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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark One)
|X| ANNUAL REPORT (AMENDED) PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES 
    EXCHANGE ACT OF 1934

For the year ended December 31, 1997

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number 0-26600

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

                             NAPTAU GOLD CORPORATION
             (Exact name of registrant as specified in its charter)

                   Delaware                               22-3386947
         (State or other jurisdiction of                (IRS Employer
         incorporation or organization)               Identification No.)

                               5391 Blundell Road
                                   Richmond BC
                                 Canada V7C 1H3
                    (address of principal executive offices)

                                 (604) 277-5252
                           (Issuer's telephone number)

             ------------------------------------------------------
                                (former address)
                              9551 Bridgeport Road
                                   Richmond BC
                                 Canada V6X 1S3

                         -----------------------------
               (Former name, former address and former fiscal year
                          if changed since last report)

      Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.

                  Yes |_|                              No  |X|

      State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 6,933,500 shares of Common
Stock, $.001 par value, were outstanding, as of December 31, 1997.

      Transitional Small Business Disclosure Format (check one):

                  Yes |_|                              No  |X|

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                                TABLE OF CONTENTS

ITEM 1.     BUSINESS........................................................   3

ITEM 2.     DESCRIPTION OF PROPERTY........................................   11

ITEM 3.     LEGAL PROCEEDINGS..............................................   12

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............   12

ITEM 5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND
            RELATED STOCKHOLDERS MATTERS...................................   12

ITEM 6.     PLAN OF OPERATION..............................................   13

ITEM 7.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................   13

ITEM 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
            ON ACCOUNTING AND FINANCIAL DISCLOSURE.........................   14

ITEM 9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
            PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.....   14

ITEM 10.    EXECUTIVE COMPENSATION.........................................   15

ITEM 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
            AND MANAGEMENT.................................................   16

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................   17

            APPENDIX A  GLOSSARY OF CERTAIN MINING TERMS...................   18

ITEM 13.    EXHIBITS AND REPORTS ON FORM 8-K...............................   24


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ITEM 1. BUSINESS

Naptau Gold Corporation ("Naptau" or the "Company") is engaged in the
acquisition, exploration and development of mineral properties, primarily gold
properties located in the Cariboo Mining District of British Columbia.

During 1995, the Company entered into an agreement (the "Exchange Agreement") to
acquire certain placer leases owned by Noble Metal Group Incorporated (a British
Columbia company) ("Noble") in exchange for 4 million common shares of the
Company, representing an initial 59.7% interest in the Company. During 1995 the
Company also acquired from Dorothy Dennis (the "Affiliate") an additional placer
lease contiguous with the placer leases acquired from Noble. The Company and
Noble also entered into an operating agreement (the "Operating Agreement")
whereby Noble will remain the operator for the mining activities on the placer
leases acquired from Noble and Dorothy Dennis (collectively, the "Placer
Leases") for a term of ten years, with Noble having the option of renewing the
agreement for a further ten year term.

      Pursuant to the Operating Agreement, proceeds from production from the
Placer Leases will be divided between the Company and Noble as follows:

      (i) for the first $1,000,000 of proceeds or 2,500 ounces of raw gold
(converted to a dollar amount), whichever is lesser, 10% of such proceeds to
Noble;

      (ii) for the next $1,000,000 of proceeds or 2,500 ounces of raw gold
(converted to a dollar amount), whichever is lesser, 17.5% of such proceeds to
Noble; and

      (iii) for cumulative operating revenues in excess of $2,000,000 or 5,000
ounces of raw gold (converted to a dollar amount), whichever is lesser, 25% of
such proceeds to Noble.

      As a result of certain extensions and modifications made to the Exchange
Agreement and Operating Agreement, the Company is obligated to (i) pay Noble
$954,000 together with interest thereon at the rate of 10% per annum from
December 31, 1995 through June 30, 1997, and 12% per annum thereafter; (ii)
deliver to Noble 4,561 ounces of gold from the Company's share of the gold
produced from the Placer Leases and (iii) deliver to Noble 300 ounces of gold in
satisfaction of the Company's obligations under the 1998 Extension Agreement.
The aggregate of such 4,861 ounces to be delivered in accordance with the
following schedule:

      (i) the first 300 ounces of gold due to the Company from 1998 or 1999
mining operations will be paid to Noble;

      (ii) up to 40% of the balance of the number of ounces of gold due to the
Company from 1998 mining operations, until 4,561 ounces is reached, will be paid
to Noble;

      (iii) up to 50% of the balance of the number of ounces of gold due to the
Company from 1999 mining operations, until the balance, if any, of the 4,561
ounces is reached, will be paid to Noble;

      (iv) up to 60% of the balance of the number of ounces of gold due to the
Company from the year 2000 and subsequent years mining operations, until the
balance, if any, of the 4,561 ounces is reached, will be paid to Noble.

The parties also agreed that Naptau shall not sell or assign its interest in the
Placer Leases until such time as these gold obligations are satisfied.

      As a result of certain extensions and modifications made to the
Acquisition Agreement with Dorothy Dennis the Company is obligated to pay the
Affiliate $200,000, and deliver the Affiliate 150 ounces of gold.


                                      -3-
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In May 1996 the Company recorded the Bill of Sale Absolute on placer claims Lou
1 and Lou 2 (the "Lou Claims") which were earlier staked by William G. Timmins
as agent for Naptau. The addition of these claims gives the Company comfort as
the projected route of the channels under exploration appear to extend into
these claim areas. The claims are adjacent to and contiguous with the present
claims owned.

Because of the inconsistency of placer golds, none of the Company's prospects or
properties may be defined as containing proven or probable reserves. The Company
has carried out extensive exploration and geological delineations of the placer
bearing channels on its properties to the extent that it is of the opinion
(supported by earlier recommendations from Lorimer, September 1980 and January
1982, and completion of the additional site preparation recommended by W.G.T.
Consultants Ltd., October 1986 and Davenport, November 1987) that enough placer
gravels have been identified with indicated economically recoverable gold
content to warrant commencing production.

The Company has never generated any revenues from its mineral exploration
activities and does not expect to generate revenues until such time as it is
able to commence its placer mining operations. The Company's ability to commence
mining operations is dependent upon its ability to raise substantial additional
funds (see Item 7 "Plan of Operation"). All of the Company's exploration
activities to date have been conducted with funds provided from Noble. If the
Company is unable to raise the funds necessary to commence mining operations,
the Company may be unable to realize on the investment in its placer mining
leases. At December 31, 1997 the Company had an accumulated deficit of $341,450.

The financial statements of the Company contained herein have been prepared on a
going concern basis. If the Company were unable to raise the funds necessary to
commence mining operations or was unable to generate positive cash flow form
such operation, it might be forced to liquidate. In such event, it is unlikely
that the Company would realize the amounts indicated on the balance sheet upon
the sale of its placer properties.

For discussion of certain material risks involved in the Company's business, see
"Risk Factors" below.

Property, Location, Description

The Company's exploration properties are comprised of the Placer Mining Leases #
29, 1159, 1160, 1850, 2093 and the Staked Placer Claims Lou 1 and Lou 2
(collectively, the "Properties"). The Properties are adjacent properties which
are located at the confluence of Keithley Creek and Snowshoe Creek, 28 miles
northwest of Likely, British Columbia in the Cariboo Mining District, and are
accessible by gravel road. The town of Likely is about 64 miles northeast of
Williams Lake, British Columbia, and may be reached by paved highway or private
plane. (See "Item 3 - Description of Property").

Exploration Results and Potential Mineral Deposits

The Properties have been the object of considerable exploration and testing
which indicate gold-bearing gravels are present on the north bench of Keithley
Creek on Placer Lease #29. Although not homogeneous, the gold is contained in
zones of varying richness.

The "Tertiary Channel", a buried paleogulch channel on Placer Leases #29 and
#1850 which is a former course of Snowshoe Creek, was first identified by a
Seismic Refraction Survey in 1982. This Channel also contains gold bearing
gravels. It should be noted that, historically placer gold from Keithley Creek
in comparison to other creeks is of a very high fineness (pure gold is 1000
fine. The average fineness of placer gold obtained in California is 885 fine).


                                      -4-
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Significant potential occurs in extensions of buried channels and additional
channels within the Properties. Preliminary interpretation of the results of a
Seismic Refraction Survey which was completed in May 1995 further define the
Tertiary Channel and its rim rock edges on Placer Leases #29 and #1850. A second
sub-parallel north trending channel (the "Eastern Channel") has been located to
the east of the known Tertiary Channel on Placer Leases #29 and #1850. The two
channels appear to converge to the north of Placer Lease #1850. The width of
each channel varies from 50 to 80 meters and the Eastern Channel is shallower
than the known Tertiary Channel to the west.

The 1995 Seismic Refraction Survey also indicates the occurrence of a third,
sub-parallel channel (the "Third Channel") further to the east on Placer Leases
#1159, #1850 and #2093. Additional seismic work is required to define this
channel or fault structure.

Field results of a Seismic Refraction Survey completed in May 1995 on Placer
Lease #1160, traces the northern continuation of the known Tertiary Channel on
Placer Lease #29 through Placer Lease #1160. This Seismic Refraction Survey also
delineates the occurrence of a second placer channel on this lease (the "1160
Channel") converging with the known Tertiary Channel at the center of Placer
Lease #1160.

Within the vicinity of the ancient Tertiary Channel near Keithley Creek on
Placer Lease #29, large gold nuggets up to 1? ounces were recovered from gravel
testing in 1994, thus providing an explanation for the occurrence of the coarse
gold well above the level of Keithley Creek, and significantly further east of
the known Tertiary Channel previously tested.

The newly delineated Channel on Placer Lease #1160 is estimated to be 85 meters
in width at the southern boundary, 40 meters in width at the center of the
Lease, and runs some 200 to 250 meters north, where it converges with the known
Tertiary Channel of Placer Lease #29, which is approximately the same width. The
total width of the two merging channels at the center of Placer Lease #1160 is
about 85 meters, which extends a further 200 meters through the northern
boundary of Placer Lease #1160 onto the Lou Claims. It is estimated that a
minimum of 1,000,000 cubic yards of placer gravels is contained on Placer Lease
#1160.

The Company believes that grades should be similar to the grades obtained on
Placer Lease #29, which were determined by various drilling programs, trenching,
other work and volume testing of the placer gravels. The recovery from the
testing ranged from 0.02 oz. gold per cubic yard of $7.00 to $11.40 per cubic
yard.

Exploration and Development Activities on the Placer Leases

It is estimated that the Company and the prior owners of the Placer Leases have
expended an aggregate of approximately $4,000,000 in exploring and developing
the Properties. Placer Lease #29 was acquired by its original owner in 1978.
Additional placer leases were then staked by such entity in 1979 and 1980.
Preliminary testing was first carried out in 1981. Prior to 1993, access roads
were constructed and upgraded, camp trailers installed and several exploration
programs, including seismic refraction surveys, geochemical soil sampling
analysis, trenching, percussion and sonic drilling, and various bulk tests
utilizing different types of equipment and recovery systems, were carried out.

During 1993-1994 old roads were widened, new roads were constructed, camp
facilities were expanded by the addition of two more trailers, an office and map
room, and a building for tools, supplies and drilling samples. Construction of
the settling and tailing ponds as well as a major water reservoir was commenced.

During the 1995 season the Company continued upgrading the physical site,
buildings and reinforcing roadways. Construction of the settling, tailing and
water reservoir ponds was completed. Clearing and raking of newly opened areas
continued as required. The Company also carried out geological, geophysical and
further Seismic Refraction surveys to delineate the channels and production
area. In total, for the year ended December 31, 1995, the Company expended
$398,926 on the above site and survey programs which was recorded as Mineral
Properties on the Balance Sheet and detailed in note 3 of the Financial
Statements.


                                      -5-
<PAGE>

In 1996 an I.P. Survey was carried out on the most southerly tip of the Ancient
Tertiary channel, and the center and eastern channels of Keithley Creek.

The I.P. Survey resistivity values of the center channel revealed a narrow or
gulch-type depression in the bedrock. The resistivity values of the eastern
channel identified a pronounced depression in the bedrock with a magnitude of
some 75 meters in depth. These channels were previously identified by the 1995
Seismic Refraction Survey.

A test program of the upper gravels in the center and most eastern channel (the
third channel) verified the existence of fine gold averaging $5.70 per cubic
yard based on a gold price of $380.00 per ounce.

In preparation for production, over 65,000 cubic yards of overburden material
was removed from the mining area. During the construction of several benches to
prevent slides and sloughing of materials an additional 10,000 cubic yards of
material was removed. Drainage ditches and a main waterway were constructed to
contain and redirect excess water flows during spring runoffs. New hauling roads
were constructed to expedite the movement of materials during production.

Valuation of the Noble Leases and PL # 1160 and Director Lease by W.G.T.
Consultants Ltd.

To assist the Company in determining the value of the Noble Leases and their
potential for future development, in June 1995, the Company obtained an opinion
(the "Noble Valuation") on the fair market value of the Noble Leases from W.G.T.
Consultants Ltd. ("W.G.T."), an independent mining consulting firm then
headquartered in Calgary, AB, Canada and subsequently relocated to Vancouver,
BC, Canada. In rendering the Noble Valuation, W.G.T. relied on published and
private reports, maps and data (the "Exploration Data") provided by the Company
and Noble and past visits by the W.G.T. personnel to the Lease sites in 1985,
1986, 1994 and 1995. W.G.T. received a fee of $1,006.67 from the Company for the
preparation of the Noble Valuation and a fee of $1,712.00 from Dorothy Dennis
for the preparation of the 1160 Valuation.


                                      -6-
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In considering the foregoing, it should be noted that at present because of the
inconsistence of placer golds, none of the Company's prospects or properties may
be defined as containing proven or probable reserves. The Company and prior
owners have carried out extensive exploration and geological delineations of the
placer bearing channels to the extent that it is of the opinion (supported by
earlier recommendations from Lorimer, September 1980 and January 1982 and
completion of the additional site preparation recommended by W.G. T. Consultants
Ltd., October 1986 and Davenport, November 1987) that enough placer gravels have
been identified with indicated economically recoverable gold content to warrant
further testing in 1997. If the indicated potential recoveries are confirmed
during testing, the testing program will be escalated into full-scale
operations.

Licenses and Permit

The gold exploration and mining industry in Canada operates under both federal
and provincial legislation governing exploration, development, production and
decommissioning of mines. Such legislation relates to the method of acquisition
and ownership of mineral rights, labor, health and safety standards, royalties,
mining and income taxes, exports, reclamation and rehabilitation of mining lands
and other matters.

The mining industry in Canada is also subject to legislation at both the federal
and provincial levels concerned with the protection of the environment. In
particular, such legislation imposes high standards on the mining industry to
reduce or eliminate the effects of wastes generated by extraction and processing
operations and subsequently deposited on the ground or emitted into the air or
water. Accordingly, the design of mines and mills and the conduct of overall
extraction and processing operations are subject to the restrictions contained
in such legislation. In addition, the construction, development and operation of
a mine, mill and refinery typically entail compliance with applicable
environmental legislation and/or review processes and the obtaining of land use
permits, water licenses, discharge approvals and similar authorizations from
various governmental agencies.

Failure to comply with the requirements of environmental legislation may result
in orders being issued thereunder which may result in the cessation, curtailment
or modification of operations or may require installation of additional
facilities or equipment to protect the environment. Violators may be required to
compensate those suffering loss or damage by reason of their mining activities
and such violators, including officers and directors thereof, may be fined or in
some cases imprisoned if convicted of an offense under such legislation.

Provincial mining legislation establishes requirements for the decommissioning,
reclamation and rehabilitation of mining properties in a state of temporary or
permanent closure. Such closure requirements relate to the protection and
restoration of the environment and the protection of public safety.

All the necessary licenses and permits that are required for the Company's
mining operations on the Placer Leases are in place and are valid until December
2001. These include a Mining Permit, Hydraulic License, Water Use Permit and
Disposal Permit. In addition, the Company maintains its "free miner certificate"
from the Province of British Columbia which is required in order to explore for
minerals or placer minerals or acquire a mineral or placer title in British
Columbia.


                                      -7-
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Equipment and Facilities

In accordance with the Operating Agreement, Noble has made available the
facilities and equipment necessary to conclude the Company's exploration program
and commence production. The composition and cost of such camp facilities and
equipment is agreed to by budget prior to the commencement of operations each
season. The Company is currently indebted to Noble in the amount of $217,846 for
equipment and facilities provided to date.

Risk Factors

Limited Operations: Need for Additional Funds. To date, prior exploration
programs have produced in excess of 300 ounces of raw gold from various test
programs at the Properties. Nevertheless, the Company, has not generated any
revenues and will not generate revenues until the commencement of placer mining
operations which are subject to the Company's abilities to raise the required
additional funds. Even though carrying costs to maintain the leases in good
standing are minimal, an inability to raise the required capital may result in
the Company being unable to realize a return on its investment in its placer
mining leases and, possibly, forfeiting its interest in the Placer Leases. At
December 31, 1997, the Company had an accumulated deficit of $341,450.

Preparation of Financial Statements. The financial statements of the Company
contained herein have been prepared on a going concern basis. If the Company
were unable to raise the funds necessary to commence mining operations or was
unable to generate positive cash flow from such operations, it might be forced
to liquidate. In such event, it is unlikely that the Company would realize the
amounts indicated on the balance sheet upon the sale of its mineral properties.

No Proven or Probable Reserves. The Company is in the exploration stage, and at
present, because of the inconsistency of placer golds, none of the company's
prospects or properties may be defined as containing proven or probable
reserves. The Company and the prior owners of the Placer Leases have carried out
extensive exploration and geographical delineations of the placer bearing
channels to the extent that the Company is of the opinion (supported by earlier
recommendations from Lorimer, September 1980 and January 1982 and upon
completion of the additional site preparation recommended by W.G.T. Consultants
Ltd., October 1986 and Davenport, November 1987) that enough placer gravels have
been identified with indicated economically recoverable gold content to warrant
commencing production.

When the Company is able to establish proven and probable reserves through
sustained production, market price fluctuations of gold, increased production
costs, or reduced recovery rates may nevertheless render ore reserves containing
relatively lower grades of mineralization uneconomic and may ultimately result
in a restatement of ore reserves.

Feasibility Studies. The Company has relied heavily upon the study conducted by
W.G.T. Consultants, Lorimer, September 1980 and January 1982, Davenport,
November 1987 and the Company's exploratory activities in determining whether
the Properties can support full scale operations. Such evaluations may prove to
be unreliable.

Risks of Foreign Operations. The Company's operations in British Columbia,
Canada are subject to the risks normally associated with conducting business in
foreign countries, including foreign exchange controls and currency
fluctuations, foreign taxation, labor disputes and uncertain economic
environments or other risks which may limit or disrupt production in markets,
restrict the movement of funds or result in the depravation of contract rights
or the taking of property by nationalization or expropriation without fair
compensation. Although the Company has not experienced any problem in Canada
rising from nationalistic policies, political instability, economic instability,
labor disputes or currency fluctuations or restrictions, there can be no
assurance that such a problem will not arise in the future. Laws and policies of
the United States affecting foreign trade, investment and taxation may also
adversely affect the Company's operations and investments.


                                      -8-
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Reliance on Third Parties for Exploration and Mining Services. The Company has
entered into the Operating Agreement with its principal stockholder, Noble,
pursuant to which Noble has agreed to provide all of the exploration and mining
services and lease the required equipment and facilities to the Company in order
to develop and operate the Properties. The loss of Noble's services could have a
material adverse affect on the Company.

Cautionary Statement for Purposes of The "Safe Harbor" Provisions of The Private
Securities Litigation Reform Act of 1995. The United States Private Securities
Litigation Reform Act of 1995 provides a new "safe harbor" for certain
forward-looking statements. The following factors set forth under "Risk Factors"
among others, could cause actual results to differ materially from those
contained in forward-looking statements made in this Form 10-KSB, future filings
by the Company with the SEC, in the Company's press releases and in oral
statements made by authorized officers of the Company. When used in this Form
10-KSB, the words "estimate," "project," "anticipate," "expect," "intend,"
"believe" and similar expressions are intended to identify forward-looking
statements.

Substantial Indebtedness to Related Parties. The Company owed an aggregate of
$1,908,893 to Noble and Dorothy Dennis in consideration of the transfer of the
Placer Leases and services rendered pursuant to the Operating Agreement. In
addition, Noble is entitled to retain a certain percentage of the gold produced
from the Placer Leases for services rendered and the Company has agreed to
deliver to Noble an aggregate of 4,861 ounces of gold from the Company's portion
of the gold produced at the Placer Leases. There can be no assurance that the
Company will be able to satisfy its obligations to Noble and Dorothy Dennis.

Conflicts of Interest. The terms upon which the Company acquired the Placer
Leases and the terms of the Operating Agreement were determined by negotiations
between representatives of Noble and the Company. Noble currently owns more than
a majority of the outstanding shares of the Company. Therefore, the agreements
between Noble, Dorothy Dennis and the Company should not be deemed the product
of arms' length negotiations.

ITEM 1. DESCRIPTION OF THE PLACER LEASES

General

The Company holds a 100% interest in all of its Properties:

Noble Leases

PL # 29           (Tenure #262692)
PL # 1159         (Tenure #282768)
PL # 1160         (Tenure #262769)
PL # 1850         (Tenure #262822)
PL # 2093         (Tenure #282832)

Placer Claims
Lou #1            (Tenure #337015)
Lou #2            (Tenure #337016)

The Placer Properties comprise approximately 430 acres of land in the aggregate
and constitute a contiguous mining site. The Placer Mining Leases are renewable
placer mining leases assigned to the Company pursuant to the Noble Agreement and
the PL#1160 Agreement. To maintain the Leases in full force and effect during
their respective terms, the Company is required to pay, in Canadian dollars,
dependent upon the specific type of lease, an annual licensing expenditure of
$5.00 per hectare of land on any Leases of Placer Minerals, $250.00 on any
Placer Mining Leases (PML) or Placer Leases (PL). The Placer Claims are
renewable annually by carrying out a minimum of $500.00 of qualified work or
paying $500.00 in cash in lieu of work and a $100.00 recording fee. Except for
the 


                                      -9-
<PAGE>

division of gold with Noble pursuant to the Operating Agreement, there are no
other third party fees or royalty interests payable with respect to the Placer
Leases. The fees payable by the Company with respect to the Placer Leases
aggregate to Cdn. $2,450, per annum, inclusive of payments in lieu of work.

In British Columbia the terms "mineral title" as used the Mineral Tenure Act
includes mineral and placer claims and leases.

Legal title to minerals in the province can be held under four types of tenure:
Freehold:
Crown granted mineral claim:
Located (staked) Mineral or Placer Claim; and
Mining or Placer Lease.

The Company holds the interests in its properties as either Located Mineral or
Placer Claims, or as a Mining or Placer Lease. Title to located Mineral and
Placer Claims, and Mining and Placer Leases is issued and administered by the
Mineral Title Branch, Ministry of Energy, Mines and Petroleum Resources and are
subject to all provisions of the Mineral Tenure Act which is also administered
by the above noted Department. A claim or lease title conveys to the holder the
right to all minerals or placer minerals as defined in the Mineral Tenure Act
and which were available at the time of location or have subsequently become
available under the terms of the Act.

Placer minerals are ores of metal and other natural substances that occur either
loose or in fragmented rock. They are found in loose earth, gravel and sand,
having been transported from the original bedrock source by natural means such
as glacial and water action. Placer minerals also include materials from placer
mine tailings and previously mined deposits of placer minerals.

There are no surface rights included in the Company's Placer Leases, but the
Company has the right to use the surface of the claim for mining purposes only.
This does not include the right to live on the claim, or build a cabin, house or
any other building or dwelling.

A Mining or Placer Lease contains the same rights as a claim, but is also an
interest in land. However, this is not the same as surface rights and the right
to reside on the land is still contingent to the work program and requires
approval. All work carried out on a claim or lease must receive approval from
the District Inspector of Mines prior to commencement and work which disturbs
the surface by mechanical means requires a Notice of Work under the Mines Act.

ITEM 2. DESCRIPTION OF PROPERTY

The Company occupies office space provided by its President, E.D. Renyk, at 5391
Blundell Road, Richmond, BC, Canada, V7C 1H3. No rent is paid for the use of
this office. The space is adequate for the planned future conduct of the
Company's business over the next twelve months.

The following is a description of the Placer Leases that were assigned to the
Company in 1995 pursuant to Exchange Agreements with Noble and Dorothy Dennis.
All Placer Leases or Placer Claims carry the right to multiple extensions.

      Placer Mining Lease #29 was originally issued to Howard Reid and Addison
      Manners of Vancouver, B.C. and acquired on March 15, 1981 by Noble. The
      present Lease term of 10 years became effective October 7, 1991 and
      expires October 15, 2001.

      Placer Mining Lease #1159 was originally issued to J. Emery of Vancouver,
      B.C. and acquired on August 21, 1980 by Noble. The present lease term of 5
      years became effective June 28, 1993 and expires October 15, 1998.


                                      -10-
<PAGE>

      Placer Mining Lease #1850 was issued July 31, 1979 to Noble. The present
      lease term of 5 years became effective September 27, 1994 and expires on
      October 15, 1999.

      Placer Mining Lease #2093 was issued September 14, 1979 to Noble. The
      present lease term of 5 years became effective September 27, 1994 and
      expires on October 15, 1999.

      Placer Mining Lease #1160 was staked by agents for D. Dennis. The present
      lease term of five years expires on December 29, 1998.

      Placer Claims Lou 1 and Lou 2 were staked by William G. Timmins as agent
      for Naptau and registered in Naptau's name May 31, 1996. The present lese
      term expires on June 11, 1999.

The Company, through Noble, has filed an application with the governing bodies
for a grouping of leases and to upgrade each of its title to a "Lease of Placer
Minerals" as is now allowed under the revised provisions of the "Mineral Tenure
Amendment Act, 1995.

Placer Claims

Placer claims are valid for one year. To maintain a placer claim the holder
must, on or before the anniversary date of the claim, pay the prescribed
recording fee and either: (a) record the exploration and development work
carried out on that claim during the current anniversary year which must equal
or exceed the minimum specified value per unit; or (b) pay cash in lieu of work.
If the value of work performed in a year is greater than the required minimum,
the surplus is termed excess work. This excess work, in full year multiples, can
be applied to cover work requirements on the claim for additional years, subject
to the limits specified in applicable regulations.

Placer Mining Leases (PML)/Placer Leases (PL)

Placer leases (PML or PL) issued under the former acts are subject to an annual
rental which just be paid on or before the anniversary date each year. If the
annual rentals are not paid these leases automatically forfeit and title to the
ground can only be re-acquired by locating a placer claim. These placer leases
are entitled to one term extension under the Mineral Tenure Act.

The holder of a valid placer lease (PML or PL) issued under the former acts or a
placer claim, or an adjoining group of these, may apply for a Lease of Placer
Minerals (LPM). A LPM is issued for a term of ten years and may be renewed for
further terms of up to ten years each. During the term of the lease an annual
rental must be paid on or before the anniversary date each year. A lease may be
ordered forfeited if the rental is not paid.

ITEM 3. LEGAL PROCEEDINGS

The Company is not the subject of any pending legal proceedings; and to the
knowledge of management, no proceedings are presently contemplated against the
Company by any federal, state or local governmental agency.

Further, to the knowledge of management, no director or executive officer is
party to any action in which any has an interest adverse to the Company.

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

Not applicable.


                                      -11-
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

A.    Market Information.

      At present, no market exists for the Company's securities and there is no
assurance that a regular trading market will ever develop or, if developed, that
it will be sustained. A purchaser of shares may, therefore, be unable to resell
the securities offered herein should he or she desire to do so. Furthermore, it
is unlikely that a lending institution will accept the Company's securities as
pledged collateral for loans unless a regular trading market develops.

B.    Holders.

      As of December 31, 1997, there were approximately 20 holders of the
Company's Common Stock.

C.    Dividends.

      The Company has never paid a cash dividend on its Common Stock and has no
present intention to declare or pay cash dividends on the Common Stock in the
foreseeable future. The Company intends to retain any earnings which it may
realize in the foreseeable future to finance its operations. Future dividends,
if any, will depend on earnings, financing requirements and other factors.

ITEM 6. PLAN OF OPERATION

In May 1997 the Company moved a new $250,000 production plant on site with the
expectation of processing 150,000 to 200,000 cubic yards of material over the 5
to 6 month 1997 mining season. This represented an average operating level of
50% of the capacity of the plant. This conservative estimate was based on the
assumption that shakedown time would be required during start-up of production
and the necessity of processing marginal pay gravels while opening the main
channel deposits. Production did not commence during the 1997 mining season due
to the failure of the manufacturer of the production plant to deliver a turnkey
plant. The Company spent the season and approximately $100,000 bringing the
plant to operating status. Concurrently with the preparation of the production
plant, the Company carried out further site preparation and refinement in
anticipation of an upcoming season of production.

At the commencement of the 1998 mining season the Company completed the tasks
necessary to commence production. In May and June 1998 the Company successfully
initiated test runs of the production plant yielding initial limited quantities
of gold.

The Company anticipates that it will continue to process materials through the
balance of the 1998 mining season. The Company intends to stop processing
materials and shut the mine down for winter in late September 1998. The Company
currently anticipates that it will process approximately 300,000 cubic yards of
material over the balance of the 1998 mining season.

At December 31, 1997, the Company had a working capital deficit of approximately
$2,214,000, a substantial portion of which is owed to Noble, $1,708,893, and
officers and directors of the Company, all of whom have a vested interest in
ensuring the Company's continued existence. The Company's continuing operations
and ability to realize the amounts shown as mineral properties on its balance
sheet are dependent upon the Company's ability to obtain the financing necessary
to meet its obligations and continue its exploration and development activities.
To date, substantially all of the financing for the Company's mining activities
has been provided by Noble. There is no assurance that Noble will continue to
fund the Company or that necessary financing will be made available by third
parties or, if made available, be on terms acceptable to the Company.


                                      -12-
<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See "Index to Financial Statements," Page 20.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None.

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(A) OF THE EXCHANGE ACT

Name                               Age     Positions Held With The Corporation
----                               ---     -----------------------------------
Edward D. Renyk                    59      Director, President & Chief
                                           Financial Officer

John J. McIntyre                   42      Director, Secretary

Lloyd E. Mear                      61      Director

Warren W. Gayle                    44      Director

Murray A. Braaten                  43      Director

E. D. Renyk. Mr. Renyk has served as the President, Chief Financial Officer and
a Director of the Company since June 8, 1995. Mr. Renyk is a member of the
Canadian, Alberta and British Columbia Institutes of Chartered Accountants. He
has been a Chartered Accountant for 33 years, managing and directing his own
practice for most of that period, specializing in consulting to both private and
publicly traded corporate firms. Prior to establishing his own practice and
subsequent to obtaining his designation as a Chartered Accountant he held
positions ranging from Controller to Vice President of Finance with various
corporations.

Mr. Renyk was admitted as a member of the Institute of Chartered Accountants of
Alberta in 1962.

J. J. McIntyre. Mr. McIntyre has served as Secretary and a Director of the
Company since June 8, 1995. Mr. McIntyre has recently founded his own law firm,
McIntyre Winteringham, after having practiced from 1984 to 1996 as a partner and
associate of Alexander Holburn Beaudin & Lang. Mr. McIntyre's current and former
firms are located in Vancouver, British Columbia. Previously, Mr. McIntyre was
employed as a Crown Counsel, also in Vancouver, for the Ministry of Attorney
General of British Columbia, from 1981 - 1984. While primarily a litigator, Mr.
McIntyre has been involved in advising mining companies throughout his time in
private practice.


                                      -13-
<PAGE>

Mr. McIntyre is a graduate of the University of Saskatchewan, located in
Saskatoon, Saskatchewan. He graduated with his LL.B. in 1980 and with his B.Sc.
(High Honors - Chemistry) in 1977.

Lloyd E. Mear. Mr. Mear has served as a Director of the Company since June 8,
1995. Mr. Mear has over thirty years of experience as a Civil Engineer including
fifteen years as an executive in the Mining Industry. From 1967 to date he has
served as the President and Chief Executive Officer of ReDev., Inc., a company
that extracts gold and platinum group metals from water sources throughout the
western United States and Canada.

Mr. Mear received a degree in Civil Engineering/Surveying in 1956 from
University of Alberta, Calgary, Alberta.

Warren W. Gayle. Mr. Gayle has served as a Director of the Company since October
5, 1995. Mr. Gayle owns a Consulting Firm in Vancouver specializing in
structured and tax driven financing for medium to large resource and
manufacturing based organizations. Prior to establishing his Company in 1991,
Mr. Gayle held various sales and management positions with multinational
corporations.

Mr. Gayle received a Bachelor of Commerce Degree - Finance in 1979 from the
University of British Columbia, Vancouver, British Columbia.

Murray A. Braaten. Mr. Braaten has served as a Director of the Company since
December 8, 1995. Mr. Braaten is a partner in the Vancouver law firm of Lando &
Co. He joined the firm as an Associate in 1981, became a partner two years
later, and has been the managing partner since 1987. Mr. Braaten has extensive
experience in business, business law, construction and real estate development.

Mr. Braaten graduated in 1980 with a Bachelor of Business Administration with
Distinction for the University of Regina and a Bachelor of Laws from the
University of Saskatchewan in Saskatoon.

Each director is elected for a period of one year at the Company's annual
meeting of shareholders and serves until his successor is duly elected and
qualified. Officers are appointed and serve at the will of the Board of
Directors.

To date the amount of time that Mr. Renyk has devoted to the business of the
Company has ranged from 40% to his full business time depending on the
activities at hand. Mr. McIntyre has expended approximately 25% of his business
time on Company affairs. It is anticipated that Mr. McIntyre will negotiate an
employment agreement with the Company when the demands on his time warrant it.
Messrs. Renyk and McIntyre expect their positions to graduate to full time as
the Company's financing and operations progress. Messrs. Mear, Gayle and Braaten
will expend such time as is required to fulfill their duties as Directors.

ITEM 10. EXECUTIVE COMPENSATION

The following table sets forth the compensation for the fiscal years ended
December 31, 1996 and 1997 ("fiscal years") payable to Mr. Renyk, the Company's
President. No other officer received any compensation from the Company in these
fiscal years.


                                      -14-
<PAGE>

                           SUMMARY COMPENSATION TABLE

                                                Long-Term
                                              Compensation
                                                 Awards

                                            Restricted Stock     All Other
                               Salary(1)         Awards         Compensation
                               --------          ------         ------------
Edward Renyk      1996          $90,000            --                --
                  1997          $90,000            --                --

(1)   On June 30, 1995, the Company entered into a five year employment
      agreement with the President of the Company that provides for a salary of
      $7,500 per month beginning July 1, 1995 (plus a cost of living adjustment
      to be made on the first day of each calendar year). The agreement also
      provides for additional incentive compensation equal to 1/2 of 1% of net
      sales up to $5,000,000, 3/4 of 1% on the next $20,000,000 in net sales and
      1 percent of net sales above $25,000,000.

Stock Options

The Company did not grant any stock options to any executive officer during
fiscal years 1996 and 1997.

Stock Option Plan and Stock Grant Program

In June 1995 the Company adopted a non-qualified stock option plan and a stock
grant program with the following provisions:

      Stock Option Plan

      The Company has reserved 300,000 shares of its authorized Common Stock for
      issuance to key employees and consultants of the Company and affiliates.
      Under this plan, no employee may receive more than 100,000 stock options.
      Options are non-transferable and expire if not exercised within two years
      from the date of issue.

      The options are issuable to officers, key employees and consultants in
      such amounts and prices as determined by the Board of Directors. As of
      December 31, 1997, no options were granted pursuant to this plan.

      Stock Grant Program

      The Company has reserved 300,000 shares of its authorized Common Stock for
      issuance to key employees and directors. Under this plan, no employee may
      receive more than 100,000 shares. The program requires the employee to
      remain in the employ of the Company for at least one year following the
      grant and to agree not to engage in any activity which would be considered
      in competition with the Company's business. If the employee violates any
      one of these conditions the ownership of the shares issued under the
      program shall revert back to the Company. The shares issued under the
      program are non-transferable, except for transfers back to the Issuer, for
      a period of one year from the date of issue. As of December 31, 1996, a
      total of 100,000 shares had been granted to five directors pursuant to
      this plan. No further grants have been made.


                                      -15-
<PAGE>

Board Compensation

The Board, from time to time, is authorized to establish compensation for the
Directors, but none has been set at this date. All of the directors are
reimbursed for their expenses incurred in connection with their attendance at
Board of Directors meetings.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1997, by its
executive officers and directors, both individually and as a group, and by each
person known by the Company to own more than 5% of the outstanding Common Stock.

                                                                   
                                            Number of           Percentage of
Name                                        Shares owned (1)    Shares Owned (2)

Noble Metal Group Incorporated (3)                4,085,000          58.92%
801-409 Granville Street
Vancouver, BC, Canada  V6C 1T2                    

James A. Howell                                     700,000          10.12%
Maritime Transport & Technology, Inc.             
161 W. 15th St., Ste. 7A
New York, New York  10011                         

Edward D. Renyk                                     390,000           5.62%
5391 Blundell Rd.
Richmond, BC, Canada  V7C 1H3
Director, President 
& Chief Financial Officer                          

John J. McIntyre                                    390,000           5.62%
McIntyre Winteringham
1501 - 543 Granville St.
Vancouver, BC, Canada  V6C 1X8
Director & Secretary                                

Lloyd Mear                                           70,000            --
5391 Blundell Rd.
Richmond, BC, Canada  V7C 1H3
Director                                        

Dorothy Dennis                                      808,500          11.66%
705 - 588 Broughton St.
Vancouver, BC, Canada  V6G 3E3                  

Warren W. Gayle                                      20,000            --
2081 Gordon Avenue
West Vancouver, BC, Canada  V7V 1V8                  

Murray A. Braaten                                    20,000            --
708 W. 22nd Avenue
Vancouver, BC, Canada  V5Z 1Z7                       

Officers and Directors                              890,000          12.84%
as a Group (5 persons)                              


                                      -16-
<PAGE>

 o    Less than 1%

(1)   Unless otherwise indicated all shares are held of record by the beneficial
      holders named above.

(2)   Based upon 6,933,500 shares of Common Stock  outstanding on December 31,
      1997.

(3)   Noble Metal Group Incorporated is a corporation publicly traded on the
      Vancouver Stock Exchange. As per their Notice of Annual General Meeting
      dated February 16, 1998 the authorized capital was 100,000,000 shares
      withouth par value, of which 29,676,119 were issued and outstanding. Known
      owner(s) of 5% or more of the outstanding share capital was Dorothy Dennis
      who held 3,463,047 shares representing 11.66%.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In February 1988 the Company issued 1,900,000 shares of Common Stock to James A.
Howell in consideration of $1,400 and certain organization expenses paid by Mr.
Howell on behalf of the Company. In May 1995 Mr. Howell transferred 350,000
shares to each of Mr. Renyk and Mr. McIntyre.

In June 1995 the Company issued 4,000,000 shares of Common Stock to Noble
pursuant to the Exchange Agreement. In April 1996 the Company issued an
additional 85,000 shares to Noble in partial consideration of its agreement to
extend the due date of certain amounts due under the Operating Agreement entered
into with respect to the Placer Leases.

In October 1995 the Company issued 800,000 shares of Common Stock to Dorothy
Dennis as partial consideration for the assignment of the PL #1160 Lease
pursuant to the PL #1160 Agreement. In April 1996 the Company issued an
additional 8,500 shares to Dorothy Dennis in consideration of her agreement to
extend the due date of $200,000 payable pursuant to the PL #1160 Lease
Agreement. For a more complete description of the terms of the PL #1160 lease
Agreement and certain related agreements between the Company and Dorothy Dennis,
see "Item 1. Business."

During 1995 certain officers and directors loaned the Company an aggregate of
$101,677 which loans were non-interest bearing and payable on demand. In 1996,
such officers and directors agreed to convert $96,000 of those loans into 40,000
shares of Common Stock at a conversion price of $2.40 per share.

In accordance with the Operating Agreement, the Company's principal stockholder,
Noble, has agreed to serve as the operator of the Company's mining activities.
The terms of the Operating Agreement are discussed in Item 1 -"Business."


                                      -17-
<PAGE>

                                                                      APPENDIX A

                        Glossary of Certain Mining Terms

alluvial                      1. Deposited by a stream.                        
   alluvial channels          2. Relating to deposits made by flowing water. 
alluvial fan                  fan a cone-shaped deposit of alluvium made by a   
                              stream where it runs out onto a level plain or   
                              meets a slower stream. The fans generally form   
                              where streams issue from mountains upon the      
                              lowland.                                         
alluvial mining               (placer mining) the recovery of heavy minerals 
                              (high specific gravity) that have become       
                              concentrated in secondary deposits, following  
                              separation by weathering agencies from primary 
                              veins higher up the watershed.                 
alluvium                      a general term for all detrital deposits resulting
                              from the operations of modern rivers, thus        
                              including the sediments laid down in river beds,  
                              flood plains, lakes, fans at the foot of mountain 
                              slopes, and estuaries.                            

arenaceous rock               resembling, made of, or containing sand or sandy 
                              particles                                        
argillaceous                  of, relating to, or containing clay or clay
   argillaceous rock          minerals                                   

auriferous                    containing gold

bedrock                       the solid rock underlying auriferous gravel, sand,
                              clay, etc., and upon which the alluvial gold      
                              rests. In placer use, the term bedrock may be     
                              generally applied to any consolidated formation   
                              underlying the goldbearing gravel. Bedrock may be 
                              composed of igneous, metamorphic or sedimentary   
                              rock. See - False bedrock                         
                              
claim                         an area of land staked by a prospector or mining 
                              company and then recorded (see "staking")       

clastic rocks                 made up of fragments of pre-existing rocks       
concessions:                  (a--sediment) that in which the State or private 
   alluvial concessions       owner of mining property has the right to grant   
   and rights                 concessions or leases to individuals or           
                              corporations at discretion, or under grant        
   development                concessions or leases to individuals or           
concessions                   corporations at discretion, or under nationality  
                              or color, has the right to locate on discovery or 
                              otherwise certain limited areas of ground and     
                              under certain conditions to hold, work or dispose 
                              of the same. (The "Claim" system)                 

confluence                    a junction or flowing together of streams; the 
                              place where streams meet.                      


                                      -18-
<PAGE>

detritus                      a general name for incoherent sediments, produced
                              by the wear and tear of rocks through the various
                              geological agencies. The name is from the Latin
                              for "worn" rock waste. A deposit of such material.

false bedrock                 a hard or relatively tight formation within a
                              placer deposit, at some distance above true
                              bedrock, upon which gold concentrations are found.
                              Clay, volcanic ash, caliche or "tight" gravel
                              formations can serve as false bedrocks. A deposit
                              may have gold concentration on one or more false
                              bedrocks, with or without a concentration on true
                              bedrock.

fine gold                     1. Pure gold, i.e., gold of 1,000-fineness. 2.
                              Gold occurring in small particles such as those
                              which would pass a 20-mesh screen but remain on
                              40-mesh.

fineness                      the proportion of pure gold in bullion or in a
                              natural alloy, expressed in parts per thousand.
                              Natural gold is not found in pure form; it
                              contains varying proportions of silver, copper and
                              other substances. For example, a piece of natural
                              gold containing 150 parts of silver and 50 parts
                              of copper per thousand, and the remainder pure
                              gold, would be 800-fine. The average fineness of
                              placer gold obtained in California is 885.

fines                         1. The sand or other small-size components of a
                              placer deposit. 2. The material passing though a
                              screen during washing or other processing steps of
                              a placer operation.

geochemical survey            the search for mineral deposits, particularly     
   geochemical soil           metalliferous deposits, by analyzing rocks, stream
sampling surveys              silts, springs, soils, surface waters or organisms
                              for abnormal concentrations of elements.          

geophysical survey            Geophysical exploration, commonly called applied
                              geophysics or geophysical prospecting, is
                              conducted to locate economically significant
                              accumulations of oil, natural gas, and other
                              minerals, including groundwater. Surveys are
                              generally identified by the property being
                              measured namely, electrical, gravity, magnetic,
                              seismic, thermal, or radioactive properties. Used
                              primarily in the search for oil, gas, and base
                              metals, electrical and electromagnetic surveys map
                              variations in the conductivity or capacitance of
                              rocks.

glacial periods               pertaining to, characteristic of, produced or
                              deposited by, or derived from a glacier.


                                      -19-
<PAGE>

gold-bearing gravels          see "placers"

Hadrynian                     one of the three eras of the Proterozoic times
                              which is of, relating to, or being the eon of
                              geologic time or the corresponding system of rocks
                              that includes the interval between the Archean and
                              Phanerozoic eons, perhaps exceeds in length all of
                              subsequent geological time, and is marked by rocks
                              that contain fossils indicating the first
                              appearance of eukaryotic organisms (as algae).

homogenous                    1 : of the same or a similar kind or nature; 2 : 
                              of uniform structure or composition throughout

hydraulic operation           mining in which a bank of gold-bearing earth or  
                              gravel is washed away by a powerful jet of water  
                              and carried into sluices, where the gold separates
                              from the earth by its specific gravity.           

I.P. surveys                  (induced polarization) a method, the basis of     
                              which is, when an electrical circuit is passed    
                              through certain kinds of ground between electrodes
                              placed at the surface, is interrupted, the        
                              electrical potential is reduced (decays) gradually
                              and measurable. The method has been most effective
                              where grains of metalliferous minerals are        
                              disconnected, with large surface areas and large  
                              ionic effects, and where the host rock has        
                              suitable resistivity.                             

lode                          a general term for metalliferous and some        
                              non-metalliferous deposits in solid, consolidated
                              (hard rock) state as distinguished from          
                              unconsolidated deposits such as placers.         

metamorphic                   of, relating to, or produced by metamorphism

metamorphism                  the mineralogical and structural adjustment of    
                              solid rocks to physical or chemical conditions    
                              differing from those under which they were formed.

metasedimentary rocks         later or more highly organized or specialized form
                              of sedimentary rock                               

micaceous                     quartzites mica - any of various colored or
                              transparent mineral silicates crystallizing in
                              monoclinic forms that readily separate into very
                              thin leaves _ micaceous \ adj.


                                      -20-
<PAGE>

mineral deposits              Most minerals are found in veins, or              
                              tabular-shaped deposits of nonsedimentary origin, 
                              often dipping at high angles; in beds, or seams,  
                              which are tabular deposits conforming to the      
                              stratification of enclosing rocks; and as masses, 
                              or large ore bodies of irregular shape standing at
                              any angle. Gold, diamonds, tin, and platinum are  
                              often found in placers, or deposits of sand and   
                              gravel containing particles of the mineral.       

ore reserve                   that part of a mineral deposit which could be    
                              economically and legally extracted or produced at
                              the time of the reserve determination.           

overburden                    worthless or low-grade surface material covering a
                              body of useful mineral.                           

oxidized                      1. to change (a compound) by increasing the      
   oxidized quartz            proportion of the electronegative part or change 
                              (an element or ion) from a lower to a higher     
                              positive valence. 2. remove one or more electrons
                              from an atom, ion, or molecule - vi: to become   
                              oxidized _ ox-i-diz-able \, adj.                 

pale- or paleo-               1 : involving or dealing with ancient forms or
                              conditions (paleobotany)                         
                              2 : early : primitive : archaic (Paleolithic)

paleoalluvial fan             see "alluvial fan"

paleochannel                  ancient channel

paleogulch                    ancient gulch (narrow valley setting)

paleozoic                     ancient geological era

placer                        an alluvial, marine, or glacial deposit containing
                              particles of valuable mineral and esp. of gold.   

placers                       the term is applied to deposits of sand, gravel,
                              and other detrital or residual material containing
                              a valuable mineral which has accumulated through
                              weathering and mechanical concentration processes.
                              The term as used in this report applies to ancient
                              (Tertiary) gravels as well as to recent deposits,
                              and to underground (drift mines) as well as to
                              surface deposits.


                                      -21-
<PAGE>

placer channels               a stream-eroded depression in the bedrock,     
                              ordinarily filled with gravel. See - Tertiary  
                              channel.                                       

placer mining                 see "alluvial mining" 

pre-glacial channel           see "paleogulch"

proven ore reserves           reserves for which (a) quantity is computed from  
                              dimensions revealed in outcrops, trenches,        
                              workings, or drill holes; grade and/or quality are
                              computed from the results of detained sampling and
                              (b) the sites for inspection, sampling and        
                              measurements are spaced so closely and the        
                              geologic character is so well defined that size,  
                              shape, depth and mineral content of reserves are  
                              well established.                                 

probable ore reserves         reserves for which quantity and grade/or quality  
                              are computed from information similar to that used
                              for proven reserves, but the sites for inspection,
                              sampling, and measurement are further apart or are
                              otherwise less adequately spaced. The degree of   
                              assurance, although lower than that for proven    
                              reserves, is high enough to assume continuity     
                              between points of observation.                    

pyritic                       any of various metallic-looking sulfides of which 
                              pyrite is the most common.                        

rim rock (or rim)             the bedrock rising to form the boundary of a    
                              placer or gravel deposit. (Fay)                 

seismic refraction            a method which interprets the time interval       
 surveys                      between the initiation of elastic waves generated 
                              by man-made explosions and the first and later    
                              disturbances of the ground as detected by a       
                              seismometer at a known distance from the source of
                              energy.                                           

staking                       the measuring and marking with stakes or posts of 
                              an area on the ground to establish mineral rights.

tertiary                      the earlier of the two geologic periods (1 million
                              to 60 million) comprised in the Cenozoic era      
                              (present day back to 60 million years ago), in the
                              classification generally used. Also, the system of
                              strata deposited during that period. (AGI)        

tertiary channels             Ancient gravel deposits, often auriferous
                              (containing gold), composed of Tertiary stream
                              alluvium.


                                      -22-
<PAGE>

- -zoic                       adj. comb form [Gk zoe life] : of, relating to, or
                              being a (specified) geological era (Archeozoic)
                              (Mesozoic)

                                      -23-
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

The following are filed as part of this Report:

3.1   Certificate of Incorporation of the Registrant (1)
3.2   Certificate of Amendment dated June 23, 1989 to Certificate of
      Incorporation (1)
3.3   Certificate of Amendment dated June 1, 1995 to Certificate of
      Incorporation (1)
3.4   Certificate for Renewal and Revival of Charter dated June 1, 1995 (1) 
3.5   By-laws of the Registrant (1) 
4.1   Form of Common Stock Certificate (1) 
10.1  Agreement to Exchange Assets for Stock (1) 
10.2  Operating Agreement (1) 
10.3  Extension Agreement between the Registrant and Noble dated September 1,
      1995 (1)
10.4  Second Extension Agreement between the Registrant and Noble dated April
      30, 1996 (1)
10.5  Satisfaction of Debt with Stock-Noble Metal Group Incorporated (1)
10.6  Modification and Extension Agreement between Registrant and Noble dated
      July 1996 canceling $1,000,000 obligation and further extending date for
      payment of $954,500 in consideration for agreement to deliver 3,421 ounces
      of gold (1)
10.7  Agreement of  Business Combination by Exchange of Assets for Stock
      Regarding Place Lease #1160 between the Registrant and Dorothy Dennis
      (1)


                                      -24-
<PAGE>

10.8  Extension Agreement between the Registrant and Dorothy Dennis dated      
      April 30, 1996 (1)
10.9  Satisfaction of Debt with Stock - Dorothy Dennis (1) 
10.10 Satisfaction of Debt with Stock - E.D. Renyk (1) 
10.11 Satisfaction of Debt with Stock - J.J. McIntyre (1) 
10.12 Stock Option Program (1) 
10.13 Stock Grant Program (1) 
10.14 Employment Agreement of Edward D. Renyk (1) 
10.15 Second Extension Agreement between Registrant and Dorothy Dennis dated
      October 1996 (1)
24.1  Consent of W.G.T. Consultants Ltd. (1)

----------
(1)   Incorporated by reference to the Company's Form 10-SB, Commission File
      No. 0-25786


                                      -25-
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: February 17, 1999
                                    NAPTAU GOLD CORPORATION
                                    (Registrant)


                                    By: /s/ Edward D. Renyk
                                       -----------------------
                                    Edward D. Renyk, President

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

  Signature                   Title                            Date
  ---------                   -----                            ----


/s/ Edward D. Renyk           President, Director and          February 17, 1999
-------------------           Principal Accounting Officer
Edward D. Renyk               


/s/ John J. McIntyre          Director                         February 17, 1999
--------------------
John J. McIntyre


/s/ Lloyd E. Mear             Director                         February 17, 1999
-----------------
Lloyd E. Mear


/s/ Warren W. Gayle           Director                         February 17, 1999
-------------------
Warren W. Gayle


/s/ Murray A. Braaten         Director                         February 17, 1999
---------------------
Murray A. Braaten


                                      -26-
<PAGE>

                             NAPTAU GOLD CORPORATION


                                      INDEX


Reports of Independent Chartered Accountants.................................F-1

Balance Sheet................................................................F-2

Statements of Operations.....................................................F-3

Statements of Cash Flows.....................................................F-4

Notes to Financial Statements................................................F-5

<PAGE>

                              [LETTERHEAD OF KPMG]

AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the balance sheets of Naptau Gold Corporation as at December 31,
1997 and 1996 and the statements of operations and deficit and cash flows for
each of the years in the three year period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1997 and 1996
and the results of its operations and its cash flows for each of the years in
the three year period ended December 31, 1997 in accordance with generally
accepted accounting principles in the United States.


/s/ KPMG

Chartered Accountants


Vancouver, Canada

March 25, 1998


COMMENTS BY AUDITOR FOR U.S. READERS ON
CANADA-U.S. REPORTING CONFLICT

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by significant uncertainties such as that referred to in
the attached balance sheets as at December 31, 1997 and 1996 and as described in
note 1 of the consolidated financial statements. Our report to the shareholders
dated March 25, 1998 is expressed in accordance with Canadian reporting
standards which do not permit a reference to such an uncertainty in the
auditors' report when the uncertainty is adequately disclosed in the financial
statements.


/s/ KPMG

Chartered Accountants


Vancouver, Canada

March 25, 1998


                                      F-1
<PAGE>

NAPTAU GOLD CORPORATION

Balance Sheets
(expressed in United States dollars)

December 31, 1997 and 1996
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    1997           1996 
                                                                -----------    -----------
<S>                                                             <C>            <C>
Assets
Equipment                                                       $    71,582    $        -- 
Mineral properties (note 3)                                       3,341,831      2,988,850
Deferred financing costs                                                 --          9,090
                                                                -----------    -----------
                                                                $ 3,413,413    $ 2,997,940
                                                                ===========    ===========

Liabilities and Shareholders' Equity
Current liabilities:
     Accounts payable and accrued liabilities (note 4)          $   277,251    $   157,183
     Contracts payable to related parties (note 3)                1,908,893      1,494,830
     Loans payable to related parties (note 4)                       27,680         12,770
                                                                -----------    -----------
                                                                  2,213,824      1,664,783
Shareholders' equity:
     Capital stock (note 5):
          Authorized:
               5,000,000 preferred shares with a par value of
                                   $0.001 per share
              20,000,000 common shares with a par value of
                                   $0.001 per share
               Issued and outstanding:
               6,933,500 common shares (1995 - 6,700,000)             6,934          6,934
          Additional paid-in capital (note 5)                     1,534,105      1,534,105
          Deficit                                                  (341,450)      (207,882)
                                                                -----------    -----------
                                                                  1,199,589      1,333,157
Continuing operations (note 1)
Commitments and contingency (notes 3 and 6)
                                                                -----------    -----------
                                                                $ 3,413,413    $ 2,997,940
                                                                ===========    ===========
</TABLE>


                                      F-2
<PAGE>

NAPTAU GOLD CORPORATION

Statements of Operations and Deficit
(expressed in United States dollars)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                         Years ended December 31,
                                                   -----------------------------------
                                                      1997         1996         1995
                                                   ---------    ---------    ---------
<S>                                                <C>          <C>          <C>
Expenses:
     Interest Expense                                  2,035           --           -- 
     Management salary (note 6)                    $  90,000    $  90,000    $  45,000
     Professional fees                                17,035       25,940       12,853
     Office and administrative                         4,105        1,332          757
     Stock grant program expense (note 5(c)(ii))          __           --          100
     Write-off of deferred financing costs            20,393       30,000           -- 
                                                   ---------    ---------    ---------
Loss for the year                                    133,568     (147,272)     (58,710)
Deficit, beginning of year                           207,882      (60,610)      (1,900)
                                                   ---------    ---------    ---------
Deficit, end of year                               $ 341,450    $(207,882)   $ (60,610)
                                                   =========    =========    =========
Loss per share                                     $   (0.02)   $   (0.02)   $   (0.01)
                                                   =========    =========    =========
</TABLE>

See accompanying notes to financial statements.


                                      F-3
<PAGE>

NAPTAU GOLD CORPORATION

Statements of Cash Flows (note 8)
(expressed in United States dollars)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                            Years ended December 31,
                                                      -----------------------------------
                                                         1997         1996         1995
                                                      ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>        
Cash generated from (used in):
Operations:
     Loss for the year                                $(133,568)   $(147,272)   $ (58,710)
     Add items not involving cash:
       Write-off of deferred financing costs             20,393       30,000           -- 
       Stock grant program expense                           --           --          100
     Changes in non-cash operating working capital:
       Accounts payable and accrued liabilities         120,068      112,183       45,000
                                                      ---------    ---------    ---------
                                                          6,893       (5,089)     (13,610)
Financing:
     Deferred financing costs recovered (incurred)      (11,303)         910      (40,000)
     Payment of contracts payable                       (10,500)          --      (45,500)
     Loans payable to related parties                    14,910        7,073      101,697
                                                      ---------    ---------    ---------
                                                         (6,893)       7,983       16,197
Investments:
     Mineral properties                                      --       (3,894)      (1,587)
                                                      ---------    ---------    ---------
Increase (decrease) in cash                           $      --    $  (1,000)   $   1,000
Cash, beginning of year                                      --        1,000           -- 
                                                      ---------    ---------    ---------
Cash, end of year                                     $      --    $      --    $   1,000
                                                      =========    =========    =========
</TABLE>

See accompanying notes to financial statements.


                                      F-4
<PAGE>

NAPTAU GOLD CORPORATION

Notes to Financial Statements
(expressed in United States dollars)

December 31, 1997

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

1.    Continuing operations:

            Naptau Gold Corporation (the "Company") was formed under the laws of
      the State of Delaware on January 8, 1988 and was inactive until 1995 when
      it entered into an agreement to acquire certain mineral properties (note
      3). The Company's principal business activity is the exploration and
      development of mineral properties, with its principal mineral properties
      comprising various placer leases in the Cariboo Mining Division of British
      Columbia, Canada (the "Placer Leases").

            These financial statements have been prepared on the basis of
      accounting principles applicable to a going concern. At December 31, 1997,
      the Company had a working capital deficiency of approximately $2,200,000,
      a significant portion of which is due to related parties. The Company's
      continuing operations and the ability of the Company to discharge its
      liabilities are dependent upon the continued financial support of related
      parties and the ability of the Company to obtain the necessary financing
      to meet its liabilities as they come due.

            The recoverability of the amounts shown as mineral properties is
      dependent upon the existence of economically recoverable mineral reserves,
      the ability of the Company to obtain the necessary financing to complete
      the development of its mineral properties and upon future profitable
      production or proceeds from the disposition thereof.

2.    Significant accounting policies:

            The financial statements have been prepared in accordance with
      generally accepted accounting principles in the United States.

      (a)   Equipment:

            Equipment is recorded at cost. Depreciation will commence once the
            assets have been put in use and will be provided using the
            straight-line method over 10 years, being the estimated useful life
            of the assets.

      (b)   Mineral property interests:

            Mineral property acquisition costs and related exploration and
            development expenditures are deferred until the property is placed
            into production, sold or abandoned. These costs will be amortized on
            a unit-of-production basis over the estimated proven and probable
            reserves of the property following commencement of commercial
            production or written off if the property is sold, allowed to lapse
            or abandoned.

            Mineral property acquisition costs include cash consideration and
            the fair value of common shares issued for mineral properties.
            Administrative expenditures are expensed in the period incurred.

            On an on-going basis, the Company evaluates the status of its
            mineral properties based on results to date to determine the nature
            of exploration and development work that is warranted in the future.
            If there is little prospect of further work on a property being
            carried out, the deferred costs related to that property are written
            down to their estimated recoverable amount.

            The amounts shown for mineral properties represent costs incurred to
            date and is not intended to reflect present or future values.

      (c)   Deferred financing costs:

            The Company defers costs associated with specific financing
            activities and charges those costs against the related share capital
            or to operations if the financing activity is unsuccessful.
<PAGE>

NAPTAU GOLD CORPORATION

Notes to Financial Statements, page 2
(expressed in United States dollars)

December 31, 1997

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

2.   Significant accounting policies (continued):

      (d)   Loss per share:

            Loss per share has been calculated using the weighted average number
            of common shares outstanding during the year.

      (e)   Use of estimates:

            The preparation of financial statements in conformity with generally
            accepted accounting principles requires management to make estimates
            and assumptions that affect the reported amounts of assets and
            liabilities and disclosure of contingent assets and liabilities at
            the date of the financial statements and the reported amount of
            revenues and expenses during the period. Significant areas requiring
            the use of management estimates include impairment of assets and
            useful lives for depreciation. Actual results may differ from those
            estimates.

      (f)   Financial instruments:

            With the exception of amounts due to related parties, as at December
            31, 1997 and 1996, in all material respects the carrying amounts for
            the Company's financial instruments approximated fair value due to
            the short term nature of these financial instruments. The Company is
            unable to determine the fair value of the amounts due to related
            parties with sufficient reliability. Accordingly, information on the
            characteristics of these balances is described in note 4.

3.    Mineral properties:

<TABLE>
<CAPTION>
===================================================================================
                                                               1997         1996
-----------------------------------------------------------------------------------
<S>                                                         <C>          <C>
Placer Leases, Cariboo Mining Division, British Columbia:
    Acquisition costs:
         Placer Leases acquired from Noble (note 3(a))      $1,775,000   $1,775,000
         Placer Leases acquired from an affiliate of the
           Company (note 3(b))                                 200,800      200,800
-----------------------------------------------------------------------------------
                                                             1,975,800    1,975,800
    Deferred interest and financing costs:
         Paid or accrued to Noble (note 3(a))                  361,970      251,725
         Paid to an affiliate of the Company (note 3(b))        20,400       20,400
-----------------------------------------------------------------------------------
                                                               382,370      272,125
    Exploration and development expenditures:
         Incurred by Noble                                     978,181      735,445
         Incurred by the Company                                 5,480        5,480
-----------------------------------------------------------------------------------
                                                               983,661      740,925
-----------------------------------------------------------------------------------

                                                            $3,341,831   $2,988,850
===================================================================================
</TABLE>

(a)  Placer Leases acquired from Noble:

            During 1995, the Company entered into an agreement to acquire
      certain Placer Leases owned by Noble Metal Group incorporated (a British
      Columbia company) ("Noble") in exchange for 4 million common shares of the
      Company, representing an initial 59.7% interest in the Company. As Noble
      acquired control of the Company by this exchange, it is considered a
      common control transaction and, accordingly, the common shares have been
      accounted for at the carrying value of the Placer Leases in the accounts
      of Noble at December 31,1994 of $1,775,000 (Noble, in association with
      limited partnerships, had also expended an additional $550,000 on
      exploration of the Placer Leases which was recovered from these limited
      partnerships and accordingly, is not reflected in the aforementioned
      carrying value). A British Columbia Mineral Tenure Act "Bill of Sale
      Absolute" held by the Company relating to the Placer Leases has not yet
      been registered with the appropriate authorities and as a result,
      registration of the Placer Leases remains in the name of the operator,
      Noble. The Company can, at any time and without any restriction, apply to
      conclude registration in its name.
<PAGE>

NAPTAU GOLD CORPORATION

Notes to Financial Statements, page 3
(expressed in United States dollars)

December 31, 1997

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

3.    Mineral properties (continued):

            The Company and Noble also entered into an operating agreement
            whereby Noble will remain the operator for the mining activities on
            the Placer Leases for a term of ten years, with Noble having the
            option of renewing the agreement for a further ten year term. The
            Company agreed to pay Noble $1,000,000 in consideration for entering
            into this operating agreement. In addition, the Company is obligated
            to pay $1,000,000 in respect of 1995 exploration and development
            expenditures and agreed to fund future annual operating expenditures
            on the Placer Leases, including the lease of certain equipment and
            facilities owned by Noble. These required payments have been accrued
            in contracts payable (see below). However, as this is a common
            control transaction, the amount of $1,602,661, being the excess of
            these amounts over the estimated book value of the related assets in
            the accounts of Noble was charged against additional paid-in capital
            during 1995 (note 5). During 1996, this amount was reduced by
            $45,500 to reflect the actual book value of the related assets in
            the accounts of Noble at December 31, 1995. To December 31, 1995,
            the Company had advanced $45,500 to Noble with respect to
            exploration and development expenditures on the Placer Leases which
            has been recorded as a reduction in the Company's contracts payable.

            During 1996, the Company entered into an extension agreement with
            Noble with respect to its contract payable to Noble, whereby the
            Company issued 85,000 common shares to Noble at an agreed price of
            $2.40 per share and agreed to pay Noble 300 ounces of gold from the
            Company's share of gold produced from mining operations on its
            placer mining leases, if any, to initially extend the due date for
            the amount outstanding under the contract payable to June 30, 1996.
            The value ascribed to the common shares issued has been included in
            deferred interest and financing costs in mineral properties,
            however, the value of the gold to be paid to Noble has not been
            accrued in these financial statements due to the uncertainty of
            ultimate payment.

            The Company and Noble subsequently agreed to amend certain of the
            terms of the operating agreement originally entered into whereby the
            Company was obliged to pay $1,000,000 to Noble as consideration for
            entering into the operating agreement. The amending agreement
            cancelled the Company's obligation to pay $1,000,000 to Noble and
            the Company agreed to pay Noble 3,421 ounces of gold from the
            Company's share of gold produced from mining operations on its
            placer mining leases, if any. Noble also granted the Company an
            extension to June 30, 1997 of the revised balance due of $954,500 as
            at December 31, 1995 in consideration for the Company agreeing to
            pay interest on such balance at a rate of 10% per annum. The Company
            reduced contracts payable and increased additional paid-in capital
            by $1,000,000 each during 1996 as a result of this amending
            agreement. The value of the gold to be paid to Noble has not been
            accrued in these financial statements due to the uncertainty of
            ultimate payment.

            In addition to funding future annual operating expenditures on the
            Placer Leases, the operating agreement provides that proceeds from
            production from the Placer Leases, if any, will be divided between
            the Company and Noble as follows:

            o     for the first $1,000,000 of proceeds or 2,500 ounces of gold
                  (converted to a dollar amount), whichever is lesser, 10% of
                  such proceeds to Noble;

            o     for the next $1,000,000 of proceeds or 2,500 ounces of gold
                  (converted to a dollar amount), whichever is lesser, 17.5% of
                  such proceeds to Noble; and

            o     for cumulative proceeds in excess of $2,000,000 or 5,000
                  ounces of gold (converted to a dollar amount), whichever is
                  lesser, 25% of such proceeds to Noble (see below).

            During 1997, the Company entered into an extension agreement with
            Noble which granted the Company a further extension to December 31,
            1998 to pay the revised balance of $954,500 due as at December 31,
            1995, in consideration for the Company agreeing to pay interest on
            such balance at a rate of 10% until June 30, 1997 and at a rate of
            12% thereafter. In addition, the Company agreed to pay Noble 4,561
            ounces of gold, instead of the 3,421 ounces previously agreed, from
            the Company's share of gold produced from mining operations on its
            placer mining leases, if any. The Company also advanced $10,500 to
            Noble during 1997, which has been recorded as an additional
            reduction in contracts payable. The interest on the contracts
            payable has been included in deferred interest and financing costs
            in mineral properties, however, the value of the gold to be paid to
            Noble has not been accrued in these financial statements due to the
            uncertainty of ultimate payment.

            The parties also agreed to revise the division of gold produced from
            the Placer Leases, if any, to incorporate the following:

            (i)   the first 300 ounces of gold due to the Company from
                  anticipated 1998 mining operations will be paid to Noble in
                  satisfaction of the terms of the 1996 extension agreement;

            (ii)  up to 40% of the balance of the number of ounces of gold due
                  to the Company from anticipated 1998 mining operations, until
                  the 4,561 ounces referred to above is reached, will be paid to
                  Noble;

            (iii) up to 50% of the balance of the number of ounces of gold due
                  to the Company from anticipated 1999 mining operations, until
                  the balance, if any, of the 4,561 ounces referred to above is
                  reached, will be paid to Noble;

            (iv)  up to 60% of the balance of the number of ounces of gold due
                  to the Company from anticipated 2000 and subsequent years
                  mining operations, until the balance, if any, of the 4,561
                  ounces referred to above is reached, will be paid to Noble.

            The parties also agree that Naptau shall not sell or assign its
            interest in the Placer Leases until such time as these gold
            obligations are satisfied.

      (b)   Placer Lease acquired from an affiliate of the Company:

            During 1995, the Company acquired a Placer Lease owned by an
            affiliate of the Company (the "Affiliate"), for $200,000 (accrued
            but not yet paid) and 800,000 common shares of the Company that have
            been assigned their par value of $0.001 per share.

            During 1996, the Company entered into extension agreements with the
            Affiliate with respect to its contract payable to the Affiliate,
            whereby the Company issued 8,500 common shares at an agreed price of
            $2.40 per share to initially extend the due dates for the amount
            outstanding under the contract payable to June 30, 1996 and
            subsequently agreed to pay the Affiliate 100 ounces of gold from the
            Company's share of gold produced from mining operations on all of
            its placer mining leases, if any, for extending the due date to
            October 12, 1997. The ascribed value for the common shares issued
            has been included in deferred interest and financing costs in
            mineral properties, however, the value of the gold to be paid to the
            Affiliate has not been accrued in these financial statements due to
            the uncertainty of ultimate payment.

            During 1997, the Company entered into an extension agreement with
            the Affiliate with respect to its contract payable to the Affiliate
            of $200,000, whereby the Company agreed to pay the Affiliate 150
            ounces of gold, instead of the 100 ounces previously agreed, from
            the Company's share of gold produced from mining operations on its
            placer mining leases, if any, to extend the due date to December
            31, 1998.
<PAGE>

NAPTAU GOLD CORPORATION

Notes to Financial Statements, page 4
(expressed in United States dollars)

December 31, 1997

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

4.    Amounts payable to related parties:

      Loans payable to related parties consist of amounts received from
      directors and officers, are non-interest bearing and have no specific
      terms of repayment. During 1996, the directors and officers converted
      $96,000 of these loans into 40,000 shares at a price of $2.40 per share.

      At December 31, 1997, accounts payable and accrued liabilities include
      accruals totalling $225,000 (1996 - $135,000) for salaries to a director
      and officer pursuant to an employment agreement (note 6), which are
      included in management salary expense for the period.

5.    Capital stock:

      (a)   Authorized:

                  During 1995, the Company increased the authorized capital
            stock from 200 common shares with a par value of $0.001 per share to
            25,000,000 shares consisting of 5,000,000 preferred shares and
            20,000,000 common shares, each with a par value of $0.001 per share,
            of which 190 common shares were outstanding. The Company
            subsequently split the 190 common shares outstanding on a 10,000 new
            for 1 old basis. The number of shares issued as at December 31, 1994
            have been restated to reflect this share split as if it had occurred
            on inception.

      (b)   Issued:

                  A continuity of the Company's issued and outstanding capital
            stock is as follows:

<TABLE>
<CAPTION>
==============================================================================================================
                                                      Common shares              
                                              -------------------------------    Additional
   Year     Consideration                           Number         Amount      Paid-in capital       Total
--------------------------------------------------------------------------------------------------------------
<S>         <C>                                 <C>             <C>             <C>              <C>    
Balance, December 31, 1994 (note 5(a))            1,900,000     $     1,900     $         --     $      1,900

1995        Mineral properties (note 3(a))        4,000,000           4,000        1,771,000        1,775,000
1995        Reduction in additional
              paid-in capital relating to                                                                    
              operating agreements with
              Noble (note 3(a))                          --              --       (1,602,661)      (1,602,661)
1995        Mineral properties (note 3(b))          800,000             800                               800
--------------------------------------------------------------------------------------------------------------

Balance, December 31, 1995                        6,700,000     $     6,700     $    168,339     $    175,039

1996        Services under stock grant
              program (note 5(c)(ii))               100,000             100                -              100
1996        On conversion of loans payable
              to related parties (note 4)            40,000              40           95,960           96,000
1996        As consideration for extending
              the due dates of contracts
              payable (note 3)                       93,500              94          224,306          224,400
1996        Increase in additional paid-in
              capital resulting from
              amendment to operating
              agreement with Noble (note 3(a))           --              --        1,000,000        1,000,000
1996        Increase in additional paid-in
              capital relating to operating
              agreements with Noble (note 3(a))          --              --           45,500           45,500
--------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 and 1997               6,933,500     $     6,934     $  1,534,105     $  1,541,039
==============================================================================================================
</TABLE>
<PAGE>

NAPTAU GOLD CORPORATION

Notes to Financial Statements, page 5
(expressed in United States dollars)

December 31, 1997

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

5.    Capital stock (continued):

      (c)   Stock option plan and stock grant program:

            in June, 1995 the Company adopted a non-qualified stock option plan 
      and a stock grant program with the following provisions:

      (i)   Stock option plan:

            The Company has reserved 300,000 shares of its authorized common
            stock for issuance to key employees and consultants of the Company
            and affiliates. Under this plan, no employee may receive more than
            100,000 stock options. Options are non-transferable and expire if
            not exercised within two years. The options may not be exercised by
            the employee until after the completion of two years of employment
            with the Company. The options are issuable to officers, key
            employees and consultants in such amounts and prices as determined
            by the Board of Directors. To December 31, 1997, no options were
            granted pursuant to this plan.

      (ii)  Stock grant program:

            The Company has reserved 300,000 shares of its authorized common
            stock for issuance to key employees and directors. Under this plan,
            no employee may receive more than 100,000 shares. The program
            requires the employee to remain in the employ of the Company for at
            least one year following the grant and to agree not to engage in any
            activity which would be considered in competition with the Company's
            business. If the employee violates any one of these conditions the
            ownership of the shares issued under the program shall revert back
            to the Company. The shares issued under the program are
            non-transferable for two years. As of December 31,1995, a total of
            100,000 shares had been granted to five directors pursuant to this
            plan, which were issued in 1996. These shares were recorded during
            the period granted at their par value of $0.001 per share and have
            been presented as shares allotted but unissued as at December 31,
            1995.

6.    Commitments:

            On June 30, 1995, the Company entered into a five year employment
      agreement with the President of the Company that provides for a salary of
      $7,500 per month beginning July 1,1995 (plus a cost of living adjustment
      to be made on the first day of each calendar year.) The agreement also
      provides for additional incentive compensation equal to 1/2 of 1% of net
      sales up to $5,000,000, 3/4 of 1% on the next $20,000,000 in net sales and
      1 percent of net sales above $25,000,000.
<PAGE>

NAPTAU GOLD CORPORATION

Notes to Financial Statements, page 6
(expressed in United States dollars)

December 31, 1997

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

7.    Income taxes:

            Under the asset and liability method of accounting for income taxes,
      deferred income tax assets and liabilities are measured using enacted tax
      rates for the future income tax consequences attributable to differences
      between the financial statement carrying amount of existing assets and
      liabilities and their respective tax bases.

            For all periods presented, the Company has not recognized any
      deferred tax assets or liabilities as the available benefits, primarily as
      a result of loss carry forwards of approximately $347,000 arising in 1995
      through and 1997, are fully offset by a valuation allowance of the same
      amount.

8.    Supplementary cash flow information:

            The following non-cash financing and investing activities occurred
      during the period:

      ==========================================================================
                                                     Year end December 31,
                                             -----------------------------------
                                                1997        1996         1995   
      --------------------------------------------------------------------------
      Acquisition of equipment                           
         for contracts payable               $  71,582    $      --   $       --
                                                         
      Expenditures on mineral properties                 
         by way of increase in contracts                 
         payable                               352,981      340,330           --
                                                         
      Acquisition of mineral properties                  
         for contracts payable                      --           --    2,200,000
                                                         
      Reduction of contracts payable on                  
         amendment of operating agreement                
         with Noble and resulting increase               
         in additional paid-in capital              --    1,000,000           --
                                                         
      Issue of common shares:                            
         For mineral properties, net of                  
         reduction of additional paid-in                 
         capital relating to agreements                  
         with Noble                                 --      269,900      173,139
                                                         
      On settlement of loans payable                     
         to related parties                         --       96,000           --
      ==========================================================================

      The Company did not pay any interest or income taxes during the years 
      ended December 31, 1997, 1996 or 1995.