance
royalty

December
31,

payments
US$

payments
US$

2003
to 2005

50,000

17,500

2006

50,000

159,500

2007
to 2008

50,000

20,000

2009
to 2011

-

20,000

2012
to 2015

-

10,000



In
August 2000, a wildfire that was raging in the United States mountain States,
including Idaho, destroyed several items on the Atlanta Gold Property. The
Company filed a claim for damages with its insurance company. In 2000, the
insurer issued proceeds of US$38,206 and, in May 2001, after further
negotiations, the insurer paid another US$71,794. The proceeds were credited to
mineral costs recovered.



---



(d)

Indonesia
Properties

The
acquisition of title to mineral projects is a very time consuming process.
Although the Company has taken every precaution to ensure that legal title to
its properties is properly recorded in the name of the Company, there can be no
assurance that such title will ultimately be secured. The Company's interest in
the majority of its properties in Indonesia is held under applications for
Contract of Work ("C.O.W.") which, if approved, may not cover all of the areas
applied for. Furthermore, there is no assurance that its interests in such
properties may not be challenged.



In
January 2001, the legal claim alleging constructive dismissal commenced in 1999
by the Company's former Exploration Manager in Indonesia was settled for
US$175,000.



(i)
Layuh Joint Venture Agreement

In
1997, the Company entered into agreements with PT Harita Jayaraya ("PT Harita"),
an Indonesian company, to form a joint venture to explore for gold and related
minerals. The Company will have an 85% interest in the venture and be the
operator and technical advisor to the venture. The 15% interest of PT Harita is
a carried interest.



In
May 1999, the Company notified the Indonesian Ministry of Mines of its intent to
proceed with its application for a seventh generation C.O.W. In October 1999,
the Company received draft seventh generation C.O.W. for initialing. The Company
continues to operate on a care and maintenance basis in connection with the
property, awaiting political stability.



(ii)
Indotan Joint Venture Agreement

In
1996, the Company entered into a joint venture with Voisey Bay and Indotan Inc.
("Indotan") for the acquisition of exploration and mining rights on seven
mineral properties in Kalimantan, Indonesia. In order to keep the joint venture
in good standing, the Company was required to issue one common share for each
US$0.75 spent by the joint venture on the mineral properties to a maximum of
2,000,000 common shares, and also, one further common share for each US$1 spent,
to a maximum of 1,500,000 common shares.



In
September 1999, the Company exercised its right under the agreement and notified
Indotan of its decision to cease participation in the agreement. In March 2000,
Indotan commenced legal proceedings against the Company, seeking 3,500,000
common shares of the Company arising from spending commitments on the properties
by the Company. In October 2001, the Indotan claim was settled by paying $7,800,
issuing 300,000 common shares of the Company, and transferring the Company's
portion of the Saran Properties, having a carrying value of $297,124, to Indotan.
At fiscal year end 2001, the Company wrote down the carrying value of the
Indonesia Properties, including the cost of the two legal claims settled, by a
total of $1,158,296 (2000 - $2,412,900).



---

4.

CAPITAL
STOCK

(a)

Authorized
share capital

Following
the continuance into the Province of Ontario on March 15, 2000 under the OBCA
(note 1), the Company's authorized capital consists of an unlimited number of
common shares, an unlimited number of first preference shares, issuable in
series and an unlimited number of second preference shares, issuable in series.



(b)

Warrants

The
following summarizes warrants that have been granted, exercised or have expired
during the three years ended December 31, 2002:

Number
of

Exercise



Shares

price
$



Outstanding,
December 31, 1999

5,013,948

Warrants
exercised

(4,897,664)

0.17
to 0.40

Warrants
cancelled

(785,743)

0.40

Warrants
issued on issuance of shares for cash

2,746,829

0.40
and 0.85

Warrants
issued as part of underwriting fees (note 4(d))

1,036,178

0.35
and 0.85

Outstanding,
December 31, 2000

3,113,548

Warrants
exercised

(2,000,005)

0.20
and 0.50

Warrants
expired

(1,113,543)

0.20
to 0.85

Outstanding,
December 31, 2001

-

Warrants
issued on issuance of shares for cash

3,255,000

1.00

Warrants
issued as part of underwriting fees (note 4(d))

586,000

0.50

Outstanding,
December 31, 2002

3,841,000



The
value of the warrants issued in 2002 is $292,695.





(c)
Stock options



The
Company has a stock option plan to provide employees, directors, and certain
consultants with options to purchase common shares of the Company. Under the
plan, the exercise price of each option must equal or exceed the market price of
the Company's stock on the day of grant and the maximum term of any option is
five years. The following summarizes the employee and director stock options
that have been granted, exercised, cancelled or expired during the three years
ended December 31, 2002:



Weighted

average

Number
of

exercise

Shares

price
$



Outstanding,
December 31, 1999

3,080,000

0.46

Options
granted

1,150,000

0.44

Options
exercised

(300,000)

0.27

Outstanding,
December 31, 2000

3,930,000

0.47



Options
granted

950,000

0.51

Options
exercised

(625,000)

0.24

Options
expired

(455,000)

0.69

Outstanding,
December 31, 2001

3,800,000

0.50

Options
granted

1,350,000

0.56

Options
expired

(800,000)

0.62

Outstanding,
December 31, 2002

4,350,000

0.49





The
Company amended the Stock Option Plan on March 15, 2000 to reserve an additional
2,500,000 common shares for issue and increase the number of common shares
available for issue from 5,000,000 to 7,500,000. As of December 31,2002, there
are 5,150,000 additional common shares in reserve available for stock
compensation. All options outstanding at December 31, 2002 expire at various
dates to December 9, 2007 and are immediately exercisable upon granting, except
for the options granted on December 9, 2002, which vest within 2 years from date
of grant.



The
weighted-average remaining contractual life of all stock options outstanding is
38 months.



Number
of

Exercise

Expiry
date

Stock
options

price
$

April
30, 2003

200,000

0.32

June
30, 2003

50,000

0.65

December
22, 2004

650,000

0.35

February
4, 2005

150,000

0.49

December
22, 2005

1,000,000

0.43

January
30, 2006

150,000

0.45

June
1, 2006

800,000

0.52

January
21, 2007

600,000

0.60

February
12, 2007

250,000

0.63

May
17, 2007

250,000

0.51

December
9, 2007

250,000

0.45

4,350,000



Had
the Company recorded compensation expense based on the fair value of the options
granted in 2002, results would have been as follows:



Loss
for the year

As
reported

$
  855,658

Pro
forma

1,322,181



Loss
per share - basic and fully diluted

As
reported

$
    0.011

Pro
forma

0.018



The
pro forma disclosure excludes the effect of the options granted prior to the
adoption of CICA  3870. The weighted average estimated fair value at the
date of grant for stock options granted during the current year was $0.345 per
share. The fair value of each option was estimated on the date of grant using
the Black Scholes option-pricing model with the following assumptions at the
measurement date:



Risk-free
interest rate:

4.50%

Expected
life:

4
years

Estimated
volatility in the market price of the common shares:

78.67%

Dividend
yield:

Nil



---



(d)
Capital Stock Offering

On
December 31, 1999, the Company completed an offering of 3,615,086 class A
special warrants and 1,878,572 class B special warrants, at a price of $0.35 per
special warrant, and 666,670 class C special warrants at a price of $0.45 per
class C special warrant for total gross proceeds of $2,222,782. Each class A
special warrant was exchangeable for one flow through common share and one half
of one common share purchase warrant of the Company. Each class B special
warrant was exchangeable for one common share and one half of one common share
purchase warrant of the Company. Each class C special warrant was exchangeable
for one flow through common share. In addition to a 7% cash underwriting fee,
the agents of the offering were granted 308,016 common share purchase warrants
exercisable for 308,016 common shares of the Company at $0.35 per warrant.



On
May 5, 2000, the common shares, flow through common shares and common share
purchase warrants issued in 1999 were qualified for distribution with the
issuance of a receipt for a final prospectus of the Company. In addition, on May
19, 2000, the Company issued a further 7,600,950 flow through common shares and
2,801,371 common shares at a price of $0.85 per share for total gross proceeds
of $8,841,973. Again, in addition to a 7% cash underwriting fee, the same agents
were granted 728,162 common share purchase warrants each exercisable for 728,162
common shares of the Company at $0.85 per warrant.



On
December 15, 2000 and December 28, 2000, the agents exercised the 308,016 common
share purchase warrants granted in 1999. In 2001, the 728,162 common share
purchase warrants issued to the agents in 2000 expired.



On
December 30, 2002, the Company completed a private offering whereby 6,510,000
flow through units were issued at a price of $0.50 per unit for total gross
proceeds of $3,255,000. Each flow through unit consisted of one flow through
common share and one half of one common share purchase warrant of the Company
exercisable at $1.00 per warrant. In addition, management of the Company
subscribed for 90,000 flow through common shares of the Company at a price of
$0.50 per share. The agents of the offering were paid underwriting fees of
$226,100 and were granted 586,000 common share purchase warrants exercisable for
586,000 common shares of the Company at $0.50 per warrant. All warrants expire
within two years from the grant date.



(e)
Shareholder Rights Plan

In
November 2000, the Board of Directors adopted a Shareholder Rights Plan (the "Plan"),
the terms of which are set forth in a Shareholder Rights Plan Agreement dated as
of November 17, 2000 between the Company and Equity Transfer Services Inc. The
Plan was approved by the shareholders at the annual meeting held on March 15,
2001. The Plan will be in effect until the 2011 annual meeting, unless
terminated earlier by the Board of Directors.



Under
the Plan, a right to purchase one of the Company's common shares (a "Right") was
issued for each outstanding common share as of November 17, 2000. In addition, a
Right will be issued for each share issued subsequent to November 17, 2000 and
prior to the separation date of the Rights. The rights are initially not
separate from the Company's common shares nor are they represented by separate
certificates. However, upon a person acquiring ownership of 20% or more of the
Company's common shares (other than by means of complying with the Plan's
Permitted Bid provisions or with approval of the Board of Directors of the
Company), a holder of a Right (other than the acquiror of 20% or more of the
Company's common shares) becomes entitled to exercise the Right and to purchase
the number of common shares as determined under the Plan at a 50% discount to
the then prevailing market price per share.



Under
the Plan, a Permitted Bid is, among other things, a bid made to all shareholders
for all common shares that is open for at least 60 days and which must be
accepted by holders of at least 50% of the Company's outstanding common shares,
excluding shares held by the offeror and certain related parties. If at the end
of 60 days, at least 50% of the outstanding shares, other than those owned by
the offeror and certain related parties, have been tendered to the bid, the
offeror may take up and pay for the shares, but must extend the bid for a
further 10 days to allow other shareholders to tender. The Rights may, in
certain circumstances, be redeemed by the Company at a price of $0.00001 per
Right.



5.

GOLD
CALL OPTIONS

In
1999, the Company entered into gold call option transactions. Call options for
15,000 ounces of gold, exercisable at US$290 per ounce and maturing in June
2001, were sold for US$243,000. Call options for 20,000 ounces of gold,
exercisable at US$320 per ounce and maturing in June 2001, were purchased for
US$128,000. The Company received cash proceeds of US$106,250 (net of commission
of US$8,750). In May 2001, the gold call options contracts expired and the gold
call option liability of US$35,000 was recorded as income (2000 - US$51,000;
1999 - US$20,250). In 2001, $10,000 (US$6,500) was paid as interest expense for
the balance outstanding since 1999.



6.

INCOME
TAXES



The
Company has non-capital tax losses of approximately $6,506,000 expiring between
2003 and 2009, which are available to reduce future Canadian taxable income.
These losses expire as follows:



2003

$
    397,000

2004

1,622,000

2005

1,132,000

2006

660,000

2007

480,000

2008

1,030,000

2009

1,185,000

$
 6,506,000



The
Company has operating losses of approximately US$5,421,000 expiring between 2003
and 2022, which are available to reduce future United States taxable income. The
Company did not pay any income taxes in 2002, 2001 or 2000. No benefit has been
recorded in the financial statements in respect of non-capital losses.



7.

SEGMENTED
INFORMATION

The
Company has operated in the following geographical segments: Canada, United
States, and Indonesia. Corporate administrative activities are conducted from
Canada. The income and expenses for the three years ended December 31, 2002, and
the assets of those years identifiable to those segments are as follows:



Canada

USA

Indonesia

Consolidated

December
31, 2002

Interest
and other income

$
     23,874

$
          (107)

$
               -

$
       23,767

Loss
(gain) for the year

855,734

(76)

-

855,658

Identifiable
assets

11,859,778

14,304,149

1,444,739

27,608,666



December
31, 2001

Interest
and other income

$
   262,105

$
                 -

$
               -

$
       262,105

Loss
(gain) for the year

948,116

(1,665)

1,158,296

2,104,747

Identifiable
assets

10,619,061

13,557,539

1,432,298

25,608,898



December
31, 2000

Interest
and other income

$
   356,217

$
                -

$
               -

$
       356,217

Loss
for the year

527,297

750

2,412,900

2,940,947

Identifiable
assets

10,802,247

13,421,126

2,142,437

26,365,810





8.

CONTINGENCY
AND COMMITMENTS

In
November 1999, the Company and Atlanta Gold Corporation of America, Inc., the
wholly owned U.S. subsidiary of the Company ("Atlanta Gold"), were named as
third party defendants in a lawsuit commenced by Monarch against Doe Run
Resource Corporation ("Doe Run") with respect to environmental liability on the
Butler Ranch, which is adjacent to the Atlanta Property. In 2002 The Company
obtained an order from the U.S. District Judge in Boise, Idaho, summarily
dismissing the claims against the Company and Atlanta Gold. Doe Run has appealed
that order to the United States Court of Appeals for the Ninth Circuit. The
Appeal has not yet been heard.



The
Company has operating lease commitments until 2005 as follows:



2003

$
67,000

2004

$
65,000

2005

$
  5,000



The
Company, by undertaking the issuance of flow through shares during the year, has
made minimum spending commitments in excess of $2,900,000 on the TORNGAT and
Jackson Inlet Diamond properties for the 2003 fiscal year.





9.

COMPARATIVE
FIGURES

Certain
comparative amounts have been reclassified to conform to the presentation
adopted in 2002.

---



U.S. GAAP reconciliation Schedule

Twin
Mining Corporation



Supplemental
Information

December
31, 2002, 2001 and 2000

(expressed
in Canadian dollars)



















---

| |  |                                                                                                                                                                                                                                                                                               
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | PricewaterhouseCoopers
      LLP
      Chartered
      Accountants
      PO
      Box 82
      Royal
      Trust Tower, Suite 3000
      Toronto
      Dominion Centre
      Toronto,
      Ontario Canada M5K 1G8
      Telephone
      +1 416 863 1133
      Facsimile
      +1 416 365 8215



January 10,
2003

Auditors'
Report

To
the Board of Directors of Twin Mining Corporation

Our audits of
the consolidated financial statements referred to in our report dated January
10, 2003, appearing in Item 19(a) of the Form 20-F ofTwin
Mining Corporationalso included audits of the information under the caption "Supplemental
Information" in Item 17 of this Form 20-F and were conducted in accordance with
auditing standards generally accepted in Canada and the United States of
America. In our opinion, the information presented under the caption "Supplemental
Information" in Item 17 is presented fairly, in all material respects, when read
in conjunction with the related consolidated financial statements.



Signed "PricewaterhouseCoopers
LLP"

Chartered
Accountants

Toronto,
Canada







PricewaterhouseCoopers
refers to the Canadian firm of PricewaterhouseCoopers LLP and the other member
firms of PricewaterhouseCoopers International Limited, each of which is a
separate and independent legal entity.

---

Twin
Mining Corporation

Supplemental
Information

December
31, 2002, 2001 and 2000

(expressed
in Canadian dollars)



Differences
between Canadian and United States generally accepted accounting principles

Years
ended December 31, 2002, 2001 and 2000

Twin Mining
Corporation has prepared its consolidated financial statements in accordance
with Canadian generally accepted accounting principles (GAAP). In preparing the
Form 20-F, the company is also required to provide additional information
relating to measurement differences between Canadian and United States (U.S.)
GAAP as it applies to the company's consolidated financial statements.

Canadian GAAP
varies in certain significant respects from the accounting principles and
practices generally accepted in the U.S. The nature and effect of these
principal measurement differences on the company's consolidated financial
statements are presented below:

|Consolidated
      statements of loss                |           |                                |           | 
|---------------------------------------------------- | --------- | ------------------------------ | --------- | 
|                                                     |           | Years
      ended December 31, |          
|                                                     |           |                                |          
|                                                     | 2002      | 2001                           | 2000      | 
|                                                     | $         | $                              | $         | 
|Loss
      in accordance with Canadian GAAP          | 855,658   | 2,104,747                      | 2,940,947 | 
|Exploration
      costs expensed for the year (a)    | 2,593,328 | 4,790,740                      | 3,278,333 | 
|Reversal
      of mineral property costs written off | -         | (1,052,194)                    | (707,728) | 
|Income
      taxes (b)                               | -         | -                              | (456,057) | 
|                                                     |           |                                |           | 
|Loss
      in accordance with U.S. GAAP              | 3,448,986 | 5,843,293                      | 5,055,495 | 
|                                                     |           |                                |           | 
|Loss
      per share under Canadian GAAP             | 0.01      | 0.03                           | 0.05      | 
|                                                     |           |                                |           | 
|Loss
      per share under U.S. GAAP                 | 0.04      | 0.08                           | 0.08      | 
|                                                     |           |                                |           | 

(1)

---

Twin
Mining Corporation

Supplemental
Information

December
31, 2002, 2001 and 2000

(expressed
in Canadian dollars)

Consolidated
balance sheets

The
incorporation of the differences in accounting principles into the consolidated
balance sheets as at December 31, 2002 and 2001 results in the following
consolidated balance sheets presented under U.S. GAAP:

|                                                    |                            |             | As
      at December 31,       |            
|--------------------------------------------------- | -------------------------- | ----------- | ------------------------------ | -----------
|                                                    |                            |             |                                |            
|                                                    |                            |             | 2002                           | 2001       
|                                                    |                            |             | $                              | $          
|Current
      assets                                |                            | 1,877,620   | 2,819,133                      |            
|Mineral
      properties                            |                            | 4,085,804   | 3,738,224                      |            
|Capital
      assets                                |                            | 42,562      | 42,189                         |            
|                                                    |                            |             |                                |            
|                                                    |                            |             | 6,005,986                      | 6,599,546  
|                                                    |                            |             |                                |            
|Current
      liabilities                           |                            | 769,063     | 879,829                        |            
|Shareholders'
      equity                          |                            | 5,236,923   | 5,719,717                      |            
|                                                    |                            |             |                                |            
|                                                    |                            |             | 6,005,986                      | 6,599,546  
|                                                    |                            |             |                                |            
|                                                    |                            |             |                                |            
|Consolidated
      statements of cash flows         |                            |             |                                |            
|                                                    |                            |             | Years
      ended December 31, |            
|                                                    |                            |             |                                |            
|                                                    |                            | 2002        | 2001                           | 2000       
|                                                    |                            | $           | $                              | $          
|Cash
      flows provided by (used in)              |                            |             |                                |            
|                                                    | Operating
      activities | (3,494,496) | (4,929,364)                    | (4,201,125)
|                                                    | Financing
      activities | 2,939,192   | 719,143                        | 9,327,891  
|                                                    | Investing
      activities | (340,498)   | (290,192)                      | (366,826)  
|                                                    |                            |             |                                |            
|(Decrease)
      increase in cash                   | (895,802)                  | (4,500,413) | 4,759,940                      |            
|Cash
      and cash equivalents - Beginning of year | 2,546,591                  | 7,047,004   | 2,287,064                      |            
|                                                    |                            |             |                                |            
|Cash
      and cash equivalents - End of year       | 1,650,789                  | 2,546,591   | 7,047,004                      |            
|                                                    |                            |             |                                |            
|                                                    |                            |             |                                |            
|a)                                                  | Exploration
      costs    |             |                                |            

U.S. GAAP
requires that exploration costs related to mineral properties be charged to
expense as incurred. As such, some of the costs accounted for as mineral
properties under Canadian GAAP would be charged to the statements of loss under
U.S. GAAP. Property acquisition costs are capitalized under both U.S. and
Canadian GAAP. Any other related costs in respect of the properties are charged
to the statements of loss under U.S. GAAP and capitalized under Canadian GAAP.

(2)

---

Twin
Mining Corporation

Supplemental
Information

December
31, 2002, 2001 and 2000

(expressed
in Canadian dollars)

b) Income
taxes

Under U.S.
GAAP, the sale of flow-through shares results in a deferred credit being
recognized for the excess of the purchase price paid by investors over the fair
value of the common shares without the flow-through feature. The fair value of
the shares is recorded as equity. When the tax deductibility of the qualifying
expenditures is renounced, a temporary difference arises with the mining
property interests. A deferred tax liability is established in the amount of the
tax benefit foregone and tax expense is recorded for the difference between the
deferred tax liability and the premium received upon issuance of the
flow-through shares. This deferred tax liability reverses as the interests are
depleted or written off.

For U.S. GAAP,
a deferred tax asset has been raised to the extent that it offsets the
liability.

New accounting
standards

Accounting
for obligations associated with the retirement of long-lived assets

Financial
Accounting Standards Board (FASB) Statement No. 143, "Accounting for Asset
Retirement

Obligations"(SFAS
143) is applicable for the Company's financial year commencing January 1, 2003.
SFAS 143 requires that obligations associated with the retirement of a tangible
long-lived asset be recorded as a liability when those obligations are incurred,
with the amount of the liability initially measured at fair value. Upon
initially recognizing a liability, an entity must capitalize the cost by
recognizing an increase in the carrying amount of the related long-lived asset.
Over time, the liability is accreted to its present value each period, (the
amount of the accretion expense should be reported as a separate operating item
on the income statement) and the capitalized cost is depreciated over the useful
life of the related asset. Upon settlement of the liability, an entity either
settles the obligation for its recorded amount or incurs a gain or loss. The
Company does not expect there to be any impact on implementation of the
standard.

FIN
45 - Guarantor's accounting and disclosure requirements for guarantees,
including indirect guarantees of indebtedness of others (proposed
interpretation)

In November
2002, the FASB issued an interpretation which would require companies to
elaborate on disclosures made by a guarantor in its financial statements about
obligations under certain guarantees it issued. In addition, the interpretation
would also require a guarantor to recognize, at inception of a guarantee, a
liability for the fair value of the obligations it has undertaken in issuing the
guarantee.

The initial
recognition and measurement of the interpretation would be applied to years
beginning after December 15, 2002, with the cumulative effect of initially
applying the provisions reported as a change in accounting principle in the
first interim period of that fiscal year. The Company does not expect there to
be any impact on implementation of the standard.

(3)

---



corporate
information



Directors

Hermann
Derbuch, P.Eng



Chairman,
President and Chief Executive Officer

Twin
Mining Corporation



James
K. Gray, O.C.*

Founder
and former Chairman,

Canadian
Hunter Exploration Ltd.



Gerard
E. Munera

Former
President & Chief Executive Officer

Minorco
(USA)



Robert
Pendreigh, P.Eng *

Technical
Director, Process, Mining and Metals,

AMEC
E&C Services Limited



Alfred
Powis, O.C.*

Former
Chairman & Chief Executive Officer

Noranda
Inc.



*
Member of the Audit Committee



Officers

Hermann
Derbuch, P.Eng

Chairman,
President and Chief Executive Officer



Rodney
N. Thomas, P.Geol.

Vice
President, Exploration



Domenico
Bertucci, CA

Chief
Financial Officer



Senior
Management

Douglas
Glaspey, B.Sc.

Project
Manager

Atlanta
Gold Project



Senior
Consultants

Dallas
Davis, P..Eng

Consultant
- Diamond Exploration



Hendrick
Visagie, MBA, B Sc.

Consultant
- Business Development



Investor
Relations and Corporate Communications

Roswitha
Derbuch

ph:
416-777-0013

fax:
  416-777-0014

email:
       info@twinmining.com

website:
    www.twinmining.com



Head
Office

Suite
1250, 155 University Avenue

Toronto,
Ontario, Canada M5H 3B7



Telephone:
416-777-0013

Facsimile:
  416-777-0014

Website:
    www.twinmining.com

E-mail:
       info@twinmining.com



Idaho
Office

967
East Parkcentre Blvd. #214

Boise,
Idaho, U.S.A. 83706



Legal
Counsel

Lang
Michener

Barristers
& Solicitors

Patent
& Trade Mark Agents

BCE
Place, P.O. Box 747

Suite
2500, 181 Bay Street

Toronto,
Ontario, Canada, M5J 2T7



Auditors

PricewaterhouseCoopers
LLP

Chartered
Accountants

P.O.
Box 82

Royal
Trust Tower, Suite 3000

Toronto
Dominion Centre

Toronto,
Ontario, Canada, M5K 1G8



Registrar
& Transfer Agent

Equity
Transfer Services Inc.

Suite
420, 120 Adelaide Street West

Toronto,
Ontario, Canada, M5H 4C3



Stock
Exchange Listings

The
Toronto Stock Exchange Symbol: TWG

Berlin/Frankfurt
OTC Exchange, Germany

878341,
EDV-Kurzel ATG



Authorized
Capital

Unlimited
common shares

Unlimited
first preference shares, issuable in series

Unlimited
second preference shares, issuable in series



Issued
Capital

80,079,344
Common Shares (January 2003)



Annual
Meeting

The
Annual and Special Meeting of the Shareholders

will
be held at 11:00 a.m., Thursday, March 20, 2003 at:

The
Hilton Toronto,

145
Richmond Street West,

Toronto,
Ontario, Canada, M5H 2L2