---

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


---

FORM 20-F

 ̈Registration statement pursuant to Section 12(b) or
  12(g) of the Securities Exchange Act of 1934

or

 ̈Annual report pursuant to Section 13 or 15(d) of the Securities
  Exchange Act of 1934
          For the fiscal year ended __________________

or

xTransition report pursuant to Section 13 or 15(d) of
  the Securities Exchange Act of 1934

For the transition period from March 1, 2002
  to December 31, 2002

Commission file number 0-26636

ASIA PACIFIC RESOURCES LTD(Exact Name of Registrant as Specified in Its Charter)

None
  (Translation of Registrant's Name into English)

New Brunswick, Canada
  (Jurisdiction of Incorporation or Organization)

712C  12th Street, New
  Westminster, British Columbia, Canada V3M 4J6 
  (Address of Principal Executive Offices)

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|None                | Not Applicable                           

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

Common Shares Without Par Value 
  (Title of Class)

Securities for which there is a reporting
  obligation pursuant to Section 15(d) of the Act:

None
  (Title of Class)

Indicate the number of outstanding shares
  of each of the Company's classes of capital or common stock as of the close
  of the period covered by the annual report.

442,225,002

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

Yes x
  No  ̈

1

---

Indicate by check mark which financial statement
  item the registrant has elected to follow.

Item 17 x
       Item 18  ̈

(APPLICABLE ONLY TO COMPANIES INVOLVED IN
  BANKRUPTCY PROCEEDING DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant
  has filed all documents and reports required to be filed by Sections 12, 13
  or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution
  of securities under a plan confirmed by a court.

Yes  ̈   
  No  ̈     Not
  Applicable x

---

2

---

Special Note Regarding Forward-Looking Statements

FORWARD-LOOKING INFORMATION

Some of the statements contained in this Transition Report
  are forward-looking statements. They include statements about the Companys
  expectations, beliefs, plans, objectives and assumptions about future events
  or performance. These statements are often, but not always, made through the
  use of words or phrases such as will likely result, are expected
  to, will continue, anticipate, believes,
  estimate, intend, plan, project,
  would and outlook. These forward-looking statements
  are not historical facts, and are subject to a number of risks and uncertainties
  beyond the Companys control. Accordingly, the Companys actual results
  could differ materially from those suggested by these forward-looking statements
  for various reasons discussed throughout this Annual Report, and particularly
  in the section entitled Risk Factors. Some of the
  key factors that have, or may have, a direct bearing on the Companys results
  of operations are:

| | (a) | the Company is subject to substantial
        risks associated with the business of exploration, development and production
        of potash and the marketing of potash;                                                                                        
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                   
| | (b) | the absence of commercial reserves,
        as defined for the purposes of U.S. Securities legislation, on its Property;                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                   
| | (c) | the Company does not currently have
        sufficient funds to comply with its financial commitments under its Special
        Prospecting Licenses and Concession Agreement in Thailand and will have
        to raise additional funds to meet this obligation.
| |     |                                                                                                                                                                                                                                                                   
| | (d) | The Company may not be granted the Prathanabats
        (Mining Licenses) by the Thai government,                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                   
| | (e) | the Company will need to raise debt
        and equity capital to have sufficient funds to construct a mine on its
        Property; (f) costs arising from environmental compliance;                                                                             
| |     |                                                                                                                                                                                                                                                                   
| | (g) | changes in, or failure to comply with,
        government regulations, their interpretation or enforcement;                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                   
| | (h) | changes in political, social, business
        and economic conditions in Thailand; (i) variations in potash prices;
        (j) ability to market its potash;                                                                                                    
| |     |                                                                                                                                                                                                                                                                   
| | (k) | the concentration of the Companys
        operations and assets in Thailand;                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                   
| | (l) | the Companys ability to manage
        future construction and operations in Thailand;                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                   
| | (m) | changes in business strategy or development
        plans;                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                   
| | (n) | continuing governmental and community
        support for the mining industry in Thailand                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                   
| | (o) | changes in general economic and business
        conditions.                                                                                                                                                                                                      

The factors described above and the risk factors referred
  to in Risk Factors could cause actual results or outcomes
  to differ materially from those expressed in any forward-looking statements.
  Therefore, readers should not place undue reliance on any such forward-looking
  statements. Further, any forward-looking statement speaks only as of the date
  on which it is made, and the Company undertakes no obligation to update any
  forward-looking statement to reflect events or circumstances after the date
  of this Annual Report or to reflect the occurrence of unanticipated events,
  except as required by law. New factors emerge from time to time, and it is not
  possible for the Company to predict all of such factors. Further, the Company
  cannot assess the impact of each such factor on its business or the extent to
  which any factor, or combination of factors, may cause actual results to differ
  materially from those contained in any forward-looking statements.

3

---

SECURITIES AND EXCHANGE COMMISSION

FORM 20-FASIA PACIFIC RESOURCES LTD.TABLE OF CONTENTS

Page

|                         |   |                                                         | No.
|------------------------ | - | ------------------------------------------------------- | ---
|                         |   |                                                         |    
|GLOSSARY OF MINING TERMS | 6
|                         |   |                                                         |    
|PART1                    |   |                                                         |    
|                         |   |                                                         |    
|ITEM 1                   |   | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS   | 8  
|ITEM 2                   |   | OFFER STATISTICS AND EXPECTED TIMETABLE                 | 8  
|ITEM 3                   |   | KEY INFORMATION                                         | 8  
|A.                       |   | Selected Financial Data                                 | 8  
|B.                       |   | Capitalization and Indebtedness                         | 9  
|C.                       |   | Reasons for the Offer and Use of Proceeds               | 9  
|D.                       |   | Risk Factors                                            | 9  
|ITEM 4                   |   | INFORMATION ON THE COMPANY                              | 13 
|A.                       |   | History and Development of the Company                  | 13 
|B.                       |   | Business Overview                                       | 13 
|C.                       |   | Organizational Structure                                | 16 
|D.                       |   | Property Plant and Equipment                            | 17 
|ITEM 5                   |   | OPERATING AND FINANCIAL REVIEW AND PROSPECTS            | 27 
|A.                       |   | Operating Results                                       | 27 
|B.                       |   | Liquidity and Capital Resources                         | 31 
|C.                       |   | Research and Development, Patents and Licenses, etc     | 33 
|D.                       |   | Trend Information                                       | 34 
|ITEM 6                   |   | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES              | 34 
|A.                       |   | Directors and Senior Management                         | 34 
|B.                       |   | Compensation                                            | 35 
|C.                       |   | Board Practices                                         | 37 
|D.                       |   | Employees                                               | 38 
|E.                       |   | Share Ownership                                         | 38 
|ITEM 7                   |   | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS       | 39 
|A.                       |   | Major Shareholders                                      | 39 
|B.                       |   | Related Party Transactions                              | 39 
|C.                       |   | Interests of Experts and Counsel                        | 39 
|ITEM 8                   |   | FINANCIAL INFORMATION                                   | 40 
|A.                       |   | Consolidated Statements and Other Financial Information | 40 
|B.                       |   | Significant Changes                                     | 40 
|ITEM 9                   |   | THE OFFER AND LISTING                                   | 40 
|A.                       |   | Offer and Listing Details                               | 40 
|B.                       |   | Plan of Distribution                                    | 40 
|C.                       |   | Markets                                                 | 40 
|D.                       |   | Selling Shareholders                                    | 41 
|E.                       |   | Dilution                                                | 41 
|F.                       |   | Expenses of the Issue                                   | 41 

4

---

|ITEM 10                                    |     | ADDITIONAL INFORMATION                                       | 41
|------------------------------------------ | --- | ------------------------------------------------------------ | --
|A.                                         |     | Share Capital                                                | 41
|B.                                         |     | Memorandum and Articles of Association                       | 41
|C.                                         |     | Material Contracts                                           | 41
|D.                                         |     | Exchange Controls                                            | 42
|E.                                         |     | Taxation                                                     | 44
|F.                                         |     | Dividends and Paying Agents                                  | 50
|G.                                         |     | Documents on Display                                         | 50
|H.                                         |     | Subsidiary Information                                       | 51
|ITEM 11                                    |     | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   | 51
|ITEM 12                                    |     | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES       | 51
|                                           |     |                                                              |   
|PARTII                                     |     |                                                              |   
|                                           |     |                                                              |   
|ITEM 13                                    |     | DEFAULTS, DIVIDEND ARREARS AND DELINQUENCIES                 | 52
|ITEM 14                                    |     | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND |   
|                                           |     | USE OF PROCEEDS                                              | 52
|ITEM 15                                    |     | (RESERVED)                                                  
|                                           |     |                                                              |   
|ITEM 16                                    |     | (RESERVED)                                                  
|                                           |     |                                                              |   
|PART III                                   |     |                                                              |   
|                                           |     |                                                              |   
|ITEM 17                                    |     | FINANCIAL STATEMENTS                                         | 52
|ITEM 18                                    |     | FINANCIAL STATEMENTS                                         | 52
|ITEM 19                                    |     | EXHIBIT INDEX                                                | 54
|                                           |    
|SIGNATURES                                 | 55 
|                                           |     |                                                              |   
|EXHIBITS                                   |     |                                                              |   
|                                           |     |                                                              |   
|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | F-1

5

---

TECHNICAL GLOSSARY

|Asia Pacificor the Company             | Asia Pacific Resources Ltd. including, unless the
        context or otherwise requires, the Company's subsidiaries                                                                                                                                                                                                                                                                                  
|-------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|APPC                                   | Asia Pacific Potash Corporation (APPC)
        is a company incorporated under the laws of Thailand and was granted the
        right to explore and develop the Udon Thani Potash Concession. The Company
        directly owns 47.5% of the common stock of APPC.                                                                                                                                
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Carnallite                             | a hydrated mineral chloride of potassium and magnesium,
        KMgCl36H2O.                                                                                                                                                                                                                                                                                                                          
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Carnallitite                           | naturally occurring mixture of carnallite and halite.                                                                                                                                                                                                                                                                                                                                                
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|EIA                                    | Environmental Impact Assessment (EIA)
        Report for APPC covering the Udon South potash mine and the Laem Chabang
        port was submitted to the Ministry of Science, Technology and Environments
        Office of Environmental Policy and Planning in October 1999, and final
        approval was given in February 2001.                                                             
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|FOB                                    | free on board.                                                                                                                                                                                                                                                                                                                                                                                       
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|GPS                                    | Global Positioning System.                                                                                                                                                                                                                                                                                                                                                                           
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Halite                                 | the mineral form of sodium chloride (rock salt).                                                                                                                                                                                                                                                                                                                                                     
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|K2O                                    | potassium oxide.                                                                                                                                                                                                                                                                                                                                                                                     
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|KCl                                    | potassium chloride.                                                                                                                                                                                                                                                                                                                                                                                  
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|kg                                     | kilogram.                                                                                                                                                                                                                                                                                                                                                                                            
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|km                                     | kilometre.                                                                                                                                                                                                                                                                                                                                                                                           
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|km2                                    | square kilometres.                                                                                                                                                                                                                                                                                                                                                                                   
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|LOM                                    | life of mine.                                                                                                                                                                                                                                                                                                                                                                                        
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|m                                      | metre.                                                                                                                                                                                                                                                                                                                                                                                               
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Mg                                     | magnesium.                                                                                                                                                                                                                                                                                                                                                                                           
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Metro                                  | Metro Resources Company Limited was incorporated
        under the laws of the Yukon Territory, Canada on August 23, 1996 and continued
        into the Province of New Brunswick on May 9, 2002. Metro is a wholly owned
        subsidiary of the Company and owns 27.5% of the common stock of APPC.                                                                                             
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|MgCl2                                  | magnesium chloride.                                                                                                                                                                                                                                                                                                                                                                                  
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|MSL                                    | mean sea level.                                                                                                                                                                                                                                                                                                                                                                                      
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Mt                                     | million tonne.                                                                                                                                                                                                                                                                                                                                                                                       
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Mt/a                                   | million tonne per annum.                                                                                                                                                                                                                                                                                                                                                                             
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|NaCl                                   | sodium chloride.                                                                                                                                                                                                                                                                                                                                                                                     
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Potash                                 | various potassium salts, primarily potassium chloride,
        also known as muriate of potash (MOP).                                                                                                                                                                                                                                                                                                
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Prathanabat                            | means a license issued by Thai authorities for mining
        within the area specified therein.                                                                                                                                                                                                                                                                                                     
|                                       |                                                                                                                                                                                                                                                                                                                                                                                                      
|Property or Udon Thani Concession area | Asia Pacific, directly and indirectly, holds a 90%
        net interest and is responsible for 100%of the costs, in the Udon Thani
        Concession granted in June 1993 by the Government of Thailand to explore
        for, develop, produce and market potash minerals for commercial sale within
        an area adjoining the Town of Udon Thani in north eastern Thailand (the
        Udon

6

---

|Special Atchayabat or SPL | means a permit issued by Thai authorities for exclusive
        prospecting in a special case within the area specified.                                     
|--------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|                            |                                                                                                                                                              
|Sylvite                     | the mineral form of potassium chloride.                                                                                                                      
|                            |                                                                                                                                                              
|Sylvinite                   | naturally occurring mixture of sylvite and halite
        (sodium chloride) : the major ore from which potash is extracted.                                  
|                            |                                                                                                                                                              
|t                           | tonne.                                                                                                                                                       
|                            |                                                                                                                                                              
|t/d                         | tonnes per day.                                                                                                                                              
|                            |                                                                                                                                                              
|t/h                         | tonnes per hour.                                                                                                                                             
|                            |                                                                                                                                                              
|t/a                         | tonnes per annum.                                                                                                                                            
|                            |                                                                                                                                                              
|Udon Thani                  | A modern city of Thailand located 15 km from the
        Udon Thani Concession                                                                               
|                            |                                                                                                                                                              
|Wildemere                   | Wildemere Limited. The Company holds 100% of the
        participating voting shares of Wildemere Limited which owns 15% of the
        common stock of APPC.

Conversion into imperial equivalents is as follows:

|To Convert | To Imperial Measurement Units | Multiply By
|---------- | ----------------------------- | -----------
|Hectares   | Acres                         | 2.471      
|Metres     | Feet                          | 3.281      
|Kilometres | Miles                         | 0.621      
|Tonnes     | Short tons                    | 1.102      
|Tonnes KCl | Tonnes K2O                    | 0.631      

7

---

PART I

Item 1. Identity of Directors, Senior Management and Advisors.

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is not a requirement to provide any information
  under this item.

Item 2. Offer Statistics and Expected Timetable.

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is not a requirement to provide any information
  under this item.

Item 3. Key Information.

|A. | Selected Financial Data.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|1. | The following financial information under Canadian
        Generally Accepted Accounting Principles (GAAP) is for the
        Company's last five completed fiscal year ends (FYE). The
        Company changed its year end from February 28 to December 31 effective
        for the transition period from March 1, 2002 to December 31, 2002. U.S.
        GAAP differs in some respects from Canadian GAAP. A reconciliation of
        these differences has been provided in note 17 of the audited consolidated
        financial statements of the Company included with this Transition Report.
        Unless otherwise noted, all currency amounts in this Transition Report
        are stated in Canadian dollars.

|                          | Ten Months
      ending
      December 31,
      2002 |   | FYE 2002
      $ |   | FYE 2001
      $ |   | FYE 2000
      $ |   | FYE 1999
      $ |  
|------------------------- | ----------------------------------------------------- | - | ---------------- | - | ---------------- | - | ---------------- | - | ---------------- | -
|Canadian GAAP             |                                                       |   |                  |   |                  |   |                  |   |                  |  
|                          |                                                       |   |                  |   |                  |   |                  |   |                  |  
|Interest and other Income | 167,379                                               |   | 32,873           |   | 172,825          |   | 197,465          |   | 522,263          |  
|Net Loss                  | (3,963,075                                            | ) | (12,236,212      | ) | (18,464,735      | ) | (11,342,672      | ) | (9,671,720       | )
|Loss Per Common Share     | (0.01                                                 | ) | (0.23            | ) | (0.34            | ) | (0.21            | ) | (0.19            | )
|Total Assets              | 101,919,206                                           |   | 94,602,691       |   | 94,448,637       |   | 98,714,506       |   | 97,620,184       |  
|Net Assets                | 84,681,394                                            |   | 12,103,494       |   | 21,282,247       |   | 39,746,982       |   | 45,066,451       |  
|Share Capital             | 156,727,265                                           |   | 75,236,994       |   | 72,179,535       |   | 72,179,535       |   | 66,156,332       |  
|Deficit                   | (72,082,014                                           | ) | (68,118,939      | ) | (55,882,727      | ) | (37,417,992      | ) | (26,075,220      | )
|                          |                                                       |   |                  |   |                  |   |                  |   |                  |  
|Common Shares Outstanding | 442,225,002                                           |   | 60,093,340       |   | 54,467,705       |   | 54,467,705       |   | 52,004,705       |  
|                          |                                                       |   |                  |   |                  |   |                  |   |                  |  

|                          | Ten Months
      ending
      December 31,
      2002 |   | FYE 2002
      $ |   | FYE 2001
      $ |   | FYE 2000
      $ |   | FYE 1999
      $ |  
|------------------------- | ----------------------------------------------------- | - | ---------------- | - | ---------------- | - | ---------------- | - | ---------------- | -
|US GAAP                   |                                                       |   |                  |   |                  |   |                  |   |                  |  
|                          |                                                       |   |                  |   |                  |   |                  |   |                  |  
|Interest and other Income | 167,379                                               |   | 32,873           |   | 172,825          |   | 197,465          |   | 522,263          |  
|Net Comprehensive Loss    | (6,093,558                                            | ) | (14,772,829      | ) | (19,431,860      | ) | (10,198,069      | ) | (10,866,214      | )
|Loss Per Common Share     | (0.02                                                 | ) | (0.22            | ) | (0.34            | ) | (0.19            | ) | (0.21            | )
|Total Assets              | 79,204,511                                            |   | 74,018,479       |   | 76,496,528       |   | 82,877,633       |   | 65,414,162       |  
|Net Assets (Deficiency)   | 60,439,270                                            |   | (10,008,147      | ) | 1,707,223        |   | 21,139,083       |   | 25,251,995       |  
|Common Shares Outstanding | 442,225,002                                           |   | 60,093,340       |   | 54,467,705       |   | 54,467,705       |   | 52,004,705       |  
|                          |                                                       |   |                  |   |                  |   |                  |   |                  |  

The Company has not paid a dividend in the last five fiscal years.

8

---

The following table sets out a history of exchange rates into United States currency from Canadian currency for the periods noted.

As at May 30, 2003 $1.00 U.S. was equal to $1.3708 Cdn.

|               | Average Rate of Exchange of $1.00
      Cdn into U.S. Currency for the Calendar Year 
      Ended December 31
|-------------- | -------------------------------------------------------------------------------------------------------------
|High
      Low | May2003
      1.4263 1.3438                                                                                  

B.Capitalization and Indebtedness.

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is not a requirement to provide any information
  under this item.

C.Reasons for the Offer and
  Use of Proceeds.

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is not a requirement to provide any information
  under this item.

D.Risk Factors

An investment in the shares of the Company must be considered
  highly speculative due to the nature of the Companys business and the
  current stage of exploration and development of its mineral resource properties.
  In particular the following risk factors apply. The order in which they appear
  does not necessarily reflect managements opinion of their order or priority.

The Company is subject to substantial risks associated
  with the mineral resource exploration and development of its Property.

The Companys business is subject to risks normally encountered
  in the mining industry related to exploration and development. The profitability
  of its business and the market value of its securities will be related to its
  success in the development of and the placing into production of its Property.
  Mineral exploration and development involve significant risks and few exploration
  mineral properties that are explored are ultimately developed into producing
  mines. Substantial expenditures will be required to place the Property into
  commercial production.

The Company has no known commercial reserves, as defined
  for the purposes of U.S. Securities legislation, on its Property.

The Company has no known commercial reservesas defined
  for the purposes of U.S. Securities legislation on its Property at this time.

The SEC does not accept Canadas Standards of Disclosure
  for Mineral Projects (National Disclosure 43-101) under which the Company has
  a compliant reserve.

Until such time as the Prathanabats (mining license) and all
  other necessary permits are obtained and sales contracts sufficient to support
  a production decision are secured, the identified potash resource cannot be
  classified as a reserve per the SEC standard.

9

---

The Company does not currently have sufficient funds to
  comply with its financial commitments under its Special Prospecting Licenses
  and Concession Agreement in Thailand and will have to raise additional funds
  to meet this obligation.

In order to place the Property into commercial production,
  the Company must obtain a Prathanabats, which requires a future payment of U.S.$5,000,000.
  As of March 31, 2003, the Company had approximately U.S.$3.4 million in working
  capital. The Company currently does not have sufficient funds to pay the fee
  when payment is required and will have to raise additional funds to meet this
  obligation.

The Company may not be granted the Prathanabats from the
  Thai government

The Concession Agreement provided that all exploration areas
  under SPLs expire June 4, 2003, unless applications for Prathanabats had been
  submitted by that date. On May 29, 2003 the Company submitted the application
  for four Prathanabats for the mining area covering the Companys potash
  deposits described in the existing environmental impact assessment approved
  by the Thai government in January 2001 (the Application). The Application
  is now under review as provided under Thai law. This process leads to approval,
  rejection or a request to modify and amend the Application. If the Application
  is not approved the Company could lose the Property. There can be no assurance
  that the Application will be approved and that the license will be obtained.
  .

The Company does not currently have sufficient funds to
  construct or operate a mine on its Property unless it raises additional funds.

The Company has approximately U.S.$3.4 million of working
  capital available as of March 31, 2003. Total capital cost for the initial stage
  is estimated at $US 308 million with the second stage at U.S.$ 221 million;
  it is anticipated that the second stage can be financed from cash flow such
  that no additional equity financing would be necessary at that time. The Company
  will need to obtain financing from outside sources as it does not have sufficient
  funds to construct or operate a mine on the Udon South deposit. The Company
  does not currently have any commitments from outside sources for the funding
  of any portion of the cost of placing the Udon South deposit into production.
  There can be no assurance that the Company or its subsidiary can raise such
  financing, or finalize a joint venture with industry partners, raise its proportionate
  share of such costs in a joint venture with a partner or that these costs will
  not increase as a result of factors beyond its control.

Future currency exchange rates, costs and prices could
  have a materially adverse impact on the development of the Companys Property.

The Companys estimated costs and prices, including potash
  selling prices, contained in the 1998 Kilborn Feasibility Study for the Udon
  South deposit were based on 1998 currency exchange rates, costs and prices.
  The Company engaged international consultants including AMEC/Ausenco for processing,
  Steffen, Robertson and Kirsten (Australasia) Pty Ltd. (SRK) for
  resources and mining, Golders for geotechnical and JT Boyd for mining, to evaluate
  development alternatives the results of which were announced in October 2002.
  Based on the technical, economic and market studies, the Company has concluded
  that there is an optimum initial rate of production balancing the various parameters
  including orderly market entry, technical start-up and commissioning issues.
  After taking into account the relatively fixed costs of underground access and
  the transportation infrastructure the optimum was found to be a staged development
  starting at one million tonnes potash per annum and subsequently scaling up
  to two million tonnes per annum.

Current values and exchange rates have been used rather than
  forecasting future trends. If future currency exchange rates, costs and prices
  change adversely from those used to calculate the estimated costs and prices,
  they could have a materially adverse impact on the feasibility of placing the
  Property into commercial production and on the Companys financial condition.

The Company may not be able to market its potash or to
  receive an adequate return on invested capital.

If the Property is placed into commercial production, the
  marketability of the Companys potash will be affected by numerous factors
  beyond control of the Company. These factors include market fluctuations, the
  proximity and

10

---

capacity of markets to absorb production from the Property;
  performance of plant and equipment, government regulations, including regulations
  relating to prices, taxes, royalties, land tenure, land use, importing and exporting
  of potash and environmental protection; and competition with large established
  potash mining companies with substantial capabilities and greater financial
  and technical resources than those of the Company. The exact effect of these
  factors cannot be accurately predicted. Even if production is achieved, a combination
  of these factors may result in the Company not receiving any or an adequate
  return on invested capital.

Some of the Companys competitors have greater financial,
  technical, and other resources than it does and it may not be able to compete
  successfully.

There are a number of large established potash mining companies
  with substantial capabilities and greater financial and technical resources
  than those of the Company with which the Company will have to compete to capture
  markets for its products. There is no established commodity exchange or forward
  market for potash and the Company will have to compete in terms of price, product
  quality and quantity, service and reliability with these established companies
  to capture its market share.

Environmental risks and compliance may create liabilities
  that could have a material, adverse effect on the Companys financial position.

Mining operations generally involve a high degree of environmental
  risk. While certain of the Companys senior executives have significant
  experience in mine construction and operation, the Company has not previously
  constructed or operated a mine and it does not have experience in managing environmental
  risks. Environmental risks, which include particulate emissions, waste management,
  mine subsidence, water usage and brine conversion and disposal, are risks against
  which the Company cannot insure itself or which the Company may elect not to
  insure. The economic impact of managing environmental risks and remediation
  of any potential damage may have a material, adverse effect on the Companys
  financial position.

Failure to comply with applicable laws, regulations and
  permitting requirements may result in enforcement actions against the Company.

The Company is required to comply with the terms of the Concession
  Agreement, the Special Prospecting Licenses and Thai laws and regulations respecting
  various aspects of our proposed mine development and operations. If the Company
  fails to comply with applicable laws, regulations and permitting requirements,
  this may result in enforcement actions against it including orders issued by
  regulatory or judicial authorities causing operations to cease or to be curtailed,
  and may include corrective measures requiring capital expenditures, installation
  of additional equipment or remedial actions. The Company may be required to
  compensate those suffering loss or damage by reason of the mining activities
  and the Company may have civil or criminal fines or penalties imposed upon it
  for violation of applicable laws or regulations.

The Company has not received any revenues from operations
  to date and anticipates that it will continue to experience net losses until
  such time as profitable operations are achieved.

The Company has no earnings record and is unlikely to receive
  revenues from its operations unless it achieves commercial production. The Company
  may continue to experience net losses even if it does achieve commercial production.

As the Companys Property is located in Thailand,
  actions by the Thai government and currency fluctuations could have an adverse
  effect on its business.

As the Companys Property is located in Thailand, currency
  fluctuations, exchange controls, restriction on foreign investment, changes
  to laws which affect the Property, changes to tax regimes or political action
  could impair the value of the Companys investment, and may adversely affect
  its financial position and the results of its operations. Thailand has little
  judicial or administrative experience with large mineral projects and, as a
  result, the Company does not know how Thailand may deal with mining issues that
  may arise.

11

---

The Company may be adversely affected by fluctuations in
  foreign exchange rates.

The Company is susceptible to fluctuations in foreign exchange
  rates, with regard to development of its Property in Thailand. The Company does
  not use derivative instruments in order to reduce its exposure to foreign exchange
  risk but it may be required by financing institutions or may elect to adopt
  such procedures in conjunction with financing the construction of our Property.
  The Companys future capital expenditure and product revenue are largely
  expected to be denominated in U.S. dollars, while operating expenses are expected
  to be incurred in Thai Baht or U.S. dollars. In the last five years, the Thai
  Baht has traded in a relatively stable pattern averaging 42 Baht per U.S.$1.00.

The Companys primary listing is on the Toronto Stock
  Exchange. However, In the United States the Companys common shares are
  subject to the SEC's penny stock rules which could decrease their liquidity.

The Companys common shares have historically traded
  at a price of less than U.S.$5.00 and therefore, would be subject to the regulations
  on penny stocks. As such, the market liquidity for the Companys common
  shares could be severely and adversely affected by limiting the ability of broker-dealers
  to sell the Companys common shares and the ability of shareholders to
  sell their common shares at a time and price acceptable to them.

The Securities and Exchange Commission has adopted rules that
  regulate broker-dealer practices in connection with transactions in penny
  stocks. Penny stocks generally are equity securities with a price of less
  than U.S.$5.00 (other than securities registered on certain national securities
  exchanges or quoted on the Nasdaq system, provided that current price and volume
  information with respect to transactions in such securities is provided by the
  exchange or system). The penny stock rule requires a broker-dealer, prior to
  a transaction in a penny stock not otherwise exempt from the rules, to deliver
  a standard risk disclosure document that provides information about penny stocks
  and the nature and level of risks in the penny stock market. The broker-dealer
  also must provide the customer with current bid and offer quotations for the
  penny stock, the compensation of the broker-dealer and its salesperson in the
  transaction, and monthly account statements showing the market value of each
  penny stock held in the customers account. The bid and offer quotations,
  and the broker-dealer and salesperson compensation information, must be given
  to the customer orally or in writing prior to effecting the transaction and
  must be given to the customer in writing before or with the customers
  confirmation. In addition, the penny stock rules require that prior to a transaction
  in a penny stock not otherwise exempt from such rules, the broker-dealer must
  make a special written determination that the penny stock is a suitable investment
  for the purchaser and receive the purchasers written agreement to the
  transaction.

12

---

Item 4. Information on the Company

A     History and Development of Asia Pacific
  Resources Ltd.

The Company was incorporated by Memorandum and Articles under
  the Company Act of the Province of British Columbia on January 29, 1986.
  By Special Resolution passed by the Company's shareholders on January 7, 2002
  and the consent of the Registrar of Companies for British Columbia issued February
  14, 2002, the Company continued into the Province of New Brunswick on April
  2, 2002 with an authorized capital of an unlimited number of common shares without
  par value (the "common shares"). As long as it continues to file its Annual
  Reports with the Director of Corporations for the Province of New Brunswick,
  unless voluntarily wound-up by its shareholders, the Company will continue in
  existence. Its principal place of business is located at 712C  12th
  Street, New Westminster, British Columbia, V3M 4J6 (telephone number: 604-516-0566).
  The Company holds a 90% beneficial interest in the Udon Thani Potash Concession
  through direct and indirect interests in Asia Pacific Potash Corporation.

B     Business Overview

In October 1984, pursuant to a Concession Agreement, APPC
  was granted the right to explore for, develop, and produce and market potash
  minerals for commercial sale within the area of a Concession situated in northeastern
  Thailand and comprising 2,330 square kilometres (km2)
  (the Udon Thani Concession or the Property). In 1992,
  in consideration of $69,510 and a 11⁄2% private royalty, payable to three
  parties associated with former Directors of the Company, calculated on 75% of
  the revenue received from the sale of potash upon production, the Company acquired
  the right to earn a 75% interest in APPC, with a 10% interest being held by
  the Government of Thailand and a 15% interest being held by Thai Central Chemical
  Company (Thai Chemical), subject to Thai Chemical having the right
  to elect to increase its interest to 27 1⁄2% by paying its proportionate
  share of the exploration and develop costs incurred. In 1995, Thai Chemical
  exercised its option and, in 1996, sold its 27 1⁄2% interest in APPC to
  Metro.

On June 15, 1998, the Company purchased 45,492,500 shares
  of Metro representing an 88.6% controlling interest, for cash consideration
  of $4,700,000 and a Promissory Note in the amount of $40,792,500. Metro owns
  a 27.5% interest in the common stock of APPC.

The Promissory Note was due August 14, 1998, with zero interest
  to that date, and 15% thereafter. Metro was a public company whose shares were
  listed for trading on the Vancouver Stock Exchange. The shares were subsequently
  de-listed in January 1999.

In July/August 1998, the Company completed a $48,000,000 financing,
  of which $40,792,500 was used to pay out the Promissory Note. Subsequently,
  in January 1999, the Company issued 615,428 common shares and acquired all of
  the remaining outstanding Metro shares not previously owned by the Company through
  a Plan of Arrangement. As a result, Metro became a wholly-owned subsidiary of
  the Company.

The Company, directly and indirectly through Metro and Wildemere, holds a 90% working interest, in the Udon Thani Concession properties, with a 10% carried stock interest in APPC being held by the Government of Thailand as follows:

| | The Company  Direct          | 471⁄2% |  | (a 52.8% working interest)
| | ----------------------------- | ---- |  | --------------------------
| | The Company Through Metro     | 271⁄2% |  | (a 30.6% working interest)
| | The Company Through Wildemere | 15%  |  | (a 16.6% working interest)
| | Government of Thailand        | 10%  |  | Carried interest          

Convertible Debenture and Pledge Agreement

The $48,000,000 financing to acquire Metro consisted of the following:

13

---

|1. | a 10% secured Convertible Debenture
        Series 1, in the aggregate principal amount of $24,460,000 U.S. (the Convertible
        Debentures), issued pursuant to a Trust Indenture (Olympus Capital
        Holdings Asia I, LP, (Olympus) held approximately 72% of the
        Convertible Debentures); and
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                      
|2. | the issue of 3,000,000 common shares at $4.00 Cdn per common
      share.                                                                                                                                                                                                                                            

The Convertible Debentures were to mature in July/August 2000
  or be convertible into common shares of the Company at $4.00 Cdn. per common
  share. Interest at the rate of 10% per annum, compounded annually, and a premium
  was payable on maturity, but waived on conversion.

As security for the Convertible Debentures, the Company mortgaged
  and pledged 45,492,500 shares of Metro (being 88.4% of the outstanding shares
  of Metro) (the Pledged Shares). Certificates for the Pledged Shares
  were deposited pursuant to the Trust Indenture and Pledge Agreement.

Convertible Debentures Extended and Converted

Subsequently, the Trust Indenture was amended to extend the
  maturity date to October 13, 2001 and to reduce the conversion price to between
  $1.529 U.S. and $1.784 U.S. per common share, with the actual conversion price
  being calculated according to a formula based on the number of days that the
  conversion occurred before maturity. The Convertible Debentures continued to
  accrue interest at the rate of 10% per year compounded annually, and the Debenture
  holders were entitled to a premium on maturity. The Company subsequently agreed
  that the accrued interest and premium were also convertible into common shares
  of the Company. In addition, the Company agreed to pay statutory withholding
  tax applicable on interest and premium payments made to the Debenture holders.

As additional security for the Convertible Debentures, Metro
  pledged 242,000 shares of APPC, which represented 88% of Metro's 27.5% interest
  in APPC.

Subsequently, as a result of a series of agreements, the maturity
  date of the Debentures was extended to April 1, 2002, and the price at which
  the principal amount of the Debentures, including accrued interest and premium
  payable could be converted, was reduced to $0.20 per common share, and the interest
  rate on the principal amount and accrued interest, but not the accrued premium,
  was increased to 14% per annum effective from October 13, 2001 to the new maturity
  date.

An Extraordinary General Meeting of the shareholders of the
  Company was held on January 7, 2002 and the shareholders approved the issuance
  of up to 320,456,390 common shares of the Company on the conversion of the Debentures.
  On April 1, 2002, 312,971,396 common shares of the Company were issued to the
  Debenture holders upon the conversion of the Debentures, including principal,
  interest and premium with Olympus receiving 72% of these common shares.

Olympus Capital agreed to provide a standby facility of $5
  million and Crew Development Corporation (Crew), a 13.3% shareholder
  of the Company, agreed to exercise its rights for $4 million under the terms
  of a rights offering and provide an additional standby facility of $1 million.
  The standby facilities were to be drawn, up to these agreed maximums if the
  rights offering were not fully subscribed for by other shareholders. The proceeds
  of the rights offering, which was completed in April, 2002 (Note 7(b)(i)), to
  the Consolidated Financial Statements included $5 million drawn from the Olympus
  Capital standby facility, $1 million from the Crew standby facility and $4 million
  from the exercise of Crews rights. Under the terms of the Conversion Agreement,
  Olympus Capital and the other former Debenture Holders agreed (subject to certain
  exceptions):

|(i)  | for a period of two months not to sell any common shares they receive
      from the conversion;                                                                  
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                   
|(ii) | for a period of 18 months, in any six month period,
        not to sell any more than one-third of the common shares they receive
        from the conversion; and

14

---

|(iii) | for a period of 18 months, not to sell common shares
        comprising 10% or more of the full diluted common shares they receive
        from the conversion to any purchaser or group of purchasers acting jointly
        or in concert, unless the trade is effected through a stock exchange and
        does not constitute a pre-arranged trade to a single purchaser.
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, Crew and its associates and subsidiaries and a former director
  of Crew and his associates and affiliates agreed to:

|(i)   | for a period of two months not to sell
        any common shares;                                                                                                                                                                                                                                                                             
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                               
|(ii)  | for a period of 18 months, in any six
        month period, not to sell any more than one-third of the common shares
        he or they hold following completion of the rights offering (excluding
        any warrant shares which may be acquired on exercise of warrants); and                                                            
|      |                                                                                                                                                                                                                                                                                                                                               
|(iii) | for a period of 18 months, not to sell
        common shares comprising 10% or more of the outstanding common shares
        to any purchaser or group of purchasers acting jointly or in concert,
        unless the trade is effected through a stock exchange and does not constitute
        a pre-arranged trade to any of the foregoing.

Olympus Capital and Crew also agreed to provide up to $800,000
  and $200,000, respectively, in interim financing by way of promissory notes
  to allow the Company to operate and meet its short-term commitments until the
  closing of the rights offering. As at February 28, 2002, $640,000 of this amount
  had been drawn from Olympus Capital and $160,000 from Crew. These amounts bore
  interest at a rate of 10% per annum and were repaid by the Company from the
  proceeds of the rights offering in April 2002.

The Company previously agreed to reimburse the Debenture Holders
  residing outside Canada for any Canadian withholding tax due on payment or deemed
  payment of interest and premium on conversion or full settlement of the Debentures.
  The estimated liability was being recognized over the term of the debenture
  as additional financing cost. During the year ended February 28, 2002, the Debenture
  Holders provided additional information that resulted in the estimated reimbursement
  being reduced by $2,755,598. This recovery has been recorded as a recovery of
  prior years finance cost on the statement of loss. The estimated accrued
  liability for reimbursement of withholding taxes at December 31, 2002 is $Nil
  (February 28, 2002 - $2,015,512).

Rights Offering

As at April 1, 2002, the Company completed a Rights Offering
  to its shareholders, pursuant to which the shareholders were entitled to subscribe
  for one Unit for each common share held as at February 20, 2002 (the "Record
  Date"), at a subscription price of $0.50 per Unit. Each Unit consisted of 21⁄2
  common shares of the Company and one warrant. Each warrant entitled the holder,
  on payment of the exercise price of $1.00 per warrant, to receive an additional
  21⁄2 common shares which expired on April 1, 2003. Olympus and Crew Development
  Corp (Crew) had each committed to exercise their rights or provide
  a standby facility for $5 million. As a result of the Rights Offering, the Company
  issued 69,160,256 common shares and 69,160,256 warrants, and received proceeds
  of $13,832,053 (including the standby facilities) with Olympus and Crew each
  subscribing for 36.2% and other shareholders for 27.6% of the offering.

In January 2003, pursuant to a private placement, the Company
  issued 21,751,896 common shares at a subscription price of $0.10 per share,
  for gross proceeds of approximately $2.2 million. Following closing of the private
  placement, the Company had approximately 464 million common shares outstanding.

15

---

Valuation of the Property

As at December 31, 2002, the Companys Property is recorded
  at a value of $87,451,256. This includes $25.6 million in capitalized exploration
  and development expenditures spent by the Company, $45.5 million to acquire
  Metro's interest (includes the purchase price excess allocated to the project),
  and $16.4 million to account for the non-tax deductibility of the purchase price
  paid Metro. In addition as at December 31, 2002, the Company had expended $7,894,269
  to acquire surface rights for the surface facilities for the proposed mine.

C.     Organizational structure

Unless the context otherwise requires, all references herein
  to the Company include the Company and its subsidiaries. The following chart
  illustrates the inter-corporate relationships of the Company and its active
  subsidiaries and their jurisdictions of incorporation. For definitions of certain
  terms used throughout this document, see the Glossary at the beginning of this
  Transition Report.

Metro Resources Company Limited

Metro Resources Company Limited (Metro) was incorporated
  under the laws of the Yukon Territory, Canada on August 23, 1996 and continued
  into the Province of New Brunswick on May 9, 2002. Metro is a wholly owned subsidiary
  of the Company and owns 27.5% of the common stock of APPC.

Wildemere Limited

Wildemere Limited ("Wildemere") was incorporated under the laws of Thailand to hold 15% of the common stock of APPC and meet Thai ownership rules.  The Company holds 100% of the participating voting shares of Wildemere, representing 49.25% of
Wildemeres share capital and local Thai Directors hold non-participating preferred shares, representing 50.75% of the share capital.

Asia Pacific Potash Corporation

Asia Pacific Potash Corporation (APPC) is a company
  incorporated under the laws of Thailand and was granted the right to explore
  and develop the Udon Thani Potash Concession. The Company holds a 47.5% direct
  interest in the common stock of APPC.



16

---

D.     Property, plant and equipment

Introduction

The Companys primary asset is its 90% interest in APPC.

The Company initiated exploration within the Property in 1993.
  As field results were collected, various consultants were commissioned to carry
  out pre-feasibility studies and ultimately bankable feasibility
  studies. The Company has identified two potash deposits within the Udon Thani
  Concession, being the Udon South Deposit (formerly called the Somboon
  Deposit) and a second, larger potash deposit, the Udon North Deposit (formerly
  called the Udon Deposit), located within 10 kilometres to the north
  of the Udon South Deposit.

During 1998, a full independently prepared feasibility study
  was prepared for the Udon South Deposit. The results of that 1998 feasibility
  study are not discussed in detail in this Transition Report because in October
  2002, the Company announced the results of scoping studies conducted by AMEC/Ausenco
  and Steffen, Robertson and Kirsten (Australasia) Pty Ltd. (the Independent
  Engineers).

In May, 2003 APPC made application for Mining Leases covering
  the Udon South deposit and has subsequently completed an updated technical and
  economic review of the proposed mining project.

The detailed analysis of various alternatives particularly
  taking into account the requirement for an orderly entry to the potash market
  and to allow time for training of people from the North East of Thailand so
  that they can participate directly in the job creation benefits was announced
  by the Company on June 30, 2003.

The studies indicate there is an optimum balance between the
  originally planned 2 million tonnes of production per annum and a lower initial
  production. After taking into account the relatively fixed costs of underground
  access and the transport infrastructure the optimum is so far found to be an
  initial 1 million tonnes per annum increasing to 2 million tpa with a plant
  expansion as the potash market share grows.

Total capital cost for the initial stage is estimated at $US
  308 million with the second stage estimated at $US 221 million ($2003). It is
  anticipated that the expansion to 2 million tpa can be financed from cash flow,
  such that no additional equity financing will be necessary.

The initial first stage of 1 mta requires less capital, is
  more straightforward in the development of the underground mine and yet gives
  around the same expected rate of return as starting immediately at 2 mta. The
  lower initial revenue is offset by the lower capital cost.

On the basis of the technical work performed by the Independent
  Engineers, the Company is of the view that all technical work is now essentially
  complete and that technical work required for the bank funding of the project,
  after the granting of the Mining Leases, will only comprise some final updating
  of the cost input data before the project can proceed to implementation.

The Company expects that the implementation of the project
  will involve a commercial relationship with one or more other companies for
  the purposes of market development and project financing. The level of third
  party equity participation to finance the project relative to the level of debt
  financing potentially will have a diluting effect on existing shareholders directly
  or on the Companys holding in the project.

Description and Location

The Udon South Deposit and the larger, lower grade Udon North
  Deposit are located approximately 500 km north of Bangkok, approximately 15
  km from the modern city of Udon Thani (population 350,000) in northeast Thailand.
  The most thoroughly explored area of the property is the Udon South Deposit.
  The Udon South Deposit covers an area of approximately 32 km2and
  the Udon North Deposit covers an area of approximately 60 km2.

17

---

Deposit Location Map



|1. | The Upper shaded area is the town of Udon Thani.                                        
|-- | ----------------------------------------------------------------------------------------
|2. | The middle shaded are is the Udon North Deposit (formerly
      the Udon Deposit).    
|3  | The lower shaded area is the Udon South Deposit (formerly
      the  Somboon Deposit).

The Concession Agreement

The effective date of the Concession Agreement is June 4,
  1993. The Concession Agreement provided that all exploration areas under Special
  Atchaybats, (special prospecting licenses)wouldexpire on June
  4, 2003, unless applications for Prathanabats (mining licenses) have been made.
  On May 29, 2003, the Company submitted the Application for four Prathanabats
  for the Udon South deposit as described in the existing Environmental Impact
  Assessment (EIA). The approval of the Mining Leases will now follow
  the structured process under Thai law that leads to the review and approval
  of the application.



18

---

The Prathanabats would grant to APPC the exclusive right to
  mine, process, dress, extract, remove, bag and store all potash on, within or
  beneath the mining area, and the right to build, maintain and operate amine
  and related facilities. In support of the application for Prathanabats, the
  feasibility study for the Udon South Project must be filed and is further supported
  by the approved EIA on file. The terms of the Prathanabats mining leases will
  be for a period of up to 25 years, with possible extensions, with the exact
  term of the Prathanabats to be the time frame necessary to permit APPC to mine
  out any proven and probable reserves of the deposit as determined at the time
  of the application for the Prathanabats.

Upon the receipt of the Prathanabats, APPC will be required
  to pay to the Thai Government U.S$5,000,000. In addition, the Government is
  entitled to a 7% royalty on the FOB mine price for potash mined, processed and
  removed from the mining area. In addition, APPC was required to contribute U.S.$225,000
  in 1994 and, thereafter, U.S.$250,000 per year to the Thai Potash Scholarship
  Fund, to be used by the Thai Department of Mineral Resources for scholarships,
  staff training, equipment, and other research facilities in the field of potash
  and phosphates. The contribution is reduced to U.S.$200,000 per year upon commencement
  of commercial production. It is further reduced by payments made to the Government
  for surface rights.

If potash production in any year after the fifth year from
  the commencement of production (being the first period of 30 consecutive days
  in which the average daily production of potash is at least 70% of the designed
  capacity of the production facility):

| | (i)   | exceeds the annual rated production capacity (subject to
      a 5% margin); or                                                                                                      
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                      
| | (ii)  | exceeds 2,100,000 tonnes of potash; or                                                                                                                                               
| |       |                                                                                                                                                                                      
| | (iii) | the capital expenditures of APPC do
        not exceed minimum capital expenditures (being U.S.$200,000,000 in 1981
        U.S. dollars for an annual capacity of 1,000,000 tonnes),

then the Governments share of net cash flow in any calendar
  year will be adjusted as follows: If APPCs internal rate of return is
  from 20% up to 30%, the Governments share of net cash flow is 25%, if
  the internal rate of return is from 30% up to 35%, the Governments share
  of net cash flow is 30%, if the internal rate of return is 35% up to 40%, the
  Governments share of net cash flow is 40%, and if the internal rate of
  return is 40% and over, the Governments share of net cash flow is 50%.
  Any major expansion after the initial 5 year production period will be treated
  as a separate project with similar profit sharing calculations.

The Concession Agreement requires APPC to employ at least
  one Thai national as a geologist. Within three years of the start of commercial
  production, 100% of unskilled labour, 75% of skilled labour, 75% of clerical,
  50% of technical and supervisory, and 50% of management and professional must
  be Thai nationals, increasing to 100% unskilled labour, skilled labour and clerical,
  and 85% technical and supervisory and management and professional by the eighth
  year.

The Concession Agreement and the November 29, 1994 Shareholders
  Agreement between the Company and Metro provides that the Board of Directors
  of APPC shall consist of up to ten Directors, one of whom is a representative
  of the Government of Thailand, six of whom represent the Company, and three
  of whom represent Metro. In June 1998, the Company acquired control of Metro.
  In January 1999, pursuant to a plan of arrangement, the Company acquired the
  remaining outstanding shares from minority shareholders of Metro and now owns
  and controls 100% of the outstanding shares of Metro.

Any dispute in respect to the Concession Agreement that cannot
  be resolved by the mutual agreement of APPC and the Ministry of Industry is
  to be submitted to the Minister of Industry for Thailand. If the Minister fails
  to make a decision on the matter within 60 days or if one of the parties is
  not satisfied with the decision of the Minister, the matter may be referred
  to arbitration. APPC and the Government of Thailand will each appoint their
  own arbitrator, and those arbitrators will appoint a third arbitrator, who shall
  not be a citizen, national or resident of Thailand or the United States, but
  shall be a native English-speaking person. The arbitration shall proceed according
  to the rules of the Thai Commercial Arbitration Rules, and the award of the
  arbitrators shall be final and binding upon the parties.

19

---

Board of Investment (BOI) Incentives

The BOI is the principal government agency responsible for
  providing incentives to stimulate investment in Thailand. The BOI is governed
  by the Investment Promotion Act and is empowered to grant a wide range of fiscal
  and non-fiscal incentives and guarantees. The Udon South Project is located
  in Investment Zone 3, the most heavily promoted geographical region of Thailand.
  APPC expects to receive certain tax incentives including an exemption from income
  tax for 8 years from the start of production, with a reduction of 50% from the
  normal tax rate for a period of 5 years following the tax free period, deduction
  from taxable profit equal to the operating cost of transportation, electricity
  and water supply for a period of 10 years from the date on which income is first
  earned, and deduction of 25% of the capital cost of infrastructure from taxable
  profit once during the 10 years from the date on which income is first earned.

APPC also expects to receive guarantees against nationalization,
  competition from new state-owned enterprises, state monopolization and price
  controls, and permission to export products and bring into the country foreign
  workers as required.

Private Royalty

The Company's interest in the Udon South and Udon North Deposits
  are subject to a royalty of 11⁄2% of 75% of the FOB minesite revenues received
  or payable to APPC from the sale of potash. The royalty is payable to three
  parties associated with former Directors of the Company

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The population of Udon Thani province is approximately 1.5
  million people, with over 70% of the people living in rural settings outside
  of municipal areas. Agriculture is a key economic sector. There is little industrial
  development in Udon Thani and most factories are dedicated to serving the agricultural
  sector. Udon Thani is one of the poorest provinces in Thailand.

The land in the Udon South Project area is relatively flat
  and lies about 200 m above sea level. Above-ground facilities would cover approximately
  2 km 2of land. Most of this land in the proximity of the area designated
  for the construction of surface facilities has already been purchased from owners
  who have voluntarily sold at a premium over the market rate. Proposed underground
  mining activities would underlie 25 km 2of land to the south of
  the above ground facilities. The proposed mine site is not located near any
  protected environmental areas.

The average mean temperature is 26° C and ranges between
  average maximum of 32.1°C and an average minimum of 21.6°C. Mean annual
  rainfall is 1439.7 mm, ranging from a high of 211-280 mm in the August rainy
  season and less than 81 mm in other months.

An existing railway line owned and operated by the State Railway
  of Thailand (SRT) lies less than 1 km from the proposed mine
  site. The existing railway line is currently underutilized. Rail access to the
  site is on land owned by APPC. Road access is from a divided paved highway that
  is the main highway between Udon Thani and Bangkok.

History

The Udon Thani Concession was granted in 1984; however no
  exploration work was carried out until 1993. The Udon Thani Concession initially
  covered an area of 2,330 km2, was reduced to 1,726 km2
  in 1996, to 850 km2in1998 and to192 km2in June, 2001.

20

---

Geological Setting

Udon Thani Province is located at latitude 16o 8
  N and longitude 102o 47E, on the Khorat Plateau, in north-eastern
  Thailand. The Phu Phan Range divides this plateau into two rock salt basins,
  Sakhon Nakhon Basin and Khorat Basin. Udon Thani is located within the Sakhon
  Nakhon Basin. The topographic surface of the area is approximately 180 
  208 above MSL. This area is located adjacent of regional highlands from which
  local streams originate and flow to lowland areas.

The mining area lies approximately 180  208 m above MSL. This area is
  located at the centre point of regional highlands, from which local streams
  originate and flow to lowland areas. The general landscape of the project area
  is flat and generally covered by rain-fed paddy fields.

The Udon Thani Concession area originally occupied approximately
  20% of the area of the Sakhon Nakhon Basin on the Khorat Plateau of north-eastern
  Thailand. Sediments of the Khorat Plateau make up the Khorat Group, a continental
  deposit that covers central Laos, Cambodia, western Vietnam, north-eastern Thailand
  and Sichuan Province of south China. In Thailand the Khorat Group, a thick clastic
  sequence, forms the basement to the Maha Sarakham Formation. The age of much
  of the Khorat Group is Early Cretaceous and Jurassic.

The Maha Sarakham Formation contains three distinct evaporite
  units named the Lower, Middle and Upper Salt Units. Each salt unit is overlain
  by a red-brown clastic unit named the Lower, Middle and Upper Clastics. The
  Lower Salt Unit contains the potash mineralization.

The sandstones, siltstones and shales of the Phu Thok Formation
  lie unconformably on the Upper Clastics Unit of the Maha Sarakham Formation.

The remaining area of the Udon Thani Concession covers 192
  km2in the Sakon Nakhon Basin. The Udon South Project is about 15-km
  southeast of the city of Udon Thani and covers approximately 30 km 2.

The area of the Udon South Mine is distant from any major
  fault zones. There are small regional faults located about 20 km from the project
  site; however, the probability of seismic activity is low.

Exploration and Mineralization

Although the Udon Thani Concession was granted in October
  of 1984, no exploration work was carried out until 1993. During 1993, APPC completed
  Phase 1 of a three-phase exploration program in respect to the Udon Thani Concession.
  This phase included a 7-hole initial exploration program on approximately 1
  km. centres, seismic surveys, and mapping and surveying programs.

The second phase of the exploration program commenced in early
  1994 was completed by May 1995 and included the drilling of 46 additional diamond
  drill holes that delineated the mineralization boundary of the potash deposit
  in the initial discovery area now known as the Udon South Deposit. Completed
  work also included a series of 35 seismic lines totaling approximately 142 km.
  This geophysical approach was used to investigate the subsurface structures
  and provide drill targets. Completion of this program confirmed the presence
  of a high grade sylvinite deposit at an average depth of 300 metres.

A nine hole widely spaced reconnaissance drilling program
  was completed to the north of the Udon South Deposit extending to the Udon Deposit.

The third phase of the exploration program was completed in
  early 1996. Approximately 300 km. of reflection seismic survey and a total of
  95 drill holes were completed in respect to the Udon South and Udon North Deposits
  which defined the gross sylvinite resource in these areas. In respect to the
  Udon South Deposit, a total of 65 holes have defined the global sylvinite resource.

On completion of the 1996/97exploration/development program,
  a total of 160 diamond drill holes and approximately 500 km. of two-dimensional
  reflection seismic survey, together with a variety of in-fill geological and
  geotechnical, metallurgical and other programs, were completed. An additional
  35 km. of 2D-seismic survey was completed in 1999 over the Udon North Deposit
  for a total of approximately 535 km. During first quarter 2000, seven in-fill
  boreholes, strategically located over the Udon North Deposit were drilled to
  define resource boundary and continuity.

21

---

The only potassium minerals noted to date are sylvite and carnallite
  which occur as distinct layers, the contact of which may show minor intermixing.
  Both, however, are intermixed with halite to produce the mineral assemblages
  known as sylvinite and carnallitite, respectively. The
  commercially important sylvinite zone always overlies the carnallitite zone,
  and contains only negligible magnesium.

Drilling and Downhole Analyses

Drilling was done on a contract basis by Aztec Drilling Co.,
  a Thai firm with its head office in Bangkok.

An Ingersoll Rand rotary rig using a tricone bit was used
  to set intermediate casing to the Middle Salt horizon. The casing was then cemented
  in. No core was recovered, but chips were collected and retained for study.

The bore holes were cored from the casing bottom to below
  the sylvinite zone within the carnallitite horizon, with Longyear 38
  and 44 truck mounted drills. HQ sized core 63.5 millimetre
  (mm) in diameter was recovered. Circulation was maintained
  with a saturated sodium chloride solution. Sporadic minor leaching of sylvite
  mineralization within the sylvinite zone was noted due to drilling fluids being
  under-saturated in potassium.

Core recovery was identified to be 100% in the sylvinite zone.
  Cases of core loss were noted in the underlying carnallitite, by the characteristic
  gamma ray signatures.

Upon hole completion, gamma ray logs were run in each hole,
  and the hole was sealed from bottom to top with normal Portland cement. During
  exploration of the Udon Deposit, deviation and caliper logging was also conducted.

The gamma ray logs were presented by the contractor, Auslog,
  as strip logs. The various rock types that may be clearly differentiated on
  the gamma ray logs include rock salt (halite), anhydrite, clastics, sylvinite
  and carnallitite, but the various clastic and halite units are not distinguishable
  one from another. The major formation breaks outside the cored interval were
  identified from the gamma logs.

When any unusual situations arose, such as core losses, wash
  outs or fluid losses, density and caliper logs were run to cross check lithologies
  against the gamma log. Starting in 1996 with hole #103, all cored holes were
  also surveyed for direction with down hole continuous read deviation instruments.

Core Handling and Security

Core was boxed, with all salt formations sleeved in plastic,
  and taken from the drill site to a company core facility at Ban Nong Sung, in
  the Udon South area. The potash core (sylvinite) was retained at the logging
  facility, and the remainder of the core was taken to the government core facility
  at Khon Kaen for storage. All cores were retained under secure locked-door conditions
  at the Nong Sung and Khon Kaen core storage facilities. Unauthorized personnel
  were provided access to core under direct supervision of APPC geological personnel
  only.

All cores retained for assaying were labeled, wrapped in cellophane
  and/or plastic containers and sealed in boxes for shipment. Upon acquiring special
  permission from Thai D.M.R. authorities, ore sample shipments were transported
  from the logging facility in Ban Nong Sung to the Bangkok International Airport
  where the cores were weighed and registered for shipment to Pioneer Laboratories
  and/or other independent laboratories in Canada.

22

---

Core Logging

The core was logged by APPCs geologists at APPCs
  leased core storage facility. The major formation breaks outside of the cored
  interval were identified from the gamma logs. The Lower Salt was visually logged
  in detail with depths tied to the footage blocks in the core boxes.

Core Sampling

After logging, the sample intervals were marked out by the
  geologist on geologic breaks or 50 cm intervals, whichever is less, in the sylvinite
  zone, and 1 metre (m) intervals in the underlying carnallitite
  zone. Clay interbeds were not sampled prior to hole 95-63.

The samples were taken as 1 cm square saw cuts, run longitudinally
  down the side of the core with a dado blade on a table saw. Earlier samples
  were cut with a normal saw blade, first 12 to 15 mm deep, later 25 to 30 mm
  deep before the use of the dado blade. The cut material provided fine to coarse
  grained chips which samples were split with a Jones riffle by the Department
  of Mineral Resources, Thailand (D.M.R.) technicians. One
  split was sent to the government lab for assay, the remainder was given to APPC
  for its assaying purposes. Check samples of Udon South core were acquired in
  1996/97 by halving and quartering the core. All holes cored since hole #102
  were sampled using both groove and quarter core techniques. APPCs samples
  were shipped to Canada for original assay by Pioneer Laboratories in New Westminster,
  B.C. Three independent laboratories were also involved at different stages in
  check sampling and assaying programs including Saskatchewan Research Foundation,
  Chemex Labs Ltd. and Lakefield Research Ltd.

Surveying

Reconnaissance survey and hole layout was conducted by using
  a hand held Global Positioning System instrument ( GPS).
  Roads were mapped by traverses with truck mounted G.P.S. instruments.

On completion of several holes an accurate transit survey
  was carried out by a local land surveyor.

Assaying

Assaying was conducted by independent qualified Canadian laboratories
  using industry standard techniques. Samples received from the field were pulverized
  with a mortar and pestle and a 1 gram (g) portion taken for
  digestion and analysis. Prior to hole 94-33 digestion was by 50 millilitre (ml)
  of 50% nitric acid followed by dilution with water to 100 ml and ICP/ES finish.
  From hole 94-33 on digestion has been by 50 ml of 95° water followed by
  dilution to 100 ml of ICP/ES finish. The change to water digestion was to ensure
  that no water insoluble potassium or magnesium was being reported.

A quality assurance and quality control check sampling and
  assaying program was conducted by KWI in order to ensure that reported grades
  for K20, Mg and Ca were representative of Udon South mineralization
  as previously disclosed. A quarter of existing cores from selected sylvinite
  intervals were re-assayed by SRC laboratory in Saskatoon under the supervision
  of KWI.

The check assays, including assay comparisons with the DMR
  analysis, and mass balance calculations all indicated the average grades of
  K20 are consistent with recorded core sample analysis. The assay
  grades and thickness were

Udon South Deposit Mineralization

The Udon South Deposit has an irregular outline up to 10 km
  long (E-W) and 6 km wide (N-S), lying between about 300 and 400 metres (m) below
  surface. The mineralization varies in thickness up to 10 m and averages 3.4
  m. The dip is generally less than 15%, trending downward from west to east,
  and flatter in the east. The potash is overlain by a halite cap of between 1
  m and 7 m in thickness (typically 4 m) which will provide support for the weaker,
  overlying Lower Clastic unit. In many areas the potash is underlain by carnallitite
  which can decompose if exposed to moisture.

23

---

For a potash horizon to be economically mineable it should
  have continuity over significant distance. It is not practical to demonstrate
  the continuity of potash horizons by close spaced drilling because a column
  of mineralization is left unmined around each drill hole in order to avoid the
  potential risk of water inflow from imperfect capping of the holes at surface.
  Therefore, details of lithology and structure are determined by geophysical
  methods, especially seismic reflection surveys, in order to demonstrate that
  lateral continuity exists. In the Somboon Deposit, a thin claystone horizon
  and a zone of white borate mineralization in the Lower Salt potash horizon serve
  as marker beds that indicate ore continuity. The clay marker bed averages 0.1m
  thick, but is as thin as 0.01 m, and in fact may be present in some holes as
  a dirty band of salt, not easily recognized as the marker.

In order to determine continuity of the potash horizon two
  north-south and two east-west traverses were selected. The core from the Lower
  Salt unit was examined visually in each hole selected for the traverses in greater
  detail than for general logging, in order to identify the claystone and white
  borate marker horizons.

Mineral Resource Inventory

The 1998 independently prepared feasibility study reported
  that upon completion of a geological model for the Udon South deposit, each
  block of the model was classified into the measured, indicated, or inferred
  resource category. The classification followed the recommendations of CIM Council
  published in Ad Hoc Committee Report, Mineral Resource/Reserve Classification:
  Categories, Definitions, and Guidelines, CIM Bulletin, September 1996.
  In the author of that feasibility reports opinion, there would be no
  material difference if the blocks were classified in accordance with the August
  20, 2000 CIM Definitions and Guideline as required in NI 43-101.

MINERAL RESOURCE ESTIMATE

|Resource Category | Tonnes
      (millions) | Ave. Thickness
      (metres) | Ave. Grade (%)
|----------------- | ----------------------- | ----------------------------- | --------------
|K2O               | Mg                     
|Measured          | 78                      | 4.3                           | 22.9          
|Indicated         | 147                     | 4.0                           | 23.7          
|Sub-Total         | 225                     | 4.1                           | 23.4          
|Inferred          | 75                      | 3.1                           | 16.3          

KWI expressed the opinion that the confidence levels associated
  with both measured and indicated resources were sufficiently high to justify
  their use in the 1998 Feasibility Study.

The estimate prepared by KWI for the 1998 Feasibility Study
  was stated to be a resource, not a reserve, because the financial evaluation
  was excluded from KWIs scope of work and because the detailed studies
  by specialist consultants on transportation, marketing and environmental matters
  had not been thoroughly reviewed.

In October 2002 the Company announced the results of scoping
  studies conducted by AMEC/Ausenco and Steffen, Robertson and Kirsten (Autralasia)
  Pty. Ltd. (SRK) who evaluated development alternatives. SRK estimates
  that the Udon South Resource totals 302 million tonnes at an average grade of
  23.5% K2O (see table below). The measured and indicated resource includes about
  30 million tonnes at 26.8% K2O within a high value core area averaging 7.2m
  in thickness. The Udon South potash resource occurs as a single horizontal sylvinite
  (potash) bed of consistent thickness and mining conditions.

|          |                  |      |                           
|--------- | ---------------- | ---- | --------------------------
|          | Tonnes (million) | %K2O | Average Thickness (meters)
|          |                  |      |                           
|Measured  | 95               | 24.5 | 4.2                       
|Indicated | 160              | 23.2 | 3.6                       
|Inferred  | 47               | 22.9 | 3.5                       
|Total     | 302              | 23.5 | 3.8                       
|          |                  |      |                           



24

---

Source: SRK, Udon South phase 1 study, September 2002, estimates
  by Andrew J 
  Vigar FAusIMM, Principal SRK Brisbane comply with the requirements of the 
  Australian JORC Code and Canadian NI43-101

Environmental Assessment

Regulatory approval of the Udon South Project by the Government
  of the Kingdom of Thailand required the preparation of an Environmental Impact
  Assessment (EIA) Report to present an environmental and socioeconomic
  baseline study, including a survey of perceptions and attitudes about the project
  of the directly affected population, as well as impact assessment, mitigation
  plans, and monitoring systems. An EIA Report was prepared for APPC covering
  the Udon South potash mine and the Laem Chabang port.

Apart from noise levels during construction and increased
  traffic, the primary concerns are reported to be the potential for salinization
  of soils and contamination of surface or ground water from seepage or spillage
  of brine or pollutants such as lubricants or chemicals. Suitable mitigation
  and monitoring techniques will be applied and enforced.

The Udon South mine EIA was submitted to the Ministry of Science,
  Technology and Environments Office of Environmental Policy and Planning
  in October 1999, and final approval was given in February 2001.

Development Plan

On June 30, 2003 the Company announced the results of the
  updates to its technical and economic review of the proposed Udon South potash
  mining project. Based on an initial production rate of 1 million tonnes of potash
  per annum (tpa), increasing to 2 million tpa through a plant expansion as market
  share grows, the studies project internal rates of return of between 16% and
  20% after-tax, for a range of potash prices, international shipping costs and
  levels of bank debt.

Management believes that the project economics are attractive,
  particularly with the anticipated long mine life, strong cashflow generation,
  the high grade of the deposit and the straight forward mining conditions. In
  addition, the mine will provide Thailand with over 1,000 jobs during the three
  year construction phase, and 900 direct jobs over a 22 year mine life. The total
  expected contribution of the Udon South potash mine to the Thai economy is estimated
  to exceed 260 billion baht (currently U.S.$6.5 billion) considering royalty
  payments, export earnings, materials purchases and employment benefits.

Total capital cost for the initial stage is estimated at $US
  308 million with the second stage estimated at $US 221 million ($2003). It is
  anticipated that the expansion to 2 million tpa can be financed from cash flow,
  such that no additional equity financing will be necessary.

The project returns are somewhat lower than previously estimated,
  mainly as a result of lower assumed global potash prices and higher assumed
  energy prices. Total operating costs have been estimated at $US53.85/tonne of
  potash at the export port, slightly higher than in previous estimates. Current
  values have been used for potash prices, shipping costs and energy costs rather
  than forecasting future trends.

The Company will incur costs in addition to the direct project
  costs which will reduce the rate of return to the Company by approximately 1.2%
  below that of the project. For example, the Company must fund the Thai Governments
  10% partially free carried interest in APPC which holds the project interest.
  In addition, the Company must pay a private royalty to three parties associated
  with former Directors of Asia Pacific Resources Ltd.

The Company reviewed development alternatives particularly
  taking into account the requirement for orderly entry to the market and to allow
  time for training of people from the North East of Thailand so that they can
  participate immediately in the job creation benefits. The Company has also undertaken
  further studies of potential markets in South East Asia where it has a natural
  cost advantage in respect of shipping. The results of these confidential studies
  have been incorporated into the overall economic studies of the Company. The
  large and growing demand in China, an estimated 6 million tonnes in 2003, and
  in the rest of Asia, an estimated 7 million tonnes, continues to be an immediate
  focus for the activities of management.

25

---

Based on the technical, economic and market studies, the Company
  has concluded that there is an optimum initial rate of production balancing
  the various parameters including orderly market entry, technical start-up, and
  commissioning issues. After taking into account the relatively fixed costs of
  underground access and the transport infrastructure the optimum was found to
  be an initial production rate of 1 million fpa of potash, increasing to 2 million
  tpa with a plant expansion as market share grows.

Management believes the plan for a staged project requires
  much less initial capital than starting immediately at 2 million tpa, It is
  expected that project funding can be obtained on terms favourable to Company
  shareholders. The staged project is also easier to execute, particularly in
  the development of the underground mine, and significantly reduces the need
  for, and cost of, rail and port infrastructure. Commercial risks are also reduced.
  These changes improve the probability that the project will be implemented as
  planned.

In addition, the design incorporates an improved underground
  tailings disposal system, and ensures that virtually no tailings will be stored
  on surface for extended periods, and that all tailings are safely stored underground
  during the mines operating life. This design will reduce the potential
  for surface subsidence, as mined out areas are filled with tailings. The change
  also minimizes possible ground water impacts, and addresses concerns brought
  up by local residents during the Companys consultations.

On the basis of the studies carried out by international consultants
  Steffen Robertson and Kirsten for resources and mining, Ausenco/AMEC for processing,
  Golders for geotechnical, and JT Boyd for mining, Company management is of the
  view that all field, laboratory and basic design work is now essentially complete
  and that technical work required for bank funding of the project, after the
  granting of the mining leases, will only comprise some final updating of cost
  input data before the project can proceed to implementation.

The Company expects that the implementation of the project
  will involve a commercial relationship with one or more other companies for
  the purposes of market development and project financing. The level of third
  party equity participation to finance the project relative to the level of debt
  financing potentially will have a diluting effect on existing shareholders directly
  or on the Companys holding in the project.

Following the May 29, 2003, submission of the Mining Lease
  Application, Company management has met with the Thai Government Committee appointed
  to oversee the process. The Company has listened carefully, and responded to
  local residents concerns regarding possible subsidence and ground water
  impacts. In addition to official consultations and extensive meetings with local
  residents, the Company continues to look to engage in dialogue with various
  Non Government Organizations who have expressed opposition to the project
  in order to understand and respond to their positions.

If other parties become involved in the Udon South Project
  it may be necessary to re-apply to the Thai Board of Investment (BOI)
  to secure promoted project status in the name of the joint venture or other
  legal entity. This may be necessary in order to receive the tax concessions
  previously granted to APPC and incorporated in the financial analysis.

At present, APPC holds the rights to exploit the
  remaining 192 square km of the Concession area. This includes the Udon South
  and Udon North Deposits. Under the terms of the Concession Agreement, the Thai
  Government is not required to participate in any funding in order to maintain
  its 10% interest in APPC; however, any funds advanced on its behalf (i.e., 10%
  of any equity funding) are recoverable from a positive project cash flow. Each
  private participant, in addition to its own equity, will be expected to assume
  responsibility for a pro rata share of the Governments carried interest.

26

---

The Companys objective is to fund its share of the required
  Udon South Project obligations through a combination of debt and equity financing
  or joint venture participation. The total costs to reach a mine construction
  decision and to construct a mine are anticipated to be greater than the Company
  can or would choose to absorb on its own.

Additional financing is expected to be obtained through other
  project participants. Various legal entities have been examined such as joint
  ventures or special purpose companies in addition to direct participation in
  either the Company or APPC. Restructuring APPC may require certain Thai Government
  approvals, which while there is every expectation that such approvals will be
  granted, may be time consuming. The Company may conduct a series of financings
  to support remaining APR project requirements.

In addition to commercial banks, negotiations will continue
  with a number of multi-lateral agencies such as the International Finance Corporation,
  the Export Development Corporation of Canada, and Kreditanstalt für Wiederaufbau
  of Germany, which have expressed interest in project financing. Subordinated
  loans, financial leases and working capital loans may also be incorporated in
  the overall financial structure.

Udon North Potash Deposit

The centre of the Udon North Deposit is located approximately
  6 km adjacent and north of the Udon South Deposit. Information pertaining to
  location, accessibility, climate, and infrastructure and physiographic history
  of the property, its general geological setting, exploration and mineralization
  are substantially the same as that disclosed for the Udon South Deposit.

Two primary areas of potash (sylvinite) mineralization have
  been delineated over a total resource area of approximately 40 square km. A
  total of 104 reconnaissance and exploration boreholes and approximately 275
  line-km. of 2D-seismic surveying have delineated the majority of the
  resource boundary. Based on a study commissioned in 1998 that developed a geological
  resource model that met a minimum thickness of 1.5 metres, the Udon North Deposit
  mineral resource is approximately 1,000 million tonne with an average grade
  of 18.2% K20. The thickness of the Udon North sylvinite horizon is
  considerably greater than the Udon South Deposit with an average thickness of
  approximately 7.5 metres.

Subsequent exploration work on the Udon North Deposit has
  included a 37 line-km. in-fill 2D-seismic survey conducted in 1999; and a limited
  drilling program in 2000 that included 7 strategically-located boreholes, to
  improve upon the geological interpretation, prove local continuity of the sylvinite
  horizon and simultaneously increase the potential resource estimate.

With the issuance of the Special Atchyabats in June 2001,
  the Udon Thani Concession area, which includes the Udon North Deposit, was reduced
  to 192 km2. Consequently, the global resource area of the Udon North
  Deposit that meets the minimum thickness and cut-off grade has been reduced
  as a result of certain land being excluded. The Company has commissioned a study
  to update the geological model and mineral resource estimate that will incorporate
  the new drilling and seismic data and boundaries of the new concession area.

Item 5. Operating and Financial Review and Prospects.

A.Operating Results.

Overview

The Company holds a 90% direct and indirect beneficial interest
  in the Udon Thani Potash concession situated in North East Thailand and has
  identified two large potash deposits on the Property. The Companys activities
  are primarily directed at the development and financing of its potash deposits.
  Under Canadian GAAP, direct exploration and development costs have been capitalized.
  Administrative and other costs associated with the evaluation of debt and financing
  alternatives have been expensed.

27

---

Critical Accounting Policies

The Company prepares its Consolidated Financial Statements
  in conformity with GAAP in Canada, which conforms in all material respects to
  United States GAAP, except for those items disclosed in Note 17 of the Notes
  to the Consolidated Financial Statements. For United States readers, the Company
  has detailed the differences and has also provided a reconciliation of the differences
  between the United States and Canadian GAAP, where applicable, in Note 17, as
  referred to above.

The preparation of the Companys Financial Statements
  requires management to make estimates and judgments that affect the reported
  amounts of assets, liabilities, revenues and expenses. The amounts recorded
  for valuation of non-producing resource properties, future income taxes and
  useful lives of capital assets, are based on estimates. All estimates are evaluated
  on an ongoing basis, including those estimates related to asset impairment.
  The estimates are based on information that is currently available and on various
  other assumptions that management believes to be reasonable under the circumstances.
  By their nature, these estimates are subject to measurement uncertainty and
  the impact on the consolidated financial statements of future periods could
  be material. Actual results could vary from those estimates under different
  assumptions and conditions.

The Company lists all of its significant accounting policies
  in Note 2 to its Consolidated Financial Statements. Of those significant accounting
  policies listed in Note 2 to the Consolidated Financial Statements, the Company
  has identified the following critical accounting policies, which are believed
  to be the most critical in fully understanding and evaluating the reported financial
  results:

Change of Accounting Date

The Company changed its financial year-end from February 28
  to December 31 effective December 31, 2002.

The Board of Directors determined that it was preferable for
  the Company to be consistent with the majority of mining companies who prepare
  their financial statements on a calendar year basis.

Investment in Potash Concession

The Company capitalizes all direct exploration and development
  expenditures related to the Property until commercial production commences or
  the investment is abandoned, at which time the costs will be either amortized
  on a unit-of-production basis or fully charged to operations.

Management regularly reviews the carrying value of the property
  for impairment or permanent declines in the value of the property by reference
  to, amongst other things, the project economics including any independent feasibility
  studies on a property, the timing of the exploration and/or development work,
  the work programs and the exploration results experienced by the Company and
  others. The review of the carrying value of any producing property will be made
  by reference to the estimated future operating results and net cash flows. When
  the carrying value of a property or equipment exceeds its estimated net recoverable
  amount, provision is made for the decline in value. If the Company is unable
  to raise sufficient additional funds to advance project development, such funding
  shortfall may have a material effect on the carrying value of its investment
  in the Property If there were any impairment or decline in the value of the
  property, the resulting write-downs would be charged to earnings.

Going Concern Assumption

The Company's financial statements have been prepared on the
  assumption that the Company will continue as a going concern. The continuation
  of the Company as a going concern is dependent upon its ability to raise additional
  funds to complete development of its potash concession and, ultimately, the
  achievement of profitable operations. On May 29, 2003 the Company applied for
  the Prathanabats from the Thai government. The Company will need to pay a fee
  with the granting of the Prathanabats of U.S.$5 million. The process from that
  point to develop the deposit into a mine includes raising the necessary capital,
  building the mine, hiring construction and operating staff and securing a market
  for its potash and ultimately achieving profitable production. The financial
  statements do not give effect to adjustments that would be necessary to the
  carrying values and classifications of assets and liabilities should the Company
  be unable to continue as a going concern.

Results of operations unaudited three months to March 31, 2003 compared with three months ended February 28, 2002

The Company incurred a net loss of $1.4 million or $0.03 per
  share for the three month period ended March 31, 2003 compared to a net loss
  of $2.2 million or $0.04 per share for the three month period ended February
  28, 2002.

Interest received was $40,771 in the three months to March
  31, 2003 reflecting the increase in cash in January 2003.

The Companys expenses for the three months ended March
  31, 2003 were $1.4 million, a decrease of $1 million from $2.4 million in the
  three months ended February 28, 2002. The Company incurred costs of $0.3 million
  related to the closure of its Vancouver, Canada office including staff termination
  costs and the non-cash write down of the unamortized cost of furniture and equipment
  in the Vancouver office.

28

---

The reduction in general and administrative costs arises primarily
  from the elimination of interest costs after the conversion of convertible debentures
  into common shares of the Company on April 1, 2002. Increases in legal and promotion
  and travel costs are due to work supporting the Companys Mining License
  Application including an active public information program in Thailand. Foreign
  exchange loss for the three months to March 31, 2003 was immaterial compared
  to a foreign exchange gain of $0.2 million in the three months ended February
  28, 2002.

Results of operations  Ten months ended December 31, 2002 compared
  to fiscal year ended February 28, 2002

The Company incurred a net loss of $ 4.0 million or $0.01
  per share for the ten months period ended December 31, 2002, down 68% from $12.2
  million or $0.21 per share for the full fiscal year ended February 28, 2002.

Interest received was $167,379 in the ten months to December
  31, 2002 compared to $32,873 in the fiscal year ended February 28, 2002 reflecting
  the cash proceeds received in April 2002.

During the ten month period to December 31, 2002, the Company
  incurred $0.7 million in interest expense compared to $8.2 million in the fiscal
  year to February 28, 2002, a decrease of $7.5 million. This arose from the conversion
  of convertible debentures into common shares of the Company on April 1, 2002.
  The Company incurred interest expense on the debentures for only one month of
  this ten-month accounting period compared to incurring interest costs for the
  full fiscal year to February 28, 2002.

General and administrative costs, including office, promotion,
  travel, and corporate compliance, for the ten months to December 31, 2002 was
  $1.1 million, an increase of $0.4 million from $0.7 million in the fiscal year
  to February 28, 2002. The Company incurred $0.4 million of new costs as it embarked
  on an active public information program in Thailand.

Salary expense for the ten months to December 31, 2002 was
  $1.3 million, a decrease of $0.5 million from $1.8 million in the fiscal year
  to February 28, 2002. The fiscal year ended February 2002 included a settlement
  for approximately $900,000 to a former Chief Executive Officer of the Company.
  The ten-month period to December 31, 2002 included a settlement of approximately
  $160,000 payable to a former employee who resigned and was entitled to a settlement
  under the terms of his employment contract.

29

---

Excluding these once-off settlements salaries have increased
  in the ten months to December 31, 2002 due to the hiring of additional staff
  in Thailand, particularly in the area of community relations, and the recruitment
  of a new full time Chief Executive Officer.

Foreign exchange gain for the ten months to December 31, 2002
  was $0.3 million compared to a foreign exchange loss of $2.4 million in the
  fiscal year to February 28, 2002. The Principal amount of the debentures, accrued
  interest and premium were denominated in U.S. dollars. These debentures were
  converted to common shares in the Company on April 1, 2002. During the ten months
  to December 31, 2002 the Canadian Dollar and theU.S.Dollar traded in a narrow
  range with the Canadian Dollar showing a small appreciation.

There was no future income tax recovery for the ten months
  to December 31, 2002. In the fiscal year to February 28, 2002 there was a non-cash
  future income tax recovery of $0.2 million relating to the accretion of the
  debentures.

Results of operations  Fiscal year ended February 28, 2002 compared to fiscal year ended February 28, 2001

The Company incurred a net loss of $12.2 million or $0.21per
  common share for the fiscal year ended February 28, 2002, down 34% from $18.5
  million or $0.34 per common share for the fiscal year ended February 28, 2001.

During the fiscal year 2002, the Company incurred $8.2 million
  in interest expense compared to $12.1 million in the fiscal year 2001, a decrease
  of $3.9 million.

- Effective March 1, 2002, the Company adopted the new
      standard of the Canadian Institute of Chartered Accountants (CICA)
      related to foreign currency translation. The new standard requires all unrealized
      foreign exchange gains and losses on foreign currency denominated monetary
      items to be recognized in income in the year they arise. Previously, the
      Companys unrealized foreign exchange gains and losses on long-term
      monetary items were deferred and amortized over the life of the item. The
      Company has adopted this new accounting standard retroactively and has restated
      the comparative financial statements to reflect the change in accounting
      policy. This change in accounting policy has resulted in a decrease of $728,382
      in the Companys deficit at March 1, 2000, an increase of $2,032,282
      in the net loss for the year ended February 28, 2001 and a decrease of $1,303,900
      in the net loss for the year ended February 28, 2002. The change in accounting
      policy had no impact on the Companys balance sheet as at February
      28, 2002.

- Included in fiscal year 2001 was $2.8 million in accrued
      withholding taxes that have been reversed in the fiscal year 2002 and disclosed
      as a separate line item. During the fiscal year 2001, the Company had agreed
      to pay any applicable Canadian withholding taxes that would otherwise have
      had to be withheld from the non-Canadian Debenture Holders in connection
      with the payment or deemed payment of interest and premium on conversion
      or full settlement of the Debentures. During the latest fiscal year, the
      Debenture Holders provided additional information allowing the Company to
      reduce the total accrued amount of withholding taxes.
- The accretion of the liability component of the Debentures,
      recorded as interest expense, decreased by $1.6 million over the previous
      fiscal year. The maturity date of the Debentures was extended during the
      fiscal year 2001 from August 13, 2000 to October 13, 2001 and the remaining
      un-accreted liability component of the Debentures at the date of extension
      was then amortized over the extended term of the Debentures.
- Accrued interest and premium expense on the Debentures
      increased by $1.0 million due to the compounding effect and higher effective
      interest and premium rates.

General and administrative costs, including office, promotion,
  travel, and miscellaneous costs, for the fiscal year 2002 was $0.7 million down
  by $0.6 million from $1.3 million in the previous fiscal year. The Company undertook
  cost cutting measures during the fiscal year 2002 to reduce its overall administrative
  costs.

Consulting fees for the fiscal year ended 2002 were $0.9 million
  up by $0.6 million from $0.3 million in the previous fiscal year. The Company
  engaged a number of consultants in Thailand to assist with the development of
  the potash project, incurring higher consulting costs in the management of the
  Company and incurred costs in hiring a new Chief Executive Officer.

Salaries expense for the fiscal year 2002 was $1.8 million,
  up by $0.4 million from $1.4 million in the previous fiscal year. At the beginning
  of fiscal year 2002, the Company agreed to a termination settlement with its
  then existing President and Chief Executive Officer for $0.9 million payable
  on a monthly basis between April 2001 and May 2003. The increase in salaries
  expense represents primarily the portion of the settlement that would not have
  been paid as salaries during fiscal year 2001.

Foreign exchange loss for the fiscal year 2002 was $2.4 million
  down by $0.5 million from $2.9 million in the previous fiscal year. The Principal
  amount of the Debentures, accrued interest and premium are denominated in U.S.$
  and the increase in foreign exchange loss was caused by the appreciation of
  the U.S. Dollar versus the Canadian Dollar.

Future income tax recovery for the fiscal year 2002 was $0.2
  million down $0.3 from $0.5 million in the previous fiscal year. This is a non-cash
  recovery and it relates to the accretion of the Convertible Debentures.

Results of operations - Fiscal year ended February 28, 2001 compared to fiscal year ended February 29, 2000

Net loss for the fiscal year ended February 28, 2001 was $18.5
  million for the fiscal year ended February 28, 2001, an increase of $7.1 million
  from the loss of $11.4 million incurred in the fiscal year ended February 29,
  2000. The major changes were:

- The Company recorded interest charges of $12 million,
      an increase of $2.7 million over the previous fiscal year which occurred
      principally as a result of an increase in interest and premium charges for
      the Convertible Debentures.
- For the fiscal year ended February 28, 2001, the Company
      recorded a foreign exchange gain of $1.1 million compared to a foreign exchange
      gain of $549,282 in FYE 2000, a change of $593,369. The Convertible Debentures,
      accrued interest and premium are denominated in U.S. Dollars. The Canadian
      Dollar depreciated in value relative to the U.S. Dollar during fiscal 2001.

- The total income tax recovery decreased by $771,708.
      Actual cash payments for taxes were $25,804 (2000 - $14,025).

B.Liquidity and Capital Resources
   three month period ended March 31, 2003

At March 31, 2003, the working capital of the Company was
  $4.7 million.

In January 2003, pursuant to a private placement, the Company
  issued 21,751,896 common shares at a subscription price of $0.10 per share,
  for gross proceeds of approximately $2.2 million. Following closing of the private
  placement, the Company had approximately 464 million common shares outstanding.

Other than for administrative expenditures the Company will
  continue to spend funds on the on-going development of its potash project. The
  Company expects to have sufficient cash to meet its short-term objectives in
  particular the public hearing process that follows submission of the Mining
  License Application. In support of the application by the Company, the feasibility
  study and the Environmental Impact Assessment, which have previously been completed,
  have also been filed.

Upon receipt of the Mining License the Company is required to pay to the Thai
  Government U.S.$5 million.

31

---

The Company will need to raise additional funds by early 2004 in order to fund
  any continuing project development costs, to meet its obligations to pay U.S.$5
  million on receipt of the Mining License, for working capital and administrative
  expenses, to purchase additional land and/or surface rights and ultimately for
  construction of the mine facilities. There is no assurance that the Company
  will be able to raise some or all of the required funds.

Liquidity and Capital Resources  ten month period ended December 31, 2002

At December 31, 2002, the working capital of the Company was
  $5.2 million.

On February 28, 2002, the working capital deficiency was $65.1
  million; although excluding the debentures, accrued interest and premium the
  Company had a working capital deficiency of $0.8 million.

On April 1, 2002, the Company completed its Rights Offering
  and received $13.8 million that was partly used to repay $800,000 in promissory
  notes and to settle $2.1 million in withholding taxes payable by the Company
  from the conversion of the debentures.

The pro forma impact of the Rights Offering, the conversion
  of the convertible debentures and repayment of the promissory notes on working
  capital assuming that these transactions had occurred at the end of fiscal year
  2002 would have increased working capital by $78 million so that the pro forma
  working capital would have been $13 million as at February 28, 2002.

Other than for administrative expenditures the Company will
  continue to spend funds on the on-going development of its potash project, in
  particular the submission of its application for a Mining License and the expected
  cost of the public hearing process that follows from submission of the application.

In January 2003, pursuant to a private placement, the Company
  issued 21,751,896 common shares at a subscription price of $0.10 per share,
  for gross proceeds of approximately $2.2 million. Following closing of the private
  placement, the Company had approximately 464 million common shares outstanding.

The Company expects to have sufficient cash to meet its short-term
  objectives in particular the submission of the Mining License application. In
  support of the application by the Company, the feasibility study and the Environmental
  Impact Assessment, which have previously been completed, must also be filed.

Upon receipt of the Mining License the Company is required
  to pay to the Thai Government U.S.$5 million.

The Company will need to raise additional funds by early 2004
  in order to fund any continuing project development costs, to meet its obligations
  on receipt of the Mining License, for working capital and administrative expenses,
  to purchase additional land and/or surface rights and ultimately for construction
  of the mine facilities. There is no assurance that the Company will be able
  to raise some or all of the required funds.

Other than as discussed herein, the Company is not aware of
  any trends, demands, commitments, events or uncertainties that may result in
  the Companys liquidity materially decreasing over and above current projected
  expenditures.

Liquidity and Capital Resources  Fiscal year ended February 28, 2002

At the end of fiscal 2002, the working capital deficiency
  was $65.1 million, an increase of $10.3 from $54.8 million a year ago. Excluding
  the Debentures, accrued interest and premium, the Company had a working capital
  deficiency of $0.8 million at the end of fiscal year 2002 compared to a positive
  working capital of $1.6 million at the end of fiscal year 2001.

Based on the available working capital, excluding the Debentures,
  as at February 28, 2001, the Company had anticipated a working capital deficit
  and the need for additional financing by the end of June 2001 at which time
  the Company completed a private placement for $3.1 million. The Company expected
  the proceeds of the private placement to allow it to meet its short-term obligations
  until at least December 2001 and sufficient time to renegotiate or refinance
  the Debentures.

32

---

Crew and Olympus had also agreed to provide up to $0.8 million
  and $0.2 million respectively in interim financing to allow the Company to meet
  its obligations until it completed the Rights Offering. As at February 28, 2002,
  the Company had drawn a total of $800,000.

On April 1, 2002, the Company completed the Rights Offering
  and received net proceeds of $13.0 million after repayment of the interim financing
  provided by Olympus and Crew. The pro forma impact of the Rights Offering, the
  conversion of the Convertible Debentures and repayment of the promissory notes
  assuming that these transactions had occurred at the end of fiscal year 2002
  would have been an increase in working capital of $78 million. The pro forma
  working capital would have been $13 million at the end of fiscal year 2002.

The Company does not have sufficient working capital to complete
  all its development work to allow it to make a mining decision, pay a fee of
  U.S.$5 million upon receipt of a mining license, purchase remaining required
  land and fund the construction of a mine. The Company expects to raise additional
  equity and debt to complete these activities. If the Company is not able to
  raise sufficient additional funds, it may lose the potash concession.

Investing Activities  ten month period ended December 31, 2002

Investing activities with respect to expenditures on the potash
  concession were $2.2 million, up from the $1.0 million spent in the year to
  February 28, 2002.

In the ten months to December 31,2002 the Company has carried
  out complete reviews of the original scoping and feasibility studies. The Company
  engaged a team of internationally recognized engineering consulting firms to
  review the economics of a staged project development. This staged development
  would allow an accelerated schedule with lower up-front capital expenditure,
  simpler mine development and more orderly market entry, compared to the Kilborn
  Western Feasibility Study completed in 1998.

In October 2002 the Company announced the preliminary results
  of the scoping studies conducted by AMEC/Ausenco and Steffen, Robertson and
  Kirsten (Australia) Pty Ltd (SRK) who evaluated the development
  alternatives. SRK estimated that the Udon South resource totals 302 million
  tonnes at an average grade of 23.5% K2O containing a high value core averaging
  7.2 metres in thickness.

The study evaluated the development alternatives on criteria
  including capital requirements, financial returns, optimal production cost and
  efficient marketing of the product. The expert technical data confirmed the
  projects economic viability using a staged project development, starting
  with one million tonnes of potash per annum and subsequently scaling up to two
  million tonnes per annum based on several factors including the development
  of the market.

Investing Activities  Fiscal year ended February 28,2002

Investing activities with respect to expenditures on the potash
  concession were $1 million, down from $1.4 million due to cash constraints.
  The Company invested in a deposit of 7.2 million Baht ($0.3 million) to be used
  as security for a letter of guarantee provided to the Department of Mineral
  Resources of Thailand for the issuance of special prospecting licenses (SPLs).
  The letter of guarantee will be retired once the Company has met all its obligations
  under the SPLs. The Companys minimal expenditures on land for the last
  two fiscal years were for maintenance purposes only.

Recent pronouncements

In June 2002, the Financial Accounting Standards Board (FASB")
  issued Statement of Financial Accounting Standard No. 146 (SFAS No. 146),
  Accounting for Costs Associated with Exit or Disposal Activities. SFAS
  No. 146 requires that the liability for a cost associated with an exit or disposal
  activity be recognized at its fair value when the liability is incurred. Under
  previous guidance, a liability for certain exit costs was recognized at the
  date that management committed to an exit plan. As SFAS No. 146 is effective
  only for exit or disposal activities initiated after December 31, 2002, the
  adoption of this statement will not impact the Company's financial statements
  for 2002.

33

---

In November 2002, the FASB issued FASB Interpretation No. 45
  (FIN 45), Guarantor's Accounting and Disclosure Requirements
  for Guarantees, Including Indirect Guarantees of Indebtedness of Others.
  FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize
  a liability for the fair value of an obligation assumed under a guarantee. FIN
  45 also requires additional disclosures by a guarantor in its financial statements
  about the obligations associated with guarantees issued. The recognition provisions
  of FIN 45 will be effective for any guarantees that are issued or modified after
  December 31, 2002. The Company does not expect that the adoption of this standard
  will have a material impact on the Company's results of operations or financial
  position.

In January 2003, the FASB issued Interpretation No. 46 (FIN
  46), Consolidation of Variable Interest Entities, an Interpretation
  of ARB No. 51. FIN 46 requires certain variable interest entities to be consolidated
  by the primary beneficiary of the entity if the equity investors in the entity
  do not have the characteristics of a controlling financial interest or do not
  have sufficient equity at risk for the entity to finance its activities without
  additional subordinated financial support from other parties. FIN 46 is effective
  for all new variable interest entities created or acquired after January 31,
  2003. For variable interest entities created or acquired prior to February 1,
  2003, the provisions of FIN 46 must be applied for the first fiscal period beginning
  after June 15, 2003. The Company does not expect that the adoption of this standard
  will have a material impact on the Companys results of operations or financial
  position.

C. Research and Development, Patents and Licenses, etc.

As the Company is a mineral exploration company with no producing
  properties, the information required by this section is not applicable.

D. Trend Information

As the Company is a mineral exploration company with no producing
  properties, the information required by this section is not applicable.

Item 6. Directors, Senior Management and Employees.

A. Directors and senior management

The names, municipality of residence, position(s) with the
  Company and principal occupation(s) of the directors and officers of the Company
  as of May 31, 2003 follows, including, in the case of directors, any other reporting
  companies they are a director of. There is no family relationship between any
  Director or Executive Officer and any other Director or Executive Officer.

34

---



|                                |     |                                                        |              
|------------------------------- | --- | ------------------------------------------------------ | -------------
|                                |     | Principal Business Activities Inside
      the Company | Served as a  
|Name                            | Age | and Business Experience                                | Director/    
|                                |     |                                                        | Officer Since
|                                |     |                                                        |              
|JOHN G. BOVARD                  | 57  | President and Chief Executive Officer of the Company   | April 2, 2002
|Director                        |     | since April 2002; prior to that, General Manager      |              
|                                |     | Resources for Multiplex Constructions Pty. Ltd., Asia  |              
|                                |     | Pacific Resources Ltd. from March 1991 to April 2002   |              
|                                |     |                                                        |              
|                                |     | Currently a director of Greenwich Resources PLC and    |              
|                                |     | Danae Resources NL                                     |              
|                                |     |                                                        |              
|ROBERT G. CONNOCHIE             | 62  | Mining Industry Consultant since April 2002;           | 1995         
|Director                        |     | President and Chief Executive Officer of the Company   |              
|                                |     | from March 2001 to January 2002. Currently a           |              
|                                |     | Director of Athlone Minerals Ltd.                      |              
|                                |     |                                                        |              
|LEE A. GRABER                   | 56  | Managing Director, Endeavour Financial. Previously     | April 2, 2002
|Director                        |     | Vice President  Corporate Development, Homestake      |              
|                                |     | Mining Company                                         |              
|                                |     |                                                        |              
|RICHARD KNIGHT                  | 63  | Managing Director, Inco Australia Management Pty       | April 2, 2002
|Director                        |     | Ltd, Previously President and CEO, Iron Ore Company    |              
|                                |     | of Canada from Sept 2000 to Aug 2001.                  |              
|                                |     |                                                        |              
|EDAN LEE                        | 36  | Chairman of the Company since April 1, 2002 and        | April 2, 2002
|Director                        |     | Managing Director, Olympus Capital Holdings Asia       |              
|                                |     |                                                        |              
|DANIEL MINTZ                    | 41  | Founding Managing Director, Olympus Capital            | April 2, 2002
|Director                        |     | Holdings Asia                                          |              
|                                |     |                                                        |              
|                                |     | Currently a Director of Korea Exchange Bank Credit     |              
|                                |     | Service Co. Ltd. and Convergys Broadband Asia Ltd.     |              
|                                |     |                                                        |              
|ARTHUR J. ROTH                  | 70  | Fertilizer Industry Consultant                         | April 2, 2002
|Director                        |     |                                                        |              
|                                |     |                                                        |              
|KEITH CROSBY                    | 52  | Senior Geologist for Asia Pacific Resources Ltd.;      | 2000         
|Vice-President  Exploration    |     | previously Senior Geologist for IMC                    |              
|and Development for Asia        |     |                                                        |              
|Pacific Potash Corporation Ltd. |     |                                                       

B. 	Compensation

Remuneration of officers and directors

On April 1, 2002, the Company approved the payment of an annual
  fee of U.S.$10,000 Richard Knight, Arthur Roth and Lee Graber for their services
  as Directors. The remaining Directors do not receive any annual fee for their
  services as Directors.

The Company has a formalized stock option plan for the granting
  of incentive stock options to the officers, employees and Directors. The purpose
  of granting such options is to assist the Company in compensating, attracting,
  retaining and motivating the Directors of the Company and to closely align the
  personal interests of such persons to that of the shareholders.

35

---

The following table sets forth all annual and long term compensation
  for services in all capacities to the Company and its subsidiaries for the ten
  months ended December 31, 2002 in respect of each of the individuals comprised
  of the Chief Executive Officer as at December 31, 2002 and the other four most
  highly compensated executive officers of the Company as at December 31, 2002
  whose individual total compensation for the most recently completed fiscal year
  exceeded $100,000 and any individual who would have satisfied these criteria
  but for the fact that individual was not serving as an officer at the end of
  the most recently completed fiscal year.

The Company currently has five paid executive officers. During
  the ten months ended December 31, 2002 the Company paid, in salary, fees and
  bonuses, in all capacities:

|Executive Officer
      and/or Director                                                                   | Salary or Fees | Other Compensation | Securities under option
      granted at an exercise price of $0.091and a 5 year term expiring
      September 9, 2007
|--------------------------------------------------------------------------------------------------------- | -------------- | ------------------ | ----------------------------------------------------------------------------------------------------------------------
|John Bovard, President
      and CEO since April 1, 
      2002, Director                                 | U.S.$156,333   | U.S.$13,500        | 8,844,500                                                                                                             
|Robert G. Connochie,
      President and CEO from 
      March 23, 2001 to April 
      1, 2002, Director | -              | U.S.$105,0003      | 1,770,000                                                                                                             
|Kwa Boo Leong2Vice
      President Operations, 
      Asia Pacific Potash Corp.                           | C$56,120       | C$27,884           |                                                                                                                       
|Keith Crosby, Vice
      President Exploration and 
      Development, Asia 
      Pacific Potash Corp.   | C$103,000      | C$6,180            | 1,100,000                                                                                                             
|Lee A. Graber, Director                                                                                   | U.S.$10,000    |                    | 1,770,000                                                                                                             
|Arthur J. Roth, Director                                                                                  | U.S.$10,000    |                    | 1,770,000                                                                                                             
|Richard Knight, Director                                                                                  | U.S.$10,000    |                    | 1,770,000                                                                                                             
|Edan Lee, Director                                                                                        | Nil            |                    | Nil                                                                                                                   
|Daniel Mintz, Director                                                                                    | Nil            |                    | Nil                                                                                                                   

| | 1. | The exercise price of all unexercised options
      increases by 10% per year compounded annually beginning on the second anniversary
      of the grant date.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                               
| | 2. | Mr. Leongs employment ended on July
      20, 2002.                                                                                                          

36

---

Robert G. Connochie ceased to be a Named Executive Officer on April 1, 2002.
  The Company and Chartwell Ventures Incorporated (Chartwell), a private
  company owned by Mr. Connochie, entered into an eighteen month contract for
  consulting services. Chartwell is paid U.S.$10,500 consulting fees per month.

Stock Options

During the ten month period ended December 31, 2002, the Company
  introduced a shareholder approved stock option plan (the 2002 Plan).
  Options granted under the 2002 Plan vest over three years as to one-third on
  each anniversary of the grant date and expire after five years. The exercise
  price of all unexercised options increases by 10% per year compounded annually
  beginning on the second anniversary of the grant date. As at December 31, 2002,
  there are also 387,000 outstanding and fully vested options that were issued
  under the Companys prior stock option plan.

Long Term Incentive Plan (LTIP) - Awards in Most Recently Completed Financial Year

|Name
      (a)                      | Securities
      Units or 
      Other Rights 
      (#) 
      (b) | Performance or
      Other Period
      Until 
      Maturation or 
      Payout 
      (c) | Estimated Future Payouts Under
      
      Non-Securities-Price-Based Plans
|----------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------
|Threshold
      ($ or #) 
      (d) | Target
      ($ or #) 
      (e)                                    | Maximum
      ($ or #) 
      (f)                                                          
|John Bovard                         | 392,500 shares                                                      | April 2, 2003                                                                               | -                                                                           

Termination of Employment, Changes in Responsibility and Employment Contracts

Effective March 1, 1998, the Company included clauses in the
  contract of its executive officers providing for compensation in the event of
  the involuntary termination of employment (other than for cause) or in the event
  of the resignation or retirement for good reason (change in duties, responsibilities
  or status, or decrease in salaries or benefits) of the executive officer following
  a change in control of the Company.

As at the fiscal period ended December 31, 2002, the Company
  had employment contracts through management services companies or directly with
  some Named Executive Officers.

John Bovard was named President and Chief Executive Officer
  on April 1, 2002 for a one year renewable term at an annual base salary of U.S.$150,000
  plus an annual allowance of U.S.$18,000 and as President and Chief Executive
  Officer of Asia Pacific Potash Corporation, in Thailand Mr. Bovard is paid an
  annual base salary of Baht 2.25 Million (about U.S.$52,600). On April 1, 2003
  Mr. Bovard was awarded an annual performance bonus in the amount of U.S.$90,000
  and issued 392,500 Shares at a deemed value of C$78,500. Mr. Bovard s
  contract with the Company was renewed on April 1, 2003 at an annual base salary
  in of U.S.$250,000 and he will be eligible for a performance bonus of U.S.$75,000.
  His contract with the Companys subsidiary was renewed on the same terms
  as 2002. Mr. Bovard is entitled to receive cash compensation equal to one years
  base salary at the time of termination if he is terminated without cause.

Robert G. Connochie ceased to be a Named Executive Officer
  on April 1, 2002. The Company and Chartwell Ventures Incorporated (Chartwell),
  a private company owned by Mr. Connochie, entered into an eighteen month contract
  for consulting services. Chartwell is paid U.S.$10,500 consulting fees per month.
  If the contract is terminated without cause the Company will be obligated to
  pay Chartwell the number of months multiplied by the monthly fee for the time
  remaining under the term of the Agreement.

Gerald Wright ceased to be a Named Executive Officer on March
  22, 2001. The Company negotiated a termination agreement with Mr. Wright that
  entitles him to receive a termination package worth approximately $900,000,
  payable on a monthly basis from April.

Remuneration Committee

The Remuneration Committee is responsible for reviewing all
  overall compensation strategy, objectives and policies; annually reviewing and
  assessing the performance of the senior officers; recommending to the Board
  the compensation of the senior officers; reviewing executive appointments; and
  recommending the adequacy and form of Directors' compensation.

For information relating to the Remuneration Committee's report
  on executive compensation, see "Report on Executive Compensation" above. This
  Committee meets at least once annually and it met three times during the ten
  months ended December 31, 2002. Currently, the members are Edan Lee and Arthur
  J. Roth, one of whom is an unrelated Director.

Chief Executive Officer Compensation

The compensation of the Chief Executive Officer consists of
  an annual base salary of approximately U.S.$205,000 in his first year of employment
  and U.S.$255,000 thereafter, an annual allowance of U.S.$18,000 per year, stock
  options to purchase 8,844,500 common shares of the Company, subject to regulatory
  and the Companys Board of Directors approvals and an annual performance
  bonus of U.S.$100,000 per year. The Company also agreed to issue to the Chief
  Executive Officer 392,500 common shares from treasury on completion of a one-year
  employment with the Company.

Compensation of Officers

The compensation of the officers of the Company consists of
  an annual base salary and stock options determined by the Company's Board of
  Directors.

C.     Board Practices

The Directors of the Company are elected at each Annual General
  Meeting of shareholders and hold office until the next Annual General Meeting,
  unless they resign prior to such Meeting. All of the Company's Directors have
  served since April 2, 2002, except Robert Connochie who was appointed in 1995.

37

---

There are no Directors' service contracts with the Company.
  Pursuant to the terms of an Agreement, Robert G. Connochie, a Director, is entitled
  to receive cash compensation equal to 18 times his monthly minimum contract
  amount if he is terminated without cause or resigns or retires for good reason
  within 15 months of a change of control, and receive cash compensation equal
  to 12 times his monthly minimum contract amount if he is terminated without
  cause or resigns or retires for a good reason more than 15 months but within
  18 months of a change of control. John Bovard, the Company's President and a
  Director, is entitled to receive cash compensation equal to one year of his
  base salary if he is terminated without cause.

The Company's Audit Committee consists of Edan Lee, Robert
  Connochie and Lee Graber. The Audit Committee's responsibility is to review
  with the Company's auditors the Company's financial statements which are to
  be submitted to the Company's shareholders at an Annual General Meeting. The
  report of the Audit Committee on the financial statements is submitted to the
  Company's Board of Directors for review prior to dissemination of the Company's
  financial statements. The Company has a Remuneration Committee, the members
  of which are Edan Lee and Arthur Roth. The Committee was established in April
  2002 and is presently formulating its terms of reference.

D.   Employees

As at December 31, 2002, the Company had 5 employees based
  from North America, however by the end of January 2003, with the closure of
  the Vancouver, B.C. office, there was only 1 employee based from North America.
  In addition, through its subsidiary, APPC, the Company had 29 permanent employees
  and 16 temporaryemployees located in Thailand.

E.     Share Ownership (as at December
  31, 2002)

The following table sets forth the share ownership of those
  persons listed in subsection 6.B above and includes details of all options or
  warrants to purchase shares of the Company held by such persons:

|Name                | Number of Shares
      held at May 31,
      2003 | Number of
      Options
      outstanding at
      May 31, 2003 | Exercise
      Price                   | Expiry Date                                                                
|------------------- | ------------------------------------------------- | --------------------------------------------------------------- | -------------------------------------- | ---------------------------------------------------------------------------
|John Bovard         | 392,500                                           | 8,844,500                                                       | $0.09                                  | September 9, 2007                                                          
|Robert G. Connochie | 342,000                                           | 132,000
      80,000
      20,000
      1,770,000               | $2.98
      3.35
      4.00
      0.09 | June 22, 2003
      May 7, 2004 
      May 7, 2004 
      September 9, 2007
|Lee A. Graber       | Nil                                               | 1,770,000                                                       | $0.09                                  | September 9, 2007                                                          
|Richard Knight      | Nil                                               | 1,770,000                                                       | $0.09                                  | September 9, 2007                                                          
|Edan Lee            | 250,022,7891                                      | Nil                                                             |                                        |                                                                            
|Daniel Mintz        | 250,022,7891                                      | Nil                                                             |                                        |                                                                            
|Arthur J. Roth      | Nil                                               | 1,770,000                                                       | $0.09                                  | September 9, 2007                                                          
|Keith Crosby        | 23,600                                            | 100,000
      55,000
      1,100,000                            | $4.00
      2.98
      0.09            | September 3, 2003
      June 22, 2003 
      September 9, 2007             

| | 1. | Beneficial owners and Managing Director
        of Olympus Capital Holdings Asia, a company that controls Olympus Capital
        Holdings Asia I, LP, which owns 250,022,789 common shares of the Company.
        Olympus Capital Holdings Asia I, LP has agreed with other former debenture
        holders not to sell common shares of the Company for certain periods of
        time.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

38

---

Item 7. Major Shareholders and Related Party Transactions.

A.Major Shareholders.

The following are the beneficial owners of 5% or more of the common shares of the Company:

|Name                                 | No. of Common Shares
      Owned or Controlled | Percentage of Outstanding
      Common Shares
|------------------------------------ | ---------------------------------------------- | ---------------------------------------------
|Olympus Capital Holdings Asia I, LP1 | 250,022,789                                    | 56.5%                                        
|Debenture holders other than Olympus | 88,445,970                                     | 20.0%                                        

|1. | Under certain circumstances, the other former debenture
      holders have agreed to vote as instructed by Olympus Capital Holdings Asia
      I, LP. (Olympus). Olympus, and the other former Debenture holders,
      have agreed that for a period of 18 months following April 1, 2002, will
      not, transfer, sell or assign in any six month period, any more than one-third
      of that particular debenture holders Shares received upon conversion
      on April 1, 2002, and for a period of 18 months, will not transfer, sell
      or assign that particular holders Shares comprising 10% or more of the fully
      diluted outstanding Shares to any purchaser or group of purchasers acting
      jointly or in concert, unless the trade is effected through a stock exchange
      and does not constitute a pre-arranged trade to a single purchaser.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Olympus Capital Holdings Asia I, LP ("Olympus") is a limited
  partnership organized under the laws of the Cayman Islands. The general partner
  in Olympus is controlled by Olympus Capital Holdings Asia (Olympus Capital),
  a direct investment firm that targets significant direct investments in companies
  operating in Asia. Olympus Capital currently has 20 investment and operating
  professionals located in Hong Kong, Tokyo, Seoul and New York. Olympus Capital
  manages over U.S.$500 million, and has invested over U.S.$400 million of capital
  in over 15 companies on behalf of third party funds and co-investors. The sole
  limited partner in Olympus is ZAM Holdings, L.P., an investment fund managed
  by Ziff Brothers Investments (ZBI) for the Ziff family. Capitalized
  with proceeds from the 1985 and 1994 sales of the Ziff familys publishing
  assets, ZBI has several U.S.$ Billions under management. Olympus acquired its
  common shares in the Company in April 2002 through conversion of the Convertible
  Debentures held by Olympus, and its participation in the Rights Offering.

B.     Related party transactions

Except as disclosed elsewhere in this Transition Report, there
  were no material transactions in the ten months ended December 31, 2002, or
  proposed material transactions between the Company or any of its subsidiaries
  and:

| | a. | enterprises that directly or indirectly
        through one or more intermediaries, control or are controlled by, or are
        under common control with, the Company;                                                                                                                                                                                                                                            
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | b. | associates;                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | c. | individuals owning, directly or indirectly,
        an interest in the voting power of the company that gives them significant
        influence over the Company, and close members of any such individuals
        family;                                                                                                                                                                                       
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | d. | key management personnel, that is, those
        persons having authority and responsibility for planning, directing and
        controlling the activities of the Company, including directors and senior
        management of companies and close members of such individuals families;                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | e. | enterprises in which a substantial interest
        in the voting power is owned, directly or indirectly, by any person described
        in (c) or (d) or over which such a person is able to exercise significant
        influence including enterprises owned by directors or major shareholders
        of the Company and enterprises that have a member of key management in
        common with the Company.

C.     Interests of Experts and counsel

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is no requirement to provide any information
  under this section.

39

---

Item 8. Financial Information.

A.Consolidated Statements and Other
  Financial Information.

The Companys consolidated financial statements are stated
  in Canadian dollars ($Cdn.) and are prepared in accordance with Canadian Generally
  Accepted Accounting Principles, the application of which in the case of the
  Company conforms in all material respects for the periods presented with United
  States Generally Accepted Accounting Principles, except as disclosed in note
  17 of the financial statements.

Audited financial statements for the ten month period ended
  December 31, 2002 and the years ending February 28, 2002, and February 28, 2001,
  together with the auditors reports for each of these periods.

Unaudited financial statements for the three month period
  ended March 31, 2003 and the three months ended February 28, 2002.

The Company does not anticipate declaring a dividend in the forthcoming fiscal year.

B.     Significant Changes.

No significant change has occurred since the date of the unaudited quarterly and audited annual financial statements and notes included in this Transition Report on Form 20F.

Item 9. The Offer and Listing.

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, is only required to report on the high and low
  sale prices for the common shares of the Company on The Toronto Stock Exchange
  for each of the six months, each fiscal quarter in each of the last two full
  financial years and subsequent period and each of the last five full financial
  years (in Canadian dollars) as follows:

The price history of the Companys common shares on The
  Toronto Stock Exchange is as follows:

|     | Ten months ended
      December 31, 2002
      (Quarters) | Feb. 2002
      (Quarters) | Financial Year
      Ended
|---- | --------------------------------------------------------- | -------------------------- | --------------------------
|     | 1st                                                       | 2nd                        | 3rd                       
|High | 0.205                                                     | 0.18                       | 0.16                      
|Low  | 0.15                                                      | 0.12                       | 0.07                      

|     | May
      2003 | April
      2003 | March
      2003 | February
      2003 | January
      2003
|---- | -------------- | ---------------- | ---------------- | ------------------- | ------------------
|High | $0.07          | $0.075           | $0.08            | $0.09               | $0.10             
|Low  | $0.06          | $0.06            | $0.065           | $0.07               | $0.08             

B.     Plan of Distribution

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is no requirement to provide any information
  under this section.

C.     Markets

The Companys common shares trade on The Toronto Stock
  Exchange in Canada, and on the Frankfurt and Stuttgart Stock Exchanges in Germany
  under the trading symbol APQ and on the OTCBB in the U.S. under
  the symbol APQCF.

40

---

D.     Selling Shareholders

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is no requirement to provide any information
  under this section.

E.     Dilution

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is no requirement to provide any information
  under this section.

F.     Expenses of the Issue

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is no requirement to provide any information
  under this section.

Item 10 Additional Information.

A.     Share Capital

This Form 20F is being filed as a Transition Report under
  the Exchange Act and, as such, there is no requirement to provide any information
  under this section.

B.     Memorandum and Articles of Association

This information is incorporated by reference to the Companys
  registration statement on Form 20F as filed on July 24, 2002.

C.     Material Contracts

The Company has entered into Material Contracts that are other
  than in the ordinary course of business during the previous two years as follows:

|(a) | Trust Indenture dated July 24, 1998
        between Asia Pacific Resources Ltd. and Pacific Corporate Trust Company,
        First Supplemental Indenture dated August 6, 1998, Second Supplemental
        Indenture dated May 14, 1999, Third Supplemental Indenture dated July
        17, 2000 and a Fourth Supplemental Indenture dated October 8, 2001 in
        respect to Convertible Debentures in the principal amount of $24,460,000
        U.S. which were converted into common shares of the Company on April 2,
        2002, as a result of which the Company issued 312,971,396 common shares,
        at $0.20 per common share, and the Trust Indenture and the Convertible
        Debentures were cancelled.                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(b) | Support Agreements dated October 8,
        2001, amendments dated December 4, 2001 and January 17, 2002, and the
        Amending Agreement dated February 5, 2002 and Standby Agreement dated
        February 4, 2002, pursuant to which Olympus and Crew Development Corporation
        ("Crew") extended the maturity date of the Convertible Debentures to April
        1, 2002, the conversion price of the Convertible Debentures was reduced
        to $0.20 per common share, the interest accruing on the Debentures was
        increased to 14% from and including October 13, 2001 to maturity, and
        Crew agreed to exercise its rights in respect to the Rights Offering to
        subscribe for further Units in the aggregate amount of $5,000,000, and
        Olympus agreed to subscribe for up to $5,000,000 of the Units offered
        under the Rights Offering which was completed on April 1, 2002 (see Item
        4 hereof Rights Offering).

41

---

|(c) | Gerald Wright ceased to be the Company's
        President and Chief Executive Office on March 22, 2001 and the Company
        negotiated a termination agreement with him which entitles him to receive
        a termination package worth approximately $900,000, payable on a monthly
        basis from April 2001 to May 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                      
|(d) | Warrant Indenture dated February 5,
        2002, pursuant to which Pacific Corporate Trust Company, of 10thFloor - 625 Howe Street, Vancouver, British Columbia, V6C 3B8, was
        designated Trustee, pursuant to which the warrants may be surrendered
        for exercise, exchange or replacement.                          
|    |                                                                                                                                                                                                                                                                                                                                      
|(e) | John Bovard dated April 1, 2002 for
        a one year renewable term employment contract.                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                      
|(f) | Chartwell Ventures Incorporated (Chartwell),
        a private company owned by Robert Connochie dated April 1, 2002 for an
        eighteen month contract for consulting services.                                                                                                                                               

D.     Canadian Exchange Controls

Limitations on the ability to acquire and hold common shares
  of the Company may be imposed by the Competition Act (Canada). This legislation
  permits the Commissioner of Competition to review any acquisition of a significant
  interest in the Company. This legislation grants the Commissioner jurisdiction,
  for up to three years, to challenge this type of acquisition before the Competition
  Tribunal if the Commissioner believes that it would, or would be likely to,
  result in a substantial lessening or prevention of competition in any market
  in Canada.

This legislation also requires any person who intends to acquire
  common shares to file a notification with the Competition Bureau if certain
  financial thresholds are exceeded, and that person would hold more than 20%
  of the Companys common shares. If a person already owns 20% or more of
  the Companys common shares, a notification must be filed when the acquisition
  would bring that persons holdings over 50%. Where a notification is required,
  the legislation prohibits completion of the acquisition until the expiration
  of a statutory waiting period, unless the Commissioner provides written notice
  that he does not intend to challenge the acquisition.

There is no law, governmental decree or regulation in Canada
  that restricts the export or import of capital, or which would affect the remittance
  of dividends or other payments by the Company to non-resident holders of the
  Companys common shares, other than withholding tax requirements.

There are no specific limitations imposed by Canadian law
  or the Companys Articles of Incorporation or By-Laws on the right of non-residents
  of Canada t hold or to vote the Companys shares, other than those imposed
  by the Investment Canada Act (Canada). This legislation subjects an acquisition
  of control of the Company by a non-Canadian to government review if the value
  of the Companys assets as calculated pursuant to the legislation exceeds
  a threshold amount. The threshold amount is adjusted annually to reflect inflation
  and the Canadian real growth rate. The threshold amount for 2000 is expected
  to be $192,000,000 Cdn. where the acquirer is a national or permanent resident
  of the United States or another country which is a member of the World Trade
  Organization. The review threshold is currently $5,000,000 Cdn. for acquisitions
  of control by other non-Canadians. A reviewable acquisition may not proceed
  unless the relevant minister is satisfied or is deemed to be satisfied that
  there is likely to be a net benefit to Canada from the transaction.

The acquisition of a majority of the Companys voting
  shares is deemed to be an acquisition of control under the Investment Canada
  Act (Canada). The acquisition of less than a majority but more than one-third
  of the Companys voting shares is presumed to be an acquisition of control
  unless the acquirer can establish that there is no control in fact by the acquirer
  through the ownership of voting shares. The acquisition of less than one-third
  of the Companys voting shares is deemed not to be an acquisition of control.
  Share acquisitions in the ordinary course of an acquirers business as
  a trader or dealer in securities are exempt from review under this legislation.

42

---

Thailand Exchange Control

Prior to 1990 almost all foreign exchange transactions required
  approval from the Bank of Thailand. In May 1990, and subsequently thereto, the
  government substantially relaxed exchange control procedures to comply with
  the International Monetary Fund requirements on the liberalization of exchange
  controls. As a result, most foreign exchange transactions now require approval
  only by a commercial bank on presentation of supporting documents.

Commercial banks may approve the following transactions:

|1. | All foreign trade transactions;                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. | Overseas service payments;                                                                                                                                             
|3. | Repatriation of investment funds, dividends and profits, loan repayments
      and interest thereon; and                                                               
|4. | Foreign direct investments by residents of
        Thailand or lending to their affiliated companies abroad for amounts not
        exceeding U.S.$10 million per year.

Other transactions including the purchase of securities and
  immovable assets outside of Thailand still require approval from the Bank of
  Thailand.

BOI Investment Incentives

Investment incentives in Thailand are regulated by the Investment
  Promotion Act 1977 which is administered by the Board of Investment (the "BOI").

The BOI promotes projects which strengthen Thailand's industrial
  and technological capability, use domestic resources, create employment opportunities,
  develop basic and support industries, earn foreign exchange, contribute to the
  economic growth of regions outside of Bangkok, develop infrastructure, conserve
  natural resources and reduce environmental problems.

APPC has been issued a BOI promotion certificate (No. 1727/2543)
  on November 22, 2000.

The basic incentives granted thereunder are as follows:

|1. | Expatriates who are skilled workers or experts, as
        well as their spouses and dependents, will be issued visas in such numbers
        and for such periods of time as the BOI may deem appropriate, and work
        permits will be issued to the skilled workers or experts for specific
        positions approved by the BOI for the period of their permitted stay in
        Thailand.                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | Permission to own land to such extent as the BOI may deem fit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3. | Import duty exemption for machinery brought into Thailand as approved
      by the BOI.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4. | Import duty reduction of seventy-five percent 75%
        of the normal rates for raw or essential materials imported for use and
        production for domestic sales for successive periods of one year, subject
        to a maximum of five years, from the date of first import, provided however,
        that such raw or essential materials are not being produced or originated
        within Thailand in quantities sufficient for the production.                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5. | Corporate income tax holiday on its net profits derived
        from the promoted activity (production of muriate of potash and industrial
        grade salt) for eight years from the date income is first derived from
        such activity. This exemption also applies to income from sales of by-products,
        e.g., scraps or wastes from the production process. If APPC has incurred
        a loss during the eight-year corporate income tax holiday, APPC may deduct
        such annual loss from its net profits accrued after the period of exemption
        of the corporate income tax holiday for not more than five years from
        the expiry date of such period; the deduction may be chosen by APPC from
        the net profit of one or several years.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|6. | Dividends remitted to APPC shareholders derived from
        the promoted activity during the corporate income tax holiday are exempt
        from withholding tax (currently 10%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

43

---

|7.  | Reduction of fifty percent (50%) of
        the normal rate of corporate income tax (currently 30%) on net profit
        derived from the promoted activity for five years from the expiry date
        of the eight-year corporate income tax holiday.                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|8.  | Deduction for the purpose of computing
        its corporate income tax of twenty-five percent (25%) of investments in
        the installation and construction of facilities, in addition to normal
        depreciation.                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|9.  | Exemption of import duty on raw and
        essential materials imported for the manufacture for export for five years
        from the date of first import.                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10. | Exemption of import duty on items imported
        for re-export for five years from the date of its first import.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|11. | Deduction for the purpose of computing
        corporate income tax five percent (5%) of the increment in export income
        over the preceding year for ten (10) years from the date income is first
        derived from such activity (exclusively for income from direct exports,
        and indirect exports where the export is carried out through third persons
        without any further production), provided, however, that the export income
        for such year shall not be less than the average export income during
        the past three years except in the first two years.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|12. | Permission to take or remit money in foreign currencies out
      of Thailand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

E.Taxation.

Canadian Federal Income Tax Consequences

The discussion under this heading summarizes the material
  Canadian federal income tax consequences of acquiring, holding and disposing
  of common shares of the Company for a shareholder of the Company who is not
  resident in Canada but is resident in the United States and who will acquire
  and hold common shares of the Company as capital property for the purpose of
  the Income Tax Act (Canada) (the Tax Act). This summary does not
  apply to a shareholder who carries on business in Canada through a permanent
  establishment situated in Canada or performs independent personal services
  in Canada from a fixed base therein if the shareholder's holding in the Company
  is effectively connected with such permanent establishment or fixed base. This
  summary is based on the provisions of the Tax Act and the regulations thereunder
  and on the Company's understanding of the administrative practices of Canada
  Customs and Revenue Agency, and takes into account all specific proposals to
  amend the Tax Act or regulations made by the Minister of Finance of Canada to
  June 30, 2002. It has been assumed that there will be no other relevant amendment
  of any governing law, although no assurance can be given in this respect. This
  summary does not cover any provincial, local and foreign tax consequences (see
  United States Income Tax Consequences below).

The provisions of the Tax Act are subject to income tax treaties
  to which Canada is a party, including the Canada-United States Income Tax Convention
  (1980) (the Convention).

The existing Convention between the United States and Canada
  essentially calls for taxation of shareholders by the shareholder's country
  of residence. In those instances in which a tax may be assessed by the other
  country, a corresponding credit against the tax owned in the country of residence
  isgenerally available, subject to limitations.

Dividends on Common Shares

Under the Tax Act, a non-resident of Canada is generally subject
  to Canadian withholding tax at the rate of 25% on dividends paid or deemed to
  have been paid to him by a corporation resident in Canada. The Convention limits
  the rate to 15% if the shareholder is resident in the United States and the
  dividends are beneficially owned by and paid to him, and to 5% if the shareholder
  is also a corporation that beneficially owns at least 10% of the voting stock
  of the payor corporation.

The Convention generally exempts from Canadian income tax
  dividends paid to a religious, scientific, literary, educational or charitable
  organization or to an organization constituted and operated exclusively to administer
  a pension, retirement or employee benefit fund or plan, if the organization
  is resident in the United States and is exempt from income tax under the laws
  of the United States.

44

---

Disposition of Common Shares

Under the Tax Act, a taxpayer's taxable capital gain or allowable
  capital loss from a disposition of a common share of the Company is 50% of the
  amount, if any, by which his proceeds of disposition exceed (or are exceeded
  by, respectively) the aggregate of his adjusted cost base of the common share
  and reasonable expenses of disposition. The amount by which a shareholder's
  allowable capital loss exceeds the taxable capital gain in a year may be deducted
  from a taxable capital gain realized by the shareholder in the three previous
  or any subsequent year, subject to certain restrictions in the case of a corporate
  shareholder and subject to adjustment when the capital gains inclusion rate
  in the year of disposition differs from the inclusion rate in the year the deduction
  is claimed.

A non-resident of Canada is not subject to tax under the Tax
  Act in respect of a capital gain realized upon the disposition of common shares
  unless the common shares represent taxable Canadian property.

Common shares of the Company will constitute taxable Canadian
  property of a shareholder at a particular time if the shareholder used the common
  shares in carrying on business in Canada, or if at any time in the five years
  immediately preceding the disposition 25% or more of the issued shares of any
  class or series in the capital stock of the Company was owned by the non-resident,
  persons with whom the non-resident shareholder did not deal at arm's length
  or the non-resident and such non arms-length persons and in certain other circumstances.

Where a United States resident realizes a capital gain on
  a disposition of common shares that constitutes taxable Canadian property,
  the Convention relieves the United States resident from liability for Canadian
  tax on such capital gains unless:

| | a. | the value of the common shares is derived
        principally from real property in Canada, including the right
        to explore for or exploit natural resources and rights to amounts computed
        by reference to production,                                                                      
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                               
| | b. | the shareholder was resident in Canada
        for 120 months during any period of 20 consecutive years preceding, and
        at any time during the 10 years immediately preceding, the disposition
        and the common shares were owned by him when he ceased to be resident
        in Canada, or     
| |    |                                                                                                                                                                                                                                                                                                               
| | c. | the common shares formed part of the
        business property of a permanent establishment or pertained
        to a fixed based used for the purpose of performing independent personal
        services that the shareholder has or had in Canada within the 12 months
        preceding the disposition.

United States Federal Income Tax Consequences

The following is a general discussion of certain possible
  United States federal income tax consequences, under current law, generally
  applicable to a U.S. Holder (as hereinafter defined) of common shares of the
  Company. This discussion does not address all potentially relevant federal income
  tax matters and it does not address consequences peculiar to persons subject
  to special provisions of federal income tax law, such as those described below
  as excluded from the definition of a U.S. Holder. In addition, this discussion
  does not cover any state, local or foreign tax consequences. (See Taxation
   Canadian Federal Income Tax Consequences above).

The following discussion is based upon the sections of the
  Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations,
  published Internal Revenue Service (IRS) rulings, published administrative
  positions of the IRS and court decisions that are currently applicable, any
  or all of which could be materially and adversely changed, possibly on a retroactive
  basis, at any time. This discussion does not consider the potential effects,
  both adverse and beneficial, of any recently proposed legislation which, if
  enacted, could be applied, possibly on a retroactive basis, at any time and
  this does not cover any state, local and foreign tax consequences. This discussion
  is for general information only and it is not intended to be, nor should it
  be construed to be, legal or tax advice to any holder or prospective holder
  of common shares of the Company and no opinion or representation with respect
  to the United States federal income tax consequences to any such holder or prospective
  holder is made. Accordingly, holders and prospective holders of common shares
  of the Company should consult their own tax advisors about the federal, state,
  local, and foreign tax consequences of purchasing, owning and disposing of common
  shares of the Company.

45

---

U.S. Holders

As used herein, a U.S. Holder means a holder of
  common shares of the Company who is a citizen or individual resident of the
  United States, a corporation or partnership created or organized in or under
  the laws of the United States or of any political subdivision thereof or a trust
  whose income is taxable in the United States irrespective of source. This summary
  does not address the tax consequences to, and U.S. Holder does not include,
  persons subject to specific provisions of federal income tax law, such as tax-exempt
  organizations, qualified retirement plans, individual retirement accounts and
  other tax deferred accounts, financial institutions, insurance companies, real
  estate investment trusts, regulated investment companies, broker-dealers, non-resident
  alien individuals, persons or entities that have a functional currency
  other than the U.S. dollar, shareholders who hold common shares as part of a
  straddle, hedging or a conversion transaction, and shareholders who acquired
  their common shares through the exercise of employee stock options or otherwise
  as compensation for services. This summary does not address the consequences
  to a person of the ownership, exercise or disposition of any options, warrants
  or other rights to acquire common shares.

Distribution on Common Shares of the Company

U.S. Holders receiving dividend distributions (including constructive
  dividends) with respect to common shares of the Company are required to include
  in gross income for United States federal income tax purposes the gross amount
  of such distributions equal to the U.S. dollar value of such dividend on the
  date of receipt (based on the exchange rate on such date) to the extent that
  the Company has current or accumulated earnings and profits, without reduction
  for any Canadian income tax withheld from such distributions. Such Canadian
  tax withheld may be credited, subject to certain limitations, against the U.S.
  Holders federal income tax liability or, alternatively, may be deducted
  in computing the U.S. Holders federal taxable income by those who itemize
  deductions. (See more detailed discussion at Foreign Tax Credit
  below). To the extent that distributions exceed current or accumulated earnings
  and profits of the Company, they will be treated first as a return of capital
  up to the U.S. Holders adjusted basis in the common shares and thereafter
  as gain from the sale or exchange of the common shares. Preferential tax rates
  for long-term capital gains are applicable to a U.S. Holder which is an individual,
  estate or trust. There are currently no preferential tax rates for long-term
  capital gains for a U.S. Holder which is a corporation.

In the case of foreign currency received as a dividend that
  is not converted by the recipient into U.S. dollars on the date of receipt,
  a U.S. Holder will have a tax basis in the foreign currency equal to its U.S.
  dollar value on the date of receipt. Generally any gain or loss recognized upon
  a subsequent sale or other disposition of the foreign currency, including the
  exchange for U.S. dollars, will be ordinary income or loss. However, an individual
  whose realized gain does not exceed $200 will not recognize that gain, to the
  extent that there are no expenses associated with the transaction that meet
  the requirement for deductibility as a trade or business expense (other than
  travel expenses in connection with a business trip) or as an expense for the
  production of income.

Dividends paid on the common shares of the Company will not
  generally be eligible for the dividends received deduction provided to corporations
  receiving dividends from certain United States corporations. A U.S. Holder which
  is a corporation may, under certain circumstances, be entitled to a 70% or 80%
  deduction of the United States source portion of dividends received from the
  Company (unless the Company qualifies as a foreign personal holding company
  or a passive foreign investment company, as defined below) if such
  U.S. Holder owns common shares representing at least 10% or 20%, respectively,
  of the voting power and value of the Company. The availability of this deduction
  is subject to several complex limitations which are beyond the scope of this
  discussion.

Under current temporary Treasury Regulations, dividends paid,
  and the proceeds of a sale of Companys common shares, in the U.S. through
  a U.S. or U.S. related paying agent (including a broker) will be subject to
  U.S. information reporting requirements and may also be subject to the 31% U.S.
  backup withholding tax, unless the paying agent is furnished with a duly completed
  and signed Form W-9. Any amounts withheld under the U.S. backup withholding
  tax rules will be allowed as a refund or a credit against the U.S. Holders
  U.S. federal income tax liability, provided the required information is furnished
  to the IRS.

46

---

Foreign Tax Credit

A U.S. Holder who pays (or has withheld form distributions)
  Canadian income tax with respect to the ownership of common shares of the Company
  may be entitled, at the option of the U.S. Holder, to either receive a deduction
  or a tax credit for such foreign tax paid or withheld. Generally, it will be
  more advantageous to claim a credit because a credit reduces United States federal
  income taxes on a dollar-for-dollar basis, while a deduction merely reduces
  the taxpayers income subject to tax. This election is made on a year-by
  year basis and applies to all foreign taxes paid by (or withheld from) the U.S.
  Holder during that year. There are significant and complex limitations which
  apply to the credit, among which is the general limitation that the credit cannot
  exceed the proportionate share of the U.S. Holders United States income
  tax liability that the U.S. Holders foreign sourced income bears to his
  or its worldwide taxable income. In the determination of the application of
  this limitation, the various items of income and deduction must be classified
  into foreign and domestic sources. Complex rules govern this classification
  process. In addition, this limitation is calculated separately with respect
  to specific classes of income such as passive income, high
  withholding tax interest, financial services income, shipping
  income, and certain other classifications of income. Dividends distributed
  by the Company will generally constitute passive income or, in the
  case of certain U.S. Holders, financial services income for these
  purposes. The availability of the foreign tax credit and the application of
  the limitations on the credit are fact specific, and U.S. Holders of common
  shares of the Company should consult their own tax advisors regarding their
  individual circumstances.

Disposition of Common Shares of the Company

A U.S. Holder will recognize gain or loss upon the sale of
  common shares of the Company equal to the difference, if any, between (i) the
  amount of cash plus the fair market value of any property received, and (ii)
  the shareholders tax basis in the common shares of the Company. Preferential
  tax rates apply to long-term capital gains or loss if the common shares are
  a capital asset in the hands of the U.S. Holder which will by long-term capital
  gain or loss if the common shares of the Company are held for more than one
  year. Deductions for net capital loss may be carried over to be used in later
  tax years until such net capital loss is thereby exhausted. For U.S. Holders
  that are corporations (other than corporations subject to Subchapter S of the
  Code), an unused net capital loss may be carried back three years and carried
  forward five years from the loss year to be offset against capital gains until
  such net capital loss is thereby exhausted.

Other Considerations

In the following circumstances, the above sections of this
  discussion may not describe the United States federal income tax consequences
  resulting from the holding and disposition of common shares:

Foreign Personal Holding Company

If at any time during a taxable year more than 50% of the
  total combined voting power or the total value of the Companys outstanding
  common shares is owned, directly or indirectly, by five or fewer individuals
  who are citizens or residents of the United States and 50% (60% in the first
  year) or more of the Companys gross income for such year was derived from
  certain passive sources (e.g., from dividends received from its subsidiaries),
  the Company may be treated as a foreign personal holding company.
  In that event, U.S. Holders that hold common shares would be required to include
  in gross income for such year their allocable portions of such passive income
  to the extent the Company does not actually distribute such income.

Foreign Investment Company

If 50% or more of the combined voting power or total value
  of the Companys outstanding common shares are held, directly or indirectly
  by citizens or residents of the United States, United States domestic partnerships
  or corporations, or estates or trusts other than foreign estates or trusts (as
  defined by the Code Section 7701(a)(31)), and the Company is found to be engaged
  primarily in the business of investing, reinvesting, or trading in securities,
  commodities, or any interest therein, it is possible that the Company may be
  treated as a foreign investment company as defined in Section 1246
  of the Code, causing all or part of any gain realized by a U.S. Holder selling
  or exchanging common shares to be treated as ordinary income rather than capital
  gain.

47

---

Passive Foreign Investment Company

Certain United States income tax legislation contains rules
  governing passive foreign investment companies (PFIC)
  which can have significant tax effect on U.S. Holders of foreign corporations.
  These rules do not apply to non-U.S. Holders. Section 1297 of the Code defines
  a PFIC as a corporation that is not formed in the United States and, for any
  taxable years, either (i) 75% or more of its gross income is passive income,
  which includes interest, dividends and certain rents and royalties or (ii) the
  average percentage, by fair market value (or, if the Company is a controlled
  foreign corporation or makes an election, adjusted tax basis) of its assets
  that produce or are held for the production of passive income is
  50% or more. The Company believes that it qualified as a PFIC for the ten month
  period ended December 31, 2002 and may qualify as a PFIC in subsequent years.
  There can be no assurance that the Companys determination concerning its
  PFIC status will not be challenged or that it will be able to satisfy the recordkeeping
  requirements which will be imposed on a Qualified Electing Fund ("QEF"). Each
  U.S. Holder of the Company is urged to consult a tax advisor with respect to
  how the PFIC rules affect their tax situation.

A U.S. Holder who holds stock in a foreign corporation during
  any year in which such corporation qualifies as a PFIC is subject to United
  States federal income taxation under one of two alternative tax regimes at the
  election of each such U.S. Holder. The following is a discussion of such two
  alternative tax regimes applied to such U.S. Holders of the Company. In addition,
  special rules apply if a foreign corporation qualifies as both a PFIC and a
  controlled foreign corporation (as defined below) and a U.S. Holder
  owns, directly or indirectly, ten percent (10%) or more of the total combined
  voting power of classes of shares of such foreign corporation (See more detailed
  discussion at Controlled Foreign Corporation below).

A U.S. Holder who elects in a timely manner to treat the Company
  as a QEF (an Electing U.S. Holder) will be subject, under Section
  1293 of the Code, to current federal income tax for any taxable year in which
  the Company qualifies as a PFIC on his pro rata share of the Companys
  (i) net capital gain (the excess of net long-term capital gain over
  net short-term capital loss), which will be taxed as long-term capital gain
  in the Electing U.S. Holder and (ii) ordinary earnings (the excess
  of earnings and profits over net capital gain), which will be taxed as ordinary
  income to the Electing U.S. Holder, in each case, for the shareholders
  taxable year in which (or with which) the Companys taxable year ends,
  regardless of whether such amounts are actually distributed.

The effective QEF election also allows the Electing U.S. Holder
  to (i) generally treat any gain realized on the disposition of his Company common
  shares (or deemed to be realized on the pledge of his common shares) as capital
  gain; (ii) treat his common share of the Companys net capital gain, if
  any, as long-term capital gain instead of ordinary income; and (iii) either
  avoid interest charges resulting from PFIC status altogether, or make an annual
  election, subject to certain limitations, to defer payment of current taxes
  on his share of the Companys annual realized net capital gain and ordinary
  earnings subject, however, to an interest charge. If the Electing U.S. Holder
  is not a corporation, such interest charge would be treated as personal
  interest that is not deductible.

The procedure a U.S. Holder must comply with in making an
  effective QEF election will depend on whether the year of the election is the
  first year in the U.S. Holders holding period in which the Company is
  a PFIC. If the U.S. Holder makes a QEF election in such first year, i.e., a
  timely QEF election, then the U.S. Holder may make the QEF election by simply
  filing the appropriate documents at the time the U.S. Holder files his tax return
  for such first year. If, however, the Company qualified as a PFIC in a prior
  year, then in addition to filing documents, the U.S. Holder must elect to recognize
  (i) under the rules of Section 1291 of the Code (discussed below), any gain
  that he would otherwise recognize if the U.S. Holder sold his stock on the qualification
  date or (ii) if the Company is a controlled foreign corporation, the U.S. Holders
  pro rata share of the Companys post-1986 earnings and profits as of the
  qualification date. The qualification date is the first day of the Companys
  first tax year in which the Company qualified as a qualified electing
  fund with respect to such U.S. Holder. The elections to recognize such
  gain or earnings and profits can only be made if such U.S. Holders holding
  period for the common shares of the Company includes the qualification date.
  By electing to recognize such gain or earnings and profits, the U.S. Holder
  will be deemed to have made a timely QEF election. A U.S. Holder who made elections
  to recognize gain or earnings and profits after May 1, 1992 and before January
  27, 1997 may, under certain circumstances, elect to change such U.S. Holders
  qualification date to the first day of the first QEF year. U.S. Holders are
  urged to consult a tax advisor regarding the availability of and procedure for
  electing to recognize gain or earnings and profits under the foregoing rules.
  In addition, special rules apply if a foreign corporation qualifies as both
  a PFIC and a

48

---

controlled foreign corporation (as defined below)
  and a U.S. Holder owns, directly or indirectly, ten percent (10%) or more of
  the total combined voting power of classes of shares of such foreign corporation
  (See more detailed discussion at Controlled Foreign Corporation
  below).

If the Company no longer qualifies as a PFIC in a subsequent
  year, a timely QEF election will remain in effect, although not applicable,
  during those years that the Company is not a PFIC. Therefore, if the Company
  re-qualifies as a PFIC, the QEF election previously made is still valid, and
  the U.S. Holder is required to satisfy the requirements of that election. Furthermore,
  a QEF election remains in effect with respect to a U.S. Holder, although dormant,
  after a U.S. Holder disposes of its entire interest in the Company. Upon the
  U.S. Holders reacquisition of an interest in the Company, the QEF election
  will apply to the newly acquired stock of the Company.

Effective for tax years of U.S. Holders beginning after December
  31, 1997, U.S. Holders who hold (actually or constructively) marketable stock
  of a foreign corporation that qualifies as a PFIC, may annually elect to mark
  such stock to the market (a mark-to-market election). If such an
  election is made, such U.S. Holder will not be subject to the special taxation
  rules of Section 1291 described below for the taxable year for which the mark-to-market
  election is made. A U.S. Holder who makes such an election will include in income
  for the taxable year for which the election was made in an amount equal to the
  excess, if any, of the fair market value of the common shares of the Company
  as of the close of such tax year over such U.S. Holders adjusted basis
  in such common shares. In addition, the U.S. Holder is allowed a deduction for
  the lesser of (i) the excess, if any, of such U.S. Holders adjusted tax
  basis in the common shares over the fair market value of such common shares
  as of the close of the tax year, or (ii) the excess, if any, of (A) the market-to
  market gains for the common shares in the Company included by such U.S. Holder
  for prior tax years, including any amount which would have been included for
  any prior tax year but for Section 1291 interest on tax deferral rules discussed
  below with respect to non-electing U.S. Holders, over (B) the mark-to market
  losses for common shares that were allowed as deductions for prior tax years.
  U.S. Holders adjusted tax basis in the common shares of the Company will
  be increased to reflect the amount included or deducted as a result of a mark-to-market
  election. A mark-to-market election only applies to the taxable year in which
  the election was made. A separate election must be made by a U.S. Holder for
  each subsequent taxable year. Because the Internal Revenue Service has not established
  procedures for making a mark-to-market election, U.S. Holders should consult
  their tax advisor regarding the manner of making such an election.

If a U.S. Holder does not make a timely QEF election during
  a year in which it holds (or is deemed to have held) the common shares in question
  and the Company is a PFIC (a non-electing U.S. Holder), then special
  taxation rules under Section 1291 of the Code will apply to (i) gains realized
  on the disposition (or deemed to be realized by reasons of a pledge) of his
  Company common shares and (ii) certain excess distributions, as
  specifically defined, by the Company.

A non-electing U.S. Holder generally would be required to
  pro rate all gains realized on the disposition of his Company common shares
  and all excess distributions on his Company common shares and all excess distributions
  over the entire holding period for the Company 's common shares. All gains or
  excess distributions allocated to prior years of the U.S. Holder (other than
  years prior to the first taxable year of the Company during such U.S. Holders
  holding period and beginning after January 1, 1987 for which it was a PFIC)
  would be taxed at the highest tax rate for each such prior year applicable to
  ordinary income. The non-electing U.S. Holder also would be liable for interest
  on the foregoing tax liability for each such prior year calculated as if such
  liability had been due with respect to each such prior year. A non-electing
  U.S. Holder that is not a corporation must treat this interest charge as personal
  interest which, as discussed above, is wholly nondeductible. The balance
  of the gain of the excess distribution will be treated as ordinary income in
  the year of the disposition or distribution, and no interest charge will be
  incurred with respect to such balance.

If the Company is a PFIC for any taxable year during which
  a non-electing U.S. Holder holds Company common shares, then the Company will
  continue to be treated as a PFIC with respect to such Company common shares,
  even if it is not longer definitionally a PFIC. A non-electing U.S. Holder may
  terminate this deemed PFIC status by electing to recognize a gain (which will
  be taxed under the rules discussed above for non-electing U.S. Holders) as if
  such Company common shares had been sold on the last day of the last taxable
  year for which it was a PFIC.

49

---

Under Section 1291(f) of the Code, the IRS has issued proposed
  regulations that, subject to certain exceptions, would treat as taxable certain
  transfers of PFIC stock by non-electing U.S. Holders that are generally not
  otherwise taxed, such as gifts, exchanges pursuant to corporate reorganizations,
  and transfers at death. Generally, in such cases the basis of the Company common
  shares in the hands of the transferee and the basis of any property received
  in the exchange for those common shares would be increased by the amount of
  gain recognized. An Electing U.S. Holder would not be taxed on certain transfers
  of PFIC stock, such as gifts, exchanges pursuant to corporate reorganizations,
  and transfers at death. The transferees basis in this case will depend
  on the manner of the transfer. In a transfer at death, for example, the transferees
  basis is equal to (i) the fair market value of the Electing U.S. Holders
  common shares, less (ii) the excess of the fair market value of the Electing
  U.S. Holders common shares reduced by the U.S. Holders adjusted
  basis in these common shares at death. The specific tax effect to the U.S. Holder
  and the transferee may vary based on the manner in which the common shares are
  transferred. Each U.S. Holder of the Company is urged to consult a tax advisor
  with respect to how the PFIC rules affect their tax situation.

Certain special, generally adverse, rules will apply with
  respect to Company common shares while the Company is a PFIC whether or not
  it is treated as a QEF. For example under Section 1298(b)(6) of the Code, a
  U.S. Holder who uses PFIC stock as a security for a loan (including a margin
  loan) will, except as may be provided in regulations, be treated as having made
  a taxable disposition of such common shares.

Controlled Foreign Corporation

If more than 50% of the voting power of all classes of shares
  or the total value of the shares of the Company is owned, directly or indirectly,
  by citizens or residents of the United States, United States domestic partnerships
  and corporations or estates or trusts other than foreign estates or trusts,
  each of whom own 10% or more of the total combined voting power of all classes
  of shares of the Company (United States shareholder), the Company
  could be treated as a controlled foreign corporation ("CFC") under
  Subpart F of the Code. This classification would affect many complex results,
  one of which is the inclusion of certain income of the CFC which is subject
  to current U.S. tax. The United States generally taxes a United States shareholder
  of a CFC currently on their pro rata shares of the Subpart F income of the CFC.
  Such U.S. shareholders are generally treated as having received a current distribution
  out of the CFCs Subpart F income and are also subject to current U.S.
  Tax on their pro rata shares of the CFCs earnings invested in U.S. property.
  The foreign tax credit described above may reduce the U.S. tax on these amounts.
  In addition, under Section 1248 of the Code, gain from the sale or exchange
  of shares by a U.S. Holder of common shares of the Company who is or was a United
  States shareholder at any time during the five-year period ending with the sale
  or exchange is treated as ordinary income to the extent of earnings and profits
  of the Company attributable to the common shares sold or exchanged. If a foreign
  corporation is both a PFIC and a CFC, the foreign corporation generally will
  not be treated as a PFIC with respect to United States shareholders of the CFC.
  This rule generally will be effective for taxable years of United States shareholders
  beginning after 1997 and for taxable years of foreign corporations ending with
  or within such taxable years of United States shareholders. Special rules apply
  to United States shareholders who are subject to the special taxation rules
  under Section 1291 discussed above with respect to a PFIC. Because of the complexity
  of Subpart F, and because it is not clear that Subpart F would apply to U.S.
  Holders of common shares of the Company, a more detailed review of these rules
  is outside of the scope of this discussion.

F.Dividends.

Each holder of common shares is entitled to receive dividends
  if, as and when declared by the Board of Directors, and will participate equally
  in any distribution of assets upon the liquidation, dissolution or winding-up
  of the Company. It is not anticipated that a dividend will be declared before
  the end of the Company's current fiscal year.

G.Documents on Display.

Copies of the documents referred to in the Annual Report may
  be inspected at the Companys office at 712C  12th Street,
  New Westminster, British Columbia, V3M 4J6.

50

---

I.     Subsidiary Information.

Not applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risk.

The Company is susceptible to fluctuations in foreign exchange
  rates, with regard the costs of the exploration and development of its potash
  project in Thailand. The Company does not use derivative instruments in order
  to reduce its exposure to exchange risk. Its exploration and development costs
  are in Canadian and U.S. Dollars and Thai Baht.

At December 31, 2002 the majority of the Companys consolidated
  cash treasury of Cdn $5.8 million was held in Canadian denominated dollars.
  The Companys purchasing power of U.S. dollars, to meet U.S. dollar denominated
  expenditures has increased by 15% for the period December 31, 2002 to May 30,
  2003. Had the Company exchanged $1 million Canadian dollars on December 31,
  2002 it would have received U.S.$630,000. Had the Company exchanged $1 million
  Canadian dollars on May 31, 2003 it would have received U.S.$730,000, an increase
  in purchasing power of 15%.

The Companys purchasing power of Thai Baht, to meet
  Thai denominated expenditures has increased by 11% for the period December 31,
  2002 to May 30, 2003. Had the Company exchanged $1 million Canadian dollars
  on December 31, 2002 it would have received Baht 27,314,900. Had the Company
  exchanged $1 million Canadian dollars on May 31, 2003 it would have received
  Baht 30,450,700, an increase in purchasing power of 11%.

The capital costs of the proposed potash mine in Thailand
  are expected to be denominated primarily in U.S. Dollars while operating costs
  are expected to be denominated primarily in Thai Baht. The project debt is expected
  to be denominated in U.S. Dollars. The revenues from the potash mine are expected
  to be denominated in U.S. Dollars. The Company would be susceptible to fluctuations
  in potash prices.

The Debentures outstanding as at February 28, 2002 were denominated
  in U.S.$ and converted into common shares of the Company on April 1, 2002 a
  price of $0.20 per common share.

Item 12. Description of Securities Other than Equity Securities.

A.Debt Securities.

None.

B.     Warrants and Rights.

Not applicable.

C.Other Securities.

Not applicable.

D.American Depositary Shares.

Not applicable.

51

---

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies.

The Company is not in default in the payment of principal or interest.

Item 14. Material Modifications to the Rights of Security Holders and Use
  of Proceeds.

There has been no material modification to the rights of security holders.

Item 15. [Reserved]

Not applicable.

Item 16. [Reserved]

Not applicable.

PART III

Item 17. Financial Statements.

The Companys consolidated financial statements are stated
  in Canadian dollars ($Cdn.) and are prepared in accordance with Canadian Generally
  Accepted Accounting Principles, the application of which in the case of the
  Company conforms in all material respects for the periods presented with United
  States Generally Accepted Accounting Principles, except as disclosed in note
  17 of the audited consolidated financial statements of the Company included
  with this annual report.

Audited consolidated financial statements for the ten months
  period ending December 31, 2002 and the fiscal years ended February 28, 2002,
  and February 29, 2001 are included herewith, together with the auditors
  reports for each of these periods.

Unaudited financial statements for the three month period
  ended March 31, 2003 and the three months ended February 28, 2002 are included
  herewith.

Item 18. Financial Statements.

The Company has responded to Item 17.

The consolidated financial statements as required under Item
  17 are found immediately following the text of this Transition Report. The report
  of Deloitte & Touche LLP, independent Chartered Accountants, is included
  herein immediately preceding the audited consolidated financial statements.

| | Audited Financial Statements:
| | -----------------------------
| |                              
| |                              

52

---

| |                                 | Notes to the Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                
| | Unaudited Financial Statements:
| |                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                
| |                                 | Consolidated Balance Sheets at March 31, 2003 and December 31, 2002.
      Consolidated Statements of Loss and Deficit for the three months ended
        March 31, 2003 compared to three months ended February 28, 2002.
      Consolidated Statements of Cash Flows for the three months ended March
        31, 2003 compared to three months ended February 28, 2002.
      Notes to the Consolidated Financial Statements

53

---

Item 19. Exhibits

|1.  | Articles of Incorporation                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                        
|    | (a)                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    | (b)                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|2.  | (a)                                                                                                                                                                                                                    
|    | -- Refer to Exhibit No. 1 --                                                                                                                                                                                           
|    |                                                                                                                                                                                                                        
|    | (b)                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                        
|    | (c)                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                        
|3.  | Voting Trust Agreements: Not Applicable.                                                                                                                                                                               
|    |                                                                                                                                                                                                                        
|4.  | Material Contracts                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                        
|    | (a)                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    | (b)                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|5.  | Foreign Patents: Not Applicable.                                                                                                                                                                                       
|    |                                                                                                                                                                                                                        
|6.  | Statement explaining earnings per share calculation:
      Not Applicable.                                                                                                                                             
|    |                                                                                                                                                                                                                        
|7.  | Statement explaining ratio of earnings to fixed
      charges: Not Applicable.                                                                                                                                         
|    |                                                                                                                                                                                                                        
|8.  | List of subsidiaries:
      Asia Pacific Potash Corporation Ltd. - Incorporated in Thailand
        Metro Resources Company Limited - a New Brunswick company N/A 
        Wildemere Limited  Incorporated in Thailand
|    |                                                                                                                                                                                                                        
|9.  | Not Applicable.                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                        
|10. | Not Applicable                                                                                                                                                                                                         

---

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for
  filing on Form 20-F and that it has duly caused and authorized the undersigned
  to sign this annual report on its behalf.

|ASIA PACIFIC RESOURCES LTD. | ASIA PACIFIC RESOURCES LTD.
|--------------------------- | ---------------------------
|(Registrant)                | (Registrant)               
|                            |                            
|"John G. Bovard"            | "Robert Scott"             
|(Signature)*                | (Signature)*               
|                            |                            
|John G. Bovard              | Robert Scott               
|Chief Executive Officer     | Chief Financial Officer    

Date: June 30, 2003

* Print the name and title of the signing officer under his signature.

55

---

CERTIFICATION

I, ROBERT SCOTT, certify that:

|1. | I have reviewed this annual report of ASIA PACIFIC
      RESOURCES LTD.;                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Based on my knowledge, this
        annual report does not contain any untrue statement of a material fact
        or omit to state a material fact necessary in order to make the statements
        made, in light of the circumstances under which such statements were made,
        not misleading with respect to the period covered by this annual report;                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | Based on my knowledge, the
        financial statements, and other financial information included in this
        annual report, fairly present in all material respects the financial condition,
        results of operations and cash flows of the registrant as of, and for,
        the periods presented in this annual report;                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | The registrant's other certifying
        officers and I are responsible for establishing and maintaining disclosure
        controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
        for the registrant and we have:                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | The registrant's other certifying
        officers and I have disclosed, based on our most recent evaluation, to
        the registrant's auditors and the audit committee of registrant's board
        of directors (or persons performing the equivalent function):                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | The registrant's other certifying
        officers and I have indicated in this annual report whether or not there
        were significant changes in internal controls or in other factors that
        could significantly affect internal controls subsequent to the date of
        our most recent evaluation, including any corrective actions with regard
        to significant deficiencies and material weaknesses.

DATE: June 30, 2003

/s/ROBERT SCOTT
  Chief Financial Officer

56

---

CERTIFICATION

I, JOHN G. BOVARD, certify that:

|1. | I have reviewed this annual report of ASIA PACIFIC
      RESOURCES LTD.;                                                                                                                                                                                                                                                                                                                                                      
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | Based on my knowledge, this
        annual report does not contain any untrue statement of a material fact
        or omit to state a material fact necessary in order to make the statements
        made, in light of the circumstances under which such statements were made,
        not misleading with respect to the period covered by this annual report;                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | Based on my knowledge, the
        financial statements, and other financial information included in this
        annual report, fairly present in all material respects the financial condition,
        results of operations and cash flows of the registrant as of, and for,
        the periods presented in this annual report                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | The registrant's other certifying officers and
      I are responsible for establishing and maintaining disclosure controls and
      procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
      registrant and we have:                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | The registrant's other certifying
        officers and I have disclosed, based on our most recent evaluation, to
        the registrant's auditors and the audit committee of registrant's board
        of directors (or persons performing the equivalent function):                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | •                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | The registrant's other certifying
        officers and I have indicated in this annual report whether or not there
        were significant changes in internal controls or in other factors that
        could significantly affect internal controls subsequent to the date of
        our most recent evaluation, including any corrective actions with regard
        to significant deficiencies and material weaknesses.

/s/JOHN G. BOVARD
  Chief Executive Officer

57

---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

|INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                                                        | F-1 
|------------------------------------------------------------------------------------------------- | ----
|                                                                                                  |     
|Auditors Report to the Directors                                                                 | F-3 
|                                                                                                  |     
|Consolidated Balance Sheets as at December 31, 2002 and February 28, 2002                         | F-4 
|                                                                                                  |     
|Consolidated Statements of Loss and Deficit for the ten month period ended                        |     
|December 31, 2002 and the fiscal years ended February 28, 2001 and 2002                           | F-5 
|                                                                                                  |     
|Consolidated Statements of Cash Flow for the ten month period ended                               |     
|December 31, 2002 and the fiscal years ended February 28, 2001 and 2002                           | F-6 
|                                                                                                  |     
|Notes to the Consolidated Financial Statements                                                    | F-7 
|                                                                                                  |     
|First Quarter Report ended March 31, 2003                                                         | F-32
|                                                                                                  |     
|Interim Consolidated Balance Sheet as at March 31, 2003 and December 31,
      2002               | F-33
|                                                                                                  |     
|Interim Consolidated Loss and Deficit for the three months ended                                  |     
|March 31, 2003 and February 28, 2002                                                              | F-34
|                                                                                                  |     
|Interim Consolidated Cash Flow for the three months ended                                         |     
|March 31, 2003 and February 28, 2002                                                              | F-35
|                                                                                                  |     
|Notes to the Unaudited Consolidated Financial Statements for the                                  |     
|Three month period ending March 31, 2003 and the three month period ended
      February 28, 2002 | F-36

F - 1

---

Managements Report

Management's Responsibility for the Consolidated Financial
  Statements

The accompanying financial statements of Asia Pacific Resources
  Ltd. and its subsidiaries and all information in the Transition Report are the
  responsibility of management and have been approved by the Board of Directors.
  The financial statements necessarily include some amounts that are based on
  management's best estimates, which have been made using careful judgment.

The financial statements have been prepared by management
  in accordance with Canadian generally accepted accounting principles. Financial
  and operating data elsewhere in the Transition Report are consistent with the
  information contained in the financial statements.

In fulfilling their responsibilities, management of Asia Pacific
  Resources Ltd. and its subsidiaries have developed and continue to maintain
  systems of internal accounting controls, and segregation of duties and responsibilities
  whenever possible.

Although no cost effective system of internal controls will
  prevent or detect all errors and irregularities, these systems are designed
  to provide reasonable assurance that assets are safeguarded from loss or unauthorized
  use, transactions are properly recorded and the financial records are reliable
  for preparing the financial statements.

The Board of Directors carries out its responsibility for
  the financial statements in this Transition Report principally through its Audit
  Committee. The Audit Committee meets periodically with management and with the
  external auditors to discuss the results of audit examinations with respect
  to the adequacy of internal accounting controls, and to review and discuss the
  financial statements and financial reporting matters.

The financial statements have been audited by Deloitte &
  Touche LLP, Chartered Accountants, who have full access to the Audit Committee,
  with and without the presence of management. Their report follows.

|/s/ John Bovard                       | /s/ Robert Scott       
|------------------------------------- | -----------------------
|                                      |                        
|John Bovard                           | Robert Scott           
|President and Chief Executive Officer | Chief Financial Officer

March 21, 2003

F - 2

---

Auditors Report

To the Directors of 
  Asia Pacific Resources Ltd.

We have audited the consolidated balance sheets of Asia Pacific
  Resources Ltd. (an exploration stage enterprise) as at December 31, 2002 and
  February 28, 2002 and the consolidated statements of loss and deficit and cash
  flows for the ten month period ended December 31, 2002 and each of the years
  in the two year period ended February 28, 2002 and the period from inception,
  January 26, 1986 to December 31, 2002. These financial statements are the responsibility
  of the Companys management. Our responsibility is to express an opinion
  on these financial statements based on our audits.

With respect to the consolidated financial statements for
  the ten month period ended December 31, 2002 and each of the years in the two
  year period ended February 28, 2002, we conducted our audit in accordance with
  Canadian generally accepted auditing standards and United States generally accepted
  auditing standards. With respect to the period from inception, January 26, 1986,
  to December 31, 2002, we conducted our audits in accordance with Canadian generally
  accepted auditing standards. Those standards require that we plan and perform
  an audit to obtain reasonable assurance whether the 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 consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  December 31, 2002 and February 28, 2002 and the results of its operations and
  its cash flows for the ten month period ended December 31, 2002 and each of
  the years in the two year period ended February 28, 2002 and the period from
  inception, January 26, 1986 to December 31, 2002 in accordance with Canadian
  generally accepted accounting principles applied on a consistent basis.

/s/ Deloitte & Touche LLP

Chartered Accountants 
  Vancouver, British Columbia 
  March 21, 2003

Comments by Auditors for U.S. Readers on Canada  United
  States Reporting Differences

United States reporting standards for auditors require the
  addition of an explanatory paragraph when the financial statements are affected
  by conditions and events that cast substantial doubt on the companys ability
  to continue as a going concern, such as those described in Note 1 to the financial
  statements. Although we conducted our audits in accordance with both Canadian
  generally accepted auditing standards and United States generally accepted auditing
  standards, our report to the Shareholders dated March 21, 2003 is expressed
  in accordance with Canadian reporting standards which do not permit a reference
  to such conditions and events in the auditors report when these are adequately
  disclosed in the financial statements.

United States reporting standards also require the addition
  of an explanatory paragraph when the financial statements reflect a change in
  accounting policy, such as described in Note 2 (d) for foreign currency translation
  and Note 2 (f) for stock compensation. The effect of the adoption of these policies
  is described therein.

/s/ Deloitte & Touche LLP

Chartered Accountants 
  Vancouver, British Columbia 
  March 21, 2003

F - 3

---

|ASIA PACIFIC RESOURCES LTD       
|---------------------------------
|(An exploration stage enterprise)
|Consolidated Balance Sheets      
|(Expressed in Canadian dollars)  
|                                 

|                                                                      |   | December 31, |   |   | February 28, |  
|--------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                                      |   | 2002         |   |   | 2002         |  
|ASSETS                                                                |   |              |   |   |              |  
|                                                                      |   |              |   |   |              |  
|CURRENT                                                               |   |              |   |   |              |  
|Cash                                                                  | $ | 5,833,316    |   | $ | 739,282      |  
|Accounts receivable                                                   |   | 93,812       |   |   | 71,749       |  
|Prepaid expenses                                                      |   | 123,302      |   |   | 69,140       |  
|Deferred financing
      costs (Note 6 (c))                           |   | -            |   |   | 117,763      |  
|Other current assets                                                  |   | 49,094       |   |   | 24,246       |  
|                                                                      |   |              |   |   |              |  
|                                                                      |   | 6,099,524    |   |   | 1,022,180    |  
|INVESTMENT IN POTASH CONCESSION (Note 3)                              |   | 87,451,256   |   |   | 85,292,873   |  
|DEPOSIT (Note 3)                                                      |   | 263,592      |   |   | 264,384      |  
|INVESTMENT IN LAND (Note 4)                                           |   | 7,894,269    |   |   | 7,869,915    |  
|PROPERTY AND EQUIPMENT (Note 5)                                       |   | 210,565      |   |   | 153,339      |  
|                                                                      |   |              |   |   |              |  
|                                                                      | $ | 101,919,206  |   | $ | 94,602,691   |  
|                                                                      |   |              |   |   |              |  
|                                                                      |   |              |   |   |              |  
|LIABILITIES                                                           |   |              |   |   |              |  
|                                                                      |   |              |   |   |              |  
|CURRENT                                                               |   |              |   |   |              |  
|Accounts payable and accrued liabilities                              | $ | 889,353      |   | $ | 1,065,201    |  
|Convertible debentures (Note 6 (a))                                   |   | -            |   |   | 39,184,920   |  
|Interest payable on
      convertible debentures (Note 6 (b) and (c)) |   | -            |   |   | 25,100,617   |  
|Promissory notes payable (Note 6 (d))                                 |   | -            |   |   | 800,000      |  
|                                                                      |   |              |   |   |              |  
|                                                                      |   | 889,353      |   |   | 66,150,738   |  
|FUTURE INCOME TAXES (Note 8)                                          |   | 16,348,459   |   |   | 16,348,459   |  
|                                                                      |   |              |   |   |              |  
|                                                                      |   | 17,237,812   |   |   | 82,499,197   |  
|                                                                      |   |              |   |   |              |  
|                                                                      |   |              |   |   |              |  
|SHAREHOLDERS' EQUITY                                                  |   |              |   |   |              |  
|                                                                      |   |              |   |   |              |  
|Share capital (Note 7)                                                |   | 156,727,265  |   |   | 75,236,994   |  
|Contributed surplus (Note 7 (d))                                      |   | 36,143       |   |   | -            |  
|Equity component of convertible debentures (Note 6 (a))               |   | -            |   |   | 4,985,439    |  
|Deficit                                                               |   | (72,082,014  | ) |   | (68,118,939  | )
|                                                                      |   |              |   |   |              |  
|                                                                      |   | 84,681,394   |   |   | 12,103,494   |  
|                                                                      |   |              |   |   |              |  
|                                                                      | $ | 101,919,206  |   | $ | 94,602,691   |  
|                                                                      |   |              |   |   |              |  

CONTINUING OPERATIONS (Note 1)

APPROVED BY THE BOARD

|/s/ John Bovard       |  | /s/ Robert G. Connochie      
|--------------------- |  | -----------------------------
|                      |  |                              
|John Bovard, Director |  | Robert G. Connochie, Director

F - 4

---

|ASIA PACIFIC RESOURCES LTD                 
|-------------------------------------------
|(An exploration stage enterprise)          
|Consolidated Statements of Loss and Deficit
|(Expressed in Canadian dollars)            
|                                           

|                                         |   | Cumulative      |   |   | Ten month    |   |   |              |   |   |              |  
|---------------------------------------- | - | --------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                         |   | from inception  |   |   | period ended |   |   | Year ended   |   |   | Year ended   |  
|                                         |   | to December 31, |   |   | December 31, |   |   | February 28, |   |   | February 28, |  
|                                         |   | 2002            |   |   | 2002         |   |   | 2002         |   |   | 2001         |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|                                         |   |                 |   |   |              |   |   | (Note 2(d))  |   |   | (Note 2(d))  |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|INTEREST AND OTHER INCOME                | $ | 3,948,153       |   | $ | 167,379      |   | $ | 32,873       |   | $ | 172,825      |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|EXPENSES                                 |   |                 |   |   |              |   |   |              |   |   |              |  
|Accounting and legal                     |   | 2,052,989       |   |   | 449,274      |   |   | 370,243      |   |   | 267,824      |  
|Amortization of property and equipment   |   | 652,616         |   |   | 60,725       |   |   | 72,226       |   |   | 110,785      |  
|Amortization of deferred financing costs |   | 3,127,999       |   |   | 322,159      |   |   | 404,741      |   |   | 517,100      |  
|Consulting                               |   | 3,693,385       |   |   | 218,228      |   |   | 943,226      |   |   | 327,031      |  
|Interest and bank charges                |   | 35,417,032      |   |   | 700,166      |   |   | 8,235,045    |   |   | 12,068,490   |  
|Recovery of prior years' accrued         |   |                 |   |   |              |   |   |              |   |   |              |  
|finance costs (Note
      6 (e))         |   | (2,755,598      | ) |   | -            |   |   | (2,755,598   | ) |   | -            |  
|Office and miscellaneous                 |   | 3,261,063       |   |   | 326,318      |   |   | 311,334      |   |   | 428,658      |  
|Promotion and travel                     |   | 5,991,272       |   |   | 731,575      |   |   | 390,267      |   |   | 912,160      |  
|Rent                                     |   | 1,169,383       |   |   | 126,273      |   |   | 164,036      |   |   | 157,245      |  
|Salaries                                 |   | 10,582,804      |   |   | 1,274,483    |   |   | 1,846,596    |   |   | 1,352,615    |  
|Stock compensation expense               |   | 114,643         |   |   | 114,643      |   |   | -            |   |   | -            |  
|Transfer fees and filing costs           |   | 741,141         |   |   | 104,557      |   |   | 71,596       |   |   | 71,703       |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|                                         |   | 64,048,729      |   |   | 4,428,401    |   |   | 10,053,712   |   |   | 16,213,611   |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|LOSS BEFORE THE                          |   |                 |   |   |              |   |   |              |   |   |              |  
|UNDERNOTED ITEMS                         |   | (60,100,576     | ) |   | (4,261,022   | ) |   | (10,020,839  | ) |   | (16,040,786  | )
|FOREIGN EXCHANGE GAIN (LOSS)             |   | (5,461,069      | ) |   | 297,947      |   |   | (2,413,557   | ) |   | (2,921,913   | )
|LOSS ON SALE OF INVESTMENTS              |   | (1,806,532      | ) |   | -            |   |   | -            |   |   | -            |  
|WRITE-DOWN OF INVESTMENTS                |   | (4,380,918      | ) |   | -            |   |   | -            |   |   | -            |  
|WRITE-OFF OF INTEREST IN                 |   |                 |   |   |              |   |   |              |   |   |              |  
|MINERAL CLAIMS                           |   | (715,920        | ) |   | -            |   |   | -            |   |   | -            |  
|SHARE OF NET LOSS ON EQUITY              |   |                 |   |   |              |   |   |              |   |   |              |  
|INVESTMENT                               |   | (701,190        | ) |   | -            |   |   | -            |   |   | -            |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|LOSS BEFORE INCOME TAXES                 |   | (73,166,205     | ) |   | (3,963,075   | ) |   | (12,434,396  | ) |   | (18,962,699  | )
|INCOME TAX RECOVERY                      |   |                 |   |   |              |   |   |              |   |   |              |  
|(EXPENSE) (Note 8)                       |   |                 |   |   |              |   |   |              |   |   |              |  
|Current                                  |   | 783,379         |   |   | -            |   |   | -            |   |   | (25,804      | )
|Future                                   |   | 2,475,613       |   |   | -            |   |   | 198,184      |   |   | 523,768      |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|NET LOSS FOR THE PERIOD                  |   | (69,907,213     | ) |   | (3,963,075   | ) |   | (12,236,212  | ) |   | (18,464,735  | )
|DEFICIT, BEGINNING OF PERIOD             |   | -               |   |   | (68,118,939  | ) |   | (55,882,727  | ) |   | (38,146,374  | )
|CUMULATIVE EFFECT OF CHANGE              |   |                 |   |   |              |   |   |              |   |   |              |  
|IN ACCOUNTING POLICY (Note 2 (d))        |   | -               |   |   | -            |   |   | -            |   |   | 728,382      |  
|DIVIDEND IN KIND (Note 14)               |   | (2,174,801      | ) |   | -            |   |   | -            |   |   | -            |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|DEFICIT, END OF PERIOD                   | $ | (72,082,014     | ) | $ | (72,082,014  | ) | $ | (68,118,939  | ) | $ | (55,882,727  | )
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|LOSS PER SHARE                           |   |                 |   | $ | (0.01        | ) | $ | (0.21        | ) | $ | (0.34        | )
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  
|WEIGHTED AVERAGE NUMBER OF               |   |                 |   |   |              |   |   |              |   |   |              |  
|SHARES OUTSTANDING                       |   |                 |   |   | 401,704,206  |   |   | 58,444,181   |   |   | 54,467,705   |  
|                                         |   |                 |   |   |              |   |   |              |   |   |              |  

F - 5

---

|ASIA PACIFIC RESOURCES LTD           
|-------------------------------------
|(An exploration stage enterprise)    
|Consolidated Statements of Cash Flows
|(Expressed in Canadian dollars)      
|                                     

|                                                                                                                                                                |   | Cumulative      |   |   | Ten month    |   |   |              |   |   |              |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                                                                                                                                                |   | from inception  |   |   | period ended |   |   | Year ended   |   |   | Year ended   |  
|                                                                                                                                                                |   | to December 31, |   |   | December 31, |   |   | February 28, |   |   | February 28, |  
|                                                                                                                                                                |   | 2002            |   |   | 2002         |   |   | 2002         |   |   | 2001         |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|                                                                                                                                                                |   |                 |   |   |              |   |   | (Note 2(d))  |   |   | (Note 2(d))  |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                            |   |                 |   |   |              |   |   |              |   |   |              |  
|Net loss for the period                                                                                                                                         | $ | (69,907,213     | ) | $ | (3,963,075   | ) | $ | (12,236,212  | ) | $ | (18,464,735  | )
|Items not involving cash                                                                                                                                        |   |                 |   |   |              |   |   |              |   |   |              |  
|Accretion of liability
      component of                                                                                                                       |   |                 |   |   |              |   |   |              |   |   |              |  
|convertible
      debentures                                                                                                                                    |   | 4,985,439       |   |   | -            |   |   | 95,486       |   |   | 1,671,879    |  
|Interest payable on
      convertible debentures                                                                                                                |   | 25,670,708      |   |   | 681,579      |   |   | 5,173,856    |   |   | 10,395,176   |  
|Amortization of property
      and equipment                                                                                                                    |   | 652,616         |   |   | 60,725       |   |   | 72,226       |   |   | 110,785      |  
|Amortization of deferred
      financing costs                                                                                                                  |   | 3,127,999       |   |   | 322,159      |   |   | 404,741      |   |   | 517,100      |  
|Loss on sale of investments                                                                                                                                     |   | 1,806,532       |   |   | -            |   |   | -            |   |   | 23,084       |  
|Stock compensation
      expense                                                                                                                                |   | 114,643         |   |   | 114,643      |   |   | -            |   |   | -            |  
|Write-down of investments                                                                                                                                       |   | 4,380,918       |   |   | -            |   |   | -            |   |   | -            |  
|Write-off of interest
      in mineral claims                                                                                                                   |   | 715,920         |   |   | -            |   |   | -            |   |   | -            |  
|Share of net loss on
      equity investment                                                                                                                    |   | 701,190         |   |   | -            |   |   | -            |   |   | -            |  
|Foreign exchange (gain)
      loss and other                                                                                                                    |   | 3,019,091       |   |   | (302,279     | ) |   | 2,639,364    |   |   | 2,753,424    |  
|Future income tax recovery                                                                                                                                      |   | (2,475,613      | ) |   | -            |   |   | (198,184     | ) |   | (523,768     | )
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|                                                                                                                                                                |   | (27,207,770     | ) |   | (3,086,248   | ) |   | (4,048,723   | ) |   | (3,517,055   | )
|Change in non-cash operating working                                                                                                                            |   |                 |   |   |              |   |   |              |   |   |              |  
|capital items (Note
      9)                                                                                                                                    |   | 623,145         |   |   | (276,921     | ) |   | 1,677,284    |   |   | (120,770     | )
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|                                                                                                                                                                |   | (26,584,625     | ) |   | (3,363,169   | ) |   | (2,371,439   | ) |   | (3,637,825   | )
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                            |   |                 |   |   |              |   |   |              |   |   |              |  
|Issue of share capital                                                                                                                                          |   | 87,012,489      |   |   | 13,832,056   |   |   | 3,057,459    |   |   | -            |  
|Deferred financing costs                                                                                                                                        |   | (683,894        | ) |   | (204,396     | ) |   | (479,498     | ) |   | -            |  
|Convertible debentures, issued for cash                                                                                                                         |   | 37,064,808      |   |   | -            |   |   | -            |   |   | -            |  
|Convertible debentures issue costs                                                                                                                              |   | (2,885,028      | ) |   | -            |   |   | -            |   |   | -            |  
|Promissory note                                                                                                                                                 |   | -               |   |   | (800,000     | ) |   | 800,000      |   |   | -            |  
|Payment of withholding tax on convertible                                                                                                                       |   |                 |   |   |              |   |   |              |   |   |              |  
|debentures                                                                                                                                                      |   | (2,070,561      | ) |   | (2,070,561   | ) |   | -            |   |   | -            |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|                                                                                                                                                                |   | 118,437,814     |   |   | 10,757,099   |   |   | 3,377,961    |   |   | -            |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                                            |   |                 |   |   |              |   |   |              |   |   |              |  
|Purchase of capital assets                                                                                                                                      |   | (1,131,756      | ) |   | (117,951     | ) |   | (20,787      | ) |   | (29,554      | )
|Net proceeds on sale of assets                                                                                                                                  |   | 355,539         |   |   | -            |   |   | -            |   |   | 292,473      |  
|Investment in Metro Resources Company
      Ltd.;                                                                                                               |   |                 |   |   |              |   |   |              |   |   |              |  
|less cash acquired
      at acquisition                                                                                                                         |   | (43,939,630     | ) |   | -            |   |   | -            |   |   | -            |  
|Investment in land                                                                                                                                              |   | (6,641,915      | ) |   | (24,354      | ) |   | (22,393      | ) |   | (47,896      | )
|Investment in potash concession                                                                                                                                 |   | (25,560,086     | ) |   | (2,158,383   | ) |   | (970,556     | ) |   | (1,401,747   | )
|Deposit                                                                                                                                                         |   | (263,592        | ) |   | 792          |   |   | (264,384     | ) |   | -            |  
|Purchase of investments                                                                                                                                         |   | (12,077,910     | ) |   | -            |   |   | -            |   |   | -            |  
|Proceeds on sale of investments                                                                                                                                 |   | 3,880,897       |   |   | -            |   |   | -            |   |   | -            |  
|Mineral claims expenditures                                                                                                                                     |   | (641,420        | ) |   | -            |   |   | -            |   |   | -            |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|                                                                                                                                                                |   | (86,019,873     | ) |   | (2,299,896   | ) |   | (1,278,120   | ) |   | (1,186,724   | )
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|NET CASH INFLOW (OUTFLOW)                                                                                                                                       |   | 5,833,316       |   |   | 5,094,034    |   |   | (271,598     | ) |   | (4,824,549   | )
|CASH POSITION, BEGINNING OF PERIOD                                                                                                                              |   | -               |   |   | 739,282      |   |   | 1,010,880    |   |   | 5,835,429    |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|CASH POSITION, END OF PERIOD                                                                                                                                    | $ | 5,833,316       |   | $ | 5,833,316    |   | $ | 739,282      |   | $ | 1,010,880    |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|Cash payments for taxes                                                                                                                                         |   |                 |   | $ | -            |   | $ | -            |   | $ | 25,804       |  
|                                                                                                                                                                |   |                 |   |   |              |   |   |              |   |   |              |  
|On April 1, 2002, the Company issued 312,971,396
      common shares upon conversion of the convertible debentures and related
      interest payable (Note 6). |  

F - 6

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|1. | CONTINUING OPERATIONS
      These consolidated financial statements have been prepared
        on the basis of accounting principles applicable to a going concern, which
        assumes the realization of assets and settlement of liabilities in the
        normal course of business.
      During the ten month period ended December 31, 2002,
        the Company incurred a net loss of $3,963,075 (year ended February 28,
        2002 - $12,236,212) and at December 31, 2002 has an accumulated deficit
        of $72,082,014 (February 28, 2002 - $68,118,939). During the ten month
        period ended December 31, 2002, the Company issued 69,160,265 common shares
        and warrants in connection with a rights offering for proceeds of $13.8
        million and 312,971,396 common shares on conversion and settlement of
        the convertible debentures and related interest payable. These transactions
        resulted in a change in control of the Company and eliminated the outstanding
        long-term debt. In addition, in January 2003 the Company completed a private
        placement for net proceeds of approximately $2.1 million.
      Continuation of the Company as a going concern is dependent
        upon the successful receipt of a mining license from the Government of
        Thailand (Note 3), the Companys ability to raise additional funds
        to pay the U.S.$ 5 million fee upon receipt of the mining license and
        to complete the development of its potash concession and ultimately the
        achievement of profitable operations.
      The Company has been engaged in discussions with prospective
        partners to secure financing for development of its potash concession
        but there is no assurance that these discussions will be concluded successfully
        or the financing achieved.
      These consolidated financial statements do not give
        effect to adjustments that would be necessary to the carrying values and
        classifications of assets and liabilities should the Company be unable
        to obtain financing or the mining license to complete development of its
        potash concession or continue as a going concern.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | SIGNIFICANT ACCOUNTING POLICIES
      These financial statements have been prepared in accordance
        with Canadian generally accepted accounting principles (Canadian
        GAAP). Specific accounting policies are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F - 7

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|2. | SIGNIFICANT ACCOUNTING POLICIES (Continued)
|-- | -------------------------------------------
|   |                                            
|   | (b)                                        

| | Furniture, fixtures and computer equipment | 5 years            
| | ------------------------------------------ | -------------------
| | Exploration equipment                      | 5 years            
| | Vehicles                                   | 5 years            
| | Leasehold improvements                     | Over the lease term

|(c) | Deferred financing costs
      Deferred financing costs consist of financing expenditures
        related to the convertible debentures (Note 6). These costs were deferred
        and amortized over the original and extended term of the debentures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(d) | Foreign currency translation
      Foreign currency monetary assets and liabilities have
        been translated into Canadian dollars at the exchange rate in effect at
        the balance sheet date. Non-monetary assets, liabilities, revenues and
        expenses have been translated into Canadian dollars at the rate of exchange
        prevailing on the respective dates of the transactions.
      Effective March 1, 2002, the Company adopted the new
        standard of the Canadian Institute of Chartered Accountants (CICA)
        related to foreign currency translation. The new standard requires all
        unrealized foreign exchange gains and losses on foreign currency denominated
        monetary items to be recognized in income in the year they arise. Previously,
        the Companys unrealized foreign exchange gains and losses on long-term
        monetary items were deferred and amortized over the life of the item.
        The Company has adopted this new accounting standard retroactively and
        has restated the comparative financial statements to reflect the change
        in accounting policy. This change in accounting policy has resulted in
        a decrease of $728,382 in the Companys deficit at March 1, 2000,
        an increase of $2,032,282 in the net loss for the year ended February
        28, 2001 and a decrease of $1,303,900 in the net loss for the year ended
        February 28, 2002. The change in accounting policy had no impact on the
        Companys balance sheet as at February 28, 2002.

F - 8

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|2. | SIGNIFICANT ACCOUNTING POLICIES (Continued)
|-- | -------------------------------------------
|   |                                            
|   | (e)                                        
|   |                                            
|   | (f)                                        
|   |                                            
|   | (g)                                        

F - 9

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|2. | SIGNIFICANT ACCOUNTING POLICIES (Continued)                                                         
|-- | ----------------------------------------------------------------------------------------------------
|   |                                                                                                     
|   | (h)                                                                                                 
|   |                                                                                                     
|   | (i)                                                                                                 
|   |                                                                                                     
|3. | INVESTMENT IN POTASH CONCESSION
      The investment in potash concession consists of the following:

| |                                                   |   | December 31, |  |   | February 28, | 
| | ------------------------------------------------- | - | ------------ |  | - | ------------ | 
| |                                                   |   | 2002         |  |   | 2002         | 
| |                                                   |   |              |  |   |              | 
| | Balance, beginning of year                        | $ | 85,292,873   |  | $ | 84,322,317   | 
| | Deferred exploration and development expenditures |   | 2,158,383    |  |   | 970,556      | 
| |                                                   |   |              |  |   |              | 
| | Balance, end of year                              | $ | 87,451,256   |  | $ | 85,292,873   | 
| |                                                   |   |              |  |   |              | 

| | The Company holds a 90% beneficial interest in APPC,
        a company which holds a potash concession situated in Udon Thani in northeast
        Thailand, and the Government of Thailand has a 10% carried interest. The
        Company will recoup the Government of Thailands 10% share of exploration,
        development and capital expenditures out of the Governments share
        of dividends from the net profits of APPC, if any, once commercial production
        has commenced.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 10

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|3. | INVESTMENT IN POTASH CONCESSION (Continued)
      On June 4, 2001, the Department of Mineral Resources
        of Thailand (DMR) issued to APPC twelve special prospecting
        licenses (SPLs), pursuant to a Concession Agreement with APPC
        and the Ministry of Industry of Thailand.
      The SPLs require APPC to expend on exploration, development
        and administrative expenditures an amount of U.S.$240,000 in the first
        and second year, respectively, from the date of issuance. APPC has already
        extended the minimum required exploration, development and administrative
        work relating to the first and second year as at December 31, 2002.
      The SPLs required APPC to provide a letter of guarantee
        to the DMR. APPC deposited $263,592 (Baht 7,200,000) with a financial
        institution to secure the required letter of guarantee. The deposit bears
        interest at a variable rate (currently 2.5% per annum) and the letter
        of guarantee for the SPLs will no longer be required when the SPLs expire
        or are converted into a mining license.
      APPC is required to apply for a mining license from
        the Government of Thailand by June 4, 2003 and ultimately receive approval
        before it can construct mining facilities, commence commercial production
        and sell potash and other mineral by-products. APPC has formally notified
        the Government of Thailand of its intention to apply for this license
        by the deadline. A fee of U.S.$5,000,000 is payable upon receipt of the
        mining license.
      The recoverability of the carrying value of the Companys
        interest in the potash concession is dependent on the ability of APPC
        to (i) obtain the necessary financing to fund APPCs continued exploration
        and development activities and construction of mine facilities, (ii) secure
        the required licenses and approvals, and (iii) ultimately, the ability
        of APPC to attain profitable operations.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4. | INVESTMENT IN LAND
      The investment in land consists of surface rights located
        in the province of Udon Thani, in northeast Thailand and above a portion
        of the Udon South deposit. The surface rights consist of approximately
        2.0 square kilometres and would be used for the facilities for the proposed
        Udon South mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

F - 11

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|5. | PROPERTY AND EQUIPMENT
|-- | ----------------------

| |                        |   |         |  |   | December 31, |  |   |          |  |   | February 28, | 
| | ---------------------- | - | ------- |  | - | ------------ |  | - | -------- |  | - | ------------ | 
| |                        |   |         |  |   | 2002         |  |   |          |  |   | 2002         | 
| |                        |   |         |  |   |              |  |   |          |  |   |              | 
| |                        |   |         |  |   | Accumulated  |  |   | Net Book |  |   | Net Book     | 
| |                        |   | Cost    |  |   | Depreciation |  |   | Value    |  |   | Value        | 
| |                        |   |         |  |   |              |  |   |          |  |   |              | 
| |                        |   |         |  |   |              |  |   |          |  |   |              | 
| | Furniture and fixtures | $ | 384,299 |  | $ | 287,182      |  | $ | 97,117   |  | $ | 53,844       | 
| | Exploration equipment  |   | 11,598  |  |   | 11,598       |  |   | -        |  |   | 718          | 
| | Vehicles               |   | 63,743  |  |   | 63,452       |  |   | 291      |  |   | 4,832        | 
| | Leasehold improvements |   | 121,918 |  |   | 104,948      |  |   | 16,970   |  |   | 36,730       | 
| | Computer equipment     |   | 247,744 |  |   | 151,557      |  |   | 96,187   |  |   | 57,215       | 
| |                        |   |         |  |   |              |  |   |          |  |   |              | 
| |                        | $ | 829,302 |  | $ | 618,737      |  | $ | 210,565  |  | $ | 153,339      | 
| |                        |   |         |  |   |              |  |   |          |  |   |              | 

|6. | CONVERTIBLE DEBENTURES
      On April 1, 2002, pursuant to an agreement between the
        debenture holders and the Company, convertible debentures and related
        interest payable with an aggregate book value of $62,594,276 were converted
        into common shares of the Company at a conversion price of $0.20 per common
        share resulting in the issuance of 312,971,396 common shares of the Company.
      Details of the original terms of the debentures and subsequent amendments
        are as follows:
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

F - 12

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|6. | CONVERTIBLE DEBENTURES
|-- | ----------------------
|   |                       
|   | (a)                   

| |                                    |   | December 31, |  |   | February 28, |  |   |            | 
| | ---------------------------------- | - | ------------ |  | - | ------------ |  | - | ---------- | 
| |                                    |   | 2002         |  |   | 2002         |  |   | Issue Date | 
| |                                    |   |              |  |   |              |  |   |            | 
| | Debt component                     | $ | -            |  | $ | 39,184,920   |  | $ | 29,162,300 | 
| | Equity component (net of financing |   |              |  |   |              |  |   |            | 
| | costs of $ 441,156)                |   | -            |  |   | 4,985,439    |  |   | 4,985,439  | 

| |     | Over the term of the debt obligation, the debt component
        was being accreted to the face value of the instrument by the recording
        of additional interest expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (b) | On July 19, 2000, the Company and the debenture holders
        agreed to an extension to the maturity date of the convertible debentures
        to October 31, 2001.
      The interest rate remained at 10% per year, compounded
        annually and was payable at the maturity date. The existing premium of
        U.S.$88 per U.S.$1,000 principal was now payable at the new maturity date.
        In addition, the Company was to pay the debenture holders an additional
        premium of U.S.$75.74 per U.S.$1,000 principal at the new maturity date.
      The principal amounts of the debentures were now convertible
        into common shares of the Company at the option of the holder at a conversion
        price calculated according to a formula. The Company also agreed to pay
        any withholding tax applicable on payments of premium and interest made
        to the debenture holders. On conversion, the premium and interest were
        to be waived.

F - 13

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|6. | CONVERTIBLE DEBENTURES (Continued)
|-- | ----------------------------------
|   |                                   
|   | (c)                               
|   |                                   
|   | (i)                               
|   |                                   
|   | (ii)                              

F - 14

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|6. | CONVERTIBLE DEBENTURES (Continued)                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                 
|   | (c)                                                                                                                                             
|   |                                                                                                                                                 
|   | (iii)                                                                                                                                           
|   |                                                                                                                                                 
|   | In addition, Crew and its
        associates and subsidiaries and a former director of Crew and his associates
        and affiliates agreed to:
|   |                                                                                                                                                 
|   | (i)                                                                                                                                             
|   |                                                                                                                                                 
|   | (ii)                                                                                                                                            
|   |                                                                                                                                                 
|   | (iii)                                                                                                                                           
|   |                                                                                                                                                 
|   | (d)                                                                                                                                             
|   |                                                                                                                                                 
|   | (e)                                                                                                                                             

F - 15

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|7. | SHARE CAPITAL
|-- | -------------
|   |              
|   | (a)          
|   |              
|   | (b)          

| | Issued for cash on public offering          | 350,000    |  | 157,500    | 
| | ------------------------------------------- | ---------- |  | ---------- | 
| | Issued for property                         | 50,000     |  | 74,500     | 
| | Issued pursuant to flow through agreements  | 279,999    |  | 254,301    | 
| |                                             |            |  |            | 
| | Balance at February 29, 1988                | 2,169,999  |  | 713,801    | 
| | Issued for cash on private placement        | 7,277,777  |  | 3,525,000  | 
| | Issued for cash on exercise of warrants     | 5,500,000  |  | 2,200,000  | 
| | Issued pursuant to flow through agreements  | 1          |  | -          | 
| |                                             |            |  |            | 
| | Balance at February 28, 1989                | 14,947,777 |  | 6,438,801  | 
| | Issued for cash on private placement        | 5,000,000  |  | 1,500,000  | 
| |                                             |            |  |            | 
| | Balance at February 28, 1990                | 19,947,777 |  | 7,938,801  | 
| | Issued for cash on private placement        | 3,400,000  |  | 510,000    | 
| |                                             |            |  |            | 
| | Balance at February 28, 1991 and 1992       | 23,347,777 |  | 8,448,801  | 
| | Issued for cash on private placement        | 1,000,000  |  | 350,000    | 
| | Issued for cash on exercise of options      | 430,000    |  | 86,000     | 
| | Issued for cash on exercise of warrants     | 3,400,000  |  | 595,000    | 
| |                                             |            |  |            | 
| | Balance at February 28, 1993                | 28,177,777 |  | 9,479,801  | 
| | Issued for cash on private placement        | 4,750,000  |  | 6,600,000  | 
| | Issued as finder's fee on private placement | 50,000     |  | 25,000     | 
| |                                             |            |  |            | 
| | Balance at February 28, 1994                | 32,977,777 |  | 16,104,801 | 
| | Issued for cash on exercise of warrants     | 875,000    |  | 1,575,000  | 
| |                                             |            |  |            | 

(continued on next page)

F - 16

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|7. | SHARE CAPITAL (Continued)
|-- | -------------------------
|   |                          
|   | (b)                      

| | Balance at February 28, 1995                             | 33,852,777  |  |   | 17,679,801  | 
| | -------------------------------------------------------- | ----------- |  | - | ----------- | 
| | Issued for cash on exercise of stock options             | 2,234,200   |  |   | 1,030,045   | 
| | Issued for cash on private placement                     | 6,000,000   |  |   | 14,742,000  | 
| | Issued for cash on exercise of warrants                  | 3,235,000   |  |   | 9,016,500   | 
| |                                                          |             |  |   |             | 
| | Balance at February 29, 1996                             | 45,321,977  |  |   | 42,468,346  | 
| | Issued for cash on exercise of stock options             | 1,267,300   |  |   | 3,627,430   | 
| | Issued for cash on exercise of warrants                  | 1,640,000   |  |   | 6,396,000   | 
| |                                                          |             |  |   |             | 
| | Balance at February 28, 1997                             | 48,229,277  |  |   | 52,491,776  | 
| | Issued for cash on exercise of stock
      options       | 57,000      |  |   | 259,350     | 
| |                                                          |             |  |   |             | 
| | Balance at February 28, 1998                             | 48,286,277  |  |   | 52,751,126  | 
| | Issued for cash on exercise of stock
      options       | 103,000     |  |   | 272,450     | 
| | Issued on private placement                              | 3,000,000   |  |   | 11,175,695  | 
| | Issued in exchange for Metro shares                      | 615,428     |  |   | 1,957,061   | 
| |                                                          |             |  |   |             | 
| | Balance at February 28, 1999                             | 52,004,705  |  |   | 66,156,332  | 
| | Issued for cash on private placement                     | 2,400,000   |  |   | 5,896,153   | 
| | Issued for cash on exercise of stock options             | 63,000      |  |   | 127,050     | 
| |                                                          |             |  |   |             | 
| | Balance at February 29, 2000 and February
      28, 2001 | 54,467,705  |  |   | 72,179,535  | 
| | Issued for cash on private placement (iii)               | 5,625,636   |  |   | 3,057,459   | 
| |                                                          |             |  |   |             | 
| | Balance at February 28, 2002                             | 60,093,341  |  |   | 75,236,994  | 
| | Issued on conversion of convertible                      |             |  |   |             | 
| | debentures (Note 6)                                      | 312,971,396 |  |   | 67,579,715  | 
| | Issued for cash on rights offering (i)                   | 69,160,265  |  |   | 13,832,056  | 
| | Grant of unvested shares (ii)                            | -           |  |   | 78,500      | 
| |                                                          |             |  |   |             | 
| | Balance at December 31, 2002                             | 442,225,002 |  | $ | 156,727,265 | 
| |                                                          |             |  |   |             | 

| | (i) | During the ten months ended December 31, 2002 the Company
      issued 69,160,265 common shares and warrants pursuant to a rights offering
      for aggregate cash consideration, after issue costs, of $13,832,056. Each
      warrant enables the holder to purchase one additional common share from
      the Company for $0.40 until April 1, 2003.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 17

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|7. | SHARE CAPITAL (Continued)
|-- | -------------------------
|   |                          
|   | (b)                      
|   |                          
|   |                          
|   |                          
|   |                          
|   |                          
|   | (c)                      

F - 18

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|7. | SHARE CAPITAL (Continued)
|-- | -------------------------
|   |                          
|   | (c)                      

| |                            | Options Outstanding |           
| | -------------------------- | ------------------- | ----------
| |                            |                     |           
| |                            |                     | Number of 
| |                            |                     | Common    
| |                            |                     | Shares    
| |                            |                     |           
| |                            |                     |           
| | Balance, February 28, 1999 |                     | 7,040,000 
| | Granted                    |                     | 1,080,000 
| | Cancelled                  |                     | (680,000  
| | Exercised                  |                     | (63,000   
| |                            |                     |           
| | Balance, February 29, 2000 |                     | 7,377,000 
| | Cancelled                  |                     | (162,000  
| |                            |                     |           
| | Balance, February 28, 2001 |                     | 7,215,000 
| | Cancelled                  |                     | (3,782,000
| |                            |                     |           
| | Balance, February 28, 2002 |                     | 3,433,000 
| | Granted                    |                     | 23,124,500
| | Cancelled                  |                     | (3,046,000
| |                            |                     |           
| | Balance, December 31, 2002 |                     | 23,511,500
| |                            |                     |           

| | The following table summarizes information concerning outstanding and
      exercisable options at December 31, 2002:
| | ---------------------------------------------------------------------------------------------------------------------

| | Number      |  | Number      |  |   | Exercise  |  |                  
| | ----------- |  | ----------- |  | - | --------- |  | -----------------
| | of Options  |  | of Options  |  |   | Price     |  |                  
| | Outstanding |  | Exercisable |  |   | per Share |  | Expiry Date      
| |             |  |             |  |   |           |  |                  
| |             |  |             |  |   |           |  |                  
| | 187,000     |  | 187,000     |  | $ | 2.98      |  | June 22, 2003    
| | 100,000     |  | 100,000     |  |   | 4.00      |  | September 2, 2003
| | 80,000      |  | 80,000      |  |   | 3.35      |  | May 7, 2004      
| | 20,000      |  | 20,000      |  |   | 4.00      |  | May 7, 2004      
| | 19,424,000  |  | -           |  |   | 0.09      |  | September 9, 2007
| | 3,700,000   |  | -           |  |   | 0.07      |  | November 24, 2007
| |             |  |             |  |   |           |  |                  
| | 23,511,000  |  | 387,000     |  | $ | 0.14      |  |                  
| |             |  |             |  |   |           |  |                  

F - 19

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|7. | SHARE CAPITAL (Continued)
|-- | -------------------------
|   |                          
|   | (c)                      
|   |                          
|   | (d)                      

| | Balance at February 28, 2002                              | $ | -       |  
| | --------------------------------------------------------- | - | ------- | -
| | Less unamortized value of unvested shares (Note 7(b)(ii)) |   | (19,357 | )
| | Stock compensation expense (Note 7 (c))                   |   | 55,500  |  
| |                                                           |   |         |  
| | Balance at December 31, 2002                              | $ | 36,143  |  
| |                                                           |   |         |  

|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Shareholder Rights Plan
      On July 17, 1996, the Company adopted a shareholder
        rights plan (the Plan). Generally, if any person or group
        makes a take-over bid other than a bid permitted under the Plan (a Permitted
        Bid) or acquires 20% or more of the Companys outstanding common
        shares without complying with the Plan, the Plan will entitle the holders
        of share purchase rights to purchase common shares of the Company at 50%
        of the prevailing market price. A take-over bid for the Company can avoid
        the dilutive effects of the share purchase rights and therefore become
        a Permitted Bid if it complies with certain specified provisions in the
        Plan. The Plan is required to be reconfirmed every three years. The plan
        was re-approved at the Annual General Meeting of the Company held on June
        28, 2002.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|8. | INCOME TAXES
      The Companys actual income tax recovery differs
        from the income tax recovery which would result from applying the statutory
        tax rate to loss before income taxes primarily as a result of not recording
        the potential tax recovery of operating losses and other non-taxable items
        and the statutory rate differences between Canada and foreign jurisdictions.
        The future income tax recovery in the years ended February 28, 2002 and
        2001 arises as a result of the tax recovery relating to the accretion
        of the liability component of the convertible debentures.

F - 20

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|8. | INCOME TAXES (Continued)
      The approximate tax effect of each type of temporary
        difference at February 28, 2002 that gives rise to the Companys
        future income tax assets and liabilities are as follows:
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                |   | December 31, |   |   | February 28, |  
| | ------------------------------ | - | ------------ | - | - | ------------ | -
| |                                |   | 2002         |   |   | 2002         |  
| |                                |   |              |   |   |              |  
| | Future tax assets              |   |              |   |   |              |  
| | Non-capital loss carryforwards | $ | 2,095,082    |   | $ | 19,801,410   |  
| | Deferred financing
      costs |   | 196,356      |   |   | 504,502      |  
| | Other                          |   | 15,886       |   |   | 62,911       |  
| |                                |   |              |   |   |              |  
| |                                |   | 2,307,324    |   |   | 20,368,823   |  
| | Less valuation allowance       |   | (2,307,324   | ) |   | (20,368,823  | )
| |                                |   |              |   |   |              |  
| | Net future tax assets          | $ | -            |   | $ | -            |  
| |                                |   |              |   |   |              |  

| |                        |   | December 31, |  |   | February 28, | 
| | ---------------------- | - | ------------ |  | - | ------------ | 
| |                        |   | 2002         |  |   | 2002         | 
| |                        |   |              |  |   |              | 
| | Future tax liabilities |   |              |  |   |              | 
| | Potash concession      | $ | 16,348,459   |  | $ | 16,348,459   | 
| |                        |   |              |  |   |              | 

| | The Company has estimated non-capital loss carry-forwards
        in Canada of approximately $2.2 million which can be applied to reduce
        future Canadian income taxes payable and will expire in 2004 through 2009.
        In addition, the Company has estimated tax loss carry-forwards in Thailand
        of approximately $4.3 million which can be applied to reduce future Thai
        taxable income and will expire in 2004 through 2008. The potential future
        tax benefit of all of these loss carry-forwards has not been recognized
        in these financial statements.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 21

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|9. | CHANGE IN NON-CASH OPERATING WORKING CAPITAL ITEMS
|-- | --------------------------------------------------

| |                                     |   | Cumulative     |   |   |              |   |   |              |  |   |              |  
| | ----------------------------------- | - | -------------- | - | - | ------------ | - | - | ------------ |  | - | ------------ | -
| |                                     |   | from inception |   |   | Ten month    |   |   |              |  |   |              |  
| |                                     |   | to             |   |   | period ended |   |   | Year ended   |  |   | Year ended   |  
| |                                     |   | December 31,   |   |   | December 31, |   |   | February 28, |  |   | February 28, |  
| |                                     |   | 2002           |   |   | 2002         |   |   | 2002         |  |   | 2001         |  
| |                                     |   |                |   |   |              |   |   |              |  |   |              |  
| |                                     |   |                |   |   |              |   |   |              |  |   |              |  
| | Decrease (increase) in:             |   |                |   |   |              |   |   |              |  |   |              |  
| | Accounts receivable                 | $ | (93,812        | ) | $ | (22,063      | ) | $ | 498,679      |  | $ | 48,837       |  
| | Prepaid expenses                    |   | (123,302       | ) |   | (54,162      | ) |   | 3,098        |  |   | (23,112      | )
| | Income taxes receivable             |   | -              |   |   | -            |   |   | 23,214       |  |   | (11,152      | )
| | Due from affiliated
      companies |   | -              |   |   | -            |   |   | 291,798      |  |   | (21,291      | )
| | Other current assets                |   | (49,094        | ) |   | (24,848      | ) |   | 38,210       |  |   | (16,211      | )
| | Increase (decrease) in:             |   |                |   |   |              |   |   |              |  |   |              |  
| | Accounts payable and                |   |                |   |   |              |   |   |              |  |   |              |  
| | accrued
      liabilities           |   | 889,353        |   |   | (175,848     | ) |   | 822,285      |  |   | (97,841      | )
| |                                     |   |                |   |   |              |   |   |              |  |   |              |  
| |                                     | $ | 623,145        |   | $ | (276,921     | ) | $ | 1,677,284    |  | $ | (120,770     | )
| |                                     |   |                |   |   |              |   |   |              |  |   |              |  

|10. | RELATED PARTY TRANSACTIONS
      On March 23, 2001, the existing President and Chief
        Executive Officer resigned from the Company and agreed to a termination
        settlement which will result in total severance payments of approximately
        $900,000 payable on a monthly basis between April 2001 and May 2003. During
        the ten month period ended December 31, 2002, the Company paid $272,195
        (year ended February 28, 2002 - $430,050) related to this severance liability.
        The remaining balance of $157,855 is included in accounts payable and
        accrued liabilities at December 31, 2002.
      Related party transactions not disclosed elsewhere in
        these financial statements include consulting and management fees of $153,179
        (year ended February 28, 2002 - $462,093; 2001 - $958,312) paid to companies
        controlled by or affiliated to directors.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|11. | COMMITMENTS
      The Company has the following future minimum payments
        in respect of lease commitments for office space:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| | 2003 | $ | 131,055 | 
| | ---- | - | ------- | 
| | 2004 |   | 56,608  | 

F - 22

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|12. | CONTINGENCIES
      During 1993, the Company acquired from Crew Capital
        Corporation, a private company related by certain former directors in
        common, a right to earn a 75% interest in APPC for $69,510, representing
        a reimbursement of development costs incurred to date, and a royalty payment
        equal to 1.5% of 75% of the total potash sales mined from the potash concession
        and based on the FOB mine price. Effective December 1, 1994, the Company
        acquired control of APPC as it incurred expenditures in satisfaction of
        the requirements for earning the 75% interest. Accordingly, at such time
        as commercial production commences, this royalty will be payable by the
        Company.
      The Company is also party to certain other actions incurred
        in the normal course of business, none of which management expects to
        have a material impact on the results of operations or financial position.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|13. | SEGMENTED INFORMATION
      The Company considers its business to consist of one
        operating segment, and the majority of its operations and capital assets
        are located in Thailand. Capital assets consist of investment in potash
        concession, investment in land and property and equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|14. | DIVIDEND IN KIND
      During the year ended February 28, 1994, the Company
        paid a dividend in kind to each shareholder of the Company representing
        one share of Canadian Crew Energy Corporation, now known as Crew Development
        Corp. (Crew) at a book value of $0.705 per share for each
        fifteen shares of the Company held on June 15, 1993. A total of 1,856,944
        shares were distributed. This transaction gave rise to a taxable gain
        based on the market value of Crew shares of $3,353,187 and resulted in
        a tax liability of $866,428 after taking into account all of the Companys
        remaining tax loss carry-forwards at that date. The dividend is shown
        inclusive of the tax liability.                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|15. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F - 23

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|15. | FINANCIAL INSTRUMENTS (Continued)                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                     
|    | (b)                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                     
|16. | SUBSEQUENT EVENT
      In January 2003, the Company completed a private placement
        of 21,751,896 common shares at a subscription price of $0.10 per share
        for net proceeds after expenses of the issue of approximately $2.1 million.

F - 24

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|17. | RECONCILIATION BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
      These consolidated financial statements have been prepared
        in accordance with generally accepted accounting principles (GAAP)
        in Canada which, in the case of the Company, differ in some respects from
        US GAAP. The differences between Canadian and US GAAP and their effect
        on the Companys consolidated financial statements are summarized
        below:
      Consolidated Balance Sheets
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                                |     |   | December 31, |   |   | February 28, |  
| | -------------------------------------------------------------- | --- | - | ------------ | - | - | ------------ | -
| |                                                                |     |   | 2002         |   |   | 2002         |  
| |                                                                |     |   |              |   |   |              |  
| |                                                                |     |   |              |   |   |              |  
| | Total assets under Canadian GAAP                               |     | $ | 101,919,206  |   | $ | 94,602,691   |  
| | Increase in investment in potash concession due to inclusion   |     |   |              |   |   |              |  
| | of valuation of options
      in purchase price of Metro       | (a) |   | 5,091,429    |   |   | 5,091,429    |  
| | Decrease in investment in potash concession                    |     |   |              |   |   |              |  
| | due to expensing of
      exploration costs                    | (b) |   | (25,560,080  | ) |   | (23,401,697  | )
| | Decrease in value of land and non-monetary assets              |     |   |              |   |   |              |  
| | due to use of current
      rate translation method            | (c) |   | (2,246,044   | ) |   | (2,273,944   | )
| |                                                                |     |   |              |   |   |              |  
| | Total assets under US GAAP                                     |     | $ | 79,204,511   |   | $ | 74,018,479   |  
| |                                                                |     |   |              |   |   |              |  
| |                                                                |     |   |              |   |   |              |  
| | Total liabilities under Canadian GAAP                          |     | $ | 17,237,812   |   | $ | 82,499,197   |  
| | Additional future income taxes recognized
      on acquisition |     |   |              |   |   |              |  
| | of Metro                                                       | (a) |   | 1,527,429    |   |   | 1,527,429    |  
| |                                                                |     |   |              |   |   |              |  
| | Total liabilities under US GAAP                                |     | $ | 18,765,241   |   | $ | 84,026,626   |  
| |                                                                |     |   |              |   |   |              |  
| |                                                                |     |   |              |   |   |              |  
| | Shareholder's equity under Canadian GAAP                       |     | $ | 84,681,394   |   | $ | 12,103,494   |  
| | Net increase in investment in potash concession                |     |   |              |   |   |              |  
| | arising on Metro acquisition                                   | (a) |   | 3,564,000    |   |   | 3,564,000    |  
| | Cumulative deferred exploration adjustment                     | (b) |   | (25,560,080  | ) |   | (23,401,697  | )
| | Cumulative translation adjustment                              | (c) |   | (2,246,044   | ) |   | (2,273,944   | )
| |                                                                |     |   |              |   |   |              |  
| | Shareholders' (deficit) equity under US GAAP                   |     | $ | 60,439,270   |   | $ | (10,008,147  | )
| |                                                                |     |   |              |   |   |              |  

F - 25

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|17. | RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
        ACCOUNTING PRINCIPLES (Continued)
      Consolidated Statements of Loss
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------

| |                                 |     |   | Cumulative        |   |   | Ten month    |   |   |              |   |   |              |  
| | ------------------------------- | --- | - | ----------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                 |     |   | from inception to |   |   | period ended |   |   | Year ended   |   |   | Year ended   |  
| |                                 |     |   | December 31,      |   |   | December 31, |   |   | February 28, |   |   | February 28, |  
| |                                 |     |   | 2002              |   |   | 2002         |   |   | 2002         |   |   | 2001         |  
| |                                 |     |   |                   |   |   |              |   |   |              |   |   |              |  
| |                                 |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Net loss under Canadian GAAP    |     | $ | (69,907,213       | ) | $ | (3,963,075   | ) | $ | (12,236,212  | ) | $ | (18,464,735  | )
| | Investment in potash concession |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | exploration                     |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | expenditures expensed           | (b) |   | (25,560,080       | ) |   | (2,158,383   | ) |   | (970,556     | ) |   | (1,401,741   | )
| | Accretion of interest on        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | convertible debentures          | (d) |   | 5,426,595         |   |   | -            |   |   | 95,486       |   |   | 1,148,111    |  
| | Amortization of deferred        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | financing costs                 | (d) |   | (441,156          | ) |   | -            |   |   | (9,191       | ) |   | (91,907      | )
| | Adjustment to income tax        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | expense                         | (e) |   | (866,428          | ) |   | -            |   |   | -            |   |   | -            |  
| | Consulting expense - warrants   | (f) |   | (1,071,937        | ) |   | -            |   |   | -            |   |   | -            |  
| | Consulting expense - options    | (f) |   | (356,988          | ) |   | -            |   |   | -            |   |   | -            |  
| |                                 |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Net loss under U.S. GAAP        |     |   | (92,777,207       | ) |   | (6,121,458   | ) |   | (13,120,473  | ) |   | (18,810,272  | )
| | Less unrealized translation     |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | (loss) gain on subsidiary       | (c) |   | (2,246,044        | ) |   | 27,900       |   |   | (1,652,356   | ) |   | (621,588     | )
| |                                 |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Net comprehensive loss          |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | under U.S. GAAP                 | (g) | $ | (95,023,251       | ) | $ | (6,093,558   | ) | $ | (14,772,829  | ) | $ | (19,431,860  | )
| |                                 |     |   |                   |   |   |              |   |   |              |   |   |              |  
| |                                 |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Loss per share under U.S. GAAP  |     |   |                   |   | $ | (0.02        | ) | $ | (0.22        | ) | $ | (0.34        | )
| |                                 |     |   |                   |   |   |              |   |   |              |   |   |              |  

F - 26

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|17. | RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
        ACCOUNTING PRINCIPLES (Continued)
      Consolidated Statements of Cash Flows
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                  |     |   | Cumulative        |   |   | Ten month    |   |   |              |   |   |              |  
| | -------------------------------- | --- | - | ----------------- | - | - | ------------ | - | - | ------------ | - | - | ------------ | -
| |                                  |     |   | from inception to |   |   | period ended |   |   | Year ended   |   |   | Year ended   |  
| |                                  |     |   | December 31,      |   |   | December 31, |   |   | February 28, |   |   | February 28, |  
| |                                  |     |   | 2002              |   |   | 2002         |   |   | 2002         |   |   | 2001         |  
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Cash flows from operating        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | activities under Canadian GAAP   |     | $ | (26,584,625       | ) | $ | (3,363,169   | ) | $ | (2,371,439   | ) | $ | (3,637,825   | )
| | Exploration expenditures         | (b) |   | (25,560,080       | ) |   | (2,158,383   | ) |   | (970,556     | ) |   | (1,401,741   | )
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Cash flows from operating        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | activities under U.S.
      GAAP |     | $ | (52,144,705       | ) | $ | (5,521,552   | ) | $ | (3,341,995   | ) | $ | (5,039,566   | )
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Cash flows from financing        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | activities under Canadian        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | and U.S. GAAP                    |     | $ | 118,437,814       |   | $ | 10,757,099   |   | $ | 3,377,961    |   | $ | -            |  
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Cash flows from investing        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | activities under Canadian GAAP   |     | $ | (86,019,873       | ) | $ | (2,299,896   | ) | $ | (1,278,120   | ) | $ | (1,186,724   | )
| | Exploration expenditures         | (b) |   | 25,560,080        |   |   | 2,158,383    |   |   | 970,556      |   |   | 1,401,741    |  
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | Cash flows from investing        |     |   |                   |   |   |              |   |   |              |   |   |              |  
| | activities under U.S.
      GAAP |     | $ | (60,459,793       | ) | $ | (141,513     | ) | $ | (307,564     | ) | $ | 215,017      |  
| |                                  |     |   |                   |   |   |              |   |   |              |   |   |              |  

F - 27

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|17. | RECONCILIATION BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
|--- | ------------------------------------------------------------------------------------------------------------
|    |                                                                                                             
|    | (a)                                                                                                         

| | Options of Metro assumed                                                |   | 5,000,000 | 
| | ----------------------------------------------------------------------- | - | --------- | 
| |                                                                         |   |           | 
| |                                                                         |   |           | 
| | Fair value of Asia Pacific options                                      | $ | 1.62      | 
| | Exchange ratio                                                          |   | 0.44      | 
| |                                                                         |   |           | 
| | Fair value of equivalent Asia Pacific options                           | $ | 0.71      | 
| |                                                                         |   |           | 
| |                                                                         |   |           | 
| | Fair value of options to be included in the purchase price              | $ | 3,564,000 | 
| |                                                                         |   |           | 
| |                                                                         |   |           | 
| | Additional future income tax liabilities related to increased           |   |           | 
| | purchase price                                                          | $ | 1,527,429 | 
| |                                                                         |   |           | 
| |                                                                         |   |           | 
| | Total increase in potash concession due to inclusion of
      valuation |   |           | 
| | of options in purchase price                                            | $ | 5,091,429 | 
| |                                                                         |   |           | 

| |     | The fair value of the options was estimated using the Black-Scholes
        option pricing model assuming no dividends are to be paid, vesting occurring
        on the date of the grant, a weighted average volatility of the Companys
        share price of 57% and an annual risk free rate of 5.3%.
      Under Canadian GAAP, the options issued by the Company are not included
        in the purchase price.                                                                                                                           
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (b) | Deferred exploration costs
      US GAAP prefers exploration costs related to mineral
        properties to be expensed until there is substantial evidence that a commercial
        body of ore has been located and project financing has been secured, whereas
        Canadian GAAP allows exploration costs related to mineral properties to
        be deferred during the exploration stage until such time as it is evident
        that the deferred cost exceeds the estimated recoverable amount or the
        property is abandoned.

F - 28


---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|17. | RECONCILIATION BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
|--- | ------------------------------------------------------------------------------------------------------------
|    |                                                                                                             
|    | (c)                                                                                                         
|    |                                                                                                             
|    | (d)                                                                                                         
|    |                                                                                                             
|    | (e)                                                                                                         

F - 29

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|17. | RECONCILIATION BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
|--- | ------------------------------------------------------------------------------------------------------------
|    |                                                                                                             
|    | (f)                                                                                                         
|    |                                                                                                             
|    | (g)                                                                                                         

F - 30

---

|ASIA PACIFIC RESOURCES LTD.                                                              
|-----------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                        
|Notes to the Consolidated Financial Statements                                           
|Ten month period ended December 31, 2002 and years ended February 28,
      2002 and 2001
|(Expressed in Canadian dollars)                                                          
|                                                                                         

|17. | RECONCILIATION BETWEEN CANADIAN AND UNITED
      STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued)
|--- | ------------------------------------------------------------------------------------------------------------
|    |                                                                                                             
|    | (h)                                                                                                         

F - 31

---





ASIA PACIFIC RESOURCES LTD.

FIRST QUARTER REPORT

FOR THE PERIOD ENDED MARCH 31, 2003

(Unaudited) 
  Prepared by Management





F - 32

---

|ASIA PACIFIC RESOURCES LTD.         
|------------------------------------
|Interim Consolidated Balance Sheets 
|March 31, 2003 and December 31, 2002
|(expressed in Canadian dollars)     
|                                    

|                                         |   | March 31    |   |   | December 31 |  
|---------------------------------------- | - | ----------- | - | - | ----------- | -
|                                         |   | 2003        |   |   | 2002        |  
|                                         |   |             |   |   |             |  
|                                         |   | (Unaudited) |   |   |             |  
|ASSETS                                   |   |             |   |   |             |  
|CURRENT                                  |   |             |   |   |             |  
|                                         |   |             |   |   |             |  
|Cash                                     | $ | 5,252,434   |   | $ | 5,833,316   |  
|Accounts receivable                      |   | 106,584     |   |   | 93,812      |  
|Prepaid expenses                         |   | 81,376      |   |   | 123,302     |  
|Other current assets                     |   | 46,159      |   |   | 49,094      |  
|                                         |   |             |   |   |             |  
|TOTAL CURRENT ASSETS                     |   | 5,486,553   |   |   | 6,099,524   |  
|                                         |   |             |   |   |             |  
|INVESTMENT IN POTASH CONCESSION          |   | 88,684,450  |   |   | 87,451,256  |  
|DEPOSIT                                  |   | 269,655     |   |   | 263,592     |  
|INVESTMENT IN LAND                       |   | 7,894,269   |   |   | 7,894,269   |  
|PROPERTY AND EQUIPMENT                   |   | 163,878     |   |   | 210,565     |  
|                                         |   |             |   |   |             |  
|                                         |   |             |   |   |             |  
|                                         | $ | 102,498,805 |   | $ | 101,919,206 |  
|                                         |   |             |   |   |             |  
|                                         |   |             |   |   |             |  
|LIABILITIES                              |   |             |   |   |             |  
|CURRENT                                  |   |             |   |   |             |  
|Accounts payable and accrued liabilities | $ | 741,545     |   | $ | 889,353     |  
|                                         |   |             |   |   |             |  
|TOTAL CURRENT LIABILITIES                |   |             |   |   | 889,353     |  
|                                         |   |             |   |   |             |  
|FUTURE INCOME TAXES                      |   | 16,348,459  |   |   | 16,348,459  |  
|                                         |   |             |   |   |             |  
|                                         |   | 17,090,004  |   |   | 17,237,812  |  
|                                         |   |             |   |   |             |  
|SHAREHOLDERS' EQUITY                     |   |             |   |   |             |  
|Share Capital (Note 2 and 5)             |   | 158,902,455 |   |   | 156,727,265 |  
|Contributed surplus                      |   | -           |   |   | 36,143      |  
|                                         |   |             |   |   |             |  
|Deficit                                  |   | (73,493,654 | ) |   | (72,082,014 | )
|                                         |   |             |   |   |             |  
|                                         |   | 85,408,801  |   |   | 84,681,394  |  
|                                         |   |             |   |   |             |  
|                                         |   |             |   |   |             |  
|                                         | $ | 102,498,805 |   | $ | 101,919,206 |  
|                                         |   |             |   |   |             |  
|CONTINUING OPERATIONS (Note 1)           |   |             |   |   |             |  

APPROVED BY THE BOARD

|/s/ John Bovard       | /s/ Robert G. Connochie      
|--------------------- | -----------------------------
|                      |                              
|John Bovard, Director | Robert G. Connochie, Director

F - 33

---

|ASIA PACIFIC RESOURCES LTD                                     
|---------------------------------------------------------------
|Interim Consolidated Statements of Loss and Deficit            
|For the three months ended March 31, 2003 and February 28, 2002
|(expressed in Canadian dollars)                                
|                                                               

|                                                     |   | Three months ended |  
|---------------------------------------------------- | - | ------------------ | -
|                                                     |   | March 31,          |  
|                                                     |   | 2003               |  
|                                                     |   |                    |  
|                                                     |   | (Unaudited)        |  
|                                                     |   |                    |  
|INTEREST AND OTHER INCOME                            | $ | 41,336             |  
|                                                     |   |                    |  
|                                                     |   |                    |  
|                                                     |   |                    |  
|EXPENSES                                             |   |                    |  
|Accounting and legal                                 |   | 140,855            |  
|Amortization of property and equipment               |   | 9,156              |  
|Amortization of deferred financing costs             |   | -                  |  
|Consulting                                           |   | 153,626            |  
|Interest and bank charges                            |   | 2,560              |  
|Recovery of prior years accrued
      finance costs |   | -                  |  
|Office and miscellaneous                             |   | 94,434             |  
|Promotion and travel                                 |   | 324,988            |  
|Rent                                                 |   | 44,320             |  
|Salaries                                             |   | 571,937            |  
|Stock compensation expense                           |   | (36,143            | )
|Transfer fees and filing costs                       |   | 76,280             |  
|                                                     |   |                    |  
|                                                     |   | 1,382,013          |  
|                                                     |   |                    |  
|                                                     |   |                    |  
|LOSS BEFORE THE UNDERNOTED                           |   | (1,340,677         | )
|                                                     |   |                    |  
|FOREIGN EXCHANGE (LOSS) GAIN                         |   | (10,577            | )
|WRITE-DOWN OF PROPERTY AND EQUIPMENT                 |   | (60,386            | )
|                                                     |   |                    |  
|LOSS BEFORE INCOME TAXES                             |   | (1,411,640         | )
|                                                     |   |                    |  
|FUTURE INCOME TAX RECOVERY                           |   | -                  |  
|                                                     |   |                    |  
|NET LOSS FOR THE PERIOD                              |   | (1,411,640         | )
|                                                     |   |                    |  
|DEFICIT, BEGINNING OF PERIOD                         |   | (72,082,014        | )
|                                                     |   |                    |  
|DEFICIT, END OF PERIOD                               | $ | (73,493,654        | )
|                                                     |   |                    |  
|                                                     |   |                    |  
|LOSS PER SHARE                                       | $ | (0.03              | )
|                                                     |   |                    |  
|                                                     |   |                    |  
|WEIGHTED AVERAGE NUMBER OF                           |   |                    |  
|SHARES OUTSTANDING                                   |   | 454,792,764        |  

F - 34

---

|ASIA PACIFIC RESOURCES LTD                                     
|---------------------------------------------------------------
|Consolidated Statements of Cash Flows                          
|For the three months ended March 31, 2003 and February 28, 2002
|(expressed in Canadian dollars)                                
|                                                               

|                                                                 |   | Three months ended |  
|---------------------------------------------------------------- | - | ------------------ | -
|                                                                 |   | March 31,          |  
|                                                                 |   | 2003               |  
|                                                                 |   |                    |  
|                                                                 |   | (Unaudited)        |  
|                                                                 |   |                    |  
|CASH FLOW FROM OPERATING ACTIVITIES                              |   |                    |  
|Net loss for the period                                          | $ | (1,411,640         | )
|Items not involving cash                                         |   |                    |  
|Accretion of liability component of convertible
      debentures |   |                    |  
|Interest payable on convertible debentures                       |   | -                  |  
|Reduction in accrued withholding taxes
      related to          |   | -                  |  
|Amortization of property and equipment                           |   | 9,156              |  
|Amortization of deferred financing costs                         |   | -                  |  
|Foreign exchange (gain) loss and other                           |   | -                  |  
|Stock compensation expense                                       |   | (36,143            | )
|Write down of property and equipment                             |   | 60,386             |  
|                                                                 |   |                    |  
|                                                                 |   | (1,378,241         | )
|Change in non-cash operating working capital items               |   | (115,719           | )
|                                                                 |   |                    |  
|                                                                 |   | (1,493,960         | )
|                                                                 |   |                    |  
|                                                                 |   |                    |  
|CASH FLOW FROM FINANCING ACTIVITIES                              |   |                    |  
|Issue of share capital                                           |   | 2,175,190          |  
|Deferred financing costs                                         |   | -                  |  
|Promissory note                                                  |   | -                  |  
|                                                                 |   |                    |  
|                                                                 |   | 2,175,190          |  
|                                                                 |   |                    |  
|                                                                 |   |                    |  
|CASH FLOW FROM INVESTING ACTIVITIES                              |   |                    |  
|Purchase of capital assets                                       |   | (22,855            | )
|Investment in land                                               |   | -                  |  
|Investment in potash concession                                  |   | (1,233,194         | )
|Deposit                                                          |   | (6,063             | )
|                                                                 |   |                    |  
|                                                                 |   | (1,262,112         | )
|                                                                 |   |                    |  
|NET CASH INFLOW (OUTFLOW)                                        |   | (580,882           | )
|CASH POSITION, BEGINNING OF PERIOD                               |   | 5,833,316          |  
|                                                                 |   |                    |  
|CASH POSITION, END OF PERIOD                                     | $ | 5,252,434          |  
|                                                                 |   |                    |  
|                                                                 |   |                    |  
|Supplemental Disclosure:                                         |   |                    |  
|Change in non-cash operating working capital items:              |   |                    |  
|Accounts receivable                                              |   | (12,772            | )
|Prepaid expenses and deposits                                    |   | 41,926             |  
|Other current assets                                             |   | 2,935              |  
|Accounts payable and accrued charges                             |   | (147,808           | )
|                                                                 |   |                    |  
|                                                                 | $ | (115,719           | )
|                                                                 |   |                    |  
|                                                                 |   |                    |  
|Cash receipts for interest                                       | $ | 41,336             |  
|Cash payments for interest                                       | $ | 2,580              |  



F - 35

---

|ASIA PACIFIC RESOURCES LTD.                                                                
|-------------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                          
|Notes to the Consolidated Financial Statements                                             
|Three month period ended March 31 2003 and three month period ended
      February 28, 2002
|Not audited                                                                                
|(Expressed in Canadian dollars)                                                            
|                                                                                           

|1 | CONTINUING OPERATIONS
      These consolidated financial statements have been prepared
        on the basis of accounting principles applicable to a going concern, which
        assumes the realization of assets and settlement of liabilities in the
        normal course of business. The Company incurred a net loss of $1.4 million
        for the three months ended March 31, 2003 and a net loss of $2.2 million
        for the three months ended February 28, 2002.
      The Companys continuing ability to meet its obligations
        as they come due, complete development of the potash concession and continue
        as a going concern, is dependent upon its ability to raise additional
        funds.
      These consolidated financial statements do not give
        effect to adjustments that would be necessary to the carrying values and
        classifications of assets and liabilities should the Company be unable
        to continue as a going concern.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2 | ACCOUNTING POLICIES
      The interim consolidated financial statements of the
        Company have been prepared by management in accordance with Canadian generally
        accepted accounting principles. The interim consolidated financial statements
        have been prepared following the same accounting principles and method
        of computation as the consolidated financial statements for the ten month
        period ended December 31, 2002. The interim consolidated financial statements
        should be read in conjunction with the consolidated financial statements
        and the accompanying notes for the ten month period ended December 31,
        2002                                                                                                                                                                                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3 | INVESTMENT IN POTASH CONCESSION
      The investment in potash concession consists of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                                                   |   | March 31, 2003 | 
| | ------------------------------------------------- | - | -------------- | 
| | Balance, beginning of period                      | $ | 87,451,256     | 
| | Deferred exploration and development expenditures |   | 1,233,194      | 
| |                                                   |   |                | 
| | Balance, end of period                            | $ | 88,684,450     | 
| |                                                   |   |                | 

| | The Company holds a 90% beneficial interest in APPC,
        a company which holds a potash concession situated in Udon Thani in northeast
        Thailand, and the Government of Thailand has a 10% carried interest. The
        Company will recoup the Government of Thailands 10% share of exploration,
        development and capital expenditures out of the Governments share
        of dividends from the net profits of APPC, if any, once commercial production
        has commenced.
      On June 4, 2001, the Department of Mineral Resources
        of Thailand (DMR) issued to APPC twelve special prospecting
        licenses (SPLs), pursuant to a Concession Agreement with APPC
        and the Ministry of Industry of Thailand.
      The SPLs require APPC to expend on exploration, development
        and administrative expenditures an amount of U.S.$240,000 in the first
        and second year, respectively, from the date of issuance. APPC had already
        extended the minimum required exploration, development and administrative
        work relating to the first and second year as at December 31, 2002.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 36

---

|ASIA PACIFIC RESOURCES LTD.                                                                
|-------------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                          
|Notes to the Consolidated Financial Statements                                             
|Three month period ended March 31 2003 and three month period ended
      February 28, 2002
|Not audited                                                                                
|(Expressed in Canadian dollars)                                                            
|                                                                                           

|   | The SPLs required APPC to provide a letter of guarantee
        to the DMR. APPC deposited $263,592 (Baht 7,200,000) with a financial
        institution to secure the required letter of guarantee. The deposit bears
        interest at a variable rate (currently 2.5% per annum) and the letter
        of guarantee for the SPLs will no longer be required when the SPLs expire
        or are converted into a mining license.
      On May 29, 2003 APPC submitted Mining License Applications
        in compliance with the terms of the Concession Agreement between the Company
        and the Government of Thailand. The Company must ultimately receive approval
        before it can construct mining facilities, commence commercial production
        and sell potash and other mineral by-products. A fee of U.S.$5,000,000
        is payable upon receipt of the mining license.
      The recoverability of the carrying value of the Companys
        interest in the potash concession is dependent on the ability of APPC
        to (i) obtain the necessary financing to fund APPCs continued exploration
        and development activities and construction of mine facilities, (ii) secure
        the required licenses and approvals, and (iii) ultimately, the ability
        of APPC to attain profitable operations.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4. | INVESTMENT IN LAND
      The investment in land consists of surface rights located
        in the province of Udon Thani, in northeast Thailand and above a portion
        of the Udon South deposit. The surface rights consist of approximately
        2.0 square kilometres and would be used for the facilities for the proposed
        Udon South mine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5. | PROPERTY AND EQUIPMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                        | March 31, 2003 |         | Dec. 31, 2002 |  
| | ---------------------- | -------------- | ------- | ------------- | -
| |                        |                |         |               |  
| |                        |                | Cost    |               |  
| |                        |                |         |               |  
| |                        |                |         |               |  
| | Furniture and fixtures | $              | 256,595 |               | $
| | Vehicles               |                | 63,743  |               |  
| | Exploration equipment  |                | 11,598  |               |  
| | Leasehold improvements |                | 121,918 |               |  
| | Computer equipment     |                | 163,419 |               |  
| |                        |                |         |               |  
| |                        | $              | 617,273 |               | $
| |                        |                |         |               |  

F - 37

---

|ASIA PACIFIC RESOURCES LTD.                                                                
|-------------------------------------------------------------------------------------------
|(An exploration stage enterprise)                                                          
|Notes to the Consolidated Financial Statements                                             
|Three month period ended March 31 2003 and three month period ended
      February 28, 2002
|Not audited                                                                                
|(Expressed in Canadian dollars)                                                            
|                                                                                           

|6. | SHARE CAPITAL
|-- | -------------
|   |              
|   | a)           

| |                                      | Number    |             |        |   |            
| | ------------------------------------ | --------- | ----------- | ------ | - | -----------
| |                                      | of Shares |             | Amount |  
| |                                      |           |             |        |   |            
| |                                      |           |             |        |   |            
| | Balance at December 31, 2002         |           | 442,225,002 |        | $ | 156,727,265
| |                                      |           |             |        |   |            
| | Issued for cash on private placement |           | 21,751,896  |        |   | 2,175,160  
| |                                      |           |             |        |   |            
| | Balance at March 31, 2003            |           | 463,976,898 |        | $ | 158,902,425
| |                                      |           |             |        |   |            

| |     | As at March 31, 2003, the fully diluted number of common
        shares was 507,356,663 and it included 19,160,265 warrants exercisable
        at $0.40 per common share and 24,219,500 vested and unvested share options.
        As at April 2, 2003, after expiry of unexercised warrants and expired
        and unexercised stock options the fully diluted number of common shares
        was 487,696,448.
      On April 23, 2003, 392,500 common shares vested to John
        Bovard, CEO, pursuant to the grant of these unvested shares on April 1,
        2002.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (b) | Contributed surplus                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| | Balance at December 31, 2002              |   | 36,143  |  
| | ----------------------------------------- | - | ------- | -
| | Plus unamortized value of unvested shares |   | 19,357  |  
| | Stock compensation expense                |   | (55,500 | )
| |                                           |   |         |  
| | Balance at March 31, 2003                 | $ | -       |  
| |                                           |   |         |  

|7. | SEGMENTED INFORMATION
      The Company considers its business to consist of one
        operating segment, and the majority of its operations and capital assets
        are located in Thailand. Capital assets consist of investment in potash
        concession, investment in land and property and equipment.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F - 38

---