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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, 1998

|_| 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: 5,933,500 shares of Common
Stock, $.001 par value, were outstanding, as of March 31, 1999.

      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


                                       -2-
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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) 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 less, 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 less, 17.5% of such proceeds to
Noble; and

      (iii) for proceeds in excess of $2,000,000 or 5,000 ounces of raw gold
(converted to a dollar amount), whichever is less, 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 (which, during 1998, was deferred until
anticipated 1999 mining operatation);

      (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(which, during 1998, was deferred until anticipated 1999 mining
operatation);

      (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.

Although the Company extracted approximately 591 ounces of gold during the
latter portion of the 1998 mining season, it has yet to generate sufficient
revenues to sustain its operations. The Company's ability to maintain its mining
operations is dependent upon its ability to raise substantial additional funds
(see Item 6 "Plan of Operation"). All of the Company's exploration activities to
date have been conducted with funds provided from Noble with the exception of
funds received from sale of placer gold recovered from the 1998 exploration
program. 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, 1998 the Company had an accumulated
deficit of $2,339,027.

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 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 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 which were, on October 4, 1998, combined into a Lease
of Placer Minerals bearing Mineral Tenure # 365488 out of the Cariboo Mining
Division of British Columbia 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 branch of Keithley
Creek on the former Placer Lease #29. Although not homogeneous, the gold is
contained in zones of varying richness.

The "Tertiary Channel", a buried paleogulch channel on the former 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 the former 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 the former Placer
Leases #29 and #1850. The two channels appear to converge to the north of the
former 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 the former
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 the former
Placer Lease #1160, traces the northern continuation of the known Tertiary
Channel on the former 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 the former Placer Lease #1160.

Within the vicinity of the ancient Tertiary Channel near Keithley Creek on the
former Placer Lease #29, large gold nuggets up to 1.5 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 the former 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 the former Placer Lease #29, which is approximately
the same width. The total width of the two merging channels at the center of the
former Placer Lease #1160 is about 85 meters, which extends a further 200 meters
through the northern boundary of the former 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 former Placer Lease #1160.

The Company believes that grades should be similar to the grades obtained on the
former 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 or $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. The former 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 and new roads were constructed. Camp
facilities were expanded by the addition of for 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.


                                       -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 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,
however, due to the failure of the manufacturer of the production plant to
deliver a turnkey plant. The Company spent the 1997 season and approximately
$100,000 bringing the plant to operating status. Concurrently with the
preparation of the production plant, the Company carried on further site
preparation in anticipation of an upcoming season of production.

      At the commencement of the 1998 mining season the Company continued the
stripping and hauling of surface materials and the heavy blue clay which
overlies the channel deposits. The expected rich black/brown gravels, grey/green
gravels and boulders were found and are now exposed at the upper portion of the
channel pocket. The edges of the first placer pocket were exposed with the
pocket appearing to be 75 feet (25 meters) wide and, per the previous Seismic
Refraction Surveys, Induced Polarization Survey and past drilling, will drop off
sharply to a depth of some 135 feet (45 meters) of which 90 feet (30 meters)
extends below the level of Keithley Creek.

      In May and June 1998 the Company initiated test runs of the production
plant using materials from the upper edges of the pocket yielding small flat and
rice sizes of gold. During the balance of the 1998 mining season the Company
continued with site preparation and in particular, during the later part of
August and the month of September, carried on larger and continued levels of
operation recovering a total of 591.90 oz. of raw placer gold.

The following table details the recovery

--------------------------------------------------------------------------------
Days of        Cubic Yds.     Recovered     Ounces    Oz./Cu. Yd.      $/Cu. Yd.
Processing     Processed      Grams
Between
Clean-Ups
--------------------------------------------------------------------------------
3                900            473.3        15.22      0.017            3.87

6              1,580          2,092.7        67.28      0.049           11.05

3                672          1,696.7        54.55      0.081           16.91

4              1,814          4,063.3       130.65      0.072           17.34

5              1,642          2,976.0        95.68      0.058           14.33

7              2,360          6,716.4       215.93      0.091           24.17
--------------------------------------------------------------------------------

      "Clean-up" is the process of removing concentrated gold bearing materials
accumulated in a secure area of the processing plant and occurs at the
discretion of management, under the scrutiny of Company management personnel.

      The Company, with the exception of 24 oz. of gold which is carried as
inventory, sold the gold recovered and applied the proceeds to the current
period's exploration costs.

      As of the first week in October operations were suspended for the season
with the expectation that, weather permitting, the Company will return to the
site in early May 1999 to commence the new season.

Valuation of the former Noble Leases and the former 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 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 the Dorothy
Dennis for the preparation of the 1160 Valuation.


                                       -6-
<PAGE>

In considering the foregoing, it should be noted that 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 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.

Licenses and Permits

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 the Work (Mining) Permit
is valid until December 2001. The Hydraulic License, Water Use Permit and
Disposal Permit are renewable annually upon payment of the current years fees.
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-
<PAGE>

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 excess of $2,000,000 for
equipment and facilities provided to date.

Risk Factors

Limited Operations: Need for Additional Funds. To date, the Company has
extracted only 591 ounces of gold through its mining programs at the Properties.
However, the Company, has not generated any significant revenues and will not
generate significant revenues until the commencement of full scale 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, 1998, the Company had an accumulated deficit of $2,339,027.

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 were
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-
<PAGE>

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
$2,280,741 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 2. DESCRIPTION OF THE PROPERTY

General

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

LPM (Lease of Placer Minerals) (Tenure #365488) formerly:

     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 LPM is approximately 211 hectacres in area and constitutes a contiguous
mining site. The LPM is for a 10 year period and is renewable for further terms
of up to ten years each. To maintain the LPM in full force and effect during its
respective term, the Company is required to pay, in Canadian dollars, an annual
licensing expenditure of $1,060. 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. $2,260, per annum, inclusive of payments in lieu of work.

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.

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 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, 1998, there were approximately 34 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 end of the 1998 mining season the Company completed the tasks necessary
to commence production by successfully completing sustained test runs of the
production plant yielding quantities of gold as detailed above under the heading
Exploration and Development Activities on the Placer Leases.

The Company anticipates that it will commence to process materials through the
Plant by mid-May of the 1999 mining season, subject to weather conditions.
Currently, the Company anticipates that it will process approximately 300,000
cubic yards of material over the term of the 1999 mining season.

Subsequent to December 31, 1998, Noble Metal Group Incorporated requested and
the Company agreed that as consideration for granting an extension of the due
date of the remaining balance due to Noble, the Bill of Sale Absolute for the
Placer Leases be placed in trust with Noble's attorney until such time as the
Company has fulfilled all of its obligations to Noble with respect to repayment
of debt. Noble also agreed to convert 1,000,000 common shares of the Company
into an obligation to pay Noble 8,695 ounces of gold from the Company's share of
gold referred to in previous agreements in the following manner:

(i)   for 1999, 33% of the ounces of gold remaining after fulfillment of
      previous obligations to Noble; and

(ii)  for 2000 and thereafter and until the 8,695 ounces have been paid to
      Noble, 505 of the ounces of gold after fulfillment of previous obligations
      to Noble.

The parties also agreed that the Company may at any time elect to pay Noble more
ounces of gold than the minimum levels specified above.

Also, subsequent to December 31, 1998 the Company entered into a further
agreement with the Affiliate (Dorothy Dennis) with respect to its contract
payable to the Affiliate of $200,000, whereby the Company agreed to pay the
Affiliate 200 ounces of gold instead of 150 ounces previously agreed, from the
Company's share of gold produced from mining operations on its placer leases, if
any, to extend the due date to December 31, 2001.

At December 31, 1998, the Company has a shareholders' deficiency of
approximately $749,000 and working capital deficiency in excess of $2,900,000, a
significant portion of which is due to related parties, 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                                       Positions Held With The Corporation
----                                       -----------------------------------
Edward D. Renyk                            Director, President & Chief
                                           Financial Officer

John J. McIntyre                           Director, Secretary

Lloyd E. Mear                              Director

Warren W. Gayle                            Director

Murray A. Braaten                          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 since 1962, 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, 1997 and 1998 ("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            --                --
                  1998          $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, 1997 and 1998.

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, 1998, 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 March 31, 1999, 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)                3,085,000          51.99%
801-409 Granville Street
Vancouver, BC, Canada  V6C 1T2

Edward D. Renyk                                     390,000           6.57%
5391 Blundell Rd.
Richmond, BC, Canada  V7C 1H3
Director, President
& Chief Financial Officer

John J. McIntyre                                    390,000           6.57%
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                                      708,500          11.94%
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          15.00%
as a Group (5 persons)


                                      -16-
<PAGE>

 --    Less than 1%

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

(2)   Based upon 5,933,500 shares of Common Stock outstanding on March 31, 1999.

(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
      without 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 former 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 minerals
  argillaceous rock

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 <a--sediment>
concessions:            that in which the State or private owner of mining
  alluvial concessions  property has the right to grant concessions or leases
  and rights            to individuals or corporations at discretion, or under
                        grant concessions or leases to individuals or
  development           corporations at discretion, or under nationality or
concessions             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 proportion
   oxidized quartz      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 between the
 surveys                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)
10.16 Modification and Extension Agreement between the Registrant and Noble
      Metal Group Incorporated dated March 9, 1999.
10.17 Extension Agreement between the Registrant and Dorothy Dennis dated March
      30, 1999
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: April 14, 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           April 14, 1999
---------------------           Principal Accounting Officer
Edward D. Renyk


/s/ John J. McIntyre          Director                          April 14, 1999
----------------------
John J. McIntyre


/s/ Lloyd E. Mear             Director                          April 14, 1999
-------------------
Lloyd E. Mear


/s/ Warren W. Gayle           Director                          April 14, 1999
---------------------
Warren W. Gayle


/s/ Murray A. Braaten         Director                          April 14, 1999
-----------------------
Murray A. Braaten


<PAGE>


               Financial Statements of

               NAPTAU GOLD CORPORATION
               (expressed in United States dollars)

               Years ended December 31, 1998, 1997 and 1996


                                                                        04/14/99
<PAGE>

AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the balance sheets of Naptau Gold Corporation as at December 31,
1998 and 1997 and the statements of operations and deficit and cash flows for
each of the years in the three year period ended December 31, 1998. 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
in Canada. 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, 1998 and 1997
and the results of its operations and its cash flows for each of the years in
the three year period ended December 31, 1998 in accordance with generally
accepted accounting principles in the United States.

Chartered Accountants

Vancouver, Canada

March 29, 1999

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. 
REPORTING DIFFERENCE

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, 1998 and 1997 and as described in
note 1 to the financial statements. Our report to the shareholders dated March
29, 1999 is expressed in accordance with Canadian reporting standards which do
not permit a reference to such uncertainties in the auditors' report when the
uncertainties are adequately disclosed in the financial statements.

Chartered Accountants

Vancouver, Canada

March 29, 1999


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION
Balance Sheets
(expressed in United States dollars)

December 31, 1998 and 1997

===============================================================================
                                                        1998           1997
------------------------------------------------------------------------------
                                                                     (restated -
                                                                         note 3)

Assets
Current assets:

   Cash                                              $     2,734    $        --

Equipment                                                 71,582         71,582

Mineral properties (note 4)                            2,098,200      2,098,200
-------------------------------------------------------------------------------

                                                     $ 2,172,516    $ 2,169,782
===============================================================================
Liabilities and Shareholders' Deficiency

Current liabilities:
   Accounts payable and accrued liabilities
   (note 5)                                          $   386,357        275,249
   Contracts payable to related parties
   (note 4)                                            2,506,843      1,921,395
   Loans payable to related parties (note 5)              30,304         17,180
-------------------------------------------------------------------------------
                                                       2,923,504      2,213,824
Shareholders' deficiency:
   Capital stock (note 6):
      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                          6,934          6,934
   Additional paid-in capital (note 6)                 1,581,105      1,534,105
   Deficit                                            (2,339,027)    (1,585,081)
-------------------------------------------------------------------------------
                                                        (750,988)       (44,042)
Continuing operations (note 1)
Commitments and contingencies (notes 4, 7 and 9)

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

                                                     $ 2,172,516    $ 2,169,782
===============================================================================

See accompanying notes to financial statements.

On behalf of the Board:


_________________________ Director


_________________________ Director


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION
Statements of Operations and Deficit
(expressed in United States dollars)

================================================================================
                                                 Years ended December 31,
                                       -----------------------------------------
                                              1998           1997          1996
--------------------------------------------------------------------------------
                                                       (restated -   (restated -
                                                           note 3)       note 3)

Expenses:
   Exploration and development, net
     of gold recoveries                $   474,620    $   242,736   $   341,999
   Interest and financing costs            119,053        112,280       149,725
   Management salary (note 7)               90,000         90,000        90,000
   Office and administrative                23,809          4,105         1,332
   Professional fees                        46,464         17,035        25,940
   Write-off of deferred financing
   costs                                        --         20,393        30,000
-------------------------------------------------------------------------------

Loss for the year                         (753,946)      (486,549)     (638,996)

Deficit, beginning of year:
   As previously reported                 (341,450)      (207,882)      (60,610)
   Adjustment to reflect change in
     accounting for exploration and
     development expenditures, and
     interest and financing costs on
     contracts payable related to
     such expenditures (note 3)         (1,243,631)      (890,650)     (398,926)
   ----------------------------------------------------------------------------

   As restated                          (1,585,081)    (1,098,532)     (459,536)
-------------------------------------------------------------------------------

Deficit, end of year                   $(2,339,027)   $(1,585,081)  $(1,098,532)
===============================================================================

Loss per share                         $     (0.11)   $     (0.07)  $     (0.09)
===============================================================================

See accompanying notes to financial statements.


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION
Statements of Cash Flows
(expressed in United States dollars)

================================================================================
                                                    Years ended December 31,
                                       -----------------------------------------
                                                   1998        1997        1996
--------------------------------------------------------------------------------
                                                        (restated -  (restated -
                                                             note 3)     note 3)

Cash flows from operating activities:
   Loss for the year                          $(753,946)  $(486,549)  $(638,996)
   Adjustments to reconcile loss for
     the year to net cash from (used
     in) operating activities:
      Write-off of deferred financing
        costs                                        --      20,393      30,000
      Non-cash operating expenses
        (note 9)                                606,848     352,981     487,830
      Increase in accounts payable
        and accrued liabilities                 111,108     120,068     112,183
------------------------------------------------------------------------------- 
    Net cash from (used in) operating                                         
    activities                                  (35,990)      6,893      (8,983)

Cash flows from financing activities:
   Deferred financing costs
     (incurred) recovered                            --     (11,303)        910
   Payment of contracts payable                 (21,400)    (10,500)         --
   Loans payable to related parties              13,124      14,910       7,073
   Additional paid in capital                    47,000          --          --
   ----------------------------------------------------------------------------
    Net cash from (used in) financing
      activities                                 38,724      (6,893)      7,983
-------------------------------------------------------------------------------

Increase (decrease) in cash                       2,734          --      (1,000)

Cash, beginning of year                              --          --       1,000
-------------------------------------------------------------------------------

Cash, end of year                             $   2,734   $      --   $      --
===============================================================================

Supplementary cash flow information (note 9)

See accompanying notes to financial statements.


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION
Notes to Financial Statements
(expressed in United States dollars)

Years ended December 31, 1998, 1997 and 1996

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

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 agreements to acquire certain mineral properties (note3). 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, 1998, the
      Company had a working capital deficiency in excess of $2,900,000 (1997 -
      $2,200,000), a significant portion of which is due to related parties, and
      has a shareholders' deficiency of approximately $751,000 (1997-$44,000).
      The Company's continuing operations and the ability of the Company to
      discharge its liabilities are dependent upon the continued financial
      support of its 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:

      (a) Basis of presentation:

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

      (b) Equipment:

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

      (c) Mineral properties:

            Mineral property acquisition costs and related interest and
            financing costs 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 estimated fair value of common shares issued for mineral
            properties, based on recent share issuances. Exploration and
            development expenditures are expensed in the period incurred (note
            3) until such time as the Company establishes the existence of
            commercial feasibility, at which time these costs will be deferred.
            Administrative expenditures are expensed in the period incurred.


                                                                        04/14/99
<PAGE>

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

Years ended December 31, 1998, 1997 and 1996

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

2. Significant accounting policies (continued):

      (c) Mineral properties (continued):

            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 are not intended to reflect present or future values.

      (d) 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.

      (e) Loss per share:

            Loss per share has been calculated using the weighted average number
            of common shares outstanding during the year. Diluted loss per share
            has not been presented as the results would be anti-dilutive.

      (f) 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.

      (g) Financial instruments:

            With the exception of amounts due to related parties, as at December
            31, 1998 and 1997, 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 notes 4 and 5.

      (h) Comparative figures:

            Certain of the prior years comparative figures have been
            reclassified, where necessary, to conform with the presentation
            adopted during the current year.


                                                                        04/14/99
<PAGE>

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

Years ended December 31, 1998, 1997 and 1996

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

3. Change in accounting policy:

      Prior to 1998, the Company's policy was to capitalize to mineral
      properties, the mineral property exploration and development expenditures
      and interest and financing costs on contracts payable related to such
      expenditures, that were incurred during the period. Effective January 1,
      1998, the Company changed its policy in this regard and began charging
      exploration and development expenditures on its mineral properties, and
      interest and financing costs on contracts payable related to such
      expenditures, to operations as incurred. This change has been applied
      retroactively and has reduced the amount previously reported for mineral
      properties and increased the amount previously reported for deficit as at
      December 31, 1997 by $1,243,631. This change also increased exploration
      and development expenses for each of the years ended December 31, 1997 and
      1996 by $242,736 and $341,999 respectively, increased interest and
      financing costs for each of the years ended December 31, 1997 and 1996 by
      $110,245 and $149,725 respectively, and has increased deficit as at
      January 1, 1996 by $398,926.

4. Mineral properties:

    ============================================================================
                                                            1998         1997
    ----------------------------------------------------------------------------

    Placer Leases, Cariboo Mining Division,
    British Columbia:
       Acquisition costs:
          Placer Leases acquired from Noble (note
          4(a))                                          $1,775,000   $1,775,000
          Placer Leases acquired from an affiliate
            of the Company (note 4(b))                      200,800      200,800
    ----------------------------------------------------------------------------
                                                          1,975,800    1,975,800

       Deferred interest and financing costs:
          Paid or accrued to Noble (note 4(a))              102,000      102,000
          Paid to an affiliate of the Company
          (note 4(b))                                        20,400       20,400
    ----------------------------------------------------------------------------
                                                            122,400      122,400
    ----------------------------------------------------------------------------

                                                         $2,098,200   $2,098,200
    ============================================================================

      (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 (also see
            below).


                                                                        04/14/99
<PAGE>

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

Years ended December 31, 1998, 1997 and 1996

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

4. Mineral properties (continued):

      (a) Placer Leases acquired from Noble (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 as 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. 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 portion of the value ascribed to the common shares issued
            relating to the operating agreement has been included in deferred
            interest and financing costs in mineral properties and the portion
            of the value ascribed to the common shares issued relating to the
            outstanding 1995 exploration and development expenditures has been
            charged to operations. The value of the gold to be paid to Noble was
            not accrued during 1996 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 an additional 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 was not accrued
            during 1996 due to the uncertainty of ultimate payment.


                                                                        04/14/99
<PAGE>

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

Years ended December 31, 1998, 1997 and 1996

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

4. Mineral properties (continued):

      (a) Placer Leases acquired from Noble (continued):

            In addition to funding future annual operating expenditures on the
            Placer Leases, the original 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 (also 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 interest on the contracts payable
            has been charged to operations. The value of the gold to be paid to
            Noble was not accrued during 1997 due to the uncertainty of ultimate
            payment.

            This extension agreement also revised 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
                  (which, during 1998, was deferred until anticipated 1999
                  mining operations);

            (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 (which, during 1998, was deferred until anticipated 1999
                  mining operations);

            (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; and

            (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.


                                                                        04/14/99
<PAGE>

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

Years ended December 31, 1998, 1997 and 1996

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

4. Mineral properties (continued):

      (a) Placer Leases acquired from Noble (continued):

            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.

            Subsequent to December 31, 1998, Noble requested and the Company
            agreed that as consideration for granting an extension of the due
            date of the remaining balance due to Noble, the Bill of Sale
            Absolute for the Placer Leases be placed in trust with Noble's
            attorney until such time as the Company has fulfilled all of its
            obligations to Noble with respect to repayment of debt. Noble also
            agreed to convert 1,000,000 common shares of the Company into the
            Company's obligation to pay Noble 8,695 ounces of gold from the
            Company's share of gold referred to in previous agreements in the
            following manner:

            (i)   for 1999, 33% of the ounces of gold remaining after
                  fulfillment of previous obligations to Noble (see above); and

            (ii)  for 2000 and thereafter and until the 8,695 ounces have been
                  paid to Noble, 50% of the ounces of gold after fulfillment of
                  previous obligations to Noble.

            The parties also agreed that the Company may at any time, elect to
            pay Noble more ounces of gold than the minimum levels specified
            above.

      (b) Placer Leases 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 date for the amount
            outstanding under the contract payable to June 30, 1996 and
            subsequently agreed to pay the Affiliate 100ounces 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 was not accrued during 1996 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. The value of the gold to be paid to the Affiliate was not
            recorded during 1997 due to the uncertainty of ultimate payment.


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION 
Notes to Financial Statements, page 7 
(expressed in United States dollars)

Years ended December 31, 1998, 1997 and 1996

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

4. Mineral properties (continued):

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

            Subsequent to December 31, 1998, the Company entered into a further
            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 200 ounces of gold, instead of the 150 ounces
            previously agreed, from the Company's share of gold produced from
            mining operations on its placer leases, if any, to extend the due
            date to December31, 2001.

5. 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, 1998, accounts payable and accrued liabilities include
      accruals totalling $315,000 (1997 - $225,000) for salaries to a director
      and officer pursuant to an employment agreement (note 7), which are
      included in management salary expense for the period. In addition, $5,916
      is included in accounts payable for payment of professional services by a
      director.

6. Capital stock:

      (a) Issued:

            The continuity of the Company's issued and outstanding capital stock
            and additional paid-in capital is as follows:

===============================================================================
                                       Common shares     Additional
                                    -------------------     paid-in
                                       Number   Amount      capital      Total
--------------------------------------------------------------------------------
Balance, December 31, 1995          6,700,000   $6,700   $  168,339   $  175,039

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

1998 Increase in additional
     paid-in capital pursuant
     to an agreement with a
     shareholder (note 6(b))               --       --       47,000       47,000
--------------------------------------------------------------------------------
Balance, December 31, 1998          6,933,500   $6,934   $1,581,105   $1,588,039
===============================================================================


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION 
Notes to Financial Statements, page 8 
(expressed in United States dollars)

Years ended December 31, 1998, 1997 and 1996

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

6. Capital stock (continued):

      (b) Additional paid-in capital:

            During 1998, the Company agreed to assist with the placement of
            625,000 shares of the Company held by an individual shareholder with
            new investors willing to purchase such shares. In consideration for
            providing this assistance, the parties agreed that any cash received
            in excess of $0.072 per share on the sale of such shares would be
            returned by the individual to the Company which amounted to $47,000.

      (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, 1998, 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 were presented as shares allotted but
                  unissued as at December 31, 1995.

7. 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.


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION 
Notes to Financial Statements, page 9 
(expressed in United States dollars)

Years ended December 31, 1998, 1997 and 1996

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

8. 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
      resource deductions of approximately $4,003,000 and loss carry forwards of
      approximately $506,000 arising in 1995 through 1998, are fully offset by a
      valuation allowance of the same amount.

9. Supplementary cash flow information:

      The following non-cash operating, financing and investing activities
      occurred during the year:

================================================================================
                                                   Year ended December 31,
                                           -------------------------------------
                                                 1998       1997        1996
--------------------------------------------------------------------------------
                                                        (restated -  (restated-
                                                            note 3)     (note 3)

Exploration and development expenses
 by way of increase in contracts
 payable                                      $ 624,200    $242,736   $  338,105

Interest and financing costs incurred
 by way of increase in contracts
 payable                                        114,540     110,245      149,725

Reduction of contracts payable by way
 of gold resources received by Noble           (131,892)         --           --
--------------------------------------------------------------------------------
                                                606,848     352,981      487,830

Reduction of contracts payable on
 amendment of operating agreement
 with Noble and resulting increase in
 additional paid-in capital                          --          --    1,000,000

Acquisition of equipment for
 contracts payable                                   --      71,582           --

Issue of common shares:
   For mineral properties, net of
     reduction of additional paid-in
     capital relating to agreements
     with Noble                                      --          --      269,900

   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, 1998, 1997 or 1996.


                                                                        04/14/99
<PAGE>

NAPTAU GOLD CORPORATION 
Notes to Financial Statements, page 10 
(expressed in United States dollars)

Years ended December 31, 1998, 1997 and 1996

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

10. Uncertainty due to the Year 2000 Issue:

      The Year 2000 Issue arises because many computerized systems use two
      digits rather than four to identify a year. Date-sensitive systems may
      recognize the year 2000 as 1900 or some other date, resulting in errors
      when information using year 2000 dates is processed. In addition, similar
      problems may arise in some systems which use certain dates in 1999 to
      represent something other than a date. The effect of the Year 2000 Issue
      may be experienced before, on, or after January 1, 2000, and, if not
      addressed, the impact on operations and financial reporting may range from
      minor errors to significant systems failure which could affect an entity's
      ability to conduct normal business operations. It is not possible to be
      certain that all aspects of the Year 2000 Issue affecting the Company,
      including those related to the efforts of customers, suppliers or other
      third parties, will be fully resolved.


                                                                        04/14/99