UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 **FORM
20-F**
 
 
 (
) REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
 
 OR
 
 (X)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 **For
the fiscal year ended December 31, 2004**
 OR
 
 (
) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
 
 For
the transition period from  to
 
 **Commission
file number 0-28528**
 
 **ALMADEN
MINERALS LTD.**
 (Exact
name of Registrant as specified in its charter)
 
 **British
Columbia, Canada**
 (Jurisdiction
of incorporation or organization)
 
 **750
West Pender Street, #1103, Vancouver, British Columbia V6C
2T8**
 (Address
of principal executive offices)
 
 Securities
registered or to be registered pursuant to Section 12(b) of the
Act.
 
 Title of each class
    Name of each exchange on which
      registered**None**
    **N/A**
 
 Securities
registered or to be registered pursuant to Section 12(g) of the
Act.
 
 **Common
Stock without par value**
 (Title
of Class)
 
 Securities
for which there is a reporting obligation pursuant to Section 15(d) of the
Act.
 
 **None**
 
 Indicate
the number of outstanding shares of each of the issuer's classes of capital or
common stock as of the close of the period covered by the annual
report.
 **31,142,767**
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 12 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.
 
 (
X ) Yes (   ) No
 
 Indicate
by check mark which financial statement item the registrant has elected to
follow.
 
 (
X ) Item 17 (   ) Item 18
 
  
  **TABLE
OF CONTENTS**
 
 
 
 **Page**Glossary
      of Geologic and Mining Terms**PART
      I**Item
      1
    Identity
      of Directors, Senior Management and Advisers
    12Item
      2
    Offer
      Statistics and Expected Timetable
    12Item
      3
    Key
      Information
    12Item
      4
    Information
      on the Company
    19Item
      5
    Operating
      and Financial Review and Prospects
    82Item
      6
    Directors,
      Senior Management and Employees
    86Item
      7
    Major
      Shareholders and Related Party Transactions
    94Item
      8
    Financial
      Information
    95Item
      9
    The
      Offer and Listing
    96Item
      10
    Additional
      Information
    98Item
      11
    Quantitative
      and Qualitative Disclosures About Market Risk
    105Item
      12
    Description
      of Securities Other than Equity Securities
    105**PART
      II**Item
      13
    Defaults,
      Dividend Arrearages and Delinquencies
    105Item
      14
    Material
      Modifications to the Rights of Security Holders andUse
      of Proceeds
    105Item
      15
    Controls
      and Procedures
    105Item
      16A
    Audit
      Committee Financial Expert
    106Item
      16B
    Code
      of Ethics
    106Item
      16C
    Principal
      Accountant Fees and Services
    106Item
      16D
    Exemptions
      from the Listing Standards for Audit Committees
    106Item
      16E
    Purchase
      of Equity Securities by the Issuer and Affiliated
    Purchasers
    106**PART
      III**Item
      17
    Financial
      Statements
    107Item
      18
    Financial
      Statements
    107Item
      19
    Exhibits
    107Signatures
    142
 
 
  2
  **Glossary
of Geologic and Mining Terms**
 
 **Adularia:** A
colourless, moderate to low-temperature variety of orthoclase feldspar typically
with a relatively high barium content. It is a prominent constituent of low
sulphidation epithermal veins.
 
 **Alkalic
Intrusive:** An
igneous rock emplaced below ground level in which the feldspar is dominantly
sodic and or potassic.
 
 **Alkalinity:** The
chemical nature of solutions characterized by a high concentration of hydroxyl
ions.
 
 **Andesite** :
A dark-coloured, fine-grained extrusive rock that, when porphyritic, contains
phenocrysts composed primarily of zoned sodic plagioclase (esp. andesine) and
one or more of the mafic minerals (eg. Biotite, horn-blende, pyroxene), with a
ground-mass composed generally of the same minerals as the phenocrysts; the
extrusive equivalent of *diorite* .
Andesite grades into *latite* with increasing alkali feldspar content, and into *dacite* with more alkali feldspar and quartz. It was named by Buch in 1826 from the
Andes Mountains, South America.
 
 **Anomalous:** A
geological feature, often subsurface, distinguished by geological, geochemical
or geophysical means, which is detectably different than the general
surroundings and is often of potential economic value.
 
 **Anomaly:** Any
concentration of metal noticeably above or below the average background
concentration.
 
 **Argillic** :
A form of alteration characterised by the alteration of original minerals to
clays.
 
 **Arsenopyrite** :
A sulphide of arsenic and iron with the chemical composition FeAsS.
 
 **Assay:** An analysis to determine the presence, absence or quantity of one or more
components.
 
 **Axis:** An imaginary hinge line about which the fold limbs are bent. The axis of a fold
can be at the top or bottom of the fold, can be tilted or horizontal.
 
 **Batholith:** An intrusion, usually granitic, which has a large exposed surface area and no
observable bottom. Usually associated with orogenic belts.
 
 **Breccia:** Rock consisting of more or less angular fragments in a matrix of finer-grained
material or cementing material.
 
 **Brecciated:** Rock broken up by geological forces.
 
 **Bulk
sample:** A
very large sample, the kind of sample to take from broken rock or of gravels and
sands when testing placer deposits.
 
 **Calc-silicate:** Calcium-bearing silicate minerals. These minerals are commonly formed as a
result of the interaction of molten rock and its derived, hot hydrothermal
fluids with very chemically reactive calcium carbonate (limestone).
Calc-silicate minerals include garnet, pyroxene, amphibole and epidote. These
minerals are commonly described as skarn and are genetically and spatially
associated with a wide range of metals
 
 **Chert:** A
very fine grained siliceous rock. Many limestones contain nodules and thin
lenses of chert.
 
 **Chip
sample:** A
sample composed of discontinuous chips taken along a surface across a given
line.
 
 **Claim:** That portion of public mineral lands, which a party has staked or marked out in
accordance with provincial or state mining laws, to acquire the right to explore
for the minerals under the surface.
 
 **Clastic:** Consisting
of rock material that has been mechanically derived, transported, and deposited.
Such material is also called detrital.
 
 3
 **Cleavage:** The
tendency of a crystal to split, or break, along planes of structural
weakness.
 
 **Columnar
Jointing:** A
pattern of jointing that breaks rock into rough, six-sided columns. Such
jointing is characteristic of basaltic flows and sills and is believed to result
from shrinkage during cooling.
 
 **Concordant
Bodies:** Intrusive
igneous bodies whose contacts are parallel to the bedding of the intruded
rock.
 
 **Conglomerate:** Rock
composed of mostly rounded fragments which are of gravel size or larger in a
finer grained matrix.
 
 **Craton:** A
central stable region common to nearly all continents and composed chiefly of
highly metamorphosed Precambrian rocks.
 
 **Crystalline:** Means the specimen is made up of one or more groups of crystals.
 
 **Cut-off
grade:** The minimum grade of mineralization used to establish quantitative and
qualitative estimates of total mineralization.
 
 **Dacite:** A
fine grained acid volcanic rock, similar to rhyolite in which the feldspar is
predominantly plagioclase.
 
 **Degradation:** The
ongoing process of erosion in a stream.
 
 **Diabase:** Igneous hypabyssal rocks. The name is applied differently in different parts of
the world leading to considerable confusion.
 
 **Diagenesis:** The
changes that occur in a sediment during and after lithification. These changes
include compaction, cementation, replacement, and
recrystallization.
 
 **Diamond
drill:** A
type of rotary drill in which the cutting is done by abrasion using diamonds
embedded in a matrix rather than by percussion. The drill cuts a core of rock
which is recovered in long cylindrical sections.
 
 **Dilution:** Results from the mixing in of unwanted gangue or waste rock with the ore during
mining.
 
 **Dip:** Geological measurement of the angle of maximum slope of planar elements in
rocks. Can be applied to
 beddings,
jointing, fault planes, etc.
 
 **Discordant
Bodies:** Intrusive
igneous bodies whose contacts cut across the bedding, or other pre-existing
structures, to the intruded rock.
 
 **Disseminated
deposit** :
Deposit in which the mineralization is scattered through a large volume of host
rock, sometimes as separate mineral grains, or sometimes along joint or fault
surfaces.
 
 **Dolomite:** A
magnesium bearing limestone usually containing at least 15% magnesium carbonate.
 
 **Dunite:** An
intrusive, monomineralic, ultramafic rock composed almost completely of
magnesian olivine.
 
 **Dyke:** A
tabular, discordant, intrusive igneous body.
 
 **Earn
in:** The
right to acquire an interest in a property pursuant to an Option
Agreement.
 
 **Ejecta:** Pyroclastic
material thrown out or ejected by a volcano. It includes ash, volcanic bombs,
and lapilli.
 
 **Epithermal:** Epithermal deposits are a class of ore deposits that form generally less than 1
km from surface. These deposits, which can host economic quantities of gold,
silver, copper, lead and zinc are formed as a result of the
 precipitation
of ore minerals from up-welling hydrothermal fluids. There are several classes
of epithermal deposits that are defined on the basis of fluid chemistry and
resulting alteration and ore mineralogy. Fluid chemistry is largely controlled
by the proximity to igneous intrusive rocks and as a result igneous fluid
content.
 
 4
 **Extrusive
Rock:** Igneous
rock that has solidified on the earth’s surface from volcanic
action.
 
 **Fault** :
(a) A fracture or fracture zone along which there has been displacement of the
sides relative to one another parallel to the fracture. (b) A break in the
continuity of a body of rock.
 
 **Feasibility
study:** Detailed study to determine if a property can be mined at a profit and the best
way to mine it.
 
 **Feldspar:** A
group of aluminum silicate minerals closely related in chemical composition and
physical properties. There are two major chemical varieties of feldspar: the
potassium aluminum, or potash, feldspars and the sodium-calcium-aluminum, or
plagioclase, feldspars. The feldspars possess a tetrahedral framework of silicon
and oxygen, with the partial substitution of aluminum for the silicon. They make
up about 60 percent of the earth’s crust.
 
 **Felsic:** Light coloured silicate minerals, mainly quartz and feldspar, or an igneous rock
comprised largely of felsic minerals (granite, rhyolite).
 
 **Fluid
inclusion:** A
cavity, with or without negative crystal faces, containing one or two fluid
phases, and possibly one or more minute crystals, in a host crystal. If two
fluid phases are present, the vapour phase (bubble) may show Brownian motion.
 
 **Folds:** Are flexures in bedded or layered rocks. They are formed when forces are applied
gradually to rocks over a long period of time.
 
 **Fracture:** Breaks in a rock, usually due to intensive folding or faulting.
 
 **Gabbro:** A
group of dark-colored, basic intrusive igneous rocks composed principally of
basic plagioclase (commonly labradorite or bytownite) and clinopyroxene
(augite), with or without olivine and orthopyroxene; also, any member of that
group. It is the approximate intrusive equivalent of basalt. Apatite and
magnetite or ilmenite are common accessory minerals.
 
 **Gambusino:**  Small
miners working without machinery.
 
 **Gangue:** Term used to describe worthless minerals or rock waste mixed in with the
valuable minerals.
 
 **Geochemical
Anomaly:** An
area of elevated values of a particular element in soil or rock samples
collected during the preliminary reconnaissance search for locating favourable
metal concentrations that could indicate the presence of surface or drill
targets.
 
 **Geochemistry:** The study of the chemistry of rocks, minerals, and mineral deposits.
 
 **Geophysics:** The study of the physical properties of rocks, minerals, and mineral deposits.
 
 **Gneiss:** A
coarse grained metamorphic rock characterized by alternating bands of unlike
minerals, commonly light bands of quartz and feldspar and dark bands of mica and
hornblende.
 
 **Gossan:** The leached and oxidised near surface part of a sulphide mineral deposit,
usually consisting largely of hydrated iron oxides left after copper and other
minerals have been removed by downward leaching.
 
 **Grade:** The concentration of each ore metal in a rock sample, usually given as weight
percent. Where extremely low concentrations are involved, the concentration may
be given in grams per tonne (g/t) or ounces per ton (oz/t). The grade of an ore
deposit is calculated, often using sophisticated statistical procedures, as an
average of the grades of a very large number of samples collected from
throughout the deposit.
 
 **Granite:** A
coarse grained, plutonic igneous rock that is normally pale pink, pale
pink-brown, or pale grey, and composed of quartz, alkali feldspar, micas and
accessory minerals.
 
 5
 **Grid:** A
network composed of two sets of uniformly spaced parallel lines, usually
intersecting at right angles and forming squares, superimposed on a map, chart,
or aerial photograph, to permit identification of ground locations by means of a
system or coordinates and to facilitate computation of direction and distance
and size of geologic, geochemical or geophysical features.
 
 **Hanging
wall and Footwall:** Terms
used in reference to faults where when mining along a fault, your feet would be
in the footwall side of the fault and the other side would be “hanging” over
your head.
 
 **Hectare:** A
square of 100 metres on each side.
 
 **Host
rock:** The
rock within which the ore deposit occurs.
 
 **Hydrothermal:** Of
or pertaining to hot water, to the action of hot water, or to the products of
this action, such as a mineral deposit precipitated from a hot aqueous solution;
also, said of the solution itself. “Hydrothermal” is generally used for any hot
water, but has been restricted by some to water of magmatic origin.
 
 **Igneous:** Means a rock formed by the cooling of molten silicate material.
 
 **Ignimbrite:** The
rock formed by the widespread deposition and consolidation of ash flows and nues
ardentes. The term includes *welded
tuff* and nonwelded but recrystallized ash flows.
 
 **Indicated** **Mineral
Resource:** An
‘Indicated Mineral Resource’ is that part of a Mineral Resource for which
quantity, grade or quality, densities, shape and physical characteristics, can
be estimated with a level of confidence sufficient to allow the appropriate
application of technical and economic parameters, to support mine planning and
evaluation of the economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered through
appropriate techniques from locations such as out-crops, trenches, pits,
workings and drill holes that are spaced closely enough for geological and grade
continuity to be reasonably assumed.
 
 **Induced
polarization (I.P.) method:** The method used to measure various electrical responses to the passage of
alternating currents of different frequencies through near-surface rocks or to
the passage of pulses of electricity.
 
 **Inferred** **Mineral** **Resource** **:** An
‘Inferred Mineral Resource’ is that part of a Mineral Resource for which
quantity and grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information
and sampling gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes.
 
 **Intermediate:** An igneous rock made up of both felsic and mafic minerals (diorite).
 
 **Intrusion** :
General term for a body of igneous rock formed below the surface.
 
 **Intrusive
Rock:** Any
igneous rock solidified from magma beneath the earth’s surface.
 
 **Joint
venture agreement:** An agreement where the parties agree to the terms on which a property will be
jointly explored, developed, and mined. (See also “Option agreement” and “Earn
in”).
 
 **Kimberlite:** A
kimberlite is a pipe-like volcano sourced from deep within the earth under
extreme temperatures and pressures. It is the host rock for diamonds and diamond
indicator minerals such as kimberlitic ilmenites and garnets.
 
 **K-silicate:** Potassium-bearing
silicates. Potassium silicates are very common rock-forming minerals, however
they are also formed by the interaction of hyrothermal fluids derived from the
cooling intrusive rocks that are genetically
 and
spatially associated with porphyry and epithermal deposits. Potassium feldspar
(orthoclase) and potassium mica (biotite) are both commonly closely associated
with copper-molybdenum ore in porphyry copper deposits.
 
 6
 **K-spar:** Potassium
feldspar.
 
 **Lamprophyre:** A
group of dike rocks in which dark minerals occur both as phenocrysts and in the
groundmass and light minerals occur in the groundmass. Essential constituents
are biotite, hornblende, pyroxene, and feldspar or feldspathoids. Most
lamprophyres are highly altered. They are commonly associated with *carbonatites.*
 
 **Lava:** Means an igneous rock formed by the cooling of molten silicate material which
escapes to the earth’s surface or pours out onto the sea floor.
 
 **Limestone:** Sedimentary rock that is composed mostly of carbonates, the two most common of
which are calcium and magnesium carbonates.
 
 **Lithosphere:** The
crust and upper mantle, located above the asthenosphere and composing the rigid
plates.
 
 **Mafic:** A
term used to describe ferromagnesian minerals. Rocks composed mainly of
ferromagnesian minerals are correctly termed melanocratic.
 
 **Mafic:** A
general term used to describe ferromagnesian minerals.
 
 **Magma:** Naturally
occurring molten rock material, generated within the earth and capable of
intrusion and extrusion, from which igneous rocks have been derived through
solidification and related processes. It may or may not contain suspended solids
(such as crystals and rock fragments) and/or gas phases.
 
 **Massive:** Implies large mass. Applied in the context of hand specimens of, for example,
sulphide ores, it usually means the specimen is composed essentially of
sulphides with few, if any, other constituents.
 
 **Measured** **Mineral** **** **Resource:**  A
‘Measured Mineral Resource’ is that part of a Mineral Resource for which
quantity, grade or quality, densities, shape, physical characteristics are so
well established that they can be estimated with confidence sufficient to allow
the appropriate application of technical and economic parameters, to support
production planning and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes that are spaced closely
enough to confirm both geological and grade continuity.
 
 **Metamorphic:** Means any rock which is altered within the earth’s crust by the effects of heat
and/or pressure and/or chemical reactions.
 
 **Metamorphic:** Pertaining
to the process of metamorphism or to its results **.**
 
 **Metasediment** :
A sediment or sedimentary rock that shows evidence of having been subjected to
metamorphism.
 
 **Metavolcanic:** An
informal term for volcanic rocks that show evidence of having been subject to
metamorphism.
 
 **Mineral
claim:** A
legal entitlement to minerals in a certain defined area of ground.
 
 **Mineral
Deposit or Mineralized Material:** A
mineralized underground body which has been intersected by sufficient closely
spaced drill holes and or underground sampling to support sufficient tonnage and
average grade of metal(s) to warrant further exploration-development work. This
deposit does not qualify as a commercially mineable ore body
 (Reserves),
as prescribed under Commission standards, until a final and comprehensive
economic, technical, and legal feasibility study based upon the test results is
concluded
 
 **Mineral:** A
naturally occurring, inorganic, solid element or compound that possesses an
orderly internal arrangement of atoms and a unique set of physical and chemical
properties.
 
 **Mineral
Resource:** A
Mineral Resource is a concentration or occurrence of natural, solid, inorganic
or fossilized organic material in or on the Earth’s crust in such form and
quantity and of such a grade or quality that it has reasonable prospects for
economic extraction. The location, quantity, grade, geological characteristics
and continuity of a Mineral Resource are known, estimated or interpreted from
specific geological evidence and knowledge.
 
 7
 **Mineral
Reserve** :
A Mineral Reserve is the economically mineable part of a Measured or Indicated
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified. A Mineral Reserve includes diluting
materials and allowances for losses that may occur when the material is
mined.
 
 **Mineralization:** Usually implies minerals of value occurring in rocks.
 
 **Monocline:** A
structure in which a bed exhibits local steepening of otherwise uniform
dip.
 
 **Net
profits interest:** The profits after deduction of expenses. Often a form of royalty.
 
 **Net
smelter returns:** Means the amount actually paid to the mine or mill owner from the sale of ore,
minerals and other materials or concentrates mined and removed from mineral
properties. A royalty based on net smelter returns usually provides cash flow
that is free of any operating or capital costs and environmental liabilities.
 
 **Option
agreement:** An agreement where the optionee can exercise certain options to acquire or
increase an interest in a property by making periodic payments or share
issuances or both to the optionor or by exploring, developing or producing from
the optionor’s property or both. Upon the acquisition of such interest all
operations thereafter are on a joint venture basis..
 
 **Ore:** A
natural aggregate of one or more minerals which may be mined and sold at a
profit, or from which some part may be profitably separated.
 
 **Ore
reserve:** The measured quantity and grade of all or part of a mineralized body in a mine
or undeveloped
 mineral
deposit for which the mineralization is sufficiently defined and measured on
three sides to form the basis of at least a preliminary mine production plan for
economically viable mining.
 
 **Orogeny:** The process of forming mountains by folding and thrusting.
 
 **Outcrop:** An
in situ exposure of bedrock.
 
 **Overburden:** A
general term for any material covering or obscuring rocks from view.
 
 **oz/t
or opt:** Ounces per ton.
 
 **Paleozoic:** An
era of geologic time, from the end of the Precambrian to the beginning of the
Mesozoic, or from about 570 to about 225 million years ago.
 
 **Panel
Sample** :
A large volume/weight continuous rock chip sample collected over a definite area
(e.g. 0.25m X 0.50m), and to a uniform depth (e.g. 2.5cm or 1 inch), on a
mineral zone. Panel sampling is generally employed in a trenching program to
obtain more representative grades particularly of a narrow mineralized structure
such as a vein.
 
 **Peridotite:** A
coarse grained ultramafic rock commonly consisting of olivine and
pyroxenes.
 
 **Phenocrysts** :
An unusually large crystal in a relatively finer grained matrix.
 
 **Phonolite** :
Any extrusive rock composed of alkali feldspar, mafic minerals and any
feldspathoid, such as nepheline, leucite, or sodalite.
 
 **Pluton:** Term for an igneous intrusion, usually formed from magma.
 
 8
 **Porphyry:** An
igneous rock composed of larger crystals set within a finer ground
mass.
 
 **Probable
Mineral Reserve** :
A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated,
and in some circumstances a Measured Mineral Resource demonstrated by at least a
Preliminary Feasibility Study. This Study must include adequate information on
mining, processing, metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can be
justified.
 
 **Proven
Mineral Reserve** :
A 'Proven Mineral Reserve’ is the economically mineable part of a Measured
Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting,
that economic extraction is justified.
 
 **Pyroclastic
rock:** A
rock of volcanic origin consisting of highly variable mixture of rock fragments,
cinders and ashes and bits of crystals and glass.
 
 **Pyroclastic
Rock:** Fragmental
rock material resulting from explosive volcanic eruptions. Such material is
literally deposited from the air and includes volcanic bombs, blocks, tuff,
cinders, ash, and pumice.
 
 **Pyroxenites:** Ultramafic
plutonic rock chiefly composed of pyroxene, with accessory hornblende, biotite,
or olivine.
 
 **Rare
Earth:** A
group of rare metallic chemical elements with consecutive atomic numbers of 57
to 71.
 
 **Reclamation
bond:** A
bond usually required by governmental mining regulations when mechanized work on
a property is contemplated. Proceeds of the bond are used to reclaim any
workings or put right any damage if reclamation undertaken does not satisfy the
requirements of the regulations.
 
 **Reserve:** That
part of a mineral deposit which could be economically extracted or produced at
the time of the reserve determination.
 
 **Reserves:** A
natural aggregate of one or more minerals which, at a specified time and place,
may be mined and sold at a profit, or from which some part may be profitably
separated.
 
 **Reverse
circulation drill:** A
rotary percussion drill in which the drilling mud and cuttings return to the
surface through the drill pipe.
 
 **Rhyolite:** The fine grained equivalent of a granite.
 
 **Royalty
interest:** A
royalty, the calculation and payment of which is tied to some production unit
such as tonne of concentrate or ounce of gold or silver produced. A common form
of royalty interest is based on the net smelter return.
 
 **Sample:** Small amount of material that is supposed to be absolutely typical or
representative of the object being sampled.
 
 **Sandstone:** Composed
of sand-sized fragments cemented together. As a rule the fragments contain a
high percentage of quartz.
 
 **Schist:** A
strongly foliated crystalline rock, formed by dynamic metamorphism, that has
well-developed parallelism of more than 50% of the minerals present,
particularly those of lamellar or elongate prismatic habit, e.g. mica and
hornblende.
 
 **Sedimentary:** A
rock formed from cemented or compacted sediments.
 
 **Sediments:** Are composed of the debris resulting from the weathering and breakup of other
rocks that have been deposited by or carried to the oceans by rivers, or left
over from glacial erosion or sometimes from wind action.
 
 9
 **Sericite:** A
fine-grained variety of mica occurring in small scales, especially in schists.
 
 **Shale:** An argillaceous rock consisting of silt or clay-sized particles cemented
together. Most shales are quite soft, because they contain large amounts of clay
minerals.
 
 **Shear
zone:** Where a fault affects a width of rock rather than being a single clean break,
the width of affected rock is referred to as the shear zone. The term implies
movement, i.e. shearing.
 
 **Silicate:** Most rocks are made up of a small number of silicate minerals ranging from
quartz (SiO2) to more complex minerals such as orthoclase feldspar (KAlSi3O8) or
hornblende (Ca2Na(Mg,Fe)4(Al,Fe,Ti)Si8)22(OH)2).
 
 **Sill:** Tabular intrusion which is sandwiched between layers in the host rock.
 
 **Skarn:** A
thermally altered impure limestone in which material has been added to the
original rock. Skarns are generally characterized by the presence of calcium and
silica rich minerals. Many skarns contain sulphide minerals which in some cases
can be of economic value.
 
 **Sonic
drill:** A
drill used to penetrate soft sediments where the drill advance by means of slow
rotations and sonic vibrations. Samples of very soft material can be collected
with this system.
 
 **Stock:** An
igneous intrusive body of unknown depth with a surface exposure of less than 104
square kilometers. The sides, or contacts, of a stock, like those of a
batholith, are usually steep and broaden with depth.
 
 **Stockwork:** A
mineral deposit consisting of a three-dimensional network of closely spaced
planar or irregular veinlets.
 
 **Strike:** The
bearing, or magnetic compass direction, of an imaginary line formed by the
intersection of a horizontal plane with any planar surface, most commonly with
bedding planes or foliation planes in rocks.
 
 **Sulphide
minerals** :
A mineral compound characterized by the linkage of sulfur with a metal or
semimetal; e.g., galena.
 
 **Syncline:** A
fold in which the bed has been forced down in the middle or up on the sides to
form a trough.
 
 **Tailings:** Material rejected from a mill after recoverable valuable minerals have been
extracted.
 
 **Tailings
pond:** A
pond where tailings are disposed of.
 
 **Tourmaline:** A
group of minerals of general formula (Na,Ca)(Mg,Fe +2 ,Fe +3 ,Al,Li) 3 Al 6 (BO 3 ) 3 Si 6 O 18 (OH) 4 ;
it sometimes contains fluorine in small amounts. Also, any mineral of the
tourmaline group. Tourmaline occurs in 3-, 6-, or 9-sided prisms, usually
vertically striated, or in compact or columnar masses; it is commonly found as
an accessory mineral in granitic pegmatites, and is widely distributed in acid
igneous rocks and in metamorphic rocks. It can indicative of alteration
associated with porphyry style mineralization **.**
 
 **Tremolite:** A
white to dark-gray monoclinic mineral of the amphibole group: Ca 2 Mg 5 Si 8 O 22 (OH) 2 .
It occurs in long blade-shaped or short stout prismatic crystals, and also in
columnar or fibrous masses, esp. in metamorphic rocks such as crystalline
dolomitic limestone and talc schist. It is a constituent of much commercial
talc. alteration — usually referring to chemical reactions in a rock mass resulting
from the passage of hydrothermal fluids.
 
 **Tuff
:** A
finer grained pyroclastic rock made up mostly of ash and other fine grained
volcanic material.
 
 **Veins:** The mineral deposits that are found filling openings in rocks created by faults
or replacing rocks on either side of faults.
 
 **Waste:** Rock which is not ore. Usually referred to that rock which has to be removed
during the normal course of mining in order to get at the ore.
 
  10
  **Notes
Concerning Terminology Related to Resources and Reserves**
 The terms
"mineral resource", "measured mineral resource", "indicated mineral resource",
"inferred mineral resource", “mineral reserve”, “probable mineral reserve” and
“proven mineral reserve” used in this Annual Report are Canadian mining terms as
defined in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian
Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council on August 20, 2000 as
may be amended from time to time by the CIM. In accordance with Industry Guide
7, Description of Property by Issuers Engaged or to be Engaged in Significant
Mining Operations, issued by the U. S. Securities and Exchange Commission,
resource is termed “mineralization” or “mineral deposit”.
 
 **Cautionary
Note to U.S. Investors concerning estimates of Measured and Indicated
Resources**
 This
Annual Report uses the terms "measured" and "indicated resources." We advise
U.S. investors that while such terms are recognized and permitted under Canadian
regulations, the U.S. Securities and Exchange Commission does not recognize
them. U.S. investors are cautioned not to assume that any part or all of the
mineral deposits in these categories will ever be converted into reserves.
 
 **Cautionary
Note to U.S. Investors concerning estimates of Inferred
Resources**
 This
Annual Report uses the terms "inferred resources." We advise U.S. investors that
while such term is recognized and permitted under Canadian regulations, the U.S.
Securities and Exchange Commission does not recognize it. "Inferred resources"
have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules estimates of inferred mineral resources may not form the
basis of feasibility or other economic studies. U.S. investors are cautioned not
to assume that any part or all of an inferred resource exists, or is
economically or legally minable.
 
 
 **Glossary
of Abbreviations**
 
 **Ag:** Silver
 **Au:** Gold
 **Ba:** Barium
 **Co:** Cobalt
 **Cu:** Copper
 **EIS:** Environmental
Impact Statement
 **Fe:** Iron
 **gpm:** gallons
per minute
 **gpt:** grams
per tonne
 **g/t:** grams per tonne
 **IP** :
Induced Polarization geophysical survey
 **Ni:** Nickel
 **NSR:** net
smelter return royalty
 **Oz:** Troy
ounce
 **Pb** :
Lead
 **Pd:** Palladium
 **PGM:** Platinum
group minerals
 **Pt:** Platinum
 **S:** Sulphur
 **tpd:** Tonnes
per day
 **ton:** Short
ton (2,000 pounds)
 **tonne:** Metric
ton (1000 kilograms - 2204.62 pounds)
 **VLF:** Very
low frequency electromagnetic geophysical survey
 **VMS:** Volcanogenic
massive sulphide
**Zn:**Zinc
   11
  **PART
I**
 
 **Item
1. Identity of Directors, Senior Management and Advisors**
 
 Not
applicable
 
 **Item
2. Offer Statistics and Expected Timetable**
 
 Not
applicable
 
 **Item
3. Key Information**
 
 On
August 1, 2001, Fairfield Minerals Ltd. (“Fairfield”) and Almaden Resources
Corporation (“Resources”) entered into an Amalgamation Agreement providing for
the amalgamation of the two companies and continuation as one company under the
name “Almaden Minerals Ltd.” It was the view of the Boards of Directors of
Fairfield and Resources that the amalgamation of the two companies would create
an entity which will be able to attract more senior financing and would also
result in administrative savings by the consolidation of the
operations.
 
 Final
determination of the basis for the share exchange ratio for the shareholders of
the two companies in the amalgamated company was determined upon completion of a
Valuation Report and a Fairness Opinion on the proposed amalgamation conducted
by two independent evaluators retained by the companies. The basis for the share
exchange was determined to be 1 common share of Almaden Minerals Ltd. for every
one share of Fairfield held and 0.77 common shares of Almaden Minerals Ltd. for
every one common share of Resources held.
 
 Ontario
Securities Commission Rule 61-501 and Toronto Stock Exchange policies required
majority of minority approval. Accordingly, the amalgamation also required the
approval of a majority of the shares voted on the Special Resolution excluding,
in the Fairfield meeting, the shares held by Resources, its insiders, associates
and affiliates, and in the Resources meeting, the shares held by Fairfield, its
insiders, associates and affiliates. On December 20, 2001, both companies held a
Meeting of Members at which time members of each of the amalgamating companies
were asked to consider, and if thought adviseable, adopt a Special Resolution to
approve the amalgamation. The Special Resolution was approved.
 
 The
amalgamation was further subject to the approval of the Supreme Court of British
Columbia. The Order of the Supreme Court of British Columbia was dated December
28, 2001, which Order included a hearing and determination that the issuance and
exchange of securities was fair.
 
 The
terms of the Articles and Memorandum of the amalgamated company was approved by
the Registrar of Companies on September 28, 2001. Essentially, under the
provision of the *Company
Act* pursuant to which the amalgamation proceeded all matters of substance were
accomplished by December 31, 2001. The application for the Certificate of
Amalgamation was filed with the Registrar of Companies but its issuance was
requested held in order to permit co-ordination with the listing of the shares
of Almaden Minerals Ltd. on the Toronto Stock Exchange and to avoid any extended
trading of Fairfield on the Toronto Stock Exchange and Resources on the Canadian
Venture Exchange.
 
 The
Company was advised in late January, early February 2002 that the Toronto Stock
Exchange had accepted the application for the listing of the shares of Almaden
Minerals Ltd. On February 1, 2002, the Registrar of Companies issued the
Certificate of Amalgamation.
 
 Based
on the chronology of these events, the Company has determined that for
accounting and taxation purposes the amalgamation is effective December 31,
2001.
 
 The
amalgamation of Almaden Resources Corporation and Fairfield Minerals Ltd. was
completed effective December 31, 2001. The Consolidated Balance Sheets as at
December 31, 2001 include the assets of Almaden Resources Corporation at their
carrying value and the assets of Fairfield Minerals Ltd. at fair value. The
Consolidated Statements of Loss and Deficit for the years ended December 31,
2001 and 2000 report the results of activities of Almaden Resources
Corporation.
 
 The
following selected financial data of the Company for Fiscal 2004, Fiscal 2003
and Fiscal 2002 ended December 31st was derived from the financial statements of
the Company which have been audited by Deloitte & Touche LLP, Independent
Registered Chartered Accountants, as indicated in their report which is included
elsewhere in this Annual Report. The selected financial data set forth for
Fiscal 2001 and Fiscal 2000 ended December 31st are derived from the Company's
audited consolidated financial statements, not included herein. The selected
financial data should be read in conjunction with the consolidated financial
statements and other information included elsewhere in the Annual
Report.
 
 12
 Reference
is made to Note 17 of the audited consolidated financial statements of the
Company included herein for a discussion of the material differences between
Canadian generally accepted accounting principles (“Canadian GAAP”) and United
States generally accepted accounting principles (“U.S. GAAP”), and their effect
on the Company's financial statements.
 **Table
No. 1**
 **Selected
Financial Data**
 **(expressed
in thousands of Canadian dollars, except per share data)**
 
 **Year**
    
    **Year**
    
    **Year**
    
    **Year**
    
    **Year****Ended**
    
    **Ended**
    
    **Ended**
    
    **Ended**
    
    **Ended****12/31/2004**
    
    **12/31/2003**
    
    **12/31/2002**
    
    **12/31/2001**
    
    **12/31/2000****Canadian
      GAAP**Revenues
    
    $
    243
    
    $
    110
    
    $
    123
    
    $
    31
    
    $
    73Net
      loss
    
    
    -3,066
    
    
    -1,326
    
    
    -3,198
    
    
    -650
    
    
    -2,795Loss
      per common share
    
    
    -0.11
    
    
    -0.06
    
    
    -0.16
    
    
    -0.05
    
    
    -0.22Weighted
      average shares (000)
    
    
    30,232
    
    
    23,379
    
    
    19,524
    
    
    13,412
    
    
    12,758Working
      capital
    
    
    4,660
    
    
    5,101
    
    
    1,522
    
    
    860
    
    
    1,082Properties
    
    
    4,440
    
    
    4,198
    
    
    3,338
    
    
    4,786
    
    
    3,150Net
      assets
    
    
    9,756
    
    
    9,854
    
    
    5,181
    
    
    5,839
    
    
    4,705Total
      assets
    
    
    10,215
    
    
    10,342
    
    
    5,636
    
    
    6,297
    
    
    4,780Capital
      stock
    
    
    25,529
    
    
    21,477
    
    
    17,389
    
    
    15,011
    
    
    13,227**U.S.
      GAAP**Net
      loss for period(1)
    
    
    -3,935
    
    
    -2,001
    
    
    -2,410
    
    
    -738
    
    
    -689Loss
      per common share
    
    
    -0.13
    
    
    -0.09
    
    
    -0.13
    
    
    -0.05
    
    
    -0.05Weighted
      average shares (000)
    
    
    30,232
    
    
    23,379
    
    
    19,524
    
    
    13,412
    
    
    12,758Working
      capital
    
    
    5,200
    
    
    6,000
    
    
    1,703
    
    
    921
    
    
    1,144Properties
    
    
    2,551
    
    
    2,840
    
    
    2,654
    
    
    3,471
    
    
    1,923Net
      assets
    
    
    8,407
    
    
    9,395
    
    
    4,728
    
    
    4,586
    
    
    3,540Total
      assets
    
    
    8,866
    
    
    9,883
    
    
    5,133
    
    
    5,044
    
    
    3,615Capital
      stock
    
    
    25,259
    
    
    21,477
    
    
    17,389
    
    
    15,011
    
    
    13,227
 (1)Cumulative
U.S. GAAP deficit since inception of the exploration stage to 12/31/2004 has
been $18,632,507.
 
 ***Canadian/U.S.
Dollar Exchange Rates***
 
 In
this Annual Report, unless otherwise specified, all dollar amounts are expressed
in Canadian dollars (CDN$). The Government of Canada permits a floating exchange
rate to determine the value of the Canadian dollar against the U.S. dollar
(U.S.$)
 
 Table
No. 2 sets forth the exchange rate for the Canadian dollars at the end of the
five most recent fiscal periods ended at December 31 st ,
the average rates for the period, the range of high and low rates and the close
for the period. Table No. 3 sets forth the range of high and low rates for each
month during the previous six months.
 
 For
purposes of this table, the rate of exchange means the noon buying rate in New
York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York. The table sets forth the
number of Canadian Dollars required under that formula to buy one U.S. Dollar.
The average rate means the average of the exchange rates on the last day of each
month during the period.
 
  13
  **Table
No. 2**
 **U.S.
Dollar/Canadian Dollar Exchange Rates for Five Most Recent Financial
Years**
 
 **Average**
    
    **High**
    
    **Low**
    
    **Close**Fiscal
      Year Ended 12/31/2004
    
    $
    1.30
    
    $
    1.40
    
    $
    1.18
    
    $
    1.20Fiscal
      Year Ended 12/31/2003
    
    
    1.39
    
    
    1.58
    
    
    1.29
    
    
    1.29Fiscal
      Year Ended 12/31/2002
    
    
    1.57
    
    
    1.61
    
    
    1.51
    
    
    1.58Fiscal
      Year Ended 12/31/2001
    
    
    1.55
    
    
    1.60
    
    
    1.49
    
    
    1.59Fiscal
      Year Ended 12/31/2000
    
    
    1.50
    
    
    1.56
    
    
    1.44
    
    
    1.50
 
 **Table
No. 3**
 **U.S.
Dollar/Canadian Dollar Exchange Rates for Previous Six
Months**
 
 **September**
    
    **October**
    
    **November**
    
    **December**
    
    **January**
    
    **February**High
    
    $
    1.31
    
    $
    1.27
    
    $
    1.23
    
    $
    1.24
    
    $
    1.24
    
    $
    1.26Low
    
    
    1.26
    
    
    1.22
    
    
    1.18
    
    
    1.19
    
    
    1.20
    
    
    1.23
 
 **The
exchange rate was 1.23 on February 28, 2005.**
 ****
 ***Risk
Factors***
 
 **General
Risk Factors Attendant to Resource Exploration and
Development**
 Resource
exploration and development is a speculative business, characterized by a number
of significant risks including, among other things, unprofitable efforts
resulting not only from the failure to discover mineral deposits but from
finding mineral deposits which, though present, are insufficient in quantity and
quality to return a profit from production. The marketability of minerals
acquired or discovered by the Company may be affected by numerous factors which
are beyond the control of the Company and which cannot be accurately predicted,
such as market fluctuations, the proximity and capacity of milling facilities,
mineral markets and processing equipment, and such other factors as government
regulations, including regulations relating to royalties, allowable production,
importing and exporting of minerals, and environment protection, the combination
of which factors may result in the Company not receiving an adequate return on
investment capital.
 
 Presently,
the Company is in the exploration stage and there is no assurance that a
commercially viable ore deposit (a reserve) exists in any of its properties or
prospects until further exploration work is done and a comprehensive economic
evaluation based upon that work is concluded. The Company retains an inventory
of gold from previous production by its predecessor (“Fairfield”) from the
Siwash mine on the Elk property. The gold was mined in 1994 and shipped to the
smelter in 1996. The gold produced was retained as inventory by Fairfield. Both
the Company and it’s predecessor have financed their operations principally
through the sale of equity securities and entering into joint venture
arrangements, and in Fairfield’s case, the sale of its inventory of gold. While
the Company believes it has sufficient capital and liquidity to finance current
operations, nevertheless, its ability to continue operations is dependent on the
ability of the Company to obtain additional financing.
 
 **Exploration
and Development Efforts May Be Unsuccessful**
 There
is no certainty that the expenditures to be made by the Company in the
exploration of its properties and prospects as described herein will result in
discoveries of mineralized material in commercial quantities. Most exploration
projects do not result in the discovery of commercially mineable ore deposits
and no assurance can be given that any particular level of recovery of ore
reserves will in fact be realized or that any identified mineral deposit will
ever qualify as a commercially mineable (or viable) ore body which can be
legally and economically exploited. Estimates of reserves, mineral deposits and
production costs can also be affected by such factors as environmental
permitting regulations and requirements, weather, environmental factors,
unforeseen technical difficulties, unusual or unexpected geological formations
and work interruptions. In addition, the grade of ore ultimately mined may
differ from that indicated by drilling results. Short term factors relating to
ore reserves, such as the need for orderly development of ore bodies or the
processing of new or different grades, may also have an adverse effect on mining
operations and on the results of operations. There can be no assurance that
minerals recovered in small-scale tests will be duplicated in large-scale tests
under on-site conditions or in production scale. Material changes in ore
reserves, grades, stripping ratios or recovery rates may affect the economic
viability of any project.
 
  14
  **Uncertainty
of Obtaining Additional Funding Requirements**
 If
the Company’s exploration programs are successful, additional capital will be
required for the development of an economic ore body and to place it in
commercial production. The only sources of future funds presently available to
the Company are the sale of its inventory or gold, sale of equity capital or the
offering by the Company of an interest in its properties and prospects to be
earned by another party or parties carrying
out further development  thereof.
Although the Company presently has sufficient financial resources to undertake
all of its currently planned exploration programs through Fiscal 2005 and has
been successful in the past in obtaining financing through the sale of equity
securities, there is no assurance that it will be able to obtain adequate
financing in the future or that such financing will be favorable. Failure to
obtain additional financing on a timely basis could cause the Company to forfeit
its interest in such properties, dilute its interests in the properties and/or
reduce or terminate its operations.
 
 **Lack
of Cash Flow**
 The
Company currently has no revenues from operations as all of its properties and
prospects are in the exploration stage. There is no assurance that the Company
will receive revenues from operations at any time in the near future. The
Company has had no prior year’s history of earnings or cash flow other than the
NSR royalty from the La Trinidad Mine. Neither the Company nor its predecessor
have paid dividends on their shares since incorporation and the Company does not
anticipate doing so in the foreseeable future. Historically, the only source of
funds available to the Company was through the sale of its equity shares and
entering into joint venture agreements. The only source of funds available to
the Company’s predecessor was through the sale of its inventory of gold, the
sale of its equity shares and entering into joint venture agreements. Any future
additional equity financing would cause dilution to current
stockholders.
 
 **Mineral
Prices May Not Support Corporate Profit**
 The
mining industry in general is intensely competitive and there is no assurance
that, even if commercial quantities of mineral resources are developed, a
profitable market will exist for the sale of same. Factors beyond the control of
the Company may affect the marketability of any substances discovered. The price
of minerals is volatile over short periods of time, and is affected by numerous
factors beyond the control of the Company, including international economic and
political trends, expectations of inflation, currency exchange fluctuations,
interest rates and global or regional consumption patterns, speculative
activities and increased production due to improved mining
techniques.
 
 **Environmental
Regulations**
 The
current and anticipated future operations of the Company, including development
activities and commencement of production on its properties, require permits
from various federal, territorial and local governmental authorities and such
operations are and will be governed by laws and regulations governing
prospecting, development, mining, production, exports, taxes, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. Companies engaged in the development
and operation of mines and related facilities generally experience increased
costs, and delays in production and other schedules as a result of the need to
comply with applicable laws, regulations and permits. The Company’s exploration
activities and its potential mining and processing operations are subject to
various laws governing land use, the protection of the environment, prospecting,
development, production, exports, taxes, labor standards, occupational health,
waste disposal, toxic substances, mine safety and other matters. Such operations
and exploration activities are also subject to substantial regulation under
these laws by governmental agencies and may require that the Company obtain
permits from various governmental agencies. The Company believes it is in
substantial compliance with all material laws and regulations which currently
apply to its activities. There can be no assurance, however, that all permits
which the Company may require for construction of mining facilities and conduct
of mining operations will be obtainable on reasonable terms or that such laws
and regulations, or that new legislation or modifications to existing
legislation, would not have an adverse effect on any exploration or mining
project which the Company might undertake.
 
 Failure
to comply with applicable laws, regulations and permitting requirements may
result in enforcement actions thereunder, including orders issued by regulatory
or judicial authorities causing operations to cease or be curtailed, and may
include corrective measures requiring capital expenditures, installation of
additional equipment or remedial actions. Parties engaged in exploration and
mining operations may be required to compensate those suffering loss or damage
by reason of the mining activities and may have civil or criminal fines or
penalties imposed for violation of applicable laws or regulations.
 
 The
enactment of new laws or amendments to current laws, regulations and permits
governing operations and activities of mining companies, or more stringent
implementation thereof, could have a material adverse impact on the Company and
cause increases in capital expenditures or production costs or reduction in
levels of production at producing properties or require abandonment or delays in
development of new mining properties.
 
 15
 To
the best of the Company’s knowledge, the Company is operating in compliance with
all applicable environmental regulations.
 
 **No
Guarantee of Title to Mineral Properties**
 While
the Company and it’s predecessor have investigated title to all of its mineral
properties and prospects, and, to the best of its knowledge, title to all of its
properties and properties in which it has the right to acquire or earn an
interest are in good standing as of the date of this Annual Report, this should
not be construed as a guarantee of title. The properties and prospects may be
subject to prior unregistered agreements or transfers unknown to the Company and
title may be affected by undetected defects, e.g. defects in staking or
acquisition process.
 
 As
there are unresolved native land claim issues in British Columbia and the Yukon
Territory, the Company’s properties and prospects in these jurisdictions may be
affected in the future. The MOR prospect is on category B lands which means the
local native group has surface rights to the area of the claims and their
permission is required to perform work on the claims.
 
 **Possible
Dilution to Present and Prospective Shareholders**
 The
Company’s plan of operation, in part, contemplates the financing of the conduct
of its business by the issuance of cash, securities of the Company, or a
combination of the two, and possibly, incurring debt. Any transaction involving
the issuance of previously authorized but unissued shares of common stock, or
securities convertible into common stock, would result in dilution, possibly
substantial, to present and prospective holders of common
stock. The Company usually seeks joint venture partners to fund in whole or in
part exploration projects. This dilutes the Company’s interest in properties it
has acquired. This dilution of interest in properties is done to spread or
minimize the risk and to expose the Company to more exploration plays but means
that any profit that might result from a possible discovery would be shared with
the joint venture partner. There is no guarantee that the Company can find a
joint venture partner for any property.
 
 **Lack
of Trading Volume**
 The
lack of trading volume of the Company’s shares reduces the liquidity of an
investment in the Company’s shares.
 
 **Volatility
of Share Price**
 Market
prices for shares of early stage companies are often volatile. Factors such as
announcements of mineral discoveries, financial results, and other factors could
have a significant effect on the price of the Company’s shares.
 
 **Risks
Associated with Penny Stock Classification**
 The
Company’s stock is subject to “penny stock” rules as defined in 1934 Securities
and Exchange Act rule 3a51-1. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks.
Transaction costs associated with purchases and sales of penny stocks are likely
to be higher than those for other securities. 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 rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized 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.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for the Company’s common shares in the
United States and shareholders may find it more difficult to sell their shares.
The Company’s common shares are subject to these penny stock rules.
 
 16
 **Material
Risk of Dilution Presented by Large Number of Outstanding Share Purchase Options
and Warrants**
 As
of March 11, 2005 there were share purchase options outstanding allowing the
holders of these options to purchase 4,176,783 shares of common stock and share
purchase warrants outstanding allowing the holders to purchase 1,848,105 shares
of common stock. Directors and officers of the Company hold 3,619,783 of these
share purchase options. An additional 557,000 share purchase options are held by
employees and consultants of the Company. None of the share purchase warrants
are held by Directors. Given the fact that as of March 11, 2005 there were
31,172,767 shares of common stock outstanding, the exercise of all of the
existing share purchase options and warrants would result in further dilution to
the existing shareholders and could depress the price of the Company’s
shares.
 
 These
shares may be issued and could depress the price of the Company’s
shares.
 
 **History
of Net Losses**
 Both
the Company and its predecessor (“Fairfield”) had net losses in a number of
years since their dates of incorporation - 9/25/1980 for the Company and
10/23/1984 for Fairfield. Due to the nature of the Company’s business, there can
be no assurance that the Company will be profitable. The Company had net losses
of $3,065,803 in Fiscal 2004, $1,326,305 in Fiscal 2003 and $3,198,025 in Fiscal
2002.
 
 The
cumulative net loss of the Company as at December 31, 2004 was
$16,762,004.
 
 **No
Proven Reserves**
 The
properties and prospects in which the Company has an interest or the properties
in which the Company has the right to earn an interest are in the exploratory
stage only, are without a known body of ore and are not in commercial
production.
 
 **Uncertainty
of Reserves and Mineralization Estimates**
 There
are numerous uncertainties inherent in estimating proven
and probable reserves and mineralization, including many factors beyond the control of the Company.
The estimation of reserves and mineralization is a subjective process and the
accuracy of any such estimates is a function of the quality of available data
and of engineering and geological interpretation and judgement. Results of
drilling, metallurgical testing and production and the evaluation of mine plans
subsequent to the date of any estimate may justify revision of such estimates.
No assurances can be given that the volume and grade of reserves recovered and
rates of production will not be less than anticipated. Assumptions about prices
are subject to greater uncertainty and metals prices have fluctuated widely in
the past. Declines in the market price of base or precious metals also may
render reserves or mineralization containing relatively lower grades of ore
uneconomic to exploit. Changes in operating and capital costs and other factors
including, but not limiting to, short-term operating factors such as the need
for sequential development of ore bodies and the processing of new or different
ore grades, may materially and adversely affect reserves.
 
 **Foreign** **Incorporation
and Civil** **Liabilities**
 The
Company amalgamated under the laws of the Province of British Columbia, Canada.
All of the Company’s directors and officers are residents of Canada and
substantially all of the Company’s assets and its subsidiary are located outside
the United States. Consequently, it may be difficult for United States investors
to effect service of process in the United States upon those directors and
officers who are not residents of the United States, or to realize in the United
States upon judgements of United States courts predicated upon civil liabilities
whether under the United States Securities Exchange Act of 1934, as amended, or
otherwise.
 
 **Conflict
of Interest**
 Some
of the Company’s directors and officers are directors and officers of other
natural resource or mining-related companies. These associations may give rise
from time to time to conflicts of interest. As a result of which, the Company
may miss the opportunity to participate in certain transactions and may have a
material, adverse effect on its financial position.
 
 17
 **Foreign
Operations**
 The
Company currently has exploration projects located in Mexico. The Company’s
foreign activities are subject to the risk normally associated with conducting
business in foreign countries, including exchange controls and currency
fluctuations, limitations on repatriation of earnings, foreign taxation, laws or
policies of particular countries, labor practices and disputes, and uncertain
political and economic environments, as well as risks of war and civil
disturbances, or other risk that could cause exploration or development
difficulties or stoppages, restrict the movement of funds or result in the
deprivation or loss of contract rights or the taking of property by
nationalization or expropriation without fair compensation. Foreign operations
could also be adversely impacted by laws and policies of the United States
affecting foreign trade, investment and taxation.
 
 **Foreign
Currency Fluctuations**
 At
the present time, some of the Company’s activities are carried on outside of
Canada. Accordingly, it is subject to risks associated with fluctuations of the
rate of exchange between the Canadian dollar and foreign
currencies.
 
 The
Company is currently not engaged in currency hedging to offset any risk of
exchange rate fluctuation and currently has no plans to engage in currency
hedging.
 
 **Operating
Hazards and Risks Associated with the Mining Industry**
 Mining
operations generally involve a high degree of risk, which even a combination of
experience, knowledge and careful evaluation may not be able to overcome.
Hazards such as unusual or unexpected geological formations and other conditions
are involved. Operations in which the Company has a direct or indirect interest
will be subject to all the hazards and risks normally incidental to exploration,
development and production of minerals, any of which could result in work
stoppages, damage to or destruction of mines and other producing facilities,
damage to or loss of life and property, environmental damage and possible legal
liability for any or all damage or loss. The Company may become subject to
liability for cave-ins and other hazards for which it cannot insure or against
which it may elect not to insure where premium costs are disproportionate to the
Company’s perception of the relevant risks. The payment of such insurance
premiums and the incurring of such liabilities would reduce the funds available
for exploration activities.
 
 **The
Ability to Manage Growth**
 Should
the Company be successful in its efforts to develop its mineral properties or to
raise capital for such development or for the development of other mining
ventures it will experience significant growth in operations. If this occurs
management anticipates that additional expansion will be required in order to
continue development. Any expansion of the Company’s business would place
further demands on its management, operational capacity and financial resources.
The Company anticipates that it will need to recruit qualified personnel in all
areas of its operations. There can be no assurance that the Company will be
effective in retaining its current personnel or attracting and retaining
additional qualified personnel, expanding its operational capacity or otherwise
managing growth. The failure to manage growth effectively could have a material
adverse effect on the Company's business, financial condition and results of
operations.
 
 **Lack
of a Dividend Policy**
 The
Company does not presently intend to pay cash dividends in the foreseeable
future, as any earnings are expected to be retained for use in developing and
expanding its business. However, the actual amount of dividends which the
Company may pay will remain subject to the discretion of the Company’s Board of
Directors and will depend on results of operations, cash requirements and future
prospects of the Company and other factors.
 
 **Competition**
 There
is competition from other mining exploration companies with operations similar
to those of the Company's. Many of the mining companies with which the Company
competes have operations and financial strength many times greater than that of
the Company.
 
 **Dependence
on Key Personnel**
 The
Company strongly depends on the business and technical expertise of its
management and key personnel, in particular, Duane Poliquin and Morgan Poliquin.
There is little possibility that this dependence will decrease in the near term.
As the Company’s operations expand, additional general management resources will
be required, especially since the Company encounters risks that are inherent in
doing business in several countries. The Company carries no life insurance on
its management and key personnel.
 
 18
 **Item
4. Information on the Company**
 
 **History
& Development of the Company**
 The
head office of the Company is located at 750 West Pender Street, Suite 1103,
Vancouver, British Columbia, Canada, V6C 2T8. The registered and records office
of the Company is 1185 West Georgia Street, Suite 1550, Vancouver, British
Columbia, Canada, V6E 4E6.
 
 The
contact persons are Duane Poliquin, President and Morgan Poliquin, Director. The
telephone number is (604) 689-7644. The fax number is (604) 689-7645. The email address
is info@almadenminerals.com .
The web-site address is www.almadenminerals.com .
 
 James
E. McInnes is Chair of the independent directors. The telephone number is (604)
662-4480. The fax number is (604) 685-0553. The email address is
jmcinnes@telus.net.
 
 On
August 1, 2001, Fairfield Minerals Ltd. (“Fairfield”) and Almaden Resources
Corporation (“Resources”) entered into an Amalgamation Agreement providing for
the amalgamation of the two companies and continuation as one company under the
name “Almaden Minerals Ltd.” It was the view of the Boards of Directors of
Fairfield and Resources that the amalgamation of the two companies would create
an entity which will be able to attract more senior financing and would also
result in administrative savings by the consolidation of the
operations.
 
 Final
determination of the basis for the share exchange ratio for the shareholders of
the two companies in the amalgamated company was determined upon completion of a
Valuation Report and a Fairness Opinion on the proposed amalgamation conducted
by two independent evaluators retained by the companies. The basis for the share
exchange was determined to be 1 common share of Almaden Minerals Ltd. for every
one share of Fairfield held and 0.77 common shares of Almaden Minerals Ltd. for
every one common share of Resources held.
 
 Ontario
Securities Commission Rule 61-501 and Toronto Stock Exchange policies required
majority of minority approval. Accordingly, the amalgamation also required the
approval of a majority of the shares voted on the Special Resolution excluding,
in the Fairfield meeting, the shares held by Resources, its insiders, associates
and affiliates, and in the Resources meeting, the shares held by Fairfield, its
insiders, associates and affiliates. On December 20, 2001, both companies held a
Meeting of Members at which time members of each of the amalgamating companies
were asked to consider, and if thought advisable, adopt a Special Resolution to
approve the amalgamation. The Special Resolution was approved.
 
 The
amalgamation was further subject to the approval of the Supreme Court of British
Columbia. The Order of the Supreme Court of British Columbia was dated December
28, 2001, which Order included a hearing and determination that the issuance and
exchange of securities was fair.
 
 The
terms of the Articles and Memorandum of the amalgamated company were approved by
the Registrar of Companies on September 28, 2001. Essentially, under the
provision of the *Company
Act* pursuant to which the amalgamation proceeded all matters of substance were
accomplished by December 31, 2001. The application for the Certificate of
Amalgamation was filed with the Registrar of Companies but its issuance was
requested held in order to permit co-ordination with the listing of the shares
of Almaden Minerals Ltd. on the Toronto Stock Exchange and to avoid any extended
trading of Fairfield on the Toronto Stock Exchange and Resources on the Canadian
Venture Exchange.
 
 The
Company was advised in late January, early February 2002 that the Toronto Stock
Exchange had accepted the application for the listing of the shares of Almaden
Minerals Ltd. On February 1, 2002, the Registrar of Companies issued the
Certificate of Amalgamation.
 
 Based
on the chronology of these events, the Company has determined that for
accounting and taxation purposes the amalgamation is effective December 31,
2001.
 
 The
Company was amalgamated in British Columbia and operates under the laws of the
Province of British Columbia, Canada. At the Annual and Special General meeting
of the Company scheduled for May 18, 2005, shareholders will be asked to
consider and if deemed advisable to pass appropriate resolutions to, among other
things, to complete transition procedures in accordance with the *Business
Corporations Act (British Columbia)* ,
(the “New Act”), increase the number of common shares which the Company is
authorized to issue to an unlimited number of common shares and to cancel the
Company’s present Articles and adopt new Articles to take advantage of
provisions of the New Act. The New Act was adopted in British Columbia on March
29, 2004 replacing the *Company
Act* (the “Former Act”).
 
 19
 The
Company’s common shares began trading on The Toronto Stock Exchange (“TSX”)
under the symbol “AMM” on February 11, 2002. Almaden Resources Corporation’s
initial public offering on the Vancouver Stock Exchange was pursuant to a
prospectus dated October 10, 1986. The shares of Fairfield Minerals Ltd. began
trading on the Vancouver Stock Exchange on July 18, 1986 and on The Toronto
Stock Exchange on May 21, 1990.
 
 There
have been no public takeover offers by third parties in respect of the Company’s
shares and the Company has made no public takeover offers in respect of other
company’s shares.
 
 **Organizational
Structure**
 The
Company currently has five wholly-owned subsidiaries that were formed to hold
properties in their respective jurisdictions-refer to Exhibit 8 to this 20-F
Annual Report.
 
 At
December 31, 2004, the Company owned a 40% share interest in ATW Resources Ltd.
("ATW"), a company incorporated in the Northwest Territories, Canada on January
6, 1993. On January 21, 2005 the Company purchased a further 10% share interest
in ATW and now owns a 50% share interest in ATW.
 
 **Business
of the Company**
 The
Company is engaged in the business of the acquisition, exploration and when
warranted, development of mineral properties. The Company has property interests
in Canada and Mexico. None of the Company's property interests are beyond
exploration stage. Presently there is no assurance that any of the Company's
mining properties or prospects contain a commercially viable ore body (reserve)
until further exploration work is done and final feasibility study based upon
such work is concluded. The Company is in the exploration stage and has not
generated any revenues from operations.
 
 **Company’s
Principal Properties**
 The
Company has five principal property interests: (1) the Elk gold, silver property
which includes the Siwash Gold deposit in Canada (100% interest), (2) the ATW
diamond prospect in Canada (50% share interest = net 37.5% property interest),
(3) the Caballo Blanco gold, silver, copper prospect in Mexico (option to
purchase 100% interest subject to a 60% option agreement earn in right by
Comaplex Minerals Corp. and a sliding scale NSR), (4) the Fuego copper, gold
prospect in Mexico (100% interest subject to a 60% option agreement earn in
right by Horseshoe Gold Mining Inc.), and (5) the San Carlos copper, gold,
silver prospect in Mexico (consists of the San Carlos concession (100% interest)
and the San Jose claim (100% interest subject to a 2% NSR) all subject to a 60%
option agreement earn in right by Hawkeye Gold and Diamond Ltd.). The El Pulpo
copper, gold prospect in Mexico has, subject to regulatory approval (granted
March 24, 2005), been sold to Ross River Minerals Inc.
 
 **Company’s
Secondary Properties**
 The
Company’s secondary property interests include the Ram prospect in Canada (100%
interest subject to a 70% earn in right by Ross River Minerals Inc.), the Rock
River Coal project in Canada (50% interest), the PV prospect in Canada (100%
interest subject to a 60% earn in right by Consolidated Spire Ventures Ltd.),
the MOR prospect (100% interest subject to a 60% earn in right by Kobex
Resources Ltd.), the Sam, Cabin Lake, Caribou Creek, Tim, Meister River and
Merit prospects in Canada (100% interests), the Logan property in Canada (40%
net carried interest to production), the Yago prospect in Mexico (consists of
the Tepic claim (100% interest) and the La Sarda concession (100% interest)),
the Galeana prospect in Mexico (option to acquire 100% interest), the Santa
Maria prospect in Mexico (100% interest), the Guadalupe prospect in Mexico (100%
interest subject to a 60% earn in right by Grid Capital Corporation), and the
Tropico prospect in Mexico (40% interest).
 
 The
Company has several other property holdings in Canada, United States and Mexico
that are not considered
either principal or secondary properties.
 
 The
Company also entered into a joint venture agreement in Fiscal 2002 with BHP
Billiton World Exploration Inc. to undertake exploration in eastern Mexico.
Phase I results are currently being reviewed.
 
  20
  ***Business
Overview***
 
 ***PRINCIPLE
PROPERTY INTERESTS IN CANADA***
 
   21
  
 **The
Elk Property - Canada**
 
   22
  The
Elk Property contains a known mineral deposit but all current work by the
Company on the property is exploratory in nature.
 
 ***Option
to Acquire Interest***
 Initial
staking was undertaken in November 1986 with additions in 1987, 1988 and 1989. A
block comprising 72 units was optioned in October 1988. The Siwash North mining
lease was issued in September 1992. Claim acquisition and subsequent work were
conducted by Cordilleran Engineering Ltd. for the Company’s predecessor
(“Fairfield”) until April 1995 when Fairfield assumed operations. Fairfield
merged with Almaden Resources Corporation in February 2002 and the claims were
transferred to the amalgamated company Almaden Minerals Ltd.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $912,549 in exploration costs including a
diamond drill program on the property. As at December 31, 2004, the Company had
deferred $2,557,245 of exploration costs on this property.
 
 ***Location
and Access***
 The
Elk Property consists of 82 contiguous mineral claims comprising 491 units plus
a 6 unit mining lease located 40 kilometers west of Peachland, British Columbia
in the Similkameen Mining Division. The claims cover forested, gently rolling
hills with fair to poor bedrock exposure. The property is accessible by paved
highway, 50 kilometers from Westbank, British Columbia, or 50 kilometers from
the town of Merritt, British Columbia.
 
 ***History
and Recent Work***
 The
property includes the Siwash Gold Mine, which, between 1992 and 1997, produced
51,460 ounces (1,600400 gm) of gold at an average grade of 2.78 oz/t
(95.32gm/t).
 
 Work
conducted on the property from 1986 to 1991 consisted of geological mapping,
prospecting, linecutting, soil sampling, geophysics, excavator trenching (8.69
km), diamond drilling (111 holes, 12,524 m) and road construction.
 
 During
1992, a bulk sample was extracted from an open pit on the Siwash vein in the
Siwash North area. It totalled 2240 tons (2032 tonnes) grading 4.016 ounces/ton
(137.7 gm/t) gold. A total of 70 reverse circulation holes were drilled to
confirm the vein grade and continuity in the 1993 pit expansion area. Open pit
mining was carried out by Wiltech Developments of Kelowna, B.C. under the
supervision of Cordilleran Engineering. The ore was shipped to the Noranda
smelter in Rouyn, Quebec in November.
 
 In
1993, bulk sampling from the open pit continued with the extraction of 3733 tons
(3386 tonnes) of mineralized material grading 3.080 oz/t (105.6 gm/t) gold.
Wiltech Developments was contracted to carry out the open pit mining under
supervision of Cordilleran Engineering personnel. Mainstreet Mining of
Whitehorse, Yukon was contracted to undertake underground development to provide
access for test mining and underground drilling. The 3.5 by 3.0 metre decline
was collared at the 1628m elevation in June and reached the 1570m elevation in
October. Test mining stopes were excavated at the 1611 and 1570 levels. Ore from
the open pit and underground operations was shipped through the summer and fall
to the Asarco smelter in Helena Montana. Eleven reverse circulation holes were
drilled to the south of the open pit to provide closer spaced data for the
planning of the 1994 open pit expansion.
 
 In
1994, Fairfield received a mining permit, the open pit was expanded to a total
size of 458,000 cubic metres and 10,119 tons (9,180 tonnes) of ore grading 2.669
oz/ton (91.51gm/t) gold were extracted. Ledcor Industries of Vancouver, B.C. was
contracted to carry out the open pit excavation under the supervision of
Cordilleran Engineering Ltd. The ore was crushed to minus 6 inches and was
shipped to the Asarco Smelter in Helena Montana. Fairfield received credits for
gold, silver and silica. An underground drill program was carried out at ten to
twenty metre centres for a total of 2419 metres in 84 NQ holes to help define
underground mineable shoots.
 
 During
1995 underground development was completed to the 1511m elevation and longhole
and shrinkage mining tests were carried out with shrinkage proving to be the
more applicable method. An underground drill program comprising 217 NQ holes at
ten metres centres for a total of 7612 metres was undertaken to fully test the
area accessible by the existing underground development. Ninety-eight surface NQ
diamond drill holes tested the areas beyond the reach of the decline and other
targets on the claim group for a total of 4645m. Including all previous
drilling, an area of about 340m by 150m had been tested at a hole spacing of
less than 20m.
 
 23
 Surface
diamond drilling totalling 6946.34 meters in 88 holes was completed on the
Siwash mining lease during 1996. Detailed drilling in the area of the proposed
Phase 5.5 open pit at approximately 20 meter centers outlined an open pitable
volume of mineralized material of 16,200 ounces of (503,820 gm) gold in 10,146
tons (9204 tonnes) at a grade of 1.597 oz/t (54.75 gm/t). Five holes were
drilled in the Deep B area down dip from the existing underground development
and increased the amount of mineralized material in this area to 12,200 tons
(11,070 tonnes) at a grade of 2.925 oz/t (100.29 gm/t). A new vein, known as the
WD zone was outlined by 25 holes over a strike length of 440 meters and added
6000 tons (5,440 tonnes) of mineralized material at 3.049 oz/t (104.5 gm/t) Au
to the property inventory. A soil geochemistry anomaly in the Gold Creek West
area was examined with five drill holes and another vein was defined over a
strike length of 160 meters with grades up to 0.574 oz/ton (19.7 gm/t) of gold
over 0.33m.
 
 Limited
prospecting, environmental monitoring and reclamation was done on the property
between 1997 and 1999.
 
 During
August 2000, Fairfield completed a twelve-hole 1400-metre drill program on the
property which targeted three gold bearing quartz vein systems in the Siwash
Mine area. Prospecting in a new logging clearcut one kilometre to the east of
the mine area has resulted in the discovery of two northeast trending structures
coincident with anomalous gold soil values.
 
 All
rock and soil samples were sent to Acme Analytical Labs of Vancouver, Canada for
assay and analysis. Check samples were sent to Chemex Labs of Vancouver.
Environmental water quality samples were sent to ASL Labs of
Vancouver.
  
 During
2001, a 230-metre trenching program comprising seven trenches was carried out on
the claims in the Siwash East and Gold Creek West areas. The trenches were dug
to determine the source of gold bearing quartz fragments found on surface and in
road cuts. Six trenches in the Siwash East area, located 1.7 km to the east of
the Siwash Mine site, exposed quartz veins up to 20cm thick and narrow pyritic
fault zones cutting quartz monzonite adjacent to an andesite dyke. The andesite
dyke was traced over 150 metres in four trenches with strong alteration and
narrow bands of pyritic gouge containing quartz fragments in the immediate
vicinity of the dyke. Trench SE01-4 was dug to a depth of 2.5 metres and exposed
a steeply dipping quartz vein about 20cm thick. A 0.5 by 0.5 meter panel sample
of the same vein taken in the wall of the trench returned 0.635 oz/ton (21.8
gm/t) gold and 0.96 oz/ton (32.9 gm/t) silver. Adjacent trenches 35 meters to
the west and 50 meters east exposed the andesite dyke with a strong alteration
zone but no quartz veins and weak gold values.
 
 Trench
GCT01-1 was excavated the Gold Creek West area, 400 meters southwest of the mine
site, to further expose a quartz vein discovered earlier in the year by hand
trenching. Deeper excavation revealed a discontinuous quartz vein approximately
30cm thick over a length of nine meters hosted in strongly argillically altered
quartz monzonite that shows evidence of slumping and deformation. The vein
returned a value of 0.598 oz/ton (20.5 gm/t) gold and 1.74 oz/ton (59.6 gm/t)
silver from a 0.8 meter by 0.5 meter panel sample.
 
 A
comprehensive review of the property database
was completed on August 31, 2001 by Leo King, P.Eng., an independent consultant. His report recommends a three stage
9500 meter drill program to further explore the Siwash, Gold Creek West and WD
vein systems.
 
 During
the 2002 field season twenty six NQ diamond drill holes tested the WD, B Zone,
Gold Creek West and Bullion Creek vein systems for a total of 4996m. Seven holes
were drilled into the WD zone to test the perimeter of the known shoot. The WD
veins were intersected in all holes close to the projected depths with grades up
to 2.66 oz/t (91.2 gm/t) Au over a true width of 0.50m. Eleven holes were
drilled into the Deep B shoot located immediately below the existing underground
development to fill-in the drill spacing to less than 25 meters and to test the
perimeter of the known mineralization. Two holes were drilled on the west side
of the existing open pit to help determine the feasibility of a pit expansion to
the west. The Gold Creek West vein located approximately 450m southwest of the
existing open pit was tested with four holes in two 50 meter step-outs to the
west of the existing grid. Two holes were drilled into the Bullion Creek
structure located 700 meters to the north of the open pit to test a geochemical
anomaly.
 
 During
Fiscal 2002 the Company purchased a mill for possible use at the Siwash
property. The mill, with a rated capacity of 125 tons per day, was purchased for
US$75,000 (CDN$118,500). During Fiscal 2003, the mill was dismantled and moved
to a storage facility near the property at a cost of $204,766. There has been no
feasibility study to justify construction of the mill nor have permits to
construct the mill been applied for. The mill was purchased because it would be
suitable for processing the Siwash mineralized material and the price was below
replacement cost. This low cost could have an impact on project economics. If
studies indicate it would not be feasible to install this mill on the Siwash
project, the mill will be sold. The Company has received an estimate that the
mill could be sold for approximately $380,000.
 
 24
 Water
sampling from eight sites around the mine area has been carried out since 1991
to determine changes in element concentrations due to mining and exploration
activities. Metal levels in the major creeks have remained well within guideline
limits though some minor increases in Cu and Zn have been noted in the sumps and
minor creeks in the immediate minesite area. Benthic invertebrate studies were
carried out during 2003 and 2004 and determined that invertebrate populations
have not been significantly effected.
 
 ***Geology
and Mineral Deposits***
 Gold-silver
mineralization on the Elk Property is hosted by mesothermal pyritiferous quartz
veins and pyritiferous altered granite and volcanics. The mineralized features
generally trend northeasterly and are thought to be Late Cretaceous or Tertiary
in age. To date, mineralization has been located in eight areas of the Elk
property: Siwash North, South Showing, Discovery Showing, Lake Zone, End Zone,
Great Wall Zone, Elusive Creek, Gold Creek West, WD Zone and the Bullion Creek
area.
 
 The
most recent estimate of contained mineralized material in the Siwash Mine area
was calculated by Giroux Consultants Ltd. on completion of the 2003 drill
program.
 
 This
calculation used geostatistical methods and incorporated drill results from 2002
and 2003 that were not included in the last estimate which was calculated in
2000. The year 2000 estimate reported an indicated
resource of 87,700 oz (2,727,700 grams) gold in 61,300 tons (55,600 tonnes) and
a probable reserve of 45,200 oz (1,405,900 gm) gold in 44,500 tons (40,400
tonnes) for a total of 141,962 ounces (4,415,500 gm) in 123,142 tons (111,710
tonnes) using a cutoff grade of 0.438 oz/t over a 3.3 ft true width (15
gmt-m).
 
 In
the course of analysing the data for the calculation of the new resource
estimate it was recognised that, adjacent to both the B and WD vein systems,
parallel, less continuous splay veins have been intersected in the drilling. As
a result two resource estimates were produced; a two dimensional model which
considers only the B and WD veins in what would be an underground mineable
resource and a three dimensional model which considers the parallel splay veins,
in the B vein only, to allow for the possibility of bulk tonnage mining. It must
be noted that the tonnage and volume contained in the second, three dimensional
model, would include a significant proportion the B Flat, B Steep and B East
vein resource estimated in the 2D resource estimate. A tabular presentation of
the two resource estimates are as follows:
  25
  **Underground
2D Resource Estimate 2004**
 **Measured
      and Indicated Resource**
    **Inferred
      Resource****Area**
    **Gold
      Cut off Grade**
    **Tonnes**
    **Gold
      Grade (g/t)**
    **Contained
      Ounces Gold**
    **Tonnes**
    **Gold
      Grade (g/t)**
    **Contained
      Ounces Gold****B
      Flat Vein**
    7
      g/t
    20,700
    19.41
    12,900
    500
    7.74
    100**B
      Steep Vein**
    7
      g/t
    71,800
    44.69
    103,200
    59,800
    19.77
    38,000**B
      East Vein**
    7
      g/t
    28,900
    22.30
    20,700
    36,200
    15.51
    18,100**WD
      Vein**
    7
      g/t
    42,600
    29.82
    40,800
    98,700
    14.69
    46,600**Total**
    **7
      g/t**
    **164,000**
    **33.69**
    **177,600**
    **195,200**
    **16.38**
    **102,800**
 
 **Bulk
Mining 3D Resource Estimate 2004**
 **Measured
      and Indicated Resource**
    **Inferred
      Resource****Gold
      Cut off Grade**
    **Tonnes**
    **Gold
      Grade (grams per tonne)**
    **Contained
      Ounces Gold**
    **Tonnes**
    **Gold
      Grade (grams per tonne)**
    **Contained
      Ounces Gold**0.5
      g/t
    808,200
    3.264
    84,800
    1,488,300
    2.570
    123,0001.0
      g/t
    564,100
    4.361
    79,100
    1,138,900
    3.126
    114,500
 
 Combining
the portions of the 2D underground resource not included in the bulk mining
resource, with the 3D bulk mining resource results in a new global inferred,
indicated and measured resource for the Siwash Project of resource as tabulated
below:
 
 **Combined
Global Resource Estimate 2004**
 **Measured
      and Indicated Resource**
    **Inferred
      Resource****Area**
    **Gold
      Cut off Grade**
    **Tonnes**
    **Gold
      Grade (grams per tonne)**
    **Contained
      Ounces Gold**
    **Tonnes**
    **Gold
      Grade (grams per tonne)**
    **Contained
      Ounces Gold****B
      Flat Vein**
    7
      g/t
    19,100
    26.70
    16,400
    500
    7.74
    100**B
      Steep Vein**
    7
      g/t
    39,700
    54.50
    69,600
    53,300
    19.93
    34,200**B
      East Vein**
    7
      g/t
    2,800
    19.43
    1,700
    25,800
    14.98
    12,400**WD
      Vein**
    7
      g/t
    42,600
    29.82
    40,800
    98,700
    14.69
    46,600**1.0
      cut off open pit**
    1.0
      g/t
    564,100
    4.361
    79,100
    1,138,900
    3.126
    114,500**Total**
    
    **668,300**
    **9.66**
    **207,600**
    **1,317,200**
    **4.91**
    **207,800**
 
 Both
the bulk tonnage and high grade vein resources are open along strike in both
directions and to depth .
Mr. Gary Giroux, M.A.Sc., P.Eng. of Giroux Consultants Ltd. supervised the
resource calculation and is the qualified person under the meaning of National
Instrument 43-101. The qualified person and supervisor for the 2002 and 2003
exploration drill programs was Wojtek Jakubowski, P. Geo. All samples were
analyzed at Acme Analytical Labs in Vancouver using wet geochemical, fire assay
and metallics techniques. Duplicate and blank samples and standards were
included in the sample shipments sent to Acme and confirmed procedural quality.
Check assays were carried out by ALS Chemex Labs in Vancouver.
 
 ***Infrastructure***
 All
major services and labour can be found in Merritt or Westbank, towns accessible
by four lane highway to the east and west of the property. There is good road
access throughout most of the property by logging roads and a major highway
(97C) crosses the northern claims. Two phase power is available at the highway
2km north of the mine site. A gas station, motel and restaurant are located at
the highway access on the northern claims. Cell phone and radio phone
communications are available from the mine site.
 
 ***Recent
Drilling Results***
 Thirty
NQ diamond drill holes drilled between August 6 and November 1, 2003 tested the
WD Zone for a total of 6570.56m. Seven holes were drilled into the WD vein
system to the west of the north-northwest trending RB fault located roughly
between 2340E and 2400E.
 Twenty
five holes were drilled to the east of the RB fault between 2370E and 2670E to
extend the known resource. The WD zone(s) were intersected in all but three
holes which were terminated before the target depth due to excessive deviation
or bad ground conditions. The known zone was extended to 2670E and to a depth of
340m below surface and 380m down dip. Fill-in drilling on sections 2445E, 2495E
and 2545E intersected the WD veins at the expected depth however gold grades
were not as high as those found on adjacent fences. A summary of composited
drill results greater than 10 gm/t-meter Au is listed below.
 
 26
 **Hole**
    **Depth**
    **Depth**
    **Interval**
    **True**
    **Specific**
    
    **Au**
    **Ag**
    **Au**
    **Ag****Number**
    **From
      (m)**
    **To
      (m)**
    **(m)**
    **Width
      (m)**
    **Gravity**
    **Zone**
    **gm/t**
    **gm/t**
    **oz/t**
    **oz/t**SND03338
    11.65
    32.45
    20.80
    17.31
    2.70
    B
    1.20
    0.51
    0.035
    0.015SND03339
    44.20
    44.71
    0.51
    0.50
    2.70
    B
    22.60
    31.58
    0.659
    0.921SND03339
    29.00
    60.25
    31.25
    29.67
    2.70
    B
    0.53
    0.00
    0.015
    0.000SND03349
    38.30
    51.25
    12.95
    12.37
    2.70
    B
    0.96
    0.00
    0.028
    0.000SND03357
    35.50
    43.80
    8.30
    8.14
    2.70
    Ba
    2.22
    0.70
    0.065
    0.020SND03357
    43.29
    43.80
    0.51
    0.50
    2.70
    Bb
    29.84
    11.39
    0.870
    0.332SND03357
    35.55
    48.00
    12.45
    12.19
    2.70
    Bb
    1.49
    0.47
    0.043
    0.014SND03348
    139.23
    140.15
    0.92
    0.50
    2.82
    C?
    35.09
    52.76
    1.023
    1.539SND03340
    49.89
    50.40
    0.51
    0.50
    2.69
    C1
    24.91
    7.12
    0.726
    0.208SND03340
    47.20
    61.20
    14.00
    12.92
    2.70
    C1
    1.16
    0.28
    0.034
    0.008SND03340
    41.35
    58.15
    16.80
    16.24
    2.70
    C1
    0.93
    0.22
    0.027
    0.006SND03341
    50.97
    51.48
    0.51
    0.50
    2.73
    C1
    78.56
    38.83
    2.291
    1.133SND03341
    48.45
    70.10
    21.65
    21.05
    2.70
    C1
    2.02
    0.94
    0.059
    0.027SND03342
    52.00
    73.60
    21.60
    19.05
    2.70
    C1
    0.65
    1.16
    0.019
    0.034SND03346
    20.50
    40.71
    20.21
    19.54
    2.70
    C1
    0.84
    1.43
    0.025
    0.042SND03343
    88.55
    96.70
    8.15
    7.88
    2.71
    D
    4.39
    9.52
    0.128
    0.278SND03363
    9.35
    37.80
    28.45
    26.85
    2.70
    D1
    0.57
    0.06
    0.017
    0.002SND03343
    95.60
    96.75
    1.15
    1.00
    2.78
    D2
    33.18
    73.10
    0.968
    2.132SND03337
    253.12
    254.30
    1.18
    1.00
    2.95
    WD
    28.25
    125.07
    0.824
    3.648SND03340
    267.92
    269.07
    1.15
    1.00
    2.75
    WD
    11.47
    35.12
    0.335
    1.024SND03346
    152.75
    153.91
    1.16
    1.00
    2.74
    WD
    15.90
    87.07
    0.464
    2.539SND03347
    202.88
    204.10
    1.22
    1.00
    2.72
    WD
    27.79
    49.97
    0.810
    1.458SND03364
    196.57
    197.70
    1.13
    0.80
    2.76
    WD
    16.14
    44.40
    0.471
    1.295SND03365
    171.64
    173.10
    1.46
    1.10
    2.71
    WD
    10.09
    21.73
    0.294
    0.634SND03354
    274.30
    274.82
    0.52
    0.50
    3.15
    WD2
    219.96
    354.42
    6.415
    10.337SND03358
    336.29
    337.71
    1.42
    1.20
    2.74
    WDa
    11.88
    36.64
    0.346
    1.069SND03355
    345.20
    345.80
    0.60
    0.50
    2.68
    WDaZ
    85.84
    18.19
    2.504
    0.530
 
 The
2004 diamond drill program in the Siwash Gold Mine area was completed in early
November for a total of 10265 meters of NQ drilling in 44 holes. The program
extended the known perimeter of the WD zone 150 metres to the east and 100
meters downdip in 50 meter step-outs. Seven holes were drilled into the B zone
to test a southwest shoot to depth and to fill in between existing 50 meter
intercepts below the existing mine workings. Four holes were drilled to test the
Bullion Creek zone over a 100m strike length. All completed holes intersected
the projected zones. Two holes were abandoned due to poor ground conditions.
Geological interpretation and re-assaying has been completed and a summary of
composited drill results greater than 10 gm/t-meter Au is listed
below.
  27
  
 **Hole**
    **Depth**
    **Depth**
    **Interval**
    **True**
    **Specific**
    
    **Au**
    **Ag**
    **Au**
    **Ag****Number**
    **From
      (m)**
    **To
      (m)**
    **(m)**
    **Width
      (m)**
    **Gravity**
    **Zone**
    **gm/t**
    **gm/t**
    **oz/t**
    **oz/t**SND04391
    55.23
    55.74
    0.51
    0.50
    2.77
    B
    74.83
    119.25
    2.182
    3.478SND04390
    55.05
    55.65
    0.60
    0.60
    2.73
    B
    43.40
    90.68
    1.266
    2.645SND04390
    55.15
    68.39
    13.24
    13.15
    2.70
    B
    3.11
    4.71
    0.091
    0.137SND04390
    43.00
    68.39
    25.39
    24.01
    2.70
    B
    1.76
    2.58
    0.051
    0.075SND04400
    297.29
    297.80
    0.51
    0.50
    2.99
    B
    48.12
    27.14
    1.403
    0.792SND04403
    337.80
    338.34
    0.54
    0.50
    2.79
    B
    20.26
    9.64
    0.591
    0.281SND04408
    192.00
    192.58
    0.58
    0.50
    2.71
    B
    22.14
    12.64
    0.646
    0.369SND04374
    50.10
    53.61
    3.51
    3.42
    2.72
    Bb
    8.51
    32.79
    0.248
    0.956SND04375
    14.87
    36.40
    21.53
    20.43
    2.70
    Bb
    0.69
    0.14
    0.020
    0.004SND04390
    67.39
    68.41
    1.02
    1.00
    2.70
    C
    13.73
    6.89
    0.401
    0.201SND04369
    160.55
    161.20
    0.65
    0.50
    2.74
    WD
    24.75
    44.22
    0.722
    1.290SND04406
    202.23
    203.42
    1.19
    0.50
    2.70
    WD
    22.81
    32.61
    0.665
    0.951SND04384
    155.70
    156.88
    1.18
    1.00
    2.78
    WDa
    61.81
    99.82
    1.803
    2.911SND04386
    198.50
    199.21
    0.71
    0.50
    2.67
    WDa
    21.62
    26.05
    0.631
    0.760SND04367
    214.63
    222.74
    8.11
    5.79
    2.71
    WD2
    5.97
    4.81
    0.174
    0.140SND04367
    214.59
    215.34
    0.75
    0.60
    2.72
    WD2
    20.51
    14.55
    0.598
    0.424SND04368
    157.76
    158.32
    0.56
    0.50
    2.74
    WD2
    31.18
    32.93
    0.910
    0.960SND04372
    233.00
    235.60
    2.60
    2.22
    2.86
    WD2
    4.80
    7.56
    0.140
    0.220SND04407
    179.37
    179.90
    0.53
    0.50
    2.78
    WD2
    20.70
    53.26
    0.604
    1.553SND04366
    176.05
    193.20
    17.15
    11.27
    2.70
    WD2-3
    2.39
    1.85
    0.070
    0.054SND04367
    222.00
    222.74
    0.74
    0.50
    2.75
    WD3
    31.71
    31.30
    0.925
    0.913SND04367
    217.33
    222.83
    5.50
    4.60
    2.71
    WD3
    5.94
    4.15
    0.173
    0.121
 
 All
samples were analyzed at Acme Analytical Labs in Vancouver using wet
geochemical, fire assay and metallics techniques. Duplicate and blank samples as
well as standards were included in the sample shipments sent to Acme and
confirmed procedural quality. Check assays will be carried out by ALS Chemex
Labs in Vancouver.
 
 A
magnetometer survey was carried out between the Siwash East area and Siwash
North to trace andesite dykes that are associated with gold bearing
mineralization.
 
 Biological
studies of the watercourses affected by the minesite have been completed and
flow measurements are in progress to determine rates of dewatering of the mine
workings.
 
 The
qualified person and supervisor for the 2004 exploration drill program was
Wojtek Jakubowski, P. Geo.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company’s exploration program for Fiscal 2005 includes further diamond drilling,
mainly on the Siwash and WD veins, at a budgeted cost of $1,000,000.
 
 
  28
  **The
ATW Prospect - Canada**
 
   29
  This
diamond exploration prospect is without known reserves and all current work by
the Company on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 In
Fiscal 1992, these claims were acquired directly by staking and additional
claims were acquired from Michael Magrum by ATW Resources Ltd. (“ATW”). The
Company owned a 40% share interest in ATW along with Williams Creek Explorations
Limited-40% share interest and Troymin Resources Ltd.-20% share interest (now
Santoy Resources Ltd.). ATW
acts as trustee and these companies are the beneficiaries of a declaration of
trust for their respective interest in the prospect . In
1993 the property was optioned to Kennecott Canada Exploration Inc. (“KCEI”).
KCEI’s interest reverted back to ATW in 2001. ATW then completed a joint venture
agreement with Aberex Minerals Ltd.-15% property interest and SouthernEra
Resources Limited-10% property interest. A 2% gross overriding royalty on
diamonds produced from TR 107 (a portion of the ATW property) is payable to
KCEI. An option granted to KCEI under an agreement made as of November 30, 2001,
by the Company, together with all other shareholders of ATW, to acquire a 40%
share interest in ATW lapsed unexercised.
 
 In
January 2005, the Company and Williams Creek acquired Santoy’s 20% share
interest in ATW and now own a 50% share interest each in ATW.
 
 ***Expenditure
to Date***
 During
Fiscal 2004, the Company’s portion of exploration costs totalled $37,646 which
included gravity, electromagnetic and magnetic surveys. Recoveries totalled
$12,163. As at December 31, 2004, the Company had deferred $196,944 in
acquisition and exploration costs on the prospect.
 
 ***Location
and Access***
 The
ATW property is located roughly equidistant between the Diavik and Snap Lake
diamond deposits, on MacKay Lake, Lac de Gras area, Northwest Territories. A
winter road to the Diavik and Diamet diamond mines passes through the
property.
 
 ***History
and Recent Work***
 Government
geological surveys, widely spaced airborne magnetic surveys and regional mineral
exploration programs were carried out in the property area before
1992.
 
 In
the summer of 1992, ATW conducted limited a summer till sampling program for
diamond indicator minerals, and contracted an airborne magnetic -
electromagnetic (EM) survey of the western half of the property. After optioning
the property, KCEI conducted several phases of prospecting, till sampling using
sonic and reverse circulation drills, ground geophysical surveys, a small
helicopter borne magnetic survey, and limited diamond drilling in two programs
that totalled 671metres. This work identified a kilometres long train of diamond
indicator minerals in glacial till that was followed east under MacKay Lake.
Their work also found one kimberlite body, TR107, which contains no diamond
indicator minerals, and therefore can not be the source of the indicator mineral
train being followed.
 
 Subsequent
to the return of the property by KCEI, the joint venture group conducted an
airborne magnetic EM survey in 2001 over the five by five kilometre projected
source area of the diamond mineral indicator train. This was followed up by
ground geophysics which confirmed the presence of four anomalies found by the
airborne survey.
 
 These
four targets were diamond drilled in the spring of 2002, but no kimberlite was
found.
 
 In
early 2003, a sonic drill program of 77 holes was completed to further trace the
indicator mineral train previously found and to narrow down the possible source
area.
 
 During
December 2003, surface Magnetometer and HLEM surveys were carried out on the
northeast end of MacKay Lake to determine the source of an indicator mineral
trend defined by the sonic drill program. Surface gravity, bathymetry and
further HLEM survey were carried out over the same area to help outline the
indicator mineral source during February of 2004. The gravity and bathymetry
surveys grid were extended in April 2004. All the geophysical work carried out
in 2003 and 2004 was done by Aurora Geosciences of Yellowknife, NT. The data
from the geophysical surveys was reviewed and interpreted by Martin St. Pierre
in December of 2004 and nine low to moderate priority drill targets were
defined.
 
 30
 ***Geology
and Mineralization***
 The
property area is within the Slave Structural Province. This terrain was formed
in the late Archean with late diastrophism. The oldest known rocks appear to be
remobilized granitoids, emplaced in a thick volcano-sedimentary sequence. All of
these units were subsequently metamorphosed, deformed and also intruded by other
mainly granitoid bodies.
 
 The
ATW claims overlay Yellowknife Supergroup rocks of the Slave Craton. These
Archean rocks consist of, metasediments (greywacke, pelite, minor quartzite,
conglomerate, iron formation, and metavolcanics). Some of these formations give
magnetic and electromagnetic responses. Large granitoid bodies intrude these
rocks. The Proterozoic MacKenzie dyke swarm dominates the airborne magnetics as
long continuous magnetic high responses that traverse the property.
 
 ***Exploration
and Drilling Results***
 Exploration
work by KCEI between 1993 and 1998 identified a long diamond indicator mineral
train or anomaly in glacial till that extended southeasterly up glacial ice
direction. Several geophysical targets were also identified from an airborne
magnetometer-EM survey. In 1994, four geophysical targets were drilled, and one
of these, TR-107 intersected a kimberlite body, that was not diamondiferous and
did not contain diamond indicator minerals. In January 1998, KCEI informed the
Company that the main exploration target on the property was the source of the
prominent indicator mineral till anomaly. This anomaly contains indicator
minerals (garnets and chromites) with chemistry from within the diamond
inclusion field suggesting the source will be diamondiferous. This indicator
mineral anomaly was been traced to the western edge of MacKay Lake. Reverse
circulation (RC) drilling was carried out on the lake ice in early 1998 follow
the till anomaly easterly back up the original direction of glacial ice movement
towards the anticipated source location. Thirty-three holes for a total of 390
metres drilled at about 100 metre on three lines were completed to sample the
till on the lake bottom. The easterly line has four holes 100 metres apart that
had elevated counts pyrope garnets (>5) in the basal till, one of these had a
very high count of olivines (>50) with elevated values in three holes. The
work thus extended the indicator mineral train but no source area was delimited.
In 1999, a sonic drill used to sample the till in a fence of holes across the
ice movement direction and 13 holes for a total of 479 metres in a single line
were drilled about five kilometres up ice direction from the last previous line
of RC drill holes. These were essentially devoid of indicator minerals, and so
it was concluded that the source area had been narrowed down to a five kilometre
by five kilometre area, and that a potential source for the diamond indicator
minerals should be looked for between these two lines of holes. Analyses were
done at KCEI’s Thunder Bay laboratory, an ISO Guide 25 facility.
 
 ATW’s
1992 airborne survey did not cover this area, so a contract was given in March
2001 to Fugro Airborne Surveys to carry out a survey of the area between these
two lines of holes, and also over a small area in a bay of MacKay Lake further
down ice on the mineral train where a small magnetic low was outlined on an old
(1960s) government magnetic survey of the area. This work outlined two targets
with pipe like characteristics and a long dike like structure that is not
magnetic indicating it is not caused by a diabase dike. Surface geophysics
confirmed the size and strength of the two pipe targets.
 
 In
early 2002, results of microprobe analyses performed on indicator minerals from
sampling of the glacial dispersion train on the property were received by the
Company from Kennecott Canada Inc. Mineral Services Canada Inc. (Mineral
Services), a subsidiary of Mineral Services International, reviewed these
microprobe results. The following is an excerpt from the summary of the report
provided from Mineral Services:
 
 “A
prominent kimberlitic indicator dispersion has been traced up-ice in till
samples over a distance of 20 km, and was found by drill sampling to continue in
MacKay Lake sediments for a further 3 km, leading to geophysical target ATW-02.
The available kimberlitic indicator mineral analyses from this, the MacKay Lake
dispersion, comprises 74 olivines, 18 orthopyroxenes, 127 clinopyroxenes and 198
garnets, but no kimberlitic ilmenite or chromite. The compositional
characteristics of this indicator assemblage show it to be derived from
kimberlite source(s) that have entrained predominantly diamond-stable mantle
peridotite along a cold cratonic geotherm similar to that defined by garnet
peridotite xenoliths in the Diavik kimberlites. Various samples show this
indicator assemblage contains from 16 to 20% G10 garnets, with moderate-Cr2O3
G10 garnets well represented. Based on available data, and assuming that these
data are representative of the samples from which they are derived, the source
kimberlite(s) are predicted to be at least moderately diamond-bearing. A more
definitive assessment of their diamond potential cannot currently be made due to
the fact that: eclogitic garnet compositions are not reported; the extent to
which the available data are representative of the full indicator mineral
population present in the tills and sediments or in specific source bodies is
not known; and several critical kimberlite-specific mineralization factors have
yet to be determined.
 
 31
 Kimberlitic
garnet, orthopyroxene and clinopyroxene recovered from a composite core sample
of the TR107 kimberlite reveal compositions quite unlike that seen in
exploration samples on the rest of the MacKay Lake property. The TR107
kimberlite apparently sampled essentially only graphite-stable mantle peridotite
on an elevated geothermal gradient. The kimberlite core sample is assigned zero
diamond potential and it manifestly does not correlate with the intrinsically
higher diamond potential of the vast majority of kimberlitic indicator minerals
recovered from the property.”
 
 In
April 2002 a program of drilling geophysical anomalies on the project was
completed. No kimberlite was found. Three resistivity low anomalies were tested.
Two were explained by graphitic conductors. No explanation was
 found
for the third anomaly.
 
 In
early 2003, a till sampling program with seventy-seven holes were drilled to
recover samples of basal till samples on several lines of hole between the last
two lines of till sampling holes described above. This work narrowed down the
anticipated source area to a one kilometre by one kilometre square.
 
 During
December 2003, surface Magnetometer and HLEM surveys were carried out on the
northeast end of MacKay Lake to determine the source of an indicator mineral
trend defined by the sonic drill program. Surface gravity, bathymetry and HLEM
survey were carried out over the same area to help outline the indicator mineral
source. The gravity and bathymetry surveys grid were extended in April 2004 for
a total of 6.5 line km. All the geophysical work carried out in 2003 and 2004
was done by Aurora Geosciences of Yellowknife NT. The data from the geophysical
surveys was reviewed and interpreted by Martin St. Pierre in December of 2004
and nine low to moderate priority targets were defined for
drilling.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company plans a bathymetric survey of the area of interest for the summer of
2005 at a budgeted cost of $30,000 to better refine the results of the 2004
gravity survey. The Company is also waiting for the results of a review of the
geophysical data by an expert.
 
  32
  ***PRINCIPAL
PROPERTY INTERESTS IN MEXICO***
 
   33
  **The
Caballo Blanco Prospect - Mexico**
 
   34
  The
Caballo Blanco Prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 In
1996, the Company signed an option to purchase agreement with two private
Mexican individuals for the approximately 40,000 acre property. Under the terms
of the agreement, to earn a 60% in the property, the Company had to issue a
total of 200,000 shares and pay US$500,000 plus value added tax over four and a
half years. To earn the remaining 40% interest, the Company had to pay an
additional US$500,000 plus value added tax within a year of earning its 60%
interest, plus a 2.5% NSR from any production. The Company could have reduced
this NSR to 1.5% for a fixed payment of US$2,000,000 plus value added tax
payable equally over 10 years.
 
 The
agreement was amended in January 2003. To earn a 100% interest, the Company must
issue a total of 200,000 shares of its stock and pay US$668,500 plus value added
tax by February 26, 2007. The underlying owner would also receive a NSR of 2.5%
to 1% based on the rate of production. The Company can purchase 50% of this NSR
for a fixed payment of US$750,000 plus value added tax.
 
 In
Fiscal 2003, the Company entered into an agreement with Comaplex Minerals Corp.
(“Comaplex”). To earn a 60% interest, Comaplex must keep the property in good
standing and incur exploration expenditures totalling US$2,000,000 by January
16, 2007.
 
 *Expenditures
to Date*
 To
December 31, 2004, the Company had incurred a total of $2,524,885 in acquisition
and exploration costs on this prospect but during Fiscal 2002 the prospect was
written-down by $2,000,000. As at December 31, 2004, the Company had deferred
costs of $524,885 on this prospect.
 
 ***Location
and Access***
 The
Caballo Blanco project, consisting of mineral concessions, currently comprising
about 8,200 hectares, is located in the state of Veracruz about 75 kilometres
northwest along the Pan American highway in eastern Mexico from the city of
Veracruz.
 
 ***History
and Recent Work***
 The
area was staked in 1993 as a new discovery. The Company carried out limited
exploration on the property in 1995 with mixed results, and subsequently
provided the owner with funding to continue prospecting under a “grubstake”
agreement. Further mineralization was found and an option agreement was
negotiated. Since 1996, the Company’s efforts have focussed on three distinct
areas of alteration and mineralisation known as the Central Grid Zone, Highway
Zone and Northern Zone respectively. Most of the work to date has been carried
out on the Central Grid and Highway zones. Geological mapping, sampling,
geochemical surveys, magnetic and induced polarization (IP) geophysical surveys
were carried out, mostly in 1997. A 2,390 metre reverse circulation drill
program was carried out by the Company in 1998 on the Central Grid Zone. This
drilling intersected both porphyry-style copper-gold mineralization and
high-grade gold-silver mineralization in veins apparently spatially peripheral
to the porphyry system. In the Highway Zone, soil geochemistry, geologic
mapping, and induced polarisation geophysical surveys identified a large altered
area containing evidence of a high sulphidation epithermal system. The Northern
Zone is a large area of argillic alteration, within which preliminary
prospecting and geochemical surveys have identified areas of elevated
gold-copper-arsenic in silcified rock. Highly anomalous values have been found
in stream silt samples and boulders in streams, and this area is thought to
represent a large unexplored high-sulphidation gold system. In 1999, 2000, and
early 2001, the Company carried out limited geological, geochemical, and IP
surveys. Late in 2000, the Company purchased exploration data and surrounding
claims from Lucero Resources Corp. The Company also purchased a small net
smelter return royalty on these claims for $1,000 Canadian dollars from Lucero’s
successor in early 2003.
 
 In
Fiscal 2001, the Company’s subsidiary, Minera Gavilan, S.A. de C.V., signed an
agreement with Noranda Exploracion Mexico S.A de C.V. (“Noranda”), a subsidiary
of Noranda Inc., which was terminated in Fiscal 2002. Noranda carried out
geological mapping, some regional geochemical surveying and diamond drilling.
Starting in March 2002, Noranda completed 1789 metres of drilling in seven
holes, four in the Central Grid area, and three into the Highway Zone area,
aimed at porphyry copper targets.
At the Company’s expense, two short holes were drilled to test a gold target in
the Central Grid part of the property.
 
 35
 Later
in Fiscal 2003, Comaplex optioned the property from the Company. Work during
2003 at the Highway and Northern zones consisted of sampling, geologic mapping
and induced polarization (IP) geophysics and was complimented by analysis of
alteration mineralogy with a PIMA portable infrared spectrometer.
 
 Comaplex
started building roads for drilling in mid 2004 but experienced difficulty with
construction on the Northern Zone. In November 2004, Comaplex started a 3000
metre drill program to test the Central Grid, Highway and Northern zones of the
prospect, the centres of which are located roughly 7 kilometers
apart.
 
 ***Geology
and Mineralization***
 The
property occurs in a caldera setting in flat lying volcanic rocks of Miocene
age, along the northeastern edge of the Trans- Mexican Volcanic Belt. It is a
new discovery, first identified by sampling in acid sulphate altered quartz
stockwork veining, in a road cut for the main coastal highway which yielded
anomalous gold values. The property covers three large hydrothermal alteration
zones called the Central Grid, the Highway Zone, and the Northern Zone. The
Central Grid area is the most deeply eroded and demonstrates porphyry Cu-Au, and
low sulfidation Au-Ag style mineralization. T he
centres of the Highway and Northern zones of the property, are located roughly 7
kilometers apart. Geologic and alteration mapping in these areas has identified
extensive zones of acid-sulphate alteration including quartz alunite and
residual or vuggy silica alteration zones. These zones of alteration, developed
in flat lying volcanic rocks, are interpreted to represent high sulphidation
gold-silver epithermal systems. Mineralogical
evidence is interpreted to indicate that minimal erosion has taken place and the
hydrothermal systems are mainly preserved.
 
 ***Exploration
Results***
 A
geochemical soil survey on a grid that covers roughly 3 kilometers by 3
kilometers in the Central Grid area of the property outlined a number of
coincident gold-copper anomalies associated with what appears to be two styles
of mineralization within a very large alteration zone. In one area, two creeks
contain float rock of porphyry style quartz stockwork veining associated with
copper-gold mineralization and K-silicate alteration. In a geochemical soil
anomaly over this location, the 200 parts per million copper contour outlines an
area roughly 700 meters by 500 meters, with coincident anomalous gold values.
The other style of mineralization, gold-silver-copper-lead quartz stockwork and
quartz barite veins, is found in several areas. One such area has an irregular
shaped soil anomaly that is roughly 700 metres by 200 metres with up 2.89 gm/t
gold and up to 0.22% copper.
 
 Geological
mapping found that the anomalous gold values are closely associated with areas
of widespread k-silicate alteration and copper staining. The geochemical grid
was extended northwards to cover possible extensions to the known highly
anomalous values.
 
 An
induced polarization and ground magnetic geophysical program over the Central
Grid area identified a very broad zone of elevated chargeability enveloping
several intense chargeability highs. These chargeability highs are linear in
orientation, and are over one km long. Profiles indicate these anomalies extend
from surface to significant depths. These linear highs relate spatially to the
presence of outcrop and float of quartz-barite-sulfide veining and associated
gold soil geochemistry.
 
 A
2,390 meter reverse circulation drill program started in April and was completed
in May 1998.
 
 Holes
CB-1 and CB-2 were drilled in the porphyry-copper-gold style target.
 
 Hole
CB-1 (located at 5100E and 3400N, drilling east at -60 o ,
167.6m deep) intersected a mineralized feldspar porphyry cut by quartz stockwork
veining. Chalcopyrite, pyrite and magnetite occur as coatings on fractures and
in disseminated form. Bornite is sparsely disseminated. Anomalous results are:
from 3m to 167.6m (164.6m) of 0.15% Cu and 0.223 grams/tonne Au, including from
3m to 110m (107m) of 0.18% Cu and 0.254 grams/tonne Au.
 
 Hole
CB-2 (located at 5295E and 3400N, drilling west at -50 o ,
193.5m deep) was similar to hole CB-1 but sections of the porphyry are more
highly clay altered with quartz stockwork veining containing pyrite
chalcopyrite, minor galena and sphalerite. Anomalous results are: from 26m to
193.5m (167.5m) of 0.09% Cu and 0.159 grams/tonne Au, including 96m to 108.2m
(12.2m) of 0.13% Cu and 0.322 grams/tonne Au; from 153.9m to 193.5m (39.6m) of
0.15% Cu and 0.394 grams/tonne Au; and the last sample 192m to 193.5m (1.5m) of
0.23% Cu and 0.720 grams/tonne Au.
 
 36
 IP
geophysical and soil geochemical anomalies were targeted with the drilling over
a roughly 1 by 2.2 kilometer area within this 150 square kilometer property. The
water table was consistently intersected at shallow depths. The water flow
encountered in many holes limited the practical depth of drilling with the
drilling system employed. Future reverse circulation drilling could achieve
better penetration depths and rates with equipment designed for higher water
flow.
 
 An
involved quality control program was employed for the project and included the
insertion of blanks, standards and duplicates into the sample stream. Samples
were submitted blind to Bondar Clegg/ITS labs of North Vancouver for analysis.
Industry standard methods of analysis were employed.
 
 Hole
CB-3 was collared into a ground magnetic high at 5545 meters east on line 3295N.
The hole, drilling west at
 -50 o, passed through 10.7 metres of overburden before intersecting andesite which
continued to 153.9 metres, the end of the hole. The andesite is highly altered
to hydrothermal magnetite, epidote, chlorite and pyrite. Magnetite and epidote
occur as veins and clots throughout the andesite. This style of alteration is
similar to magnetite-epidote skarning developed in volcanics adjacent to
porphyry Cu-Au deposits elsewhere. Several gold values over 1.52 meter sample
widths were elevated with a high of 0.774 grams/tonne Au. This hole was drilled
across the assumed dip of the skarned zone and did not penetrate through to an
expected andesite/intrusive contact.
 
 Hole
CB-4 (collared at 5600 East on line 3524N; drilling east at -50 o )
passed through 16.8 metres of overburden before penetrating the same andesite to
the end of the hole. The andesite is skarned as in hole CB-3, however at depth
in the hole silicification, clay alteration and pyrite associated with
quartz-sulfide veining were intersected. Several zones contained anomalous assay
results.
 
 Results
in Hole CB-4 included 39.62 meters from 96.01m to 135.63 meters that averaged
0.25g/t gold and about 1.0 g/t Ag with 0.15% Cu and 0.10% Pb and 0.18% Zn. This
interval included a higher grade section from 96.01 meters to 108.20 meters
totaling 12.19 meters averaging 3.8 g/t Au, 23 (g/t) Ag, 0.37% Cu, 0.19% Pb and
0.34% Zn. This section relates to strong veining and included a high of 19.9 g/t
Au and 26 g/t Ag over 1.52 meters from 102.1 to 103.63 meters. A further zone of
mineralization and veining was intersected from 123.4 to 126.5 meters over 3.10
meters of 1.7 g/t Au, 14 g/t Ag, and 0.11% Cu, 0.21% Pb and 0.35%
Zn.
 
 Holes
CB-5 and CB-6 were drilled further south on line 2000 N at 5760 E and 5600 E
respectively. CB-5 was drilled to the west at -50 o and CB-6 was drilled east at -50 o .
Both holes collared in similarly altered andesite but at shallow depths
penetrated a highly silicified, clay altered and pyritized feldspar porphyry.
The porphyry is cross-cut by narrow, dark quartz-pyrite-chalcopyrite veinlets.
 
 Intersections
in CB-5 included a 13.72 meters zone of veining, from 21.33 meters to 35.05
meters of 1.8 g/t Au, 31 g/t Ag and 0.10% Cu. A second zone was intersected
48.77 meters from 54.86 to 103.63 meters averaging 0.241 g/t Au and 0.06% Cu.
Included in this section is a 19.81 meter zone from 83.82 to 103.63 meters
averaging 0.446 g/t Au and 0.11% Cu.
 
 CB-6
intersected similar porphyry style mineralization over 67.05 meters from 35.05
meters to 102.1 meters averaging 0.188 g/t Au and 0.05% Cu. This includes a
13.72 meter section from 35.05 to 48.77 meters averaging 0.361 g/t Au and 0.09%
Cu.
 
 The
results from holes CB-5 and CB-6 indicate that porphyry Au-Cu mineralization
exists over 1.4 kilometres to the south of the previously released holes, CB-1
and CB-2. The mineralization is associated with the highly altered feldspar
porphyry, an entirely different intrusive rock from that intersected in CB-1 and
CB-2.
 
 The
remaining holes returned lower but still anomalous gold and copper
values.
 
 Fluid
inclusion work on drill cuttings from the reverse circulation drilling program
in the main grid, identified three stages of quartz with several types of
inclusions. The early and late stages of quartz and the inclusion
characteristics are diagnostic of a classic copper-gold-porphyry system. The
intermediate banded quartz is common only in the shallow porphyry systems of the
Maricunga Au belt.
 
 Geological
mapping, line cutting and geochemical soil sampling on the Highway Zone extended
the gold in soils anomaly to cover an area 2 kilometres long, and up to 400
metres wide. Geological mapping and prospecting of this area has found extensive
vuggy silica in float and some outcrops in an area of widespread deep weathering
and overburden.
 
 37
 On
the Northern Zone, the Company conducted further geochemical stream silt
sampling to find the source of anomalous gold values in drainages that contained
float with multigram gold values in vuggy silica and breccia. The stream silt
sampling and follow up geological mapping and prospecting isolated an area of
extensive large angular boulders of vuggy silica and subcrop with anomalous gold
values.
 
 In
order to test the Central Grid and Highway Zone porphyry targets, Noranda
drilled 1,789 meters in seven holes. Four were drilled in the Central Grid
looking for the extension of the outcropping copper bearing porphyry and three
holes were drilled into the previously undrilled Highway Zone. The report
summary states “Despite pervasive K-spar flooding potassic alteration associated
with the porphyry in the Central Grid and the huge argillic alteration zone that
occurs at the Highway Zone, significant copper mineralization was not found.”
Noranda states the presence of an important gold deposit in the Central Grid
area has not been ruled out but possibilities for an open pittable copper
porphyry have been reduced. On the Highway Zone, very low values of copper were
found but drilling did intersect short intervals of elevated gold. Hole
CB-02-07, Noranda’s last hole, which was drilled in an area of extensive
argillic alteration associated with elevated gold in soil geochemistry had
several interesting gold intersections. These included stockwork veining from
51.35 to 84 meters depth within which a 6 meter section averaged 1.42 g/t gold.
A sample from 192 to 195 meters depth within a zone of argillic alteration
averaged 2.5 g/t gold and the final sample of the hole from 212.0 to 212.5
meters depth returned a gold value of 4.98 g/t gold. The hole was lost at this
point due to poor drilling conditions.
 
 Two
further holes were attempted
at the Company’s expense at the end of Noranda’s program, under the supervision of an independent
consultant. These were located near reverse circulation Hole CB98-04, from
Almaden’s 1998 program, which intersected 12.2 meters of 3.8 grams of gold per
tonne. Hole CB-02-08 was drilled east at -50°, parallel to and about thirty
metres south of hole 98-4. It intersected fault gouge in the area where the vein
was expected. Hole CB-02-09 was located ninety meters north of CB 98-04 and also
aimed east at -50°. This hole intersected a mineralized vein zone from 57.3 to
60.0 meters, and from 69.0 meters to 73.0 meters the recovered material
contained fragments of quartz vein material that is mineralized with
chalcopyrite, galena, and pyrite. The hole was abandoned in bad ground at 73.0
meters, which is a few metres before the expected location of the zone found in
hole CB 98-04.
 
 Comaplex’s
2003 program on the Highway zone outlined several prominent areas of alteration
and mineralisation. A significant resistivity and chargeability anomaly has
resulted from this work over a roughly 5 by 3 kilometer area of acid sulphate
alteration characterised by hypogene alunite and vuggy silica.
 
 At
the Northern zone, sampling, geologic mapping and PIMA analyses have defined a
huge, roughly 6 by 5 kilometer area of acid sulphate alteration and vuggy
silica, including many breccia bodies. Past
sampling in these areas by Almaden has returned anomalous gold values, the
highest being 11 g/t. The alteration in the Northern zone is very similar to
that in the Highway zone, however up until this program very little work had
been carried out in this area. Initial sampling by Comaplex returned anomalous
gold values from outcrop, the highest being 1 g/t. Outcrop in this area includes breccia bodies containing clasts of vuggy silica.
An IP section over the zone outlined a large high resistivity
feature.
 
 A
drill program that was to have commenced earlier in 2004 was delayed due to
additional permitting requirements, shortage of drilling equipment, difficulties
in road building and the summer rainy season. Drilling on a portion of the
southern Highway zone commenced in November 2004 and shut down for the Christmas
season. The core has been logged and sampled by Comaplex staff and results have
not yet been reported by Comaplex.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005 with all work being
conducted by Comaplex Minerals Corp. who is working to earn their interest in
the prospect. A diamond drill program to test the principal targets of interest
on the Highway Zone and Northern Zone is currently planned for March/April 2005
and is expected to utilise a man-portable diamond drill rig. Utilising this
equipment is anticipated to greatly reduce the difficulties in access and road
building encountered in the past due to very hard and rocky ground conditions.
  38
  **The
Fuego Prospect - Mexico**
 
   39
  The
Fuego Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 During
Fiscal 2003, the Company’s subsidiary, Compania Minera Zapata, S.A. de C.V.,
acquired 100% interest in the prospect by staking. The project fell under the
area of influence of the BHP Billiton joint venture discussed below, and under
terms of this joint venture it was offered to BHP, who declined to participate
and have released any interest in the prospect.
 
 In
February 2004, the Company entered
into an agreement (the “Horseshoe Option” with Horseshoe Gold Mining Inc.
(“Horseshoe”). To earn an initial 50% interest, Horseshoe must maintain the
property in good standing, incur exploration expenditures totalling US$2,000,000
and issue 1,000,000 shares to the Company by December 31, 2006. Horseshoe can
increase its interest to 60% by incurring a further US$1,000,000 of exploration
expenditures by December 31, 2007. Upon earning a 60% interest in the prospect ,
Horseshoe would have 120 days to acquire Almaden’s remaining 40% interest in the
prospect in return for a 40% interest in the issued capital of Horseshoe, to be
issued by Horseshoe to Almaden at that time. Horseshoe’s right to increase its
interest to 60% is subject to approval by its shareholders of the acquisition of
Almaden’s remaining 40% interest. By reason of delays in obtaining requisite
permits to conduct exploratory drilling and consequent delays in securing
appropriate drilling equipment, Horseshoe was unable to make requisite
expenditures within the times provided in the Horseshoe Option. By amendment
dated as of the 31 st of January 2005, times to perform work requirements and to meet share issuances
were extended essentially by one year.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $27,763 in exploration costs, net of
recoveries. As at December 31, 2004, the Company had deferred $58,135 in
acquisition and exploration costs on the prospect.
  ***Location
and Access***
 The
prospect is located in south central Oaxaca State, Mexico and is accessible from
the city of Oaxaca by paved highway southeast for 114 kilometers to San Pedro
Totolapan, then by unpaved road south for 24 kilometers to San Maria Zoquitlan
and a further 32 kilometers of rough winding road extending in a southeasterly
direction.
 
 ***Infrastructure***
 There
is no infrastructure within the immediate area of the prospect.
 
 ***History
and Recent Work***
 Limited
historic mining was last carried out on the prospect in 1905 from open cuts and
small scale, shallow underground openings on at lease 3 separate quartz veins.
 
 Horseshoe
completed a surface geologic mapping and rock and soil sampling program on the
prospect. A small Induced Polarization (IP) geophysical survey was carried out
to test the effectiveness of this methodology in identifying vein structures
that are not exposed.
 
 ***Geology
and Mineralization***
 The
prospect is a high-level, classic quartz-adularia epithermal vein system. The
textures identified, including fine grained silica and electrum banding and
bladed calcite, are typical of that associated with epithermal vein systems
worldwide. Some limited historic workings exist on one of several banded veins
identified within a more than 20 meter wide zone of veining and silicification
in volcanic rocks. Banded quartz-adularia veins within the vein system generally
dip shallowly and are up to 5 meters wide. In the initial work the parallel vein
system has been traced nearly a kilometre along strike. To date 16 grab and chip
rock samples have been taken on the property of both banded quartz adularia vein
material and silicified volcanic wall rock. Visible gold was recognised in
several hand specimens collected on the property which were not sent for
analysis. The property has excellent infrastructure and represents an epithermal
vein system that has had no modern exploration.
 
 ***Exploration
Results***
 The
El Fuego vein system was first examined and sampled by Almaden during a
helicopter-supported reconnaissance exploration project in March 2003. There is
no evidence of any recent work on the prospect. In December 2003, a
reconnaissance style, field appraisal that included geological mapping and
limited rock sampling was carried out by an independent geologist. In early
2004, reconnaissance geological mapping, sampling and an Induced Polarization
survey gave better definition to the vein. This work identified the known veins
as resistivity and chargeability highs. Additional resistivity and chargeability
highs were identified in this work which suggests that further veins may exist.
 
 40
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005 with all work being
conducted by Horseshoe who is earning its interest in the prospect. Early in
2005, Horseshoe advised the Company that it will be conducting further mapping,
prospecting and sampling, preparatory to drilling anticipated by mid
year.
 
  41
  **The
San Carlos Prospect - Mexico**
 
   42
  The
San Carlos Prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature. The San Carlos Prospect
consists of the San Carlos and San Jose claims located in the State of
Tamaulipas in Mexico
 
 ***Option
to Acquire Interest***
 The
prospect is owned through the Company’s subsidiary, Compania Minera Zapata, S.A.
de C.V. The San Carlos claim was acquired directly by staking. The San Jose
claim, initially held under option, was purchased outright in February 2001 for
US$100,000 plus a 2% NSR. These claims surround several small claims totaling 97
hectares which were optioned for a purchase price of US$1,000,000 over six years
subject to a sliding scale royalty of from 2.5% to 1.5% depending on the rate of
production.
 
 During
Fiscal 2001, Aurcana Corporation (“Aurcana”) was granted the option to acquire
up to a 60% interest in the project. To earn an initial 50% interest, Aurcana
had to maintain the property in good standing, incur exploration expenditures of
US$2,000,000 by January 1, 2007 and issue a total of 300,000 common shares to
the Company. Aurcana earned a 10% interest in the San Jose concession upon
payment of the US$50,000 to the Company. At the end of Fiscal 2003, Aurcana
relinquished their option on the property. They also ceded their 10% interest in
the San Jose claim to Almaden in return for a release from further work
commitments.
 
 In
March 2004, the Company entered into an agreement (the “Hawkeye Option”) with
Hawkeye Gold and Diamond Ltd. (“Hawkeye”). To earn an initial 51% interest,
Hawkeye must maintain the property in good standing, incur exploration
expenditures totalling US$2,000,000 and issue 500,000 shares to the Company
within four years. US$350,000 must be spent by March 15, 2005 (“Initial
Expenditures”). As of February 2, 2005, Hawkeye had not reimbursed Almaden for
taxes paid for the prospect on Hawkeye’s behalf (the “Tax Obligation”) and a
notice of default was issued, giving Hawkeye 90 days to rectify the failure to
pay the Tax Obligation. As of March 16, 2005, Hawkeye has provided no
information as to Initial Expenditures and a notice giving 30 days to cure the
default has been given. If the default is not cured, Notice of Termination of
the Hawkeye Option will be given.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $111,790 in exploration of which $95,238 was
recovered from Hawkeye who are earning their interest in the prospect. The
deemed value of securities received from Hawkeye pursuant to the option
agreement was $58,000. As at December 31, 2004, the Company had deferred
acquisition and exploration costs of $203,142, net of write-downs, on the
property.
 
 ***Location,
Access and Climate***
 The
prospect is located in the state of Tamaulipas, which is in the north-eastern
part of Mexico. The town of San Carlos is located roughly in the center of the
San Carlos claim block. There is two phase power, telephone service, general
supplies and a small hotel in this town.
 
 San
Carlos is connected by paved road, and is about 100 kilometres north of the
capital of Tamaulipas, Ciudad Victoria. The town of Linares, Nuevo Leon is
located approximately 80 kilometers northwest of San Carlos. Intermediate to San
Carlos and Linares, and connected by an all season dirt road is the mining
district of San Jose.
 
 The
climate is arid and hot. During the summer months temperatures can average
greater than 35 degrees centigrade. The duration and timing of the summer rainy
season varies considerably; however, rains generally are expected during the
months of June, July and August.
 
 The
town of San Carlos is approximately a three and one half hour drive from
Monterrey which is a major industrial city with a population of about three
million people. Ciudad Victoria and Linares are both about a one and one half
hour drive from San Carlos and have populations of over 100,000 people. All
necessary supplies can be purchased at these towns and labour is
abundant.
 
 ***History
and Recent Work***
 Accurate
historic data is difficult to find, however, it appears that up until 1911
copper-gold mining did occur. At that time, the operator was an English company
that built a narrow gauge rail line to the property and a small smelter on the
property. There is no record of total production at that time. Several attempts
were made to establish production on a small scale from these skarn zones as
recently as 1950, records are incomplete but indicate 4,067 tons of direct
shipping ore that averaged 4.02% copper (Cu) and 11.24 grams/ton gold (Au) was
mined during this period. Fairfield was attracted to this area following a
review by management of the geological literature on eastern Mexico. The
literature indicated that the many of the igneous rocks are alkalic in
composition. This is of interest because many large copper-gold deposits are
associated with these types of rocks. The literature also described a skarn zone
up to five hundred metres wide. The San Jose area was the site of an historic
mining camp (Begonia and Santa Helena mines) that was active during the late
1800's and early 1900's. Production from this area was from a number of
high-grade copper-gold skarn orebodies. The old workings are reported to be
limited to less than 100 metres below surface. There has been only limited
exploration, development, and production from that time until the present
activity.
 
 43
 Fairfield
acquired a large block of ground over the area and then negotiated terms to
acquire the San Jose and Begonia claims. The San Jose Claim was subsequently
purchased subject to a 2% royalty.
 
 Property
scale prospecting and stream sediment sampling were undertaken in May 1998 and
February 1999 by Fairfield’s personnel. An airborne
magnetometer-electro-magnetic survey was carried out over most of the claim
block in April 1999 by Terraquest Ltd. of Mississauga, Ontario. In June 2000 a
baseline was cut for geochemical surveying. Assaying and analysis was carried
out by Acme Analytical Labs of Vancouver, Canada.
 
 In
Fiscal 2001, Aurcana carried out geological mapping, geochemical surveys,
underground mapping and sampling in the Begonia and Santa Helena mine areas, and
two phases of geophysical surveys. Targets outlined by this work were drilled in
two phases in late 2002 and early in 2003. Further limited geochemical surveys
to check a gold anomaly on the eastern edge of the previous grid was also
carried out. No further work was carried out by Aurcana.
 
 In
2004 Hawkeye carried out a geologic mapping, geochemical and geophysical survey
and rock and soil sampling program over the area of anomalous soils identified
by Aurcana. This work delineated several areas that are deemed anomalous with
respect to gold, silver, lead and zinc responses in soil samples and elevated
chargeability responses recorded in the induced polarization geophysical survey
carried out. Hawkeye has informed Almaden that it intends to drill these targets
in 2005.
 
 ***Geology
and Mineralization***
 A
trend of alkalic intrusive centers has been recognized in eastern Mexico. These
rocks generally form distinct, isolated high relief areas and intrude deformed
and thrust faulted, dominantly carbonate strata of the eastern extent of the
Sierra Madre Oriental mountain range.
 
 Extrusive
and intrusive rocks in the San Carlos area are interpreted to represent the
erosional remnant of a denuded shield volcano. The volcanic rocks have been
recognized along the margins of a major intrusive complex, and the intrusives
are thought to represent shallowly emplaced magmas. The San Jose area is cored
by a strongly fractured quartz-microdiorite. To the south of the San Jose area
both calc-alkaline and alkaline intrusives occur and have been cut by
lamprophyre and phonolite dykes.
 
 Several
styles of mineralization are known in the San Carlos district. Manto and vein
silver-lead-zinc orebodies hosted in limestone were exploited in the
18 th century east of the San Jose district at San Nicolas. These orebodies were very
important at that time and at one point the town of San Nicolas reportedly had a
population of over 10,000. Several grab samples were taken from dump material
and exposures in workings. Most of these showings are held by others but are
proximal to the San Carlos claim group.
 
 Mineralization
in the San Jose district is closely related to intrusive rocks. Copper sulphides
and gold are associated with calc-silicate minerals and magnetite (skarn) that
have replaced the limestone country rock. Copper sulphides and gold are also
associated with extensive K-silicate alteration and veining within the intrusive
body, which present the potential for a porphyry style gold-copper deposit in
the intrusive complex. The geologic setting of the San Carlos project bears many
similarities to that of the Grasberg and Bingham Canyon porphyry
copper-gold-molybdenum deposits where similar intrusive rocks intrude folded
limestone strata forming porphyry, skarn mineralization and more distal lead
zinc silver mineralization.
 
  44
  ***Exploration
Results***
 Stream
sediment sampling and prospecting along with examination of old workings in the
Begonia and Santa Helena areas, when related to the known geology and airborne
magnetic survey results, indicated several areas for follow-up with potential
for porphyry and skarn related copper gold deposits. The San Jose area has
evolved into the main area of interest and this is the focus for further
work.
 
 A
second area of interest, the Magnum zone, located 15 kilometres south of the San
Jose mining camp was defined by an airborne magnetic anomaly, and a number of
stream silt samples anomalous in copper and gold from the creeks draining this
area. Follow-up geologic mapping and prospecting identified skarn boulders and
large areas of outcropping gabbro and pyroxenite. Further prospecting and
sampling to locate the source of these anomalies failed to find a significant
zone of mineralization.
 
 The
third area of interest on the property, the El Jatero zone, where Fairfield’s
work identified an interesting gold stream sediment anomaly, is located roughly
15 km east of the Magnum zone. The anomalous streams appear to drain an area of
highly clay altered intrusive rocks, and follow-up mapping and prospecting
failed to find significant mineralization.
 
 *Aurcana
Work*
 A
preliminary prospecting and mapping program confirmed the presence of widespread
porphyry style alteration, and copper-gold mineralization in the multi-phase
intrusive complex. Aurcana’s next program of work was carried out over the San
Jose zone and consisted of 1,002 soil samples, ground magnetics and one line of
induced polarisation (IP) geophysics, all carried out on a cut grid. The soil
survey identified an approximately 1.5 km by 2.0 km area of coincident, elevated
copper and molybdenum soil geochemistry, spatially associated with an area of
altered and veined intrusive rocks. The copper and molybdenum anomaly remained
open to the north and is flanked by elevated Zn, Pb and Mn in soil. This
zonation is typical of that seen in many Cu-Au-Mo porphyry systems world wide.
The copper-molybdenum in soil anomaly had a high magnetic response in the ground
magnetic geophysical data. In addition to the copper-molybdenum soil anomaly,
several Au-Cu soil geochemical anomalies were identified. Of these anomalies,
most are associated with known skarn bodies with past copper-gold production but
several also constitute new discoveries as they are not spatially associated
with known mineralization or past mining.
 
 Detailed
mapping and sampling by Aurcana of the La Begonia workings identified a
skarn-breccia complex measuring approximately 50 metres by 250 metres. The
highly porous and permeable nature of the breccia has permitted oxidation and
supergene processes to take place. Within the heavily oxidized, sulphide poor
skarn-breccia area, average assay values for continuous channel samples (2 m
lengths) were taken. Underground mapping and sampling was also conducted on the
Santa Elena Mine, approximately two km north of La Begonia, however access was
limited to two stopes due to a high water level in the main access tunnel. While
the geological setting at the Santa Elena Mine is similar to La Begonia, the
Santa Elena Mine has a lower gold content. It appears that most of the past
mining and development was from the oxide horizon. Mapping of the underground
workings combined with surface observations identified what appears to be an
important structural orientation in the southern portion of the San Jose area.
It appears that the gold-copper bearing breccia bodies have formed along
north-east trending zones which coincide with several trends identified from
results of a soil geochemical survey conducted in late 2001. The significance of
this controlling structure and the coincident geochemical trends is the
potential to discover additional high-grade breccia-skarn bodies on the
property.
 
 The
cut grid was extended approximately 1.0 km to the north and provided control to
complete a soil geochemical survey. This work, combined with further induced
polarization (IP) geophysical surveying and a ground magnetic survey identified
a large copper-gold soil anomaly coincident with a chargeability high in the IP
results.
 
 In
December 2002, Aurcana drilled two diamond drill holes totaling 440 metres to
test the Begonia skarn zone. Due to rugged topography, the drill setup was 150
metres from the area of high grade underground sampling. Both holes were from
the same setup and did not intersect any sulphide mineralization in the skarn
zone in the western end of Begonia.
 
 A
second phase of diamond drilling started in February 2003 to test the
approximately 1.5 km by 2.5 km area containing the IP anomaly and elevated
copper and gold values in soils. Four holes totaling 765 metres were drilled.
All holes targeted a depth of approximately 200 metres and all encountered
geology indicative of a porphyry system however grades of copper, molybdenum and
gold were low.
 
 45
 During
its last phase of surface work, Aurcana further defined a gold in soils anomaly
at the northeastern edge of the surveyed area. This anomalous area lies over the
contact between intrusive rocks and limestone.
 
 *Hawkeye
work*
 Hawkeye’s
work program designed to evaluate the potential for Carbonate Replacement
Deposits (CRD) style and copper-gold skarn mineralization around the 9 km
periphery of the Tertiary intrusion into the thick section of Cretaceous
carbonates.
 
 A
total of 21 km of Induced Polarization survey was completed using a pole-dipole
technique in a six to eight level array at 50 m slope chained
intervals.
 
 The
results obtained to date have identified six areas of interest underlain by
significant Induced Polarization (IP) anomalies (chargeability highs and
coincident resistivity highs and lows) and a combination of coincident anomalous
soil and rock geochemical responses.  The six targets are outlined in the
north and eastern parts of the project area within the carbonate sequence at
various distances peripheral to the main San Jose monzonite intrusion.  Two
of the targets are classified as Au-Cu (Gold-Copper) targets likely associated
with proximal and contact skarn and/or fracture mineralization whereas the
remaining four are believed to represent more distal carbonate replacement
deposit (CRD) style mineralization.
 
 The
most widely anomalous element of significance for CRD style mineralization is
zinc, forming an intermittent linear north trending band 3 km long and 1.3 km
wide.  Clusters of moderately anomalous response outline northwest trends
up to 1 km long and 100 m wide.  One of these anomalies is believed to
coincide with the southeastern extension of the smithsonite silicification
zone.  Manganese and arsenic response are also largely coincident with zinc
while silver and lead values are weakly elevated but do form small clusters that
are coincident within the outer periphery of the grid.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned Fiscal 2005 exploration program with all work being done
by Hawkeye who is earning its interest in the prospect. Hawkeye has advised that
it is currently designing a work program which the Company anticipates will
include drill testing of the anomalies found.
 
 **The
El Pulpo Prospect - Mexico**
 
 The
El Pulpo Prospect is without known reserves and all current work by the Company
on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
Company’s subsidiary acquired a 100% interest in the Gavilan claims by staking
in Fiscal 2001.
 
 Two
additional claims, which are surrounded by the Gavilan claims, were optioned
from private Mexican individuals in Fiscal 2003. To earn a 100% interest, the
Company must pay US$162,000 plus value added tax by February 2005. The two
claims are subject to a 1% NSR which can be purchased for a fixed payment of
US$300,000 plus value added tax. The optionors have the right to conduct small
scale (less than 40 tonnes per day) mining operations. An agreement to option a
further three claims is expected to be finalized when the optionors (the same
group of private Mexican individuals) complete underlying documentation. Similar
terms are agreed to with the NSR buyout amount to be US$200,000. These will all
come under the deal with Ross River, and that company is responsible for all
payments on these claims while its option is in good standing.
 
 In
Fiscal 2003, the Company entered into an agreement with Ross River Minerals Ltd.
(“Ross River”). To earn an initial 50.1% interest, Ross River must maintain the
property in good standing, incur exploration expenditures totalling US$2,000,000
and issue 425,000 shares to the Company by April 30, 2008. Ross River can
increase its interest to 60% by incurring a further US$1,000,000 of exploration
expenditures by April 30, 2010.
 
 In
December 2004, the Company entered into an agreement (the “Ross River
Acquisition”), subject to regulatory approval (granted March 24, 2005), with
Ross River in which the Company agreed to sell a 100% of its right, title and
interest in the prospect. In consideration for the Company’s interest, Ross
River will issue to the Company 2.2 million shares of Ross River. Ross River is
required to issue an additional 1.0 million shares when exploration and
development expenditures on the property meet or exceed US $10.0 million and an
additional 1.0 million shares on the delivery of a positive feasibility study
recommending production on any part of the property. Almaden will retain a 2%
NSR regarding any minerals from it’s formerly 100% owned concessions. After a
feasibility study is completed on a mineral deposit, one half of this 2% NSR (a
1% NSR) can be purchased by Ross River from Almaden for fair market value as
determined by an internationally recognised engineering firm acceptable to both
parties. Since entering into the original agreement with Ross River during
Fiscal 2003, Ross River has issued 225,000 shares to the Company and informed
the Company that it has made expenditure of close to US$2.0 million which
included 1,561.2 meters of diamond drilling.
 
 46
 ***Expenditures
to Date***
 As
at December 31, 2004, the Company had recoveries exceeding its deferred costs on
the property and is carrying it at $1, subject to approval of the agreement
discussed above.
  
 ***Location
and Access***
 El
Pulpo is located north-east of Mazatlan, Mexico and covers an area of
approximately 120 square kilometres. Access to the mineral claims is by Highway
15 to San Ignacio and then by all season dirt road to Vado Hondo.
 
 ***History
and Recent Work***
 The
optioned claims have numerous old historic workings explored in the past for
gold and copper.
 
 The
El Pulpo prospect was discovered by a major company in the early 1970’s. A soil
and rock geochemical sampling program was carried out at that time and produced
a copper anomaly associated with a K-silicate altered and stockwork veined
intrusive body. A prominent consultant visited the property at that time and
wrote a report, now in the Company’s possession, recommending work including
exploration tunnelling. The Company believes that no other significant work has
been performed on the property until the current claim was staked. Late in 2002,
the Company conducted stream silt geochemical survey over parts of the claim
block, this work detected several gold-copper anomalies, rock sampling also
found several areas with anomalous gold copper and silver values.
 
 ***Geology
and Mineralization***
 The
El Pulpo project represents a large area of porphyry-style alteration and
mineralization developed in the Teriary age Sinaloa batholith and known
alteration and mineralization covers an area 8 km by 8 km. This alteration is
manifested by quartz-tourmaline veining, associated with copper-gold and
molybdenum values peripheral to a zone of stockwork quartz veining associated
with copper values. Later Miocene lithic tuffs cover part of the claim
area.
  Ross
River has informed the Company of the following results from fieldwork carried
out by Ross River during March and April 2003:
 
 El
Bagre Target: The El Bagre Target exhibits altered calc-alkaline intrusive
quartz stockwork mineralisation hosting both oxide and sulphide copper
mineralisation. Four widely spaced rock samples were collected over an area of
one square kilometre and contained significant copper, gold and silver values.
 
 Papaya
Target: The Papaya Target is one kilometre north of the El Bagre Target. Seven
samples collected from a vein by Ross River contained anomalous gold values.
 
 El
Tiburon Target: The El Tiburon target is a further one kilometre north of the La
Trucha target. Grab samples indicate a zone where follow-up is
warranted.
 
 In
May 2003 Ross River reported initial results from a large sampling and mapping
program. In this program several vein systems were identified and sampled
including the Papaya and Trucha areas. Ross River reported that the Papaya vein
system has been traced over 2 kilometers. Ross River has reported that the vein
was identified 1.0 to 1.3 kilometers along strike where grab samples taken have
returned anomalous values in gold and copper. On the Trucha vein system located
2 kilometers north of the Papaya area, Ross River reported that the mineralized
zone explored so far is 1,200 metres long and 850 metres wide within which six
veins have been recognized. The discovery showing occurs on a ridge and consists
of sub-outcrop of quartz-tourmaline veining exhibiting hematite and copper
oxides and is three metres wide. Ross River reported analyses from two new grab
samples taken across the width of the showing.
 
 47
 Ross
River also reported that two additional veins to the west and within 400 metres
of the Papaya vein (Juana and Cerro Blanco veins) have been traced over the same
strike length as the Papaya vein and that four additional parallel veins in the
same area have been discovered but have yet to be sampled. This system is open
along strike both to the north and south and the full widths of all the veins
remain to be delineated.
 
 Ross
River also reported results from the La Trucha target located 2 kilometres
northeast of the Papaya target.
 
 Approximately
one kilometre along strike to the southwest another area of sub-outcropping
quartz-tourmaline veins exposed through overburden cover and Ross River has
reported the results of sampling from this zone.
 
 Ross
River has reported that the veins whose assays were reported on La Trucha and
its southwest extension are open along strike to the southwest and
northeast.
 
 In
November 2003, Ross River informed Almaden that is has discovered a new area of
porphyry style alteration and mineralization. Ross River released the results of
the initial findings of this work in a news release, an excerpt from which
follows:
 
 “Ross
River Minerals has discovered a new copper porphyry zone and extended the known
mineralized zones of both the Papaya and La Trucha targets on its El Pulpo
property in Mexico. To date, the company has identified three copper porphyry
targets and four gold-silver-copper vein targets on the 200-square-kilometre
property.
 
 A
new area, named the Langosta target, consisting of strong quartz-sericite-pyrite
(phyllic) alteration with stockwork quartz veining, has been identified
extending southward along a tributary creek (Quebrada Magistral) 2,000 metres
east of the Papaya target, approximately 2,500 metres southwest of La Cetolla
copper porphyry target and 600 metres northeast from the El Bagre copper target
on Rio Los Frailes. Phyllic alteration is observed, to date, on the north side
of Rio Los Frailes over a distance of 100 metres and over a distance of 150
metres on the south side of Rio Los Frailes. This alteration extends outward
from a core of potassic alteration consisting of secondary biotite and potassium
feldspar and minor magnetite over a distance of 210 metres in a southerly
direction. These two styles of alteration characteristic of porphyry systems are
hosted within an altered granodiorite to quartz-diorite intrusive
complex.
 
 Copper
mineralization observed along Quebrada Magistral, within the altered
granodiorite to quartz-diorite, consists of veinlets, disseminations and
clusters of chalcopyrite (approximately 5 to 10 per cent). At higher elevations
within this mineralized area, clusters of arsenopyrite mineralization
(approximately 1 to 5 per cent) have also been identified. Secondary copper
oxides within this area consist of malachite and black copper oxides. The extent
of the mineralized area mapped so far measures approximately 100 metres (north
to south direction) and 75 metres (east to west direction) and remains open in
all directions. A total of 25 panel and chip samples have been taken from this
area and analytical results are pending. Geologic mapping and sampling are
continuing to determine the dimension and grade of this altered and mineralized
porphyry system. Samples are being prepared at GM-Lacme Laboratories in
Guadalajara, Mexico, with final analyses being carried out by Acme Analytical
Laboratories Ltd. in Vancouver, B.C. Victor Jaramillo, P.Geo, is the qualified
person supervising the work in this area.”
 
 In
December 2003, Ross River provided the Company with the following results in the
form of a news release, an excerpt from which follows:
 
 “Continued
geological mapping and sampling of the La Langosta target have outlined a zone
of potassic and phyllic alteration covering an area approximately 2.0 kilometres
long by 1.5 kilometres wide. A larger propylitic alteration zone occurs outside
the phyllic alteration envelope. The potassic core is characterized by secondary
biotite and potassic feldspar veining. Outside this zone occurs a
quartz-sericite-pyrite alteration (phyllic) envelope and then an outer
propylitic altered zone characterized by pervasive chlorite, disseminated pyrite
and calcite veinlets. The limits of the propylitic alteration have yet to be
defined. These alteration zones remain open to the southwest.
 
 48
 From
observations of limited outcrop, copper (chalcopyrite and copper oxides) and
minor molybdenite mineralization appears to be concentrated within an area of
approximately 1,500 metres by 750 metres. The earlier identified El Bagre target
lies within the La Langosta porphyry system, within the potassic altered
envelope and is characterized by chalcopyrite, copper oxide and minor
molybdenite mineralization as veinlets and disseminations.
 
 Ross
River is still defining the structural controls within this porphyry system.
However, the topographic relief, from Rio Frailes to the ridges 750 metres
southeast, exposes the mineralized system vertically over 200 metres. This
extends from a potassic zone, with chalcopyrite mineralization, near Rio
Frailes, in the north, to a topographically higher phyllic altered zone
containing secondary iron and copper oxides to the southeast.
 
 Preliminary
analyses have been received for 24 samples, taken from the initial discovery
area of 100 metres by 75 metres, include copper sulphides, mixed copper
sulphides and oxides and leached oxide cap.”
 
 In
January 2004, Ross River provided the Company with the following results in the
form of a news release, an excerpt from which follows:
 
 “Ross
River Minerals Inc. (the 'Company') is pleased to report that the 2003 field
season concluded with the Company completing 9.5 kilometres of new trail
construction and expanding the already extensive Papaya and La Trucha vein
systems on the Company's property located in Sinaloa State, Mexico. In addition,
the Company discovered seventeen new mineralized veins. Of these, seven have
greater than 300 metres of strike length traced to date. All seventeen remain
open along strike.
 
 The
new 1.5 kilometre access trail to the La Trucha target passed through a
well-mineralized new area (La Plancha) which shows very strong
tourmaline-quartz-copper oxide and sulfide mineralization in five shallow
dipping veins, one of which has 2.0 metres of exposed width. Four other veins
have been identified in this area with lesser-exposed widths but with equally
strong mineralization. A total of 37 rock samples were collected from the La
Plancha area.
 
 At
the La Trucha target 500 metres of trenching using a Cat D7E bulldozer has been
completed to date. The southerly vein ('F'vein), was cut in two locations and
showed strong fracturing and faulting within tourmaline-quartz veining and
copper oxides. Assay results are pending. Further trenching using a tracked
excavator will commence mid January 2004.
 
 Exploration
at the Papaya target included 1,200 metres of trail rehabilitation and over 350
metres of trenching at two locations in the down-dip (western) direction of the
vein. At the northern location (Papaya Norte) the 40 degrees dipping
quartz-tourmaline vein was exposed over 7 metres width. At the southern trenched
area (Papaya Sur), 350 metres south of Papaya Norte, five subparallel veins
identified to date, ranging from 0.1 to 1.5 metres wide, occur on the footwall
(east) side of the 10 metre wide main vein. Assays are pending.
 
 A
newly discovered vein (Pitayo) has been found 200 metres southeast of the
trenched Papaya Sur zone. The Pitayo vein appears to be subparallel to the
Papaya vein and is exposed over greater than 4.0 metres width. Six other veins
identified to date with lesser-exposed widths were discovered during trail
access construction. Two of these veins are observed to be crosscutting and
exhibit extensive copper and iron oxides. Assays are pending.
 
 During
January, as development of the 2 kilometre access trail along the Papaya vein
continues, trenching to expose the full width of these veins will take place.
Over 1,000 metres of reconnaissance geological mapping and rock sampling along
the proposed trail/trench has revealed five mineralized areas to date.
  The
Company has discovered a new zone (El Sauz), extending 1.6 kilometres north of
the Papaya target, of tourmaline-quartz-copper oxide vein mineralization. A
total of 26 samples were collected and analyzed.
  49
 In
addition, during geological reconnaissance, a float sample of massive sulfide
was found in a creek bed in the El Sauz area near the La Trucha and La Plancha
drainage divide. The float sample returned values of gold and silver. Its
geochemistry is similar to other veins in the La Trucha area, however the source
of this float has yet to be discovered.”
  
 On
May 13, 2004, the Company reported that Ross River had provided the Company with
the following results in the form of a news release, a partial excerpt from
which follows:
  Papaya
Target: Inversion analysis and geophysical interpretation has identified four
structures trending in a northwest/southeast direction on the Papaya grid. The
first 800 metres long is open to the southeast, the second 3,500 metres long is
open to the north and southeast, the third 700 metres long is open to the northwest
and the fourth 2,100 metres long is open to the northwest and southeast.
Resistivity depth slicing at 100 metres shows, as expected, resistivity
anomalies associated with the northwest/southeast trending chargeability
anomalies and at surface are shown to be correlative with known mineralization.
Three of the anomalies, including the main Papaya vein zone, are associated with
anomalous gold, silver, copper, tellurium and bismuth identified in soil
geochemistry. In addition, a large chargeability anomaly (7 - 18 mV/V) occurs at
the southeast corner of the grid over an east/west distance of 900 metres and is
open to the south and east. Geophysical surveying in progress on the La Langosta
grid will better define this anomaly.
  La
Trucha Target: Three chargeability anomalies have been identified on the La
Trucha target. The first 700 metres long by 500 metres wide, trending northeast
to southwest, disappears under Quaternary overburden cover. The second anomaly
500 metres long by 400 metres wide is located immediately to the south. The
third anomaly extending to the Papaya grid immediately adjacent to the west
trends in a northwest southeast direction over 1100 metres in length and 300
metres in width and plunges under a ridge capped by volcanic rocks to the
southeast. All three chargeability anomalies are associated with co-incident
resistivity anomalies and known outcrops of quartz tourmaline veining. As
anticipated, due to the thick overburden the soil geochemistry was of limited
use, however, where known outcrops of gold, silver and copper occur, spot
anomalies of gold, silver, copper, tellurium and bismuth were reported. The
extent of the geophysical anomalies on the La Trucha, particularly over known
mineralization, indicate the target at depth appears to be much larger than
originally anticipated.
  La
Langosta Target (including El Bagre): The I.P. and soil geochemistry surveys
have been completed on the La Langosta grid. The surveys show an elliptical
chargeability anomaly ring extending in a northeast/southwest direction over
2,100 metres and 1,000 metres in a northwest/southeast direction. The width of
the ring ranges from 150 - 300 metres. The chargeability ranges from 10 - 54
mV/V. This anomaly is coincident with porphyry style mineralization within the
La Langosta target. Follow-up work within this high chargeability zone has
discovered two new outcrops, the first 30 metres by 20 metres in size, 500
metres south of El Bagre within intrusive rock containing disseminated
chalcopyrite plus copper oxides. A second outcrop 200 metres to the west and 20
metres wide of strongly potassically altered quartz monzonite with sheeted
quartz tourmaline veins containing disseminated pyrite and chalcopyrite.
Additional I.P. lines are being cut to the east as the chargeability anomaly is
open in that direction.
  Cerro
Colorado Target: The I.P. geophysical survey has just commenced on the Cerro
Colorado grid. Soil geochemistry has outlined two large zones anomalous in gold,
silver and copper. The largest of these is also anomalous in bismuth and
tellurium. The largest zone extends in a northeast/southwest direction and is
coincident with known gold, silver and copper mineralization and is 200 - 300
metres in width and at least 1,700 metres long and is open along strike at both
ends. Additional soil lines are being cut. The second anomaly is new and is 100
- 250 metres in width and 1,100 metres long in a northwest/southeast
direction.
  La
Cetolla: Six trenches up to 2 metres deep and between 8 and 20 metres in length
were dug by hand over 900 metres in an east west direction. Five of the trenches
exposed disseminated and stockwork copper mineralization consisting of
chalcopyrite and copper oxides. Assays are pending.
 
 In
addition, a new area of stockwork copper mineralization has been discovered 2.2
kilometres southeast of the La Cetolla porphyry copper-gold target. Exploration
work is continuing in this area.
  50
 The
above from a Ross River news release refers to the unit of measurement “mV/V”.
This is the geophysical unit of measurement for chargeability, or the
overvoltage induced in the geophysical survey. Chargeability is a function of
the metallic mineral content of the area surveyed.
  
 On
May 26, 2004, the Company reported that Ross River had provided the Company with
the following results in the form of a news release, an excerpt from which
follows:
 
 “Ross
River Minerals Inc. (the "Company") is pleased to announce that drilling has
commenced on its 200 sq. km. El Pulpo property located in Sinaloa State, Mexico.
Drilling will begin on the Papaya gold-silver-copper target, followed by the La
Trucha and Cerro Colorado gold-silver-copper targets.
 
 Additional
soil and geophysical lines have been cut at the south end of the Papaya grid and
east of the La Langosta grid and east and west of the Cerro Colorado grid, in an
attempt to close off the geophysical and soil geochemistry anomalies extending
beyond the existing grids.
 
 To
date the Company has identified four high grade gold-silver-copper vein targets
(Papaya, La Trucha, El Tiburon and El Sauz), a stockwork gold-silver target
(Cerro Colorado) and two copper-gold porphyry targets (La Langosta/El Bagre and
La Cetolla) on the property, with less than a third of the property explored to
date. Data from the current exploration program will assist in identifying drill
locations for the La Langosta copper-gold porphyry target. On-going exploration
of the known targets is continuing to discover new mineralized
zones.”
 
 On
June 11 th ,
2004, the Company reported that Ross River had provided the Company with the
following results in the form of a news release, a partial excerpt from which
follows:
  Ross
River Minerals Inc. is pleased to announce that it has confirmed Cerro Colorado
as the third and largest copper-gold porphyry target identified to date on its
200 square kilometre El Pulpo property. This is in addition to the previously
identified La Langosta/El Bagre and La Cetolla copper-gold porphyry targets and
the Papaya, La Trucha, El Sauz and El Tiburon gold-silver vein
targets.
  As
previously reported, a large I.P. chargeability anomaly was outlined associated
with gold, silver and copper soil geochemistry anomalies. Previous work focused
on the gold potential along a northeast-southwest trending ridge characterized
by sheeted and stockwork gold bearing quartz-tourmaline veining within zones of
phyllic alteration in an intrusive setting. Prospecting and geological mapping
of anomalous soil geochemistry and geophysical anomalies north of the
northeast-southwest trending ridge in topographically lower areas has discovered
widespread fractured controlled and disseminated porphyry style chalcopyrite
mineralization within potassically altered granodiorite. At higher elevations
the anomalies are associated with a widespread reddish-brown soil overlying
altered oxidized granodiorite with remnant chalcopyrite, pyrite and iron oxides
with anomalous copper in soils.
  The
porphyry mineralization on Cerro Colorado appears to be outlined by three
chargeability anomalies >10mV/V at n=1, forming a rough ellipse. On most
lines, which are spaced at 200 metres, the chargeability increases at depth with
greater than 15mV/V to >30mV/V. The largest anomaly has a length of 1,900
metres and a width of 750 metres and trends northeast-southwest. The second
anomaly 520 metres northwest of the first has dimensions of 800 metres by 300
metres trending in a northwest-southeast direction. The third anomaly 200 metres
west of the first is 450 metres by 300 metres in size.
  All
the chargeability anomalies have coincident copper soil geochemistry anomalies,
silver soil geochemistry anomalies and gold soil geochemistry anomalies.
Molybdenum and zinc overlap and are outboard of the copper anomalies. Where the
anomalies outcrop, potassic (biotite+/-potassium feldspar+/-hematite after
magnetite) and phyllic (sericite+/-quartz+/-pyrite) alteration with chalcopyrite
and/or copper oxides are observed. The surficial distribution of these metals is
consistent with large porphyry copper deposits.
  51
 To
date at least forty percent of the Cerro Colorado area has been mapped and
sampled as part of a follow-up program of prospecting and mapping the soil
geochemistry and geophysical anomalies. Assays are pending for rock samples.
James R. Reeves P.Geo. is the qualified person supervising the geologic work in
this area.
  Drilling
is continuing on the Papaya and La Trucha gold, silver, copper vein targets and
results will be reported when received. Trenching is also continuing on the
Cerro Colorado, La Langosta and Papaya targets. Management is extremely
encouraged by the on-going field program that continues to identify new and
larger copper, gold, silver targets.
  The
above from a Ross River news release refers to the unit of measurement “mV/V”.
This is the geophysical unit of measurement for chargeability, or the
overvoltage induced in the geophysical survey. Chargeability is a function of
the metallic mineral content of the area surveyed.
 
 On
August 20, 2004, the Company reported that Ross River had provided the Company
with the following results in the form of a news release dated August 20, 2004,
a partial excerpt from which follows:
  “Vancouver,
BC: Ross River Minerals Inc. (TSX-V: RRM) (the "Company") is pleased to announce
that it has completed compiling surface and trench samples collected during 2004
on its Cerro Colorado, La Langosta and La Cetolla copper-silver-gold porphyry
targets located in Sinaloa State, Mexico, and that it has discovered a fourth
area of porphyry-style copper mineralization on the 200 square kilometre El
Pulpo property.
  Jocquistes:
Prospecting in the eastern part of the El Pulpo claim area has revealed a fourth
area of porphyry style mineralization approximately four kilometres east and
south of La Cetolla. The prospect, called Jocquistes, features widespread
malachite/azurite encrustations on fractures and outcrops and 1-3 centimetre
quartz stockwork veins containing chalcopyrite with associated pervasive phyllic
alteration overprinting potassic alteration over a minimum area of 500 by 1,000
metres. The intensity of alteration and the continuity of mineralization is
similar to the La Cetolla prospect. The Company plans to conduct extensive
prospecting on this target early in the fall to better determine the extent of
the mineralization. The discovery of the Jocquistes prospect has given a new
perspective to exploration of the El Pulpo claim block. An overall pattern is
emerging of copper prospects surrounding a molybdenum-rich core.
  Cerro
Colorado: Soil geochemistry and Induced Polarization (IP) and magnetometer
geophysical surveys were completed over an area of 6.8 square kilometres. An
area 1,900 by 750 metres anomalous in copper, gold, silver and molybdenum in
soils was outlined associated with an extensive IP anomaly. Satellite anomalies
also occur 200 metres west (dimensions: 450 by 300 metres) and 520 metres north
(dimensions: 800 by 300 metres) of the major anomaly (see press release dated
June 9, 2004 and refer to Ross River’s website). Mapping in the southeastern
part of the major anomaly identified significant widespread areas of potassic
and phyllic alteration related to disseminated and stockwork copper
mineralization within the granodiorite host rock. One hundred seven rock chip
samples were collected from outcrops and from trenches and road cuts at depths
of 2 to 4 metres within this area. Individual samples were collected over widths
of 0.2-7.0 metres.
  La
Langosta: Soil geochemical and IP/magnetometer surveys were carried out over a
grid 2,200 metres by 1,800 to 2,500 metres in the La Langosta area. Prospecting
and mapping was conducted over a small portion of the anomalous area to identify
the origin of the IP chargeability anomalies. One hundred six rock samples were
collected, including 95 chip samples, mostly from leached bedrock in hand-dug
trenches at depths of 1 to 2 metres.
  These
results are extremely encouraging considering these are from preliminary
sampling over a small part of the extensive anomalous areas of the Jocquistes,
Cerro Colorado and La Langosta targets and are mainly from leached bedrock.
  La
Cetolla: Preliminary prospecting of the La Cetolla target east of the La
Langosta area has confirmed the copper-gold porphyry extending over an area of
1,100 by 230 metres previously discovered by Placer Mexicana in the 1970’s.
Subsequent exploration has extended this area to 1,575 by 430 metres and is open
in all directions. Fifty-nine samples were taken from outcrops and from hand-dug
trenches at depths of 1 to 2 metres. Fifty-three chip samples were taken from
61.7 metres of trenches and 59.6 metres of outcrops over widths of 0.3 to 5.40
metres.
  52
 The
initial 2004 exploration program on the El Pulpo property was curtailed by the
rainy season in early July. The Company has not received all the assays and
re-assays from the drilling program of the Papaya and La Trucha gold-silver vein
systems. These results will be released as soon as they become available.
Reassays have been requested for those samples over the reportable limit. Data
review, checking and compilation of the initial 2004 program is presently
underway which will be followed by the planning of a major exploration and
drilling program of El Pulpo to commence this October.
  Victor
Jaramillo P. Geo. and James R. Reeves P. Geo. were the Qualified Persons
supervising exploration of these targets.
  ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. Ross River has
advised that it has applied for regulatory approval (granted March 24, 2005) of
the Ross River Acquisition.
 
 **The
Ram Prospect - Canada**
 
 The
Ram Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
Ram claims were acquired from the Company’s predecessor (“Fairfield”) and are
100% owned by the Company.
 
 In
May 2000, Fairfield entered into an agreement with Ross River Gold Ltd. (now
Ross River Minerals Inc. (“Ross River”)) whereby Ross River can earn a 70%
interest in the prospect by incurring $500,000 in exploration expenditures by
April 1, 2006 and issuing to the Company a total of 390,000 shares (amended).
Ross River has also paid the Company $21,000 in consideration for an extension
to the agreement.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $44 on this prospect. The proceeds from
securities received pursuant to the agreement with Ross River was $37,910.
$37,866 of excess recoveries has been charged to mineral properties revenue for
Fiscal 2004. As at December 31, 2004, the Company is carrying this prospect at
$1.
 
 ***Location
and Access***
 The
Ram prospect is in the Watson Lake Mining District, 260 kilometers northeast of
Whitehorse, and 45 kilometers south of Ross River, Yukon Territory. The claims
are accessible by seasonal four-wheel drive road originating from the South
Canol Road (Highway 8).
 
 ***History
and Recent Work***
 The
current 69 Ram claims formed part of a much larger block of 758 claims staked in
1984 and 1985 by Regional Resources Ltd. (Fairfield’s predecessor), to cover
gold-silver and base metal geochemical anomalies and mineral occurrences. Work
completed by Regional in 1985 included line cutting, grid geochemical surveys,
geological mapping, prospecting and minor hand trenching.
 
 Title
to the entire claim group was transferred to Fairfield in 1986. During 1987,
Fairfield conducted further grid soil sampling, reconnaissance rock sampling and
ground geophysical surveys. In 1988, Fairfield and joint venture partner Equity
Silver Mines Ltd. carried out diamond drilling and additional soil geochemistry.
Thirty-one BQ core holes totaling 3723 metres were drilled to test five separate
targets on the property. Fifteen of these holes tested the Vole, Trout and Mouse
Showings located on the presently existing (69) claims.
 
 From
1991 to 1999, the property was under option to Pacific Comox Resources Ltd.
which conducted airborne and ground geophysical surveys, and a reverse
circulation drill program that included six short holes on the present (69)
claims. The claim holdings were reduced to this number by December
1993.
 
 53
 In
May 2000 the Ram claims were optioned by Ross River which in turn optioned them,
together with its larger adjoining Tay-LP land package, to Newmont Exploration
of Canada Limited (“Newmont”). Fieldwork in the Ram area by Newmont during 2000
included airborne magnetic and electromagnetic (EM) geophysical surveys,
geological mapping and prospecting, soil and rock geochemical sampling, and
auger overburden drill sampling. Newmont terminated its option on the entire
Ram/Tay-LP project in December, 2001.
 
 During
2002, Ross River carried out further prospecting and rock sampling on the Ram
claims, as well as diamond drilling of four holes totaling 342.6 metres to test
EM and geochemcial anomalies.
 
 ***Geology
and Mineralization***
 The
present claim area is underlain by a sequence of moderately deformed and
metamorphosed Lower Paleozoic sediments intruded by probable Cretaceous age
granitic rocks. Lithologies comprising the stratigraphic assemblage include
phyllite, schist, dolostone, quartzite and slate. Calc-silicate hornfels and
chlorite-magnetite skarn occur at or near intrusive contacts.
 
 Auriferous
mineralization on the property is dominantly hosed by phyllite and occurs as
irregular quartz-sulphide masses, veins and stockworks, breccias,
skarn/hornfels, and local replacements of thin calcareous interbeds. Sparse
intrusive exposures are variably silicified, clay altered and also locally
contain quartz-sulphide veins and sulphide disseminations. A prominent regional
domal uplift of the stratified rocks is interpreted to reflect the presence of
buried intrusions responsible for the mineralizing events. The style and setting
of the various occurrences are consistent with the model of intrusion related
gold systems along the Tintina Gold Belt of central Yukon and Alaska, within
which the Ram prospect is situated.
 
 The
gold is associated with quartz-tourmaline, pyrrhotite, pyrite, bismuthenite,
tellurides, chalcopyrite, arsenopyrite and galena. Best mineralization
discovered to date occurs at the Vole Showing, where drilling in 1988
intersected a quartz-sulphide stockwork zone assaying 2.2 g/t gold over 5.3
metres. Approximately 1300 metres south of this area, a 5-metre wide
quartz-sulphide vein outcrops at the Trout Showing. This showing was also drill
tested in 1988; silver assays of up to 101.8 g/t over 1.74 metres were returned,
but gold values were low.
 
 ***Infrastructure***
 There
is no infrastructure in place on the prospect.
 
 ***Drilling
Results***
 During
Fiscal 2002, Ross River completed four diamond drill holes totaling 342.6 metres
on the Ram claims, to test EM and geochemical anomalies. No significant gold
assays were obtained from core samples.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. Ross River is
maintaining its option on the property. The claims have expiry dates from
December 31, 2013 to December 31, 2019.
 
 **The
Rock River Coal Prospect - Canada**
 
 The
Rock River Coal Prospect is without proven reserves and all current work by the
Company on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 During
Fiscal 2002, the Company acquired a 50% interest in four coal exploration
licenses covering 187,698 acres in the Yukon Territory through application to
Indian and Northern Affairs Canada. Santoy Resources Ltd. (“Santoy”), formerly
Troymin Resources Ltd. (“Troymin”), holds the remaining 50% interest. The
licenses were originally applied for by the Company’s President during Fiscal
2001 and when granted, a 50% interest was for the benefit of the Company and a
50% interest was for the benefit of Troymin. The licenses are subject to a gross
over riding royalty (‘GORR”) of 3% payable to H. Leo King upon the licenses
being issued. The joint venture can also purchase up to 2% of the GORR for
$1,000,000 for each per cent.
 
 54
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company renewed the licenses for a second three-year term. The
Company’s portion (50%) of the lease deposit was $4,712 for this first year. Its
portion of recoveries based on exploration work applied against previously paid
lease deposits was $10,541. As at December 31, 2004, the Company had deferred
costs of $39,337 on this prospect.
 
 ***Location
and Access***
 The
licenses are located in the Watson Lake Mining District in the Yukon Territory,
100 kilometres north east of Watson Lake. Access is by helicopter. A winter road
extends to 10 kilometres of the property.
 
 ***History
and Recent Work***
 Coal
was discovered by Sulpetro Minerals Ltd. in the Rock River Basin in July 1980
and five holes were drilled in 1981 for a preliminary evaluation of the coal
potential. A gravity survey of the entire basin on widely spaced lines was
carried out in 1982. This survey identified nine responses possibly sourced by
coal units. These can be divided into six anomalous areas, one of which includes
the known coal beds. Near surface coal was intersected in drill holes one and
two. A Yukon Government publication, “Yukon Exploration and Geology 1983”
reports that Sulpetro staff estimated 56,000,000 tonnes of lignite coal lies
within 80 metres of the surface in the vicinity of holes 1 and 2. Analyses
indicated a thermal content of 6645 BTU at equilibrium moisture and a waste to
coal ratio of 2:1. The coal ranks from lignite A to subbituminous C. The
Almaden/Troymin joint venture conducted a review of government and Sulpetro
data. During the summer of 2003, a geological review and reconnaissance program
was carried out on the prospect by Aurora Geosciences Ltd.
 
 ***Geology
and Mineralization***
 Tertiary
strata in the Rock River Basin accumulated in an inter montane valley whose
geometry and history was probably controlled by subsidence related to the Rock
River fault. Coal deposits in the Rock River Basin are interpreted as products
of desposition in forest moor environments associated with stable channel
fluvial systems. If the elongate gravity anomalies identified by Sulpetro are
coal the ultimate coal potential of the property is very high. To prove up coal
resources would require an extensive program of closely spaced
holes.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. The Company is
required to file a statement of work or remit fees based on $0.05 per acre in
year one, $0.10 per acre in year two and $0.20 per acre in year three. The
licenses expire on July 30, 2007.
 
 **The
PV Prospect - Canada**
 
 The
PV Prospect is without known reserves and all current work by the Company on the
prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
initial 10 claims (40 units) comprising the PV prospect were acquired by staking
by the Company’s predecessor (“Fairfield”) in October 2001 and are 100% owned by
the Company. The Company added 26 single-unit PV claims by staking in February
and June 2003, and also staked a separate block of 12 single-unit NIC claims
during October 2003.
 
 In
March 2004, the Company entered
into an agreement with Consolidated Spire Ventures Ltd. (“Spire”). To earn a 60%
interest, Spire must incur exploration expenditures totalling $1.3 million and
issue 600,000 shares to the Company by January 10, 2007.
 
 In
May 2004, the Company completed the staking of an additional 22 mineral claims
and was reimbursed by Spire for the costs of this work .
These new claims partly overlap and substantially expand the previous PV and NIC
claim groups, joining them into one contiguous block currently comprising 353
units or approximately 88 square kilometres.
 
 ***Expenditures
to Date***
 As
at December 31, 2004, the Company had incurred $46,929 in acquisition and
exploration costs on the prospect of which $33,835 was recovered by Spire who
are earning their interest in the prospect. The deemed value of securities
received pursuant to the option agreement with Spire was $14,000. As at December
31, 2004, the Company has $130,897 in deferred acquisition and exploration costs
on the prospect.
  55
 ***Location
and Access***
 The
property is located approximately 50km west of Merritt, British Columbia and
access to all but the (new) central claims is by road. The central claims are
accessed by helicopter.
 
 ***History
and Recent Work***
 A
preliminary program carried out in October 2001 consisted of prospecting and
reconnaissance scale rock and soil geochemistry. This work resulted in the
discovery of widespread and locally abundant gold bearing quartz vein float.
Initial soil sampling at 50-meter intervals was conducted along a network of old
logging roads and trails throughout the claim block. Analytical results from the
280 soil samples taken outlined anomalous gold and arsenic, mainly within the
one square kilometer area containing the most abundant mineralized quartz
float.
 
 In
2002 field work consisted of initial coarse grid soil geochemistry, multiple
stages of detailed (infill grid) soil geochemistry, minor portable auger (soil)
sampling, substantial further prospecting and reconnaissance (rock, silt, soil)
sampling, plus mechanical excavator trenching and test pitting with related
mapping and rock/basal soil sampling. Totals of 1241 soil, 123 rock and 11
stream sediment samples were collected and shipped to Acme Analytical
Laboratories Ltd. in Vancouver, BC for 35-element geochemical analysis.
 
 The
2001-02 total of 1385 grid and road soil samples defined multiple element
geochemical anomalies in the area of Bonanza Creek resulting in a 660-metre
(2,165-ft.) trenching program undertaken in October 2002. Test pits were dug to
a depth of five metres (16.4 ft.) at fifteen locations on the west side of
Bonanza Creek but no bedrock was reached. Intermediate volcanic flows and
pyroclastics with varying degrees of carbonate and clay alteration were
uncovered by excavation on the east side of Bonanza Creek. Narrow north-trending
quartz stringers were exposed and sampled but no significant gold values were
returned.
 
 The
2003 exploration work consisted of limited prospecting and reconnaissance
geochemical sampling on the northern PV claims, and a five line-kilometre
induced polarization (IP) geophysical test over the central Bonanza Creek area
(PV 1 claim). Totals of 17 rock, nine stream sediment and two soil samples were
collected and submitted to Acme Analytical Laboratories Ltd. in Vancouver, BC
for 36-element geochemical analysis. The results identified several new gold ±
arsenic ± antimony ± mercury stream sediment anomalies, and new occurrences of
gold bearing quartz vein float. The IP survey results outlined two resistivity
features which may be reflecting blind alteration zones related to vein
structures underlying the main soil geochemical anomaly along central Bonanza
Creek valley.
 
 Work
on and around the (then) separate NIC claim block in 2003 included prospecting,
reconnaissance geochemical sampling, and minor hand trenching. Totals of 51
rock, 24 silt, and 68 soil samples were collected and tested for 36 elements by
Acme Analytical Labs in Vancouver, BC. The silt sample results provided better
definition of previously identified gold ± arsenic ± antimony ± mercury
anomalies. The rock and soil sample results identified a two-kilometre long by
roughly 500-metre wide gold-silver geochemical anomaly containing forty
mineralized quartz vein float occurrences and one bedrock occurrence. Limited
hand trenching on the bedrock occurrence (NIC Discovery Zone) intermittently
exposed a < 0.5-metre to ~ 1.5-metre wide northeast trending subvertical
quartz vein/breccia zone, over a strike length of about 20 metres. Ten channel
samples taken at various sections across the exposures yielded gold and silver
analyses ranging from 0.32 g/t to 6.15 g/t, and from 0.70 g/t to 56.7 g/t,
respectively. Check assays on five of these samples reported gold values ranging
from 0.89 g/t to 9.24 g/t, and silver values ranging from 3.4 g/t to 81.1
g/t.
 
 In
May 2004 the new claims joining the PV and NIC groups were staked to cover
additional multi-element silt geochemical anomalies and gold-silver bearing
quartz float occurrences located during previous regional sampling conducted by
the Company.
 
 Later
in 2004 Spire carried out a two-phase exploration program at a total cost of
$81,848. The first phase of exploration was conducted over the month of July.
Work carried out included establishing, prospecting and soil sampling a control
grid over the NIC Zone. A regional prospecting and silt sample survey was also
conducted on the property’s central and northern areas. The second phase was
carried out during the first week of November. This follow-up program included
(a) a short extension of the NIC Discovery Zone hand trench, numerous soil test
pits on the NIC gold-in-soil anomalies and (b) limited prospecting, seven
reconnaissance soil lines and two-hand trenches in the newly identified gold
Anomaly Clusters. A total of 38.65 Km of soil grid lines were sampled and a
combined total 25 rocks, 997 soils and 90 silts were collected. All samples were
analyzed for 36 elements by Acme Analytical Labs in Vancouver, BC.
 
 56
 The
NIC Zone multi-element soil anomaly was expanded to a size of 2,600m by 900m.
This soil anomaly is now closed in all directions, except to the northeast,
where it appears to be narrowing to less then 100m wide. The individual element
anomalies tend to have a northeastward trend, although a lesser northward trend
has been noted. A number of soil test pits were dug on select gold-in-soil
highs. Rock samples collected from these pits yielded sub-anomalous values. The
two rock chip samples collected from the extension of the Discovery Zone hand
trench reported 0.80 g/t and 0.67 g/t gold over 1.0m and 0.5m, respectively,
extending established gold mineralization an additional 3.2 metres in one strike
direction.
 
 The
regional silt sampling and prospecting survey successfully identified 18 early
stage gold-in-silt geochemical anomalies, which collectively form three loosely
defined gold anomaly cluster areas. Preliminary work on the Anomaly Cluster 1
area identified a strong, northeast trending, open-ended multi-element soil
anomaly. Six one-metre contiguous rock chip samples collected from a 6.0m long
hand trench, within this soil anomaly, returned gold analyses ranging from 0.19
g/t to 0.82 g/t.
 
 In
the Anomaly Cluster 2 area, preliminary soil and trench rock chip sampling
returned generally sub-anomalous gold and pathfinder element (Ag, Mo, As, Sb,
Hg) values. The overall geochemical response from three reconnaissance contour
soil lines is weak. All trench rock samples were sub-anomalous in
gold.
 
 The
very early-staged Anomaly Cluster 3 area includes two silt samples collected
over a ~1.0 km range, with strongly anomalous gold values. A very brief visit
was made to the area during the November follow-up work. A single grab rock
sample collected from an outcrop of chlorite-altered basalt, with minor silica
flooding, yielded sub-anomalous analytical values. The source of these two
gold-in-silt anomalies remains unknown.
 
 ***Geology
and Mineralization***
 The
newly expanded PV claim block is underlain dominantly by a northwest trending
belt of Cretaceous volcanics and lesser sediments known as the Spences Bridge
Group. These rocks include intermediate, locally felsic and mafic flows and
pyroclastics with some sandstone, shale and conglomerate, as well as a younger
basaltic unit differentiated as the Spius Creek Formation. The assemblage dips
gently to the northeast and unconformably overlies Triassic-Jurassic mafic
intrusive rocks exposed along the southwestern claim boundary. Locally, the
assemblage in turn is overlain by Tertiary (Eocene) mafic to felsic volcanics.
These younger volcanic units are cut by small (Miocene?) intrusions of
intermediate composition, which may be part of a feeder system to
them.
 
 The
major structural features in the prospect area are steeply dipping normal
faults, parallel and subparallel with bounding regional fault systems. These
faults have dominant north-south and NNW-SSE trends. Within the claim area,
there are also several other orientations of prominent lineaments as interpreted
from aerial photographs, topographic maps and field observations. Most of the
major stream gullies (inferred structures) trend north to northeast, similar to
the presently defined main soil geochemical and mineral occurrence trends.
 
 Mineralization
found to date includes approximately two hundred float occurrences of gold ±
silver bearing quartz veins and breccias, as well as the insitu NIC Discovery
Zone and Anomaly Cluster 1 showings. All of the occurrences exhibit compositions
and textures typical of low sulphidation type epithermal systems. Most of the
mineralized float is subangular in nature, indicating local sources. The
majority of the float occurrences lie within a 2.5-square kilometre area (PV
Zone) that straddles Bonanza Creek valley, and coincides with a multi-element
soil geochemical anomaly, on the original 40-unit PV claim group. Preliminary
fluid inclusion studies on a few quartz vein samples from this area have
reported formation temperatures of ~200 o C,
indicating only shallow erosion of the source epithermal system.
 
 The
NIC Discovery showing is an irregular zone of quartz veins and silica flooding
hosted in clay altered andesite (± basalt) tuffs, where vertical to subvertical
dipping veins have orientations varying from due north to N.35 o E
(azimuth 035 o ).
A locally prominent ridge extends northeastward from the discovery (trench)
exposures, and roughly forms the long axis of the 2600m x 900m NIC Zone soil
anomaly and mineralized quartz float trend.
 
 57
 The
Anomaly Cluster 1 showing is situated five kilometres to the north-northeast of
the PV Zone, along the same structural and geochemical trend. Exposed bedrock in
the trench consists of limonitic quartz veins and breccias hosted in a variably
porphyritic basalt. Individual quartz vein widths vary from one to six
centimetres and have a relatively consistent orientation of 016 o /50 o E.
 
 ***Planned
work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned Fiscal 2005 exploration program with all work being
conducted by Spire which is earning its interest in the prospect. Spire has
advised the Company that future work plans include data compilation and further
field work with the aim of defining drill targets for 2005.
 Spire’s
geological consultant has advised the Company that he has recommended to Spire
the following programs:
 a)
    Mechanized
      trenching and rock sampling in the NIC Zone soil anomaly
    area.
 b)
    Detailed
      grid soil sampling, prospecting and additional hand trenching at Anomaly
      Clusters 1 and 2.
 c)
    Additional
      regional drainage prospecting and recon soil sampling of the Anomaly
      Cluster 3 area, as well as the northwest corner of the claim
      block.
 
 **The
MOR Prospect - Canada**
 
 The
MOR Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
claims comprising the MOR Prospect were acquired by staking by the Company’s
predecessor (“Fairfield”) during August 1997 (MOR 1-4), August 1998 (MOR 5-8)
and September 1998 (MOR 9-12). The MOR 13 to 52 claims were added in April 1999
when the prospect was optioned to Brett Resources Inc. (“Brett”). Brett carried
out an exploration program and then returned the prospect to Fairfield in
December 1999. The claims were transferred to the Company upon amalgamation. The
surface rights are held by the Teslin Tlingit Council/Yukon First Nations, from
whom permission is required for entry to conduct work.
 
 In
August 2003, the Company entered into an agreement with Kobex Resources Ltd.
(“Kobex”) on the claims comprising the MOR, Caribou Creek and Cabin Lake
prospects. To earn an initial 50% interest Kobex must incur exploration
expenditures of $50,000 by August 31, 2004 and issue 100,000 shares to the
Company. To maintain the option in good standing, Kobex must incur a further
$450,000 in exploration expenditures by August 31, 2007 and issue an additional
300,000 shares to the Company in installments of 100,000 shares by August 31,
2005, 2006 and 2007 respectively. Kobex can increase its interest to 60% by
incurring a further $500,000 of exploration expenditures by August 31, 2008 and
issuing a further 100,000 shares to Almaden. Upon commencement of commercial
production, Kobex would be required to issue an additional 500,000 shares to
Almaden . In
January 2005, Kobex returned the claims comprising the Cabin Lake and Caribou
Creek prospects to the Company but retained the MOR prospect.
  ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $391 of exploration on the prospect which was
written off to operations. Deemed proceeds from securities received pursuant to
the option agreement with Kobex was $30,500. As at December 31, 2004, the
Company had deferred $31,524 in acquisition and exploration costs, net of
proceeds, write-downs and recoveries, on the prospect.
  ***Location
and Access***
 The
MOR prospect is located 9km north of the Alaska Highway in the Morley River area
of southern Yukon Territory and consists of 52 contiguous mineral claims in the
Watson Lake Mining District. Access is by helicopter from a staging area on the
Alaska Highway.
 
 ***History
and Recent Work***
 The
initial MOR claims (1-4) were staked in August of 1997 to cover a small zone of
significant base and precious metal values in soil and in gossanous schist
subcrop (Discovery Showing), located during follow-up of regional stream
sediment anomalies identified by Fairfield’s predecessor company in 1980.
Subsequent work in 1997 focussed on hand pitting and trenching in this area, but
also included prospecting and reconnaissance (silt, soil, rock) sampling
elsewhere on and around the four claims.
 
 58
 During
1998 Fairfield added 8 claims (MOR 5-12) and carried out grid soil geochemistry
(21 line-km / 432 samples), ground magnetic and VLF-EM geophysical surveys (11
line-km), limited blast trenching in the Discovery Showing area, and minor
prospecting with reconnaissance rock sampling.
 
 In
April 1999, Brett Resources Inc. optioned the property from Fairfield and staked
40 additional claims (MOR 13-52). Brett subsequently conducted a soil
geochemical survey (22 line-km / 442 samples) covering some of the new claims,
property-wide preliminary geological mapping at 1:10,000 scale, more detailed
(1:1,500) geological mapping in areas of known mineralization, prospecting and
rock sampling, plus claim tagging. Brett relinquished its option on December 31,
1999.
 
 Field
work in 2000 consisted of additional grid soil geochemistry (43 line-km) and
ground magnetic, VLF-EM geophysical surveys (29.5 line-km); detailed grid based
soil profile and bedrock sampling by portable power auger, further prospecting
with reconnaissance rock sampling, plus handheld GPS-surveying of the claim
post, grid line and sample locations. A total of 1223 samples were collected and
shipped to Acme Analytical Laboratories Ltd. (Vancouver, B.C.) and ALS Chemex
(North Vancouver, B.C.) for multi-element analysis.
 
 A
two-week prospecting program was undertaken in July 2001. A total of 197
portable power auger soil samples and 6 rock samples were collected. All samples
were shipped to Acme Analytical Labs for analysis.
 
 During
in Fiscal 2004, Kobex completed an induced polarization (IP) geophysical survey
over the prospect which defined an 800 meter long linear chargeability anomaly
that remains open along strike. This anomaly is coincident with significant
mineralization identified in trenches and anomalous soil geochemistry. Kobex has
provided Almaden with the results of a two hole diamond drill program that it
completed in August, 2004. The holes were drilled roughly 100 meters apart and
were designed to test the IP chargeability feature. Both holes intersected
mineralization and alteration commensurate with a VMS system including massive
sulphides. At this time there is insufficient geologic information to be able to
determine the orientation of the massive sulphide units, including true widths.
Hole MO04001 intersected significant alteration and mineralization from the
collar to 25 meters depth. A further mineralised unit was intersected at roughly
42 meters depth in this hole. Analyses from these intersections are tabulated
below:
 
 **From
      (m)**
    **To
      (m)**
    **Interval
      (m)**
    **Copper
      %**
    **Zinc
      %**
    **Silver
      g/t**
    **Gold
      g/t**
    **Lead
      %**18
    22.9
    4.9
    0.69
    1.31
    39.70
    0.82
    0.15Including:19.3
    21.7
    2.4
    0.83
    1.43
    40.71
    0.83
    0.1419.3
    19.9
    0.6
    1.06
    1.27
    25.28
    0.63
    0.0641.9
    42.6
    0.9
    0.69
    0.18
    11.8
    0.50
    0.05
 
 The
second hole (MO04002) also encountered significant mineralization in two
separate units. The
first was intersected at roughly 23 meters depth and the second at roughly 66
meters depth. The results of the analyses from these intersections are tabulated
below:
 
 **From
      (m)**
    **To
      (m)**
    **Interval
      (m)**
    **Copper
      %**
    **Zinc
      %**
    **Silver
      g/t**
    **Gold
      g/t**
    **Lead
      %**23.30
    27.05
    3.75
    0.17
    0.76
    12.95
    0.17
    0.11Including:24.50
    24.85
    0.35
    0.44
    2.17
    26.20
    0.41
    0.2766.12
    68.00
    1.88
    0.97
    0.21
    19.78
    0.35
    0.05Including:67.30
    68.00
    0.70
    1.23
    0.37
    37.65
    0.50
    0.12
 
 The
companies believe these results represent a new Cu-Zn-Au-Ag-Pb VMS system hosted
by similar geologic units to that of the Kudz Ze Kayah and Wolverine VMS
deposits which also occur in the Yukon-Tanana terrane. The initial discovery of
the Kudz Ze Kayah deposit was made by Cominco Ltd. in 1994. Cominco (1999)
reported a resource of 11.3 million tonnes grading 5.9% zinc, 1.5% lead, 0.9%
copper, 133 g/t silver and 1.3 g/t gold. This was followed by the discovery of
the Wolverine deposit in 1995 by Westmin and Atna (currently owned by Yukon Zinc
Corporation). Drilling on the Wolverine deposit from 1995 to 1997 defined a
resource in all categories (Westmin Resources Ltd., 1998) of 6,237,000 tonnes
grading 12.66% zinc, 1.55% lead, 1.33% copper, 371 g/t silver and 1.76 g/t gold.
 
 59
 ***Geology
and Mineralization***
 The
MOR claims are underlain by deformed and metamorphosed volcanic and sedimentary
rock assemblages of Devonian-Mississippian age. These assemblages include the
Big Salmon Complex which in part has been correlated to Yukon-Tanana
stratigraphy that is host to several important volcanogenic massive sulphide
deposits in the Finlayson Lake district, 160 kilometres to the northeast.
 
 The
main mineralized zone at MOR is closely associated with several subparallel
felsic schist/tuff horizons within a dominantly mafic volcanic sequence.
Mineralization at the Discovery Showing, exposed by limited hand trenching
during 1997-98, consists mainly of coarse grained pyrite and chalcopyrite in
quartz-sericite and chlorite schists. Work programs in 1998 and 1999 have traced
the mineralized unit(s) intermittently in outcrop over a strike length of 900
metres, and have outlined an encompassing 2000-metre long by 100 to 250- metre
wide multi-element soil geochemical anomaly with a partly coincident moderately
strong VLF-EM geophysical conductor.
 
 The
2000/2001 auger sampling provided for better overall definition of the main
mineralized trend, and revealed significant blind mineralization at two widely
separated locations within this trend. Weathered and decomposed bedrock samples
from the new showings, which may represent different felsic horizons than any
previously sampled, yielded highly anomalous base and precious metal values as
shown in the following table:
 
 **Grid
      Location**
    **Depth
      & Sample Interval (m)**
    **Cu**
      **(%)**
    **Pb**
      **(%)**
    **Zn**
      **(%)**
    **Ag**
      **(g/t)**
    **Au**
      **(g/t)**2450E/2500N
    0.7
      - 1.4
    0.12
    0.57
    0.03
    43.1
    1.251.4
      - 2.0
    0.08
    0.31
    0.04
    43.1
    0.422450E/2510N
    0.2
      - 0.7
    0.10
    0.25
    0.04
    41.8
    1.760.7
      - 1.4
    0.07
    0.18
    0.04
    26.1
    0.491.4
      - 2.2
    0.10
    0.27
    0.05
    43.4
    0.783000E/2610N
    0.4
      - 1.3 *
    0.02*
    0.25
      *
    0.01*
    60.7
      *
    0.99*
 (*Averaged
result from 3 samples within this interval. Best individual sample results
include 109.2 g/t Ag and 2.14 g/t Au.)
 
 Elsewhere
on the property, results from the 2000 program have outlined coincident
copper-silver soil anomalies together with several weak VLF-EM conductors within
a broad zone situated approximately one kilometre south from the main
(Discovery) trend.
 
 ***Infrastructure***
 There
is no infrastructure in place on the prospect.
 
 ***Drilling
Results***
 During
Fiscal 2004, Kobex completed two diamond drill holes totalling 185.3m to test IP
geophysical anomalies on the MOR claims. The results are as reported
above.
 
 60
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005 with
all work being conducted by Kobex who are earning their interest in the
prospect. Kobex has not yet advised the Company concerning a work plan for 2005.
The claims
are in good standing until April 29, 2012 through to April 29, 2015.
 
 **The
SAM Prospect - Canada**
 
 The
SAM Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
initial staking of 43 claim-units (1,075 hectares) was undertaken in late 2003.
During 2004, further staking expanded the prospect to 140 claim-units (3,500
hectares). In January 2005, a closely adjacent SAMS (Sam South) block comprising
300 BCGS grid cells (~6,190 hectares) were acquired via the new BC Minerals
Titles Online system. All claim-units are 100% owned by the
Company.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $13,909 in staking costs and $33,152 in
exploration costs. As at December 31, 2004, the Company had incurred $57,599 in
acquisition and exploration costs on the property.
  ***Location
and Access***
 The
prospect is readily accessible by road, 25 kilometres northeast from Lytton on
the Trans-Canada Highway.
 
 ***History
and Recent Work***
 Pre-acquisition
work during 2003 consisted of prospecting and recon geochemical sampling based
on follow-up of a government (BC-RGS) regional gold stream sediment anomaly.
This program generated 22 rock, 41 silt, and 14 soil samples. The 2004
assessment work program included minor access road improvements, further
prospecting and recon sampling (25 rocks, 8 silts), approximately 21 line-km of
roadcut soil sampling (417 soils), and limited hand trenching at three sites (16
rock chip samples). All of the samples collected to date have been tested for 36
elements, by Acme Analytical Laboratories in Vancouver, BC.
 
 The
rock sampling identified variable grade gold and lesser silver mineralization in
a number of widely scattered quartz float occurrences, and in two major insitu
vein showings named Discovery and JJ.
 
 The
soil and stream sediment sampling outlined two broad areas of
gold-arsenic-antimony ± mercury enrichment which include and encompass the
Discovery and JJ mineral zones.
 
 ***Geology
and Mineralization***
 The
prospect area is underlain by a northwest-southeast trending shallowly dipping
sequence of intermediate and mafic volcanic rocks of the Cretaceous Spences
Bridge Group. Sill-like bodies of feldspar porphyry are also present, and felsic
dyke (?) rubble has been noted in a few localities. The ages and relationships
of these rocks to the main volcanic assemblage are presently
unknown.
  Major
structural features in the local area are north-south oriented high angle normal
faults. Two, east to ENE-trending, vague lineaments in the central property area
are discernible from aerial photographs, topographic maps and limited field
observations. These easterly striking features are roughly parallel with the
main soil geochemical anomaly trends and mineral showings identified to
date.
  Quartz
hosted gold and lesser silver mineralization has been identified in widely
scattered float occurrences, and in **t** wo
major vein showings, located on the SAM 1 and SAM 2 claims. All of these
occurrences exhibit compositions and classic textures typical of low
sulphidation epithermal veins and breccias. The styles of mineralization include
massive multiphase vein, multistage breccia, stockwork veinlet, and pyritic
silica-carbonate replacement of hostrock. Disseminated pyrite and specular
hematite also occur in both quartz matrix and hostrock clasts at the Discovery
Showing. Fluid inclusion studies of two vein rubble samples from the discovery
area have reported formation temperatures in the range of <200 o C
to 210 o C,
indicating minimal erosion of the epithermal system at this site.
  61
 The
(2003) Discovery Showing represents a large but low grade vein breccia zone
having an estimated 4.2m true width over which the 2004 channel sampling
returned gold analyses ranging from 0.34 g/t to 0.48 g/t, with negligible
silver. This zone trends ENE and is subvertical. Better grade rubble (1.21 to
2.16 g/t Au) occurs ~250m along strike.
  The
newly discovered high grade JJ Showing is situated nearly three kilometers to
the southwest of the Discovery Vein, on a subparallel ENE structural trend. It
consists of a moderately dipping zone containing two closely spaced veins (Jan
& Jodi Veins) and intensely altered andesite wallrock having an estimated
combined 2m true width. Channel sampling of the JJ exposure has yielded gold
assays of 12.79 to 53.38 g/t from vein material and 4.49 to 9.15 g/t from the
selvages. Corresponding sample silver assays range from 13 to 36 g/t (in vein)
and 4 to 7 g/t (in the selvages).
  ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
  The
Company has planned a 2005 exploration program to include the following: further
prospecting and recon rock/silt geochemical sampling, geological mapping, grid
based soil geochemical sampling, and mechanized trenching on both the Discovery
and JJ mineral zones at a budgeted cost of $70,000.
 
 **The
Cabin Lake Prospect - Canada**
 
 The
Cabin Lake prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
122 original claims comprising the Cabin Lake prospect were acquired by staking
between March and September 1997 by the Company’s predecessor (“Fairfield”). The
claims were transferred to the Company upon amalgamation and are owned 100% by
the Company.
 
 In
August 2003, the Company entered into an agreement with Kobex Resources Ltd.
(“Kobex”) on the claims comprising the MOR, Caribou Creek and Cabin Lake
prospects. During April 2004, 103 of the Cabin Lake claims were allowed to
lapse. In January 2005, Kobex returned the 19 remaining claims comprising the
Cabin Lake prospect to the Company.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $2,502 in maintenance costs on this prospect,
$1,995 of which was recovered from Kobex. The deemed value of securities
received from Kobex pursuant to the option agreement was $18,300. At December
31, 2004, the Company wrote-off $17,206 of costs incurred on this prospect and
is carrying it at $1.
  ***Location
and Access***
  The
Cabin Lake prospect is located in the Watson Lake Mining District of Yukon
Territory. The claims are 190 kilometers southeast of the city of Whitehorse and
are accessed by helicopter. The Alaska Highway passes 20km south of the claim
group, but to date there is no road access.
 
 ***History
and Recent Work***
 The
initial 100 Cabin Lake claims were staked during March to May of 1997 to cover
several multiple-element stream sediment and soil anomalies, and occurrences of
copper and copper plus molybdenum discovered in 1996. In June 1997, a 277
line-km airborne electromagnetic (EM) and magnetic survey was flown over this
claim group. Several EM anomalies and conductive trends parallel to stratigraphy
and to major fault structures were identified.
 
 An
initial phase of baseline cutting, soil sampling, geological mapping,
prospecting and hand trenching was undertaken in July 1997. Very encouraging
results were returned from the Avalanche Area, where a large copper soil anomaly
with values greater than
150 g/t Cu was delineated over an area of approximately 900 by 500 meters.
 
 Twenty-two
claims were added and a second phase of work in August and September of 1997
included fill-in soil sampling, intensified prospecting of anomalies, 390m of
excavator trenching, and 7.05 line-kilometers of induced polarization (IP)
geophysical surveying. The best results from trenching were 0.35% copper
averaged over 18.4m of continuous chip samples. The IP survey identified several
zones of chargeability and resistivity anomalies, with the strongest
chargeability values extending several hundred meters to the east and south of
known mineralization exposed at surface in the Avalanche Area.
 
 62
 During
the 1998 field season additional IP geophysical surveys, soil geochemistry and
prospecting were carried out. The IP chargeability and resistivity anomalies
detected in 1997 in the Avalanche Area were better defined and
extended.
 
 In
the southern half of the property (South Area) partly underlain by a granitic
intrusion, widely spaced grid soil sampling (200m X 50m) outlined a number of
coincident copper-molybdenum anomalies over an area of 200m by 1500m, with peak
values of 640g/t Cu and 68 g/t Mo .
 
 No
work has been undertaken on the Cabin Lake claims since 1998.
 
 ***Geology
and Mineralization***
 The
prospect is primarily underlain by Paleozoic to Triassic metasedimentary and
metavolcanic rocks of marine origin. Two distinct Mesozoic intrusive bodies are
present: a small diorite/granodiorite stock exposed in the central and
northwestern part of the property, and a larger granodiorite/quartz monzonite
pluton on the southwestern claims.
 
 Pyrite,
chalcopyrite and minor other sulphide minerals are present as disseminations to
semi-massive bands in certain schist layers on the central and western claims
(Avalanche Area). The sulphide minerals appear to be stratabound, and may
represent remobilized and metamorphosed stratiform syngenetic type
mineralization similar to important polymetallic deposits recently discovered
within broadly correlative terranes in the Finlayson Lake map area located about
160 kilometers northeast of Cabin Lake.
 
 Local
porphyry-type alteration and quartz stringers carrying chalcopyrite-molybdenite
mineralization are hosted by granodiorite in the south area. Angular quartz
float indicative of larger individual veins (10-30cm wide) occurs in linear
topographic depressions.
 
 ***Infrastructure***
 There
is no infrastructure in place.
 
 ***Drilling
Results***
 No
drilling has been carried out on the prospect to date.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. The claims are in
good standing to April 14, 2005 and will be renewed beyond that date by payment
of cash-in-lieu of work in the event that no new joint venture partner is found.
 
 **The
Caribou Creek Prospect - Canada**
 
 The
Caribou Creek prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
48 claims comprising the Caribou Creek prospect were acquired by staking by the
Company’s predecessor (“Fairfield”) during April, September 1997 and August
1998. The claims were transferred to the Company upon amalgamation and are owned
100% by the Company.
 
 In
August 2003, the Company entered into an agreement with Kobex Resources Ltd.
(“Kobex”) on the claims comprising the MOR, Caribou Creek and Cabin Lake
prospects. In January 2005, Kobex returned the claims comprising the Caribou
Creek prospect to the Company.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred no costs on this prospect. The deemed value of
securities received from Kobex pursuant to the option agreement was $12,200. At
December 31, 2004, the Company wrote-off $22,799 of costs deferred on this
prospect and is carrying it at $1.
  63
  ***Location
and Access***
 The
Caribou Creek prospect is located in the Watson Lake Mining District of Yukon
Territory, 180 kilometres east of Whitehorse and 180 kilometres west of Watson
Lake. The prospect is accessed by helicopter from Morley River on the Alaska
Highway, which is located about 30km south of the area.
 
 ***History
and Recent Work***
 Previous
mineral exploration work in the area covered by the present claims is limited to
reconnaissance programs carried out by Fairfield’s predecessor company in 1980,
and by Fairfield in 1996 and 1997. Stream sediment sampling and follow-up work
in 1980 identified a strong copper-lead-zinc silt and soil geochemical anomaly
in the vicinity of gossanous schist outcrop. The initial 30 claims were staked
in April 1997 to cover the stream sediment and soil anomalies from the 1980
sampling program, and additional claims were added in September to extend the
property over favourable lithologies. Further claims were added in August 1998
to cover the projections of anomalous zinc soil geochemical trends.
 
 After
initial claim acquisition, an 85 line-km airborne electromagnetic (EM) and
magnetic survey was flown over the area during June 1997. Several weak EM
anomalies and magnetic trends were identified.
 
 Programs
of soil sampling, geological mapping, prospecting and an induced polarization
(IP) geophysical survey were undertaken in later 1997 and in 1998. A 600-meter
by 100-meter band of anomalous copper, lead, zinc and silver values in soils was
identified on the central and western claims. Several occurrences of rusty,
pyritic schist float and bedrock were noted in two areas and were exposed by
blast trenching in 1998. Rock samples returned weakly anomalous gold and silver
values from one of these trenched areas. The IP geophysical survey conducted
along 3 line-km identified several zones of moderate chargeability within the
area of anomalous soil geochemistry.
 
 The
prospect was optioned to Brett Resources Inc. (“Brett”) in 1999 which carried
out limited geological mapping and rock sampling. Brett relinquished its option
on December 31, 1999.
 
 ***Geology
and Mineralization***
 The
prospect is primarily underlain by a package of Paleozoic metavolcanic and
metasedimentary schists, which are overlain (either structurally or
stratigraphically) by Mississippian limestone. A variety of small intrusive
bodies are present, at least some of which intrude both the schist and
limestone.
 
 Strongly
disseminated pyrite is present within certain schist layers in the central and
western property area, and may represent stratiform syngenetic type
mineralization. These gossanous schist horizons are hosted within a bimodal
volcanic sequence in the vicinity of strong copper, lead, zinc, silver and gold
soil geochemical anomalies.
 
 ***Infrastructure***
 There
is no infrastructure in place on the prospect.
 
 ***Drilling
Results***
 No
drilling has been carried out on the claims.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. The claims are in
good standing until various dates ranging from September 4, 2005 through April
14, 2010.
 
 **The
Tim Prospect - Yukon Territory**
 
 The
Tim Prospect is without known reserves and all work done by the Company’s
predecessor (“Fairfield”) on the prospect has been exploratory in nature. No
work has been conducted on the prospect since 1988.
 
 ***Option
to Acquire Interest***
 The
Company owns a 100% interest in the prospect, acquired during 2002 from
Fairfield through amalgamation.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $1,050 of costs to maintain this prospect. As
at December 31, 2004, the Company has written off all acquisition and
exploration costs and is carrying this prospect at $1.
 
 64
 ***Location
and Access***
 The
Tim prospect consists of 10 contiguous claims located 72 kilometres (45 Mi.)
West of Watson Lake, Yukon Territory at latitude 60 degrees 03' North and
longitude 130 degrees 05' West. A seasonal four-wheel drive road originating at
kilometre 1128 (Mile 701) of the Alaska Highway provided access to the claims
during previous exploration programs.
 
 ***History
and Recent Work***
 The
original group of 130 TIM claims was staked by Regional Resources Ltd.
(Fairfield's predecessor) in 1983, to cover silver-lead-zinc geochemical
anomalies and mineralized float occurrences in an area highly prospective for
replacement type massive sulphide deposits. Fairfield staked 30 additional
claims during 1986, following transfer of title from Regional. Work conducted
from 1983 to 1986 consisted of reconnaissance stream sediment sampling, soil
geochemistry, prospecting and geological mapping.
 
 In
1988 work included road construction, line cutting, soil sampling, induced
polarization (IP) geophysical surveys, and excavator trenching. Eighteen
trenches totalling 2712 linear metres were excavated in two mineralized areas
named North and South Zones. The 1988 soil geochemical survey involved higher
density sampling within the anomalous areas outlined by prior (1984/86)
sampling.
 
 A
diamond drill program was recommended following evaluation of the 1988
exploration results, but was never carried out. The property has been reduced to
10 claims covering the main (North Zone) trend of mineralization.
 
 ***Geology
and Mineralization***
 The
TIM claims are underlain by a folded succession of Lower Cambrian and earlier
sedimentary rocks comprising intercalated limestone, phyllite, quartzite,
siltstone and mudstone. A nearby buried intrusion is inferred from geophysical
signatures on published maps and from local thermal alteration effects observed
in limestone. The limestone unit is cut by fault breccias, quartz-calcite veins
and oxide mineral bodies.
 
 Soil
geochemical surveys have outlined two large coincident silver (Ag) - lead (Pb) -
zinc (Zn) anomalies measuring approximately 1500 metres long by 300 metres wide,
and containing geochemical values of up to 20 .8
g/t Ag, 6660 g/t Pb and 1700 g/t Zn. Within these anomalous areas trenching has
exposed two zones of Ag-Pb-Zn bearing oxide mineralization. The main or North
Zone has been traced over a strike length of 1000 metres.
 
 The
mineralization consists of massive iron and manganese oxides, with minor remnant
sulphides including galena, sphalerite and pyrite occurring as isolated cobbles
or as discrete grains within the oxides and wall rock material. North Zone oxide
bodies uncovered by trenching range in width from four to 30 metres and occur
mainly in limestone, at or near an inferred major fault contact with overlying
phyllite rocks.
 
 ***Infrastructure***
 There
is no infrastructure on the claims.
 
 ***Drilling
Results***
 No
drilling has been conducted to date.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no work program planned for Fiscal 2005. A joint venture partner is
being sought to fund potential future work.
 
 **The
Meister River Prospect - Canada**
 
 The
Meister River Prospect is without known reserves and all work by the Company’s
predecessor (“Fairfield”) on the prospect has been exploratory in nature. No
work has been conducted on the prospect since 1986.
 
 ***Option
to Acquire Interest***
 The
Company owns a 100% interest in the prospect, acquired during 2002 from
Fairfield through amalgamation.
 
 65
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $735 in maintenance costs on this prospect. As
at December 31, 2004, the Company has written-off all acquisition and
exploration costs and is carrying this prospect at $1.
  
 ***Location
and Access***
 The
Meister River prospect is located 90 kilometres (56 miles) west of Watson Lake,
Yukon Territory and 14 kilometres (9mi.) northwest of kilometre 1110 (Mile 690)
on the Alaska Highway. A seasonal four-wheel drive road from the Alaska Highway
provided access to the claims during previous exploration programs.
 
 ***History
and Recent Work***
 All
of the original 410 Meister River (MR) claims were staked by Regional Resources
Ltd. (Fairfield’s predecessor) in 1981 to 1984, to cover geochemical anomalies
and mineral occurrences in a geological setting favourable for hosting
replacement type massive lead-zinc sulphide deposits.
 
 Property
exploration programs from 1981 to 1985 included grid layout, aerial photography,
geological mapping, prospecting, geochemical sampling, airborne and ground
geophysical surveys, hand trenching, backhoe trenching/test-pitting, sonic
overburden drilling, and diamond drilling comprising five NQ (core) holes
totalling 1,077 metres in the West Zone oxide mineral body. The access road from
the Alaska Highway as well as trench and drill site access trails were also
constructed during this time period.
 
 In
May 1986 the property was transferred to Fairfield. A diamond drilling program
carried out later that season consisted of 2,413 metres in 22 NQ holes of which
eight holes (687m) further tested the West Zone, and 14 holes (1,726m) which
tested four separate areas of mineralization in the South Zone.
 
 Following
the 1986 program, additional diamond drilling was recommended for the West Zone
to test for sulphide mineralization at depth but this work has not been carried
out. As at December 31, 2004, all except seven of the claims have been allowed
to lapse.
 
 ***Geology
and Mineralization***
 The
MR claim group is underlain by a deformed and metamorphosed sequence of Lower
Cambrian or earlier sedimentary rocks. A small Cretaceous (?) quartz monzonite
stock occurs nearby. Mineralization consisting of zinc-silver-lead bearing
massive iron and manganese oxides, with sparse remnant sphalerite and galena,
appears to be related to replacements and/or fault structures at or near
phyllite-carbonate contacts. Five separate mineral zones have been identified of
which the most substantial is the West Zone oxide body.
 
 The
West Zone mineralization has been traced in outcrop and in trenches over a
strike length of 1000 metres, revealing true widths ranging from less than one
metre to 18 metres. It occurs as mantos or elliptical shaped lenses aligned
along a moderately dipping fault structure. The best averaged assay results from
trench samples are 12.01% zinc (Zn), 0.32% lead (Pb) and 1.39 oz/ton silver (Ag)
over 14.0 metres that included a 9.0 - metre section of massive oxides. The
oxide material has been intersected to a vertical depth of 105 metres by diamond
drilling, and has been encountered in 12 of the 13 holes which have tested the
West Zone. Drill intercepts of oxide ranged in length from 1.0 to 29.0 metres;
the 29-metre interval, from Hole 86-MR-8, assayed 3.79% Zn and 1.22 oz/ton Ag
and included a 14-metre section which assayed 4.57% Zn, 0.94% Pb, 2.01 oz/ton
Ag.
 
 In
the South Zone, based on the 1986 drill program, the best results were returned
from a partially oxidized graphitic phyllite unit where a 12.0-metre intercept
assayed 2.56% lead, 2.06% zinc and 0.05 oz/ton silver. A 5.0-metre section
within this interval assayed 5.02% lead, 4.11% zinc and 0.10 oz/ton
silver.
 
 ***Infrastructure***
 Two
lumber and plywood buildings, as well as core storage racks, remain at the old
exploration campsite.
 
 ***Drilling
Results***
 No
recent drilling has been conducted by the Company.
 
  66
  ***Planned
Work Program-Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. The Company is
seeking a joint venture partner to fund potential future work.
 
 **The
Merit Prospect - Canada**
 
 The
Merit Prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
Merit claim group comprises about 1,700 hectares (17 sq. km) and was acquired by
staking during 2004 and early 2005 and is 100% owned by the
Company.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $7,202 in staking costs and $11,188 in
exploration costs on the prospect. As at December 31, 2004, the Company had
deferred $18,390 of costs on the prospect.
  ***Location
and Access***
 The
prospect is readily accessible by road, 30 kilometres west of Merritt, British
Columbia.
 
 ***History
and Recent Work***
 Pre-acquisition
work during July to September 2004 consisted of prospecting and recon
geochemical sampling, based on follow-up of earlier government (BC-RGS) and
Company-generated regional gold stream sediment anomalies. This program
generated 71 rock, 56 silt, and 16 soil samples. Following initial claim
staking, in September-October 2004, further similar work was carried out which
generated an additional 28 rock and 109 soil samples. All of the samples were
tested for 36 elements, by Acme Analytical Laboratories in Vancouver,
BC.
 
 The
rock sample results have identified numerous gold-silver bearing quartz (±
calcite) float occurrences, and insitu quartz-carbonate
alteration/mineralization along two major northerly (to NNE) - trending
structures. Initial grid soil sampling conducted over an area of 800 metres by
200 metres on one segment of the main structure has outlined a multi-element
anomaly.
 
 ***Geology
and Mineralization***
 The
Merit prospect is underlain dominantly by the northwest trending belt of
intermediate to mafic volcanics and minor sediments of the Cretaceous Spences
Bridge Group. This assemblage dips gently to the northeast and is locally
overlain by Tertiary (Eocene) mafic to felsic volcanics. Major structural
features in the local area are north to northeast trending, steeply dipping
normal faults. One such feature, situated adjacent to the eastern claim
boundary, is a prominent structural break that extends northward for over 40
kilometres through to and beyond the Highland Valley porphyry copper producing
district.
  Within
the claim area, all of the (float and bedrock) mineral occurrences found to date
show characteristics of low sulphidation type epithermal veins and
breccias.
  The
main or **** El
Gordo structure has been traced intermittently along a strike length of 2,700
metres and is highlighted by two segments of exposed alteration and
mineralization called Discovery Hill and Sullivan’s Ridge zones. Both of these
zones are characterized by intense iron carbonate-hematitic silica and clay
alteration containing elevated to strongly anomalous values of one or more of
the epithermal suite trace elements arsenic, antimony, mercury, barium, plus
copper and manganese. The more prominent Sullivan’s Ridge consists of a 10- to
50-metre wide zone that is readily traceable in outcrop and talus over a length
of 750 metres. Locally abundant quartz vein and carbonate-quartz breccia rubble
occurs within the alteration envelope. Rock samples of this material from random
sites along the zone have yielded anomalous gold and silver analyses.
 
 A
second, parallel northerly trending structure has been identified 1.5 kilometres
to the west of El Gordo. This structure is characterized by the West Zone quartz
vein and rubble train which has been traced over a 350-metre strike length.
Initial hand trenching across this zone at three closely spaced intervals has
revealed a massive hematitic quartz vein having true widths of 1.5 to 2.5
metres. Ten continuous chip samples across the vein have returned anomalous
gold, silver, copper, arsenic, antimony, barium and mercury
analyses.
 
 67
 The
nature of the alteration and mineralization found to date at Discovery Hill,
Sullivan’s Ridge and West zones, including the presence of high mercury and
barium values, suggests that **** these
zones may represent the very upper reaches of an epithermal system.
  ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
  The
Company is currently planning a 2005 exploration program to include detailed
prospecting, grid based soil geochemical sampling, geological mapping, and
trenching at a budgeted cost of $70,000.
 
 **The
Logan Property - Canada**
 
 The Logan
Property contains an inferred mineral resource of 13.08 million tonnes (14.42 million tons) grading 5.10% zinc and 23.7 gm/tonne
(0.69oz/ton) silver, as recently re-estimated by an independent party to comply
with the Canadian Securities Administrators (CSA) National Instrument 43-101
standards (Form 43-101F1).
 
 ***Interest***
 The
Company owns a 40% carried interest in the property, acquired from its
predecessor (“Fairfield”) through amalgamation. The owner of the 60% joint
venture interest is required to fund 100% of exploration expenditures until a
production decision is made, at which time the Company may elect to pay its
proportionate share of future expenditures after the production decision or
convert its property interest into a 15% Net Profits Interest. In 2003, the 60%
owner agreed to sell its joint venture interest to Expatriate Resources Ltd.
(“Expatriate”). To simplify documentation, a new agreement was entered into at
this time directly between the Company and Expatriate with all details of the
previous agreement remaining the same. In late 2004 Expatriate was restructured
into two successor corporate entities, resulting in a transfer of the 60% joint
venture interest to one of the successors named Yukon Zinc
Corporation.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred no costs on this prospect. As at December 31,
2004, the Company has written off all acquisition and exploration costs and is
carrying this property at $1.
  ***Location
and Access***
 The
Logan Property comprises 156 claims located 108 kilometres northwest of Watson
Lake, Yukon at latitude 60 degrees 30 minutes North and longitude 130 degrees 27
minutes West. The claims are situated 38 kilometres north of the Alaska Highway
and 258 kilometres east of Whitehorse. Principal access is by fixed-wing
aircraft or helicopter. A 52 kilometre trail originating from Milepost 687 (Km
1105) on the Alaska Highway provides minimum winter access to the property for
track-equipped machinery.
 
 ***History
and Recent Work***
 The
initial 36 Logan claims were staked in July and October 1979 to cover showings
of zinc-silver-copper-tin mineralization discovered during a reconnaissance
prospecting and stream sediment sampling program undertaken by Regional
Resources Ltd. (Fairfield’s predecessor). Additional claims (Logan 37-106) were
staked at various dates in 1984 and 1986. Property exploration programs
including geological mapping, geochemical and geophysical surveys, detailed
prospecting and hand trenching were carried out between 1979 and
1985.
 
 In
May 1986 the property was transferred to Fairfield and subsequent exploration
programs during 1986 to 1988 included diamond drilling (103 holes totalling
16,439 metres of NQ core), excavator trenching (15 trenches totalling 2,412
linear metres), additional soil geochemistry, Induced Polarization geophysical
surveys, as well as aerial photography, various ground control surveys,
construction of a 700-metre long gravel airstrip, and reclamation work. Most of
the drilling was conducted at 100-metre by 50-metre grid spacing.
 
 All
of the above work programs were performed or supervised by Cordilleran
Engineering Ltd. of Vancouver, Canada. All project sample assays and analyses
were performed by Bondar Clegg & Company Ltd. in North Vancouver. In late
1988 an initial mineral resource estimate for the Main Zone deposit was
calculated by J.J. Hylands, P.Eng., and M.A. Stammers, FGAC, of Cordilleran
Engineering Ltd. These calculations, utilizing sectional and plan methods,
resulted in a determination of 12.25 million tonnes (13.5 million tons) grading
6.17% zinc and 26.4 gm/tonne (0.77 oz/ton) silver. However, this estimate was
not strictly defined according to Canadian Institute of Mining (CIM) standard
resource/reserve classifications.
 
 68
 In
early 1989 preliminary metallurgical testing was undertaken on composite samples
of drill core assembled from 16 selected intersections of the Main Zone deposit.
This work was conducted by Lakefield Research under the direction of Strathcona
Mineral Services Ltd. of Toronto, Canada. The results demonstrated that high
zinc (93-97%) and silver (85-87%) recoveries are readily achievable from a
concentrate grading 50-54% zinc.
 
 The
project was dormant from 1989 through 2002.
 
 In
early 2003 Expatriate purchased a 60% joint venture interest in the property
from Energold Minerals Inc. (formerly Total Energold) and became the operator of
the project. A baseline environmental survey was conducted in and around the
property in advance of further exploration and/or engineering studies. Staking
of the LOGAN 107 to 152 and STRIP 1 to 4 mineral claims was completed to cover
areas of potential infrastructure. Core storage facilities at the old
exploration camp were refurbished and core inventoried for future
examination.
 
 In
November 2003, Expatriate commissioned Hatch Associates Ltd. (”Hatch”) to
complete a resource estimate and data compilation as part of an Independent
Technical Report to NI 43-101 standards. Hatch completed this assignment with
the assistance of Mr. Gary Giroux, P.Eng., while Hatch’s Qualified Person for
this assessment is Mr. Callum Grant, P.Eng. who visited and inspected the
property in October 2003. The resource estimation portion of the report was
released on March 24, 2004.
 
 The
Hatch re-estimation of resources at Logan uses the block model method, with
Kriging applied to the assay data from 58 drill holes completed in the Main Zone
during 1986-88. The model relies wholly on this historical drill-hole
information and does not include any new exploration data. The model is
constrained by geologic boundaries to mineralization as interpreted on 23
cross-sections of the Main Zone over a 1.53 km (0.95 mile) strike length. No
mineralized intercepts are included from the East or West Zones. The published
Inferred Resource of 13.08 MT grading 5.10% Zn and 23.7 g/t Ag uses a 3.5%
zinc-equivalent cutoff that is based upon metal prices of US 43 cents per pound
zinc and US$5.50 per ounce silver, with recoveries of 94% and 64%
respectively.
 
 ***Geology
and Mineral Deposits***
 The
property is dominantly underlain by granodiorite and pegmatites of the
Cretaceous Marker Lake Batholith, which has intruded Lower Cambrian and possibly
older metasedimentary rocks. Tertiary andesite dykes, quartz-feldspar
monzonite-latite porphyry dykes, quartz veins and breccia bodies are associated
with an eight kilometre long northwest trending mineralized structure. Within
this structure, at least three mineral bodies have been identified and named as
the Main, West and East Zones.
 
 The
Main Zone deposit has been defined by 58 drill intersections, to an average
vertical depth of 185 metres (~600 feet). It is contained within a steeply
dipping fault bounded tabular body 1100 metres long by 50 to 140 metres wide.
Sphalerite with lesser pyrite, arsenopyrite, chalcopyrite, pyrrhotite,
silver-bearing lead sulphosalts and cassiterite occur as fracture fillings,
disseminations and coarse masses in quartz veins or breccia and silicified
hostrock.
 
 ***Infrastructure***
 With
the exception of the airstrip and connecting network of drillsite access trails,
there is no infrastructure in place on the property.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
  The
Company has no planned exploration program for Fiscal 2005. Yukon Zinc
Corporation has renewed the Yukon Government permits required for exploration
land use and winter road access. No exploration work is currently planned for
Fiscal 2005 by Yukon Zinc with exception of some possible property maintenance
(e.g. claim tagging).
 
  69
  **The
Yago Prospect - Mexico**
 
 The
Yago prospect is without known reserves and all current work by the Company on
the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 In
Fiscal 1997 the Company’s subsidiary, Minera Gavilan, S.A. de C.V., completed
the assembly, from several Mexican individuals, of claims covering a large
epithermal gold target near Yago, Nayarit, Mexico. The claims under option
consisted of the Guadalupe, Sagitario and Yago claims. To earn a 100% interest
in the Guadalupe claim, the Company had to pay US$30,000 plus value added tax
over six years (amended). To earn a 100% interest in the Sagitario claim, the
Company had to pay US$250,000 plus value added tax by January 1, 2005 (amended).
There is a 2% NSR to only one owner on any production from his property. In
Fiscal 2000 the Company terminated its option on the Yago 1 to Yago 7 claims to
reduce property payments. The Tepic claim was acquired directly by staking,
reduced in size and then partially restaked in 2002 at the request of an
optionee. Only a reduced portion of this ground is still held.
 
 In
Fiscal 1999 the Company entered into an agreement to acquire a 100% interest in
8 mining concessions which comprise the adjoining La Sarda mine and surrounding
property for payments totalling US$2,000,000 plus value added tax over four
years, as well as improvements, a 300 tpd mill and equipment located within the
mining concessions. If the mill was not included when the option was exercised
in full, the purchase price would have been reduced by US$200,000. In Fiscal
2000, the Company purchased this prospect outright for US$110,000 plus
value-added tax, not including the mill.
 
 In
Fiscal 2002, the Company optioned the project to Ascot Resources Ltd. (“Ascot”).
Under the terms of the agreement, to earn an initial 50% interest Ascot had to
issue 300,000 shares to the Company and incur exploration expenditures of
US$1,000,000 within two years. Ascot relinquished their option in Fiscal
2003.
 
 During
Fiscal 2004, the Company completed the acquisition of a 100% interest in the
Guadalupe claim for US$15,000 plus value added tax and a 100% interest in the
Sagitario claim for US$10,000 plus value added tax. The Company also completed
documentation for the purchase of the Don Alonzo claim.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $43,960 in acquisition costs and $27,643 in
exploration costs on this prospect, primarily on the payment of Mexican mining
taxes and duties to keep the property in good standing. During Fiscal 2004, the
Company wrote the prospect down by $647,629. As at December 31, 2004, the
Company had deferred costs of $223,479 on the prospect.
 
 ***Location
and Access***
 The
Yago prospect is located in the state of Nayarit, on the Pacific Coast of
Mexico. The claims encompass the town of Yago, which is located by paved road
approximately seven kilometers from Highway 15, which is the major thoroughfare
from the United States to Mexico. Yago is located roughly 50 kilometers north of
Tepic, the capital of Nayarit.
 
 ***History
and Recent Work***
 *Southern
Part:*
 The
assembled claims cover a large alteration zone centered on a northwest trending
extensional structure with numerous separate gold veins, many of which had had
historic small scale mining operations from numerous old workings. It is
believed that this was the first time in many years that all these claims had
been assembled into a single property. The separate owners each controlled a
part of the main area of interest in the southern part of the property which is
a large stockwork zone of chalcedonic banded quartz veins where small scale
mining was carried out. Wider veins within the stockwork zone were mined by
underground open stopes accessed by adits and by glory holes mined out to
surface.
 
 In
1997, soil sampling and geological mapping were carried out on a grid over the
southern area of interest. Numerous rock samples were also taken at this time.
Encouraging results were followed up by expanding the grid and detailed in fill
soil sampling in areas of interest.
 
 70
 In
Fiscal 1998, the Company optioned the property to Santoy Resources Ltd.
(“Santoy”) who conducted a 975.2 metre drill program late in the year. Results
did not meet their expectations and Santoy dropped their option in July 1999.
 
 During
November and December 1999 a program of mapping, sampling and road building was
carried out on the project. Work was focussed on the Guadalupe-Tejona-Korina
vein system in the southern portion of the project. Samples of ore from recent
development and production blasts were also taken from the La Sarda area active
operations, roughly seven kilometres north. The La Sarda Prospect had been in
continuous production for about 5 years and mining during the option period was
to be for the benefit of the current owner but restricted to 150 tonnes per day
maximum and to material above the lowest level of workings on the La Sarda vein
which is roughly 100 metres below the surface. Mining operations ceased in early
2000.
 
 In
March 2000, the Company and its predecessor (“Fairfield”) entered into an
agreement where Fairfield could earn 51% of the Company’s interests and rights
to the prospect. Fairfield drilled two holes on the southern part of the
property with discouraging results, and completed the acquisition of the
northern part of the property.
 
 In
2002, the Company optioned the property to Ascot. The optionee carried out
further sampling, geological mapping, induced polarization geophysical surveys
and limited diamond drilling. Ascot dropped their option in 2003.
 
 *Northern
Part:*
 In
this area, the thrust of the Company’s exploration effort was to find new,
larger zones of high grade material at greater depths on both the La Sarda and
parallel vein zones.
 
 In
December 1999 some mapping was carried out on the La Sarda vein. Because the
mine and mill were operating without established reserves, production and grade
were somewhat erratic. The La Sarda vein had provided most of the production
over the previous four or five years. This vein was found by mapping to be just
underneath the opaline silica horizon, further indication that only the top
portion of this extensive system is exposed.
 
 The
La Sarda area active workings were inspected. Four major sub parallel vein
systems have been recognized in this area, and three were being actively worked
at that time. High grade ore was reported in the active faces of the La
Cucaracha vein workings. A sample taken from muck from an ore face returned
values of 20.2 grams/tonne Au and 151 grams/tonne silver.
 
 ***Geology
and Mineralization***
 The
assembled claims cover a large alteration zone centered on a northwest trending
extensional structure with numerous separate gold veins.
 
 The
country rocks in the area are Tertiary andesitic tuffs and flows that are
observed to be flat-lying. The alteration zone is characterized by strataform
silicification spatially associated with friable argillic alteration dominated
by kaolinite with subordinate alunite and cristobalite.
 
 This
alteration zone is interpreted to represent the paleowater table of a
shallowly-eroded epithermal system. Gold-bearing quartz veins with prominent
crustiform, colloform banding and stockwork quartz veining, are exposed beneath
the strataform alteration and are the target of the exploration
efforts.
 
 ***Infrastructure***
 A
main railway line crosses the prospect and there are electric powerlines to the
town of Yago. The prospect is approximately seven kilometeres from Highway 15
and is traversed by numerous gravel roads.
 
 ***Exploration
Results***
 *Southern
Part* :
 In
1997, a 1 by 1 kilometer grid was cut over the area of intense quartz-adularia
veining and float and a soil sampling program was carried out at 50 meter
spacing on lines 100 metres apart. Several large multi-line gold-silver-antimony
anomalies resulted that extended to the edge of the grid. A follow-up survey was
carried out in which the grid was expanded to roughly 1.5 by 2 kilometers.
Samples were taken intermediate to anomalous samples taken in the initial
program to provide greater detail and to serve as a check on previous sampling.
Sampling was also carried out to define the extent of anomalies discovered in
the first phase of sampling. The in fill sampling confirmed the results of the
previous survey while the additional soil sampling provided better definition of
the existing anomalies and resulted in new anomalies which still remain open.
This anomaly lies in the central and south-west part of the grid in an area
devoid of old workings and remains open in two directions. Veins mapped in this
area strike roughly 10 degrees east of north. Emanating from the north-east part
of this anomaly is a linear gold-silver-antimony soil anomaly trending
approximately 40 degrees east of north. The trend coincides with the attitudes
of veins measured in outcrop in the north-east portion of the grid. Several
other multi-line gold in soil anomalies resulted from the soil sampling.
Antimony and silver for the most part correlate well with gold geochemistry,
defining similar trends throughout the grid.
 
 71
 At
the time of soil sampling more than sixty rock samples were taken over the
property. These samples were taken from exposures in historic workings and the
associated dumps as well as the vein float prevalent over the property.
Conventional Fire Assay and ICP techniques were employed on both rock and soil
samples.
 
 Several
areas of intense banded quartz-adularia veining, stockwork veining and one area
of hydrothermal brecciation and silicification were defined which are coincident
with areas of anomalous soil geochemistry. The initial geologic data indicates
that the veining represents high elevations within a shallowly eroded
low-sulfidation epithermal system, of which the paleo-water table is preserved
over much of the property. Exploration was designed to seek bonanza vein type
mineralization.
 
 Geologic
work and road building in the southern Guadalupe-Tejona-Korina area was designed
to provide access and investigate areas for future diamond drilling. During the
course of this work several new veins and previously unknown historic workings
were discovered. In the La Korina area (on the Sagitario claim), the lowest
elevation workings, several shafts and adits were discovered in heavy
undergrowth. The work completed has enabled the Company to select several sites
for drilling in this area. Several banded quartz-adularia veins were discovered
in the new road cuts within areas of high gold in soil geochemistry. In one area
banded veining was discovered in an area of very high gold soil geochemistry
along the La Guadalupe vein trend over 500 metres from known historic
workings.  These
areas and the Korina area were not tested by past drilling and are relatively
lower in elevation than the depth tested by past drilling.
 
 This
program of work resulted in the definition of several key drill hole locations
in the southern Guadalupe-Tejona-Korina area. These locations would test the
correct elevations for potential bonanza grades at depth along the strike and
intersection of several banded quartz-adularia veins. Road building provided
access for these holes. Drill holes were also been designed to test the La Sarda
area vein systems to the north including the Cucaracha vein.
 
 Numerous
small scale old workings are present on the property.
 
 Hydrothermal
alteration mapping and fluid inclusion studies support the conclusion that the
present erosion surface represents shallow depths beneath the paleo-water table
of the hydrothermal system. The potential for high-grade gold-silver
mineralization is expected to extend from surface to significant depths beneath
the present surface.
 
 In
December 1998, seven (7) widely spaced holes totaling 975.2 metres were
completed by Santoy to test epithermal vein targets at depth. Widespread quartz
veining and stockwork systems were encountered at depth, many of which
correlated well with surface zones.
 
 Widespread
anomalous gold, silver and base metal values were obtained from the drilling
with the most significant mineralized intervals as follows:
  72
  
 **Hole
      No.**
    **From
      - To (m)**
    **Interval
      (m)**
    **Au
      (g/t)**
    **Ag
      (g/t)**98-01
      (Tejona
      Vein)
    53.3
      to 54.8
    1.5
    0.37
    24.998-02
      (Guadalupe
      Vein)
    44.2
      to 47.2
      67.0
      to 70.1
      121.9
      to 126.4
    3.0
      3.1
      4.5
    0.44
      0.51
      0.54
    43.8
      15.1
      16.798-03
      (between
      Creek & Tejona)
    38.1
      to 54.8
      incl.38.1
      to 39.6
    16.7
      1.5
    0.15
      0.63
    22.6
      99.898-04
      (La
      Morraya)
    42.6
      to 44.2
    1.6
    0.32
    35.798-05
    198.1
      to 201.1
    3
    1.8
    0.998-06
      (Creek
      Zone)
    32.0
      to 36.5
    4.5
    0.13
    9.498-07
    No
      significant values
 
 In
July 2000, Fairfield began a diamond drilling program on the southern part of
the property. Progress was very poor. Drilling commenced with two holes on the
Guadalupe vein that would be the most difficult to access if the rainy season
were to start early. Hole one did not reach its objective and the core barrel
was lost in the hole. After much difficulty, hole two was completed to the
planned depth. However, the drill rods became stuck when pulling out of the
hole, and they are still stuck. Fairfield brought a drilling expert to the
project to identify the problems, which he determined not to be related to
ground or any local conditions. The program was terminated. Although the first
hole did not reach its targeted vein, another vein was intersected. The
projected vein in hole two was also intersected where expected. No significant
assays were returned from these holes.
 
 In
2002, Ascot completed a gradient array IP (induced polarization) geophysics
survey on the La Sarda and Yago grids. The two large geophysical grids covered
three of four principal veins in the La Sarda mine area, and the Guadalupe, La
Tejona and La Korina vein systems in the Yago area to the south.
 
 At
La Sarda the three northeast-striking veins surveyed to date were mapped very
effectively by gradient array IP and traced approximately 200 metres beyond
their last known exposures. The data suggest that all three vein structures
remain well defined over a strike length of 900 metres and are open for
extension to the northeast. In the Yago area, south of La Sarda, the IP data
appear more complex. On the west side of the grid geophysics traced the
north-south striking Guadalupe vein over a distance of approximately 400 metres
and defined a large area of very high resistivity corresponding to the La Tejona
and La Korina vein structures.
 
 A
total of 1098.2 metres of diamond drilling was completed on the La Sarda vein by
Ascot, one hole was lost before reaching the vein target, another hole had lost
core through the section where the vein intersection was expected, and the
remaining four had low grade values that nevertheless showed good vein width and
continuity.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. The Company
considers the prospect to have potential for a high-grade gold vein deposit. The
next step in the exploration process is an aggressive program of diamond
drilling designed to develop a high-grade resource. The Company will maintain
the prospect and seek to consolidate its interest in the area by acquiring
further claims that may become available in the area. The project will be
presented to potential joint venture partners
 
 73
 **The
Galeana Prospect- Mexico**
 
 The
Galeana prospect is without known reserves and all current work by the Company
is exploratory in nature.
 
 ***Option
to acquire interest***
 Pursuant
to an agreement dated February 22, 2001, the Company’s predecessor (“Fairfield”)
acquired an option to earn a 100% interest in the Galeana claim group from a
Mexican individual. To earn a 100% interest, the Company must pay US$100,000
plus value added tax over seven years. The Company must also pay US$400,000 plus
value added tax should the property go into production. The claims are subject
to a NSR of 3% to 1% based on the rate of production. The Company can purchase
50% of this NSR for a fixed payment of US$500,000 plus value added tax at any
time.
 
 During
Fiscal 2002, the Company entered into an agreement with Grid Capital Corporation
(“Grid”). To earn an initial 50% interest, Grid had to maintain the property in
good standing, incur exploration expenditures totalling US$1,000,000 and issue
400,000 shares to the Company by July 31, 2006. In January 2005, Grid terminated
its option on the property.
 
 ***Expenditures
to date***
 During
Fiscal 2004, the Company incurred $206,590 in exploration on this prospect.
$224,966 was recovered from Grid, who were earning their interest in the
prospect, for current and previous years expenditures. The deemed value of
securities received from Grid pursuant to the option agreement was $12,000. At
December 31, 2004, the Company wrote-off $87,895 of costs deferred on this
prospect to operations and is carrying it at $1.
 
 ***Location
and Access***
 The
Galeana project is centred on the village of Galeana, located roughly 22
kilometers by all season gravel road south of the town of Guadalupe y Calvo in
Chihuahua State, Mexico. Guadalupe y Calvo is connected by paved highway to
Parral, a major commercial and mining supply centre.
 
 ***History
and Recent Work***
 The
property covers two major vein systems, the Miguel Ahumada - Estrella de Oro
trend and the San Geronimo trend, both of which have had limited historic
production. Production took place from 1889 to 1910, and it is estimated from
historic reports that up to 100,000 ounces may have been extracted from vein
material averaging 0.6 ounces per ton (opt) Au. The mines were closed in 1910,
prior to the Mexican revolution. Several comprehensive evaluations of the
deposits were carried out between 1902 and 1923 and are in the possession of
Almaden. Apart from small scale activities by local miners, the property sat
idle until 1996, at which time the present owner acquired it. In 1997 the
property was optioned to Duran Gold Corp. (“Duran”) of Vancouver, Canada. Duran
was a private company and optioned the property with the intention of making an
initial public offering based on the Galeana property as a principal asset.
Duran mapped and sampled all the accessible historic workings and made
preparations for a diamond drill program to test the known ore shoots to depths
beneath and along strike from the historic stoping. In 1999, Duran was unable to
raise the funds necessary to carry out the proposed exploration, and as a
result, Duran terminated their option on the Galeana property.
 
 In
2002, the Company carried out a limited program of geologic and alteration
mapping.
 
 In
April 2003, Grid carried out an exploration program that consisted of geological
mapping, rock and soil geochemical sampling and Induced Polarization
geophysics.
 
 At
the Miguel Ahumada zone, Grid reported that fault breccia, epithermal quartz
veining and quartz vein breccia, has been traced for over 500 meters. The zone,
where exposed by a number of open cuts, pits and adits, varies from 1 meter to
more than 3 meters in thickness. Four grab samples of banded quartz vein clasts
from a breccia were taken by Grid in the Ahumada adit. Four surface samples of
quartz float were taken by Grid 150 meters to the northeast of the eastern-most
opening. Two anomalous soil samples taken 150 meters to the north of the
above-mentioned high-grade quartz float, indicate the presence of an
undiscovered auriferous vein and represent a high priority target for follow-up
work. Along strike to the southwest of the Ahumada zone, results of soil
sampling and quartz vein float sampling has extended the zone 200 meters and
indicates the zone is open to the southwest. I.P. surveys carried out over the
four lines crossing the Ahumada trend suggest that several parallel veins may be
present. One kilometre north of the Ahumada zone, the Falda Norde structure
sampling by Grid returned anomalous to highly anomalous gold values from rock
and soils over a 800 meter strike length. The best results were returned from a
chip sample taken in the Falda Norde adit across a zone of banded limonitic
epithermal veining, vein breccia and clay gouge.
 
 74
 Mapping
of alteration mineralogy in the Galeana area, petrographic analysis of quartz
vein textures, fluid inclusion microthermometry and the low silver to gold
ratios of veins sampled, all support the interpretation that the exposed veins
represent a high level within the original hydrothermal system. This
interpretation coupled with the identification of high gold grades in fragments
found in breccia bodies identified on the property, suggest that the potential
to identify high grade gold and silver ore shoots in the veins may increase with
depth.
 
 Grid’s
late 2004 drill program tested one of the vein systems identified on the
property, the Miguel Ahumada zone.
 
 ***Geology
and Mineralization***
 The
property covers two major vein systems, the Miguel Ahumada - Estrella de Oro
trend and the San Geronimo trend, both of which have had limited historic gold
production. Both vein systems represent classic banded quartz-adularia-carbonate
low sulphidation epithermal veins. The veins are exposed in dominantly andesitic
flows of the upper part of the Lower Volcanic Sequence of the Sierra madre
Occidental volcanic province although alteration and veining continue into the
lower part of the Upper Volcanic Sequence. Ignimbrites of the Upper Volcanic
sequence have been observed at higher elevations on the property.
 
 ***Drilling
Results***
 In
April 2004 Grid reported that recent prospecting has encountered gold-silver
mineralization in epithermal quartz-carbonate float found in the area of the
Estrella de Oro vein structure. The area is located two kilometers to the south
along the projected strike extent of the Ahumada zone.
 
 A
diamond drill program initiated in February 2004 was suspended while road access
was completed to the primary drill target, the Ahumada zone, which has not yet
been drilled. Initial drill testing with three diamond drill holes on a
secondary target, the Falda Norte Zone, was completed. The drill holes did not
intersect the down-dip projection of the Falda Norte structure due to
postmineral diking and faulting.
 
 An
excerpt from Grid’s December 26, 2004 news release on the second phase of
drilling follows:
 
 “The
drill program, consisting of 3 diamond drill holes totaling 560 meters, tested
the San Miguel Ahumada zone, one of three major vein structures on the property.
All three holes intersected zones of brecciation with local zones of
silicification and minor quartz veining. The highest value was intersected in
hole GAD04-05, where a 0.73 meter core interval from 129.12 meters to 129.85
meters assayed 5.01 g/t gold.”
 
 Almaden
is waiting for a detailed geological report from Grid which would better enable
an assessment of the results. Grid did not test this structure further.
 
 ***Planned
Work Program for Fiscal 2005, ending December 31,
2005***
 The
Company will review the Grid drill report when received and consider further
work based on this data.
 
 **The
Santa Maria Prospect - Mexico**
 
 The
Santa Maria Prospect is without known reserves and all current work by the
Company on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
prospect is owned through the Company’s subsidiary, Compania Minera Zapata, S.A.
de C.V. The Cerro Grande claim was acquired directly by staking. This project
falls under the area of influence of the BHP Billiton World Exploration Inc.
(“BHP”) joint venture discussed below, and under terms of this joint venture it
has been offered to BHP.
 
  75
  ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $14,109 in exploration costs on the prospect
and wrote $50,000 of deferred costs off to operations. As at December 31, 2004,
the Company had $25,752 in deferred costs on the prospect.
  ***Location
and Access***
 The
Santa Maria project is located twenty-one kilometres north of Puebla, Puebla
State, Mexico and may be accessed by paved highway from Puebla. Several other
paved and unpaved roads provide access to various parts of the prospect from
this highway. The centre of the prospect is approximately latitude 19 degrees 42
minutes North and longitude 97 degrees 52 minutes west.
 
 ***Infrastructure***
 All
major services are found in Puebla, a major city located roughly one hundred
kilometres to the south west of the prospect. Labour is available in local towns
and villages. There is good road access throughout most of the area and major
power lines also cross the prospect. A local power line network supplies
electricity to villages within the area.
 
 ***History
and Recent Work***
 Several
limited, surficial historic workings exist on the prospect, however their age is
unknown. To the Company’s knowledge, no recent work has been carried out on the
prospect other than that done by the Company.
 
 ***Geology
and Mineralization***
 The
project covers an area of intensely altered rocks roughly 5 by 5 kilometres in
size. Within this area a field program carried out by the Company identified
both a porphyry copper and en epithermal gold target. The copper porphyry target
occurs within K-silicate altered intrusive rocks that intrude deformed limestone
which is overlain by intensely altered volcanic rocks. Calc-silicate altered
limestone occurs in proximity to the intrusive contacts and is associated with
skarn-type copper mineralization. Multiple phases make up the intrusive body
which has been altered and veined. Stockwork quartz pyrite veining dominates the
alteration and is associated with minor copper mineralization. This alteration
is observed to overprint earlier potassic alteration. An induced polarisation
geophysical survey was carried out on one line over the exposed stockwork veined
intrusive. This survey indicated that the exposed mineralization represents a
portion of a larger intrusive hosted system. The volcanic rocks, which are
exposed roughly one kilometer to the south of the outcropping intrusive are also
extensively altered. The alteration is indicative of the upper parts of an
epithermal system and includes replacement silicification and sinter, the
precipitate or sediment that was deposited from a hot spring. Quartz-calcite
veins with textural evidence of boiling have been identified outcropping in
limestone roughly 100 meters beneath the exposed sinter. Initial sampling of
these veins and from float boulders of breccia containing quartz vein fragments
have returned anomalous values in gold and silver. The sinter and overlying
altered volcanic rocks are highly anomalous in Hg, As and Sb.
 
 ***Exploration
Results***
 A
program of geologic mapping, rock, stream silt sampling and induced polarization
geophysics was carried out in January of 2003. This program focused on the
exposed porphyry intrusive and related skarn bodies but also covered areas of
epithermal alteration. Anomalous results were received from rock samples taken
from both the porphyry style and epithermal alteration and mineralisation. These
results warrant further work. One line of induced polarization geophysics was
carried out on the property. This work identified a greater than two kilometer
wide zone of elevated chargeability response which is coincident with the
exposed altered and mineralised intrusive system.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company expects that BHP will quitclaim the property to Almaden. If this
happens, the Company will then formulate an exploration plan.
 
 **The
Guadalupe Prospect - Mexico**
 
 The
Guadalupe Prospect is without known reserves and all current work by the Company
on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 During
Fiscal 2003, the Company’s subsidiary acquired 100% interest in the La Bufa
claim by staking.
 
 76
 In
February 2004, the Company entered into an agreement with Grid Capital
Corporation (“Grid”). To earn an initial 50% interest, Grid must maintain the
property in good standing, incur exploration expenditures totalling US$1,000,000
and issue 400,000 shares to the Company by June 30, 2007. Grid can increase its
interest to 60% by incurring an additional US$1,000,000 of exploration
expenditures and issuing a further 100,000 shares to the Company by December 31,
2008.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred $25,022 in acquisition and exploration on this
prospect. $3,420 was recovered from Grid, who is earning its interest in the
prospect. The deemed value of securities received from Grid pursuant to the
option agreement was $31,000. As at December 31, 2004, the Company is carrying
this prospect at $3,428.
 
 ***Location
and Access***
 The
Guadalupe project surrounds the town and mining camp of Guadalupe y Calvo in
Chihuahua State, Mexico.
 
 ***History
and Recent Work***
 Gold
was discovered at Guadalupe y Calvo on the ground surrounded by the La Bufa
claim in October 1835. Production was sufficiently large that the Mexican
government built a mint at Guadalupe y Calvo in 1844. L.J. Buchanan (1981)
estimated historic production at 2,000,000 ounces gold and 28,000,000 ounces
silver. Estimated production grade was 37 g/t gold and 870 g/t silver. This
ground is currently being explored by another company.
 
 The
La Bufa ground has some known vein outcrops with old historic
workings.
 
 In
April 2004, Grid reported that an initial program of geological mapping and
sampling traced a major vein structure, the La Bufa, over a 1.4 kilometre
distance. The La Bufa vein is hosted in a window of lower volcanic group
andesitic rocks, the same rocks that host the past-producing mines at Guadalupe
y Calvo located one kilometre to the northwest.
 
 A
major vein structure, has been traced from the Guadalupe camp over a 1.4
kilometer distance onto the Bufa property. Grid has reported that the vein
system consists of a series of NW-SE striking, banded and brecciated, low
sulphidation epithermal quartz veins that vary in strike length from 200 to 700
meters with an aggregate length of all veins mapped of 3.9 kilometers. Over 1.6
kilometers of this vein strike length, widths vary from 1 to 7.8 meters in true
thickness. To
date 47 chip samples have been collected from 33 locations along this section of
the vein system.
 
 A
drill program was carried out by Grid in December, 2004. The program consisted
of 666.15 metres in 5 holes, the longest of which was 241.9 metres (hole
GUD04-01A). The holes were drilled in three locations along a roughly 137 metre
strike length of the vein system. The first hole drilled (GUD04-01) encountered
shallow historic workings and was stopped at 58.75 metres depth, however the
last sample before the opening was encountered returned 1.55 g/t Au and 91.1 g/t
Ag over 0.4 metres. Hole GUD04-01A was drilled at the same location and
underneath this first hole. Holes GUD01-02 (120.5 meters deep), GUD01-03 (115
metres deep) and GUD01-04 (130 metres deep) were drilled 43, 92 and 137 meters
respectively northwest along strike from the collar of holes GUD01-01 and 01A.
The most important intersections from these holes are tabulated
below:
  77
  
 **Hole
      Number**
    **From**
    **To**
    **Width**
    **Gold
      (g/t)**
    **Silver
      (g/t)**GUD04-01
    58.35
    58.75
    0.40
    1.55
    91.1GUD04-01A
    63.0
    63.46
    0.46
    3.23
    195GUD04-01A
    76.49
    78.15
    1.66
    1.56
    69.8Including
    76.49
    77.23
    0.74
    2.29
    63.4GUD04-02
    70.96
    73.20
    2.24
    0.41
    21Including
    72.51
    73.2
    0.69
    0.714
    41.6GUD04-02
    84.80
    86.70
    1.90
    0.25
    20.7Including
    86.16
    86.70
    0.52
    0.40
    40.5GUD04-03
    64.38
    66.00
    **1.62**
    **9.00**
    **447**Including
    64.38
    65.20
    **0.82**
    **17.15**
    **787**GUD04-03
    68.91
    70.52
    **1.61**
    **8.70**
    **503**GUD04-03
    84.00
    86.20
    2.2
    1.35
    55.6GUD04-03
    95.40
    96.90
    **1.50**
    **5.96**
    **52.4**Including
    96.18
    96.90
    **0.72**
    **9.48**
    **87.1**GUD04-04
    73.18
    73.70
    0.52
    2.87
    363GUD04-04
    107.71
    108.57
    0.86
    2.50
    109GUD04-04
    121.63
    122.45
    0.82
    1.765
    80.8
 
 Almaden
believes these results to represent four pierce points along roughly 10% of the
1.4 kilometre strike length of the Bufa vein system controlled by Almaden and
Grid. The intersections represent brecciated quartz vein systems, of which there
are clearly several parallel veins as indicated by hole GUD04-03 which
intersected four zones of veining and brecciation all of which returned
significant gold and silver values. Grid has informed Almaden that at this time
there is not enough geologic information to accurately determine the true widths
for the intersections.
 
 ***Geology
and Mineralization***
 The
La Bufa vein is a banded, brecciated, low-sulphidation, epithermal quartz vein
that is crosscut by a series of en echelon veins varying in length from 30
centimetres to 7.8 metres true thickness. The veins are variably mineralized
with pyrite, hematite and limonite.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005 with all work being
conducted by Grid who are earning their interest in the prospect. The Company
expects that Grid will plan further drilling.
 
 **The
Tropico Prospect - Mexico**
 
 The
Tropico Prospect is without known reserves and all current work by the Company
on the prospect is exploratory in nature.
 
 ***Option
to Acquire Interest***
 The
Company’s predecessor (“Fairfield”), through its Mexican subsidiary, acquired
the Tropico Prospect from Minera BHP, S.A de C.V. (“BHP”), a subsidiary of BHP
Billiton, for a nominal consideration. The property is subject to a 2.25% net smelter return payable to
BHP.
 
 In
Fiscal 1999, Fairfield optioned the property to Santoy Resources Ltd. (“Santoy”)
who could earn a 60% interest by incurring US$1,000,000 of exploration
expenditures and issuing 200,000 shares to the Company. When Santoy’s
expenditures had reached US$950,000, the Company agreed to accept 110,000 shares
of Santoy in lieu of the remaining US$50,000 needed to fulfil the work
obligation to earn 60% of the project. In
Fiscal 2001, Fairfield and Santoy entered into an agreement with Sumitomo Metal
Mining Company. The agreement was terminated during Fiscal 2003.
 
 78
 Santoy
and the Company acquired the San Pablo concession from the Mexican government in
a public auction held in Mexico City on February 22, 2002 for US$150,000,
payable in installments. Yearly installments are optional and the joint venture
is not obligated to make these if the concession is relinquished. During Fiscal
2004, the Company and Santoy relinquished the concession.
 
 ***Expenditures
to Date***
 During
Fiscal 2004, the Company incurred no costs on the prospect and as at December
31, 2004, had written all deferred costs off to operations and is carrying the
prospect at $1.
 
 ***Location
and Access***
 The
Tropico Prospect is located twenty one kilometres north of Mazatlan, Sinaloa,
Mexico and may be accessed via Highway 15 from Mazatlan. Several other paved and
unpaved roads provide access to various parts of the prospect from Highway 15.
The centre of the prospect is approximately latitude 23 degrees 27 minutes North
and longitude 106 degrees 27 minutes west.
 
 ***History
and Recent Work***
 There
has been limited historic exploration for copper and gold as evidenced by
numerous pits and diggings in the area. Consejos Roussos Minerales (“CRM”), the
Mexican government mining company, mapped the Marmol quadrangle and carried out
soil geochemical and geophysical surveys in the San Pablo area located on the
southern margin of the Tropico mining concession after claiming it in
1993
 
 Since
1996, BHP carried out reconnaissance geological mapping at a scale of 1:250,000,
photo interpretation and petrographic studies. This work was followed by more
detailed geological mapping at 1:25,000. Mapping revealed copper mineralization
associated with a layered mafic plutonic sequence. Selected samples were
analyzed for platinum group elements with significant anomalous results. A
stream sediment survey was carried out over the entire concession area resulting
in the identification of additional areas of potential.
 
 In
1998, Fairfield acquired the Tropico and Tropico 2 mining concessions from BHP.
The Company carried out limited check sampling of mineral showings which
returned anomalous values in copper, silver, gold, platinum and palladium.
Santoy also completed check sampling confirming the presence of anomalous
platinum, palladium, gold and copper values.
 
 Subsequently,
the Company completed four reverse circulation drill holes in an initial test of
areas underlain by anomalous copper-gold-platinum-palladium mineralization
hosted in a mafic igneous complex.
 
 In
July 2000 the parties agreed that the Maricela and Tarantula II claims which
were acquired by Santoy be included in the agreement. The claims adjoin the
Tropico prospect to the south.
 
 In
2001 Santoy carried out line cutting geochemical rock and soil sampling,
geological mapping, and geophysical surveys. Favourable results from this work
resulted in a 1,500 metre trenching program.
 
 Based
on trenching results, Santoy planned further trenching and drilling. Subsequent
trenching, drilling, geophysics, geochemical, and geological work were financed
by Sumitomo with Santoy acting as operator.
 
 ***Geology
and Mineralization***
 The
Tropico Prospect is underlain by a Jurassic-Cretaceous layered mafic igneous
complex that intrudes a late Paleozoic basement. The mafic complex is in turn
cut by Late Cretaceous-Early Tertiary, diorite that may be the earliest phase of
the Sinaloa batholith. Oligocene volcanic rocks and younger thin alluvium cover
much of the area, limiting exposures of older rocks to small outcrop areas on
hill tops.
 
 The
large mafic igneous complex hosts two main types of mineralization; primary
copper sulphide minerals and pyrite with associated gold, platinum and palladium
values, and secondary copper mineralization developed by oxidation and
weathering of the primary sulfide minerals.
 
 Due
to limited outcrop exposure, the thickness of the mineralized zones is unknown.
Limited reverse circulation drilling data indicates that individual zones of
mineralization range up to 21 meters in thickness and extend to depths of at
least 70 meters. It should be noted that the intersections may not represent
true thickness since more drilling is required to define dimensions of the
mineralized zones.
 
 79
 The
Maricela and Tarantule II claims are underlain by the same mafic intrusive
complex that Santoy has been exploring on the adjoining Tropico prospect.
Results from previous geological mapping and chip sampling, along with grid soil
geochemistry and geophysical surveying have outlined a one kilometre wide
copper-gold-silver mineralized pyroxenite unit that can be traced for a strike
length of 2.5 kilometres
 
 ***Exploration
and Drilling Results***
 Four
reverse circulation drill holes totalling 1980 feet were drilled for 1998
assessment work in two separate areas of economic interest known as Santa Fe and
Cerro Capule. Five foot sample intervals for the entire length of the holes were
collected and submitted for preparation to the Chemex Lab in Guadalajara,
Mexico, then shipped to Vancouver, British Columbia for thirty two element
analyses by ICP methods. Gold, platinum and palladium metals were extracted by
fire assay and analyzed by ICP methods. Weakly anomalous gold, platinum and
palladium values were returned from sampling. Hole TR-1 intersected 0.5% copper
over 9metres.
 
 In
2000, Santoy cut grids and carried out soil sampling that identified an area
anomalous in copper, gold and platinum group elements. Prospecting, geological
mapping and 30 line kilometres of induced polarization and magnetic surveys were
also completed. Several areas had coincident anomalies from both soil
geochemistry and geophysics.
 
 In
2001, Santoy completed an approximately 1500 metre trenching program that
returned anomalous values in copper, gold, palladium and platinum. Results
justified a drilling program to test the trench values at depth.
 
 In
February 2002 Sumitomo and Santoy completed a first phase of exploration on the
project. This first phase program totalling US$600,000 was financed by Sumitomo
and consisted of fifteen diamond drill holes totalling 2,844 meters targeting
three of the seven identified soil geochemical anomalies. In addition to the
drill program 17 trenches, totalling 2,473 meters were completed. As part of the
program, the soil geochemical coverage of the property was extended to cover the
most easterly portion of the mafic-ultramafic complex. Two separate coincident
copper-platinum-palladium-gold soil geochemical anomalies have resulted from
this work.
 
 A
review of the work completed by the Mexican government on San Pablo shows that
the favourable geology and anomalous Cu/PGM values can be extended for another
1.5 km bringing the overall target to in excess of 3.0 km of strike
length.
 
 The
following are the key results from the first phase.
 
 *Maricela
Area -* Eight
diamond drill holes totaling 1,632 metres were completed on the Maricela area
and tested mineralization in trenches 1, 4, 7 and 11. Seven of the eight drill
holes have tested under three of the trenches within a 600 x 300 metre portion
of the anomalous trend. One drill hole is located a further 400 metres to the
east. All of the drill holes on Maricela encountered feldspathic, massive
pyroxenite, indicating that the pyroxenitic phases of the ultramafic complex are
a minimum of 300 metres thick. The pyroxenite has been extensively altered to
secondary tremolite. Sulphide mineralization encountered in these holes
comprises variable amounts of chalcopyrite, cubanite, bornite, pyrrhotite, and
minor pentlandite. A thick, cumulate phase anorthositic gabbro is interpreted to
form the hanging wall unit to the pyroxenite, and a number of surface Cu-PGM
occurrences within this unit near the contact remain untested. The lower
(footwall) contact is not exposed on surface, and may be partially covered by
overlying younger Tertiary volcanics. The lower contact is of particular
interest for its potential to develop contact style Cu/PGE mineralization.
 
 Four
holes drilled in the Maricela area intersected anomalous copper and precious
metal values. Hole M-01-01 intersected 110.5 meters that graded 0.34 % copper,
0.14 g/t Platinum, 0.24 g/t Palladium and 0.09 g/t gold. This included 21.0
meters that averaged 0.79 % copper, 0.29 g/t Platinum, 0.63 g/t Palladium and
0.24 g/t gold. Hole M-01-03 intersected 128.1 meters that graded 0.39 % copper,
0.17 g/t Platinum, 0.23 g/t Palladium and 0.15 g/t gold. Hole M-01-04
intersected 127.4 meters that graded 0.36 % copper, 0.18 g/t Platinum, 0.24 g/t
Palladium and 0.13 g/t gold. Hole M-02-08 intersected 38.9 meters that graded
0.50 % copper, 0.25 g/t Platinum, 0.34 g/t Palladium and 0 .15
g/t gold. This included 10.9 meters that averaged 0.95 % copper, 0.53 g/t
Platinum, 0.68 g/t Palladium and 0.31 g/t gold.
 
 80
 *Santa
Fe Area -* The
Santa Fe area is located 7.0 kilometres east of Maricela. A total of four
diamond drill holes totalling 728 metres tested two separate strongly anomalous
soil and rock geochemical areas outlined by previous programs. The two areas
were each tested with two holes spaced 100 metres apart.
 
 *El
Capule Area -* Three
diamond drill holes totalling 485 metres tested under the recently completed
trenching in this area, located 10.5 km east of Maricela. No significant
intervals were encountered in any of these holes.
 
 A
second phase of exploration was completed in October of 2002. Excavator
trenching was carried out over four separate target areas to test coincident
favourable geology and anomalous rock and soil geochemical responses. Three of
the targets were located within the eastern portion of the mafic complex, and
were up to 13.0 km east of the Maricela area. A further four trenches were also
completed within the Maricela area, bringing the total number of trenches in
this area to sixteen. Following this trenching program a second phase of
drilling was carried out totaling 1,554 meters in 10 diamond drill holes. Five
of these holes tested a 1,100 meter long section of the mafic complex, including
the Maricela area. Three holes tested a portion of the projected hangingwall
contact area between massive pyroxenite and megacrystic gabbro in the Maricela
area. Two short holes tested the El Pochote area 2.4 kilometers east of San
Pablo.
 
 Limited
induced polarization work and a further three holes were drilled early in 2003,
no significant values were encountered.
 
 ***Infrastructure***
 All
major services are found in Mazatlan, a major city located twenty kilometres to
the south of the prospect. Labour is available in local towns and villages.
There is good road access throughout most of the area and a major highway
(Number 15) crosses the western part of the prospect and major power lines also
cross the western and eastern portions of the prospect. A local power line
network supplies electricity to villages within the area.
 
 ***Planned
Work Program - Fiscal 2005, Ending December 31, 2005***
 The
Company has no planned exploration program for Fiscal 2005. A limited
metallurgical test indicated low concentrate grades form the material tested. If
any new exploration results on the property were encouraging, further testing
would be indicated to determine how to achieve high concentrate grades. The
Company and Santoy plan to conduct a review of the exploration
data.
 
 **BHP
Billiton Joint Venture - Mexico**
 
 On
May 9, 2002, the Company entered into a joint venture agreement (“Joint
Venture”) with BHP Billiton World Exploration Inc. (“BHP”) to undertake
exploration in eastern Mexico. Under terms of the Joint Venture, each company
advanced U.S.$200,000 for exploration in the first year. The parties are
negotiating an agreement whereunder, to earn a 51% interest in a Project Area
designated under the Joint Venture, BHP must incur an aggregate of U.S.$750,000
for exploration on the Project Area on or before the 7th anniversary of the
Agreement (of which U.S.$250,000 must be expended by the 5th anniversary, after
which both companies are committed to fund a further U.S.$750,000 of
exploration. If either company fails to make its contribution, it would be
diluted. If a party’s interest is diluted to below 10%, such interest is
conveyed to the non-defaulting party in return for a 2% net smelter return
royalty. If both companies maintain their interest of funding, BHP can earn a
further 19% interest in each Project Area by incurring the lesser
of:
 (i)
    all
      expenditures to complete a Feasibility Study on the Project Area;
      or
 (ii)
    aggregate
      expenditures of U.S.$25,000,000 on the Project
Area.
 
 An
additional 10% interest in a Project Area can be earned by BHP by incurring all
expenditures to bring such Project Area into Commercial Production.
 
  81
  Initial
helicopter-borne reconnaissance programs were completed in May 2003 and March
2004 over the areas of interest of the joint venture program. A 100% interest
was acquired by staking in two prospects identified during this program. The
prospects, named Fuego and Cerro Colorado, are located very close to one another
in Oaxaca State. Both projects were offered to BHP under terms of the joint
venture agreement. BHP determined that the prospects were not copper prospects,
and has quit claimed its interest in the two prospects back to the Company.
 
 **Item
5.**  **Operating
and Financial Review and Prospects**
 
 ***Operating
Results***
 The
following discussion and analysis of the results of operations and the Company’s
financial position should be read in conjunction with the consolidated financial
statements and related notes for the year ended December 31, 2004 appearing
under Item 17 - Financial Statements and listed under Item 19 -
Exhibits.
 
 The
Company’s consolidated financial statements are stated in Canadian Dollars and
are prepared in accordance with Canadian GAAP, the application of which, in the
case of the Company, conforms in all material respects for the periods presented
with U.S. GAAP except as presented in Note 17 to the consolidated financial
statements included herein.
 
 The
Company is in the business of acquiring and exploring mineral properties and
prospects in Canada, the United States and Mexico with the aim of developing
them to a stage where they can be exploited at a profit or to arrange joint
ventures whereby other companies provide, in whole or in part, funding for
development and exploitation. At that stage, the Company’s operations would, to
some extent, be dependent on the world market prices of any minerals mined. The
Company does not have producing properties and operations on its properties and
prospects are exploratory searches for mineable deposits.
 
 **Fiscal
2004 compared to Fiscal 2003**
 The
Company’s operations during the year ended December 31, 2004 (“Fiscal 2004”)
produced a net loss of $3,065,803 or $0.11 per share compared to $1,326,305 or
$0.06 per share for the fiscal year ended December 31, 2003 (“Fiscal 2003”). The
significant fluctuation in net loss is primarily due to an increase in the
write-down of interests in mineral properties and the expense recognized for
stock options granted during the year.
 
 The
Company has no revenue from mining operations. Revenue currently consists of
proceeds received from mineral properties option agreements in excess of the
properties carried value, interest income and the recovery of value-added tax in
Mexico, all of which increased during Fiscal 2004 as compared to Fiscal
2003.
 
 General
and administrative costs were $705,826 during Fiscal 2004 compared to $605,763
during Fiscal 2003. This increase was primarily due to an increase in travel and
promotion due to the Company’s participation in numerous investment conferences
throughout the year including the Vancouver Investment Conference, the
Prospectors and Developers Association Conference, the New York Institutional
Gold Conference, the Las Vegas Precious Metals Conference and the San Francisco
Precious Metals Conference. The Company also engaged Roth Investor Relations
Inc. of New Jersey to introduce senior management to various fund managers in
eastern United States. General exploration costs were $539,794 in Fiscal 2004
compared to $439,503 in Fiscal 2003. This increase was primarily due to the
purchase of satellite imagery and data maps at a cost of $183,472.
 
 Significant
non-cash expenses include the write-down of interests in mineral properties,
stock option compensation and income tax recovery. Write-down of interests in
mineral properties during Fiscal 2004 increased to $903,358 as compared to
$105,666 during Fiscal 2003. This write-down is based on managements evaluation
of the carrying value of each mineral property interest held. Stock option
compensation during Fiscal 2004 increased to $1,234,782 as compared to $220,000
during Fiscal 2003. This expense is directly related to the number of stock
options granted during any fiscal year. A future income tax recovery was
recorded upon the adoption of the recommendations of Emerging Issues Committee -
146 with respect to flow-through shares. For all flow-through shares issued
subsequent to December 31, 2003, the Company will recognize the future income
tax liability and a corresponding increase to deficit on the date the Company
renounces the tax credits associated with the expenditures, provided there is
reasonable assurance that the expenditures will be made. The recognition of any
portion of previously unrecognized future income tax assets will be recorded as
a reduction of income tax expense. The impact of this adoption was a future
income tax recovery of $338,400 in Fiscal 2004.
 
 **Fiscal
2003 compared to Fiscal 2002**
 The
Company’s operations during the year ended December 31, 2003 (“Fiscal 2003”)
produced a net loss of $1,326,305 or $0.06 per share compared to $3,198,025 or
$0.16 per share for the fiscal year ended December 31, 2002 (“Fiscal 2002”). The
significant fluctuation in net loss is primarily due to the expense for mineral
properties interests write-downs of $105,666 during Fiscal 2003 compared to
$2,180,738 during Fiscal 2002.
 
 82
 The
Company has no revenue from mining operations. Revenue currently consists of
recovery of costs in excess of costs incurred relating to mineral property
agreements, interest income, the recovery of tax and mineral exploration tax
credits. Revenue in Fiscal 2003 remained consistent with revenue in Fiscal
2002.
 
 General
and administrative costs were $605,763 during Fiscal 2003 compared to $598,753
during Fiscal 2002. General exploration costs were $439,503 in Fiscal 2003
compared to $332,485 in Fiscal 2002. This increase was primarily due to the
joint venture program in Eastern Mexico with BHP Billiton. Non-cash stock option
expense was $220,000 during Fiscal 2003 compared to $162,000 during Fiscal 2002.
 
 ***Liquidity
and Capital Resources***
 
 **Fiscal
2004 Ended 12/31/2004**
 At
the end of Fiscal 2004, the Company had working capital of $4,659,617 compared
to $5,100,785 at the end of Fiscal 2003 and cash and cash equivalents of
$4,125,706 at the end of Fiscal 2004 compared to $4,838,914 at the end of Fiscal
2003. The decrease in cash is primarily due to an increase in investment in
mineral properties during Fiscal 2004. Also, the market value of the Company’s
inventory of gold bullion at the end of Fiscal 2004 was $843,599 - $568,831
above book value and the market value of equity securities at the end of Fiscal
2004 was $1,045,147 - $540,393 above book value. These values differ from the
GAAP valuation on the balance sheet which is at the lower of cost or market.
Also, included in working capital is a contingent liability in the event the
Company is unsuccessful in its appeal of assessed additional mineral tax for
prior years. The Company expects its level of cash resources to be sufficient to
meet its working capital and mineral exploration requirements for the next
several years. The Company has no long-term debt.
 
 Cash
used for operating activities during Fiscal 2004 was $1,212,115 after adjusting
for the non-cash activities compared to $911,766 during Fiscal 2003. Significant
non-cash expenses are discussed above.
 
 Cash
flows from financing activities during Fiscal 2004 were $2,071,427 compared to
$5,779,301 during Fiscal 2003. The source of cash during Fiscal 2004 is from the
completion of private placement financings ($1,722,250), the exercise of share
purchase warrants ($1,503,438) and the exercise of stock options ($290,000). In
January 2004, the Company completed a private placement of 1,300,000 common
shares raising proceeds of $1,699,435 net of issue costs. These funds were
received prior to December 31, 2003 and were recorded as a subscription for
shares. In August 2004, the Company completed two flow-through private placement
financings issuing a total of 420,000 common shares at $2.25 per share raising
proceeds of $849,415 net of issue costs. Please see Note 9 to the consolidated
financial statements for the year ended December 31, 2004 for further
details.
 
 During
Fiscal 2004, Almaden had net proceeds from the sale of equity securities in
excess of purchases of $22,689 compared to $244,768 during Fiscal 2003. This
relates to the investment of excess cash in investments earning a higher rate of
interest. During Fiscal 2004, $173,747 was invested in property, plant and
equipment, primarily the purchase of vehicles to be used in exploration in
Mexico, a geological data base and IP survey equipment, compared to $247,879
during Fiscal 2003. During Fiscal 2004, investments of $1,421,462 were made in
mineral properties interests, primarily the Elk property in British Columbia
($912,549) and the acquisition of several new interest in British Columbia and
Mexico compared to $990,477 during Fiscal 2003. These investments are net of any
proceeds received from option agreements and costs recovered. There were no gold
sales during Fiscal 2004 and Fiscal 2003.
 
 **Fiscal
2003 Ended 12/31/2003**
 At
the end of Fiscal 2003, the Company had working capital of $5,100,785 compared
to $1,521,627 at the end of Fiscal 2002 and cash and cash equivalents of
$4,838,914 at the end of Fiscal 2003 compared to $964,967 at the end of Fiscal
2002. The significant increase in cash is primarily due to the issuance of
capital stock. In addition, the market value of the Company’s inventory of gold
bullion at the end of Fiscal 2003 was $859,681 - $584,913 above book value. The
market value of marketable securities at the end of Fiscal 2003 was $1,268,497 -
$899,211 above book value. These values differ from the GAAP valuation on the
balance sheet which is at the lower of cost or market. Also, included in working
capital is a contingent liability in the event the Company is unsuccessful in
its appeal of assessed additional mineral tax for prior years. The Company
expects its level of cash resources to be sufficient to meet its working capital
and mineral exploration requirements for the next several years. The Company has
no long-term debt.
 
 Cash
used for operating activities during Fiscal 2003 was $911,766 after adjusting
for the non-cash activities compared to $855,487 during Fiscal 2002.
 
 83
 Cash
flows from financing activities during Fiscal 2003 were $5,779,301 compared to
$2,378,605 during Fiscal 2002. This significant increase in sources of cash
reflects the success of the Company in raising a total of $4,087,341 through the
issue of new shares and the exercise of options and warrants in 2003.
 
 In
March 2003, the Company completed a private placement of 80,000 units raising
proceeds of $62,780 net of issue costs. In August 2003 the Company completed a
private placement of 323,500 units raising proceeds of $247,671 net of issue
costs. In September 2003 the Company completed a private placement of 1,700,000
units raising proceeds of $1,160,524 net of issue costs. In October 2003, the
Company completed a private placement of 55,000 units and 70,000 common shares
raising proceeds of $183,856. In December 2003, the Company completed a private
placement of 280,000 units raising proceeds of $413,700 net of issue costs. In
December, the Company completed a second private placement of 135,000 units and
5,000 common shares raising proceeds of $294,173 net of issue costs. In January
2004, the Company completed a private placement of 1,300,000 common shares
raising proceeds of $1,699,435 net of issue costs. These funds were received
prior to December 31, 2003 and were recorded as a subscription for shares.
Further details regarding the private placements are disclosed in Note 9 to the
consolidated financial statements.
 
 During
the year the Company received cash proceeds of $1,648,664 and $75,973 pursuant
to the exercise of share purchase warrants and stock options,
respectively.
 
 Subsequent
to December 31, 2003 and up to March 31, 2004, the Company received cash
proceeds of $569,461 from the exercise of share purchase warrants and stock
options.
 
 During
Fiscal 2003, Almaden had net proceeds from the sale of marketable securities in
excess of purchases of $244,768 compared to the purchase of marketable
securities in excess of sales during Fiscal 2002 of $164,366. $247,879 was
invested in property, plant and equipment during Fiscal 2003 primarily the
dismantling and moving of the mill, compared to $151,856 during Fiscal 2002, net
of proceeds. Investments of $990,477 were made in mineral properties interests
primarily in Mexico an British Columbia during Fiscal 2003 compared to $873,935
during Fiscal 2002. There were no gold sales during Fiscal 2003 compared to
$362,906 during Fiscal 2002.
 
 As
none of the Company’s properties or prospects are currently in production and
consequently, do not produce any revenue, there is little variation expected in
operating results from year to year until such time, if any, as a production
decision is made on one of its properties or prospects. The Company is likely to
continue incurring annual losses until/unless a significant discovery is made
and there is no reassurance this will happen.
 
 ***Trend
information***
 The
mineral exploration industry has been through a very difficult period with low
prices for both precious and base metals. Management believes that the lack of
interest lead to low market capitalizations and large companies found it was
easier to grow by purchasing companies or mines than to explore for them. This
lead to downsizing of large company exploration staffs and many professionals
took early retirement or left the industry to pursue other careers. As a result
of these trends, there are few good gold-silver projects in the pipeline and a
developing shortage of experienced explorationists. With improving metal prices
and increasing demand, especially from Asia, supply difficulties may occur in
the future and there is a discernible need for good exploration projects based
on sound geological work. As junior companies (many of which are staffed by
former large company geologists) find it easier to raise funds, they are
beginning to seek properties of merit to explore.
 
 ***Off-balance
Sheet Arrangements***
 The
Company has no off-balance sheet arrangements other than the lease related to
its office premises as disclosed below.
 
 ***Forward
looking statements***
 Certain
information included in this discussion may constitute forward-looking
statements. Forward-looking statements are based on current expectations and
entail various risks and uncertainties. These risks and uncertainties could
cause or contribute to actual results that are materially different than those
expressed or implied. The Company disclaims any obligation or intention to
update or revise any forward-looking statement, whether as a result of new
information, future events, or otherwise.
 
  84
  ***Contractual
Obligations***
 The
Company is obligated under an operating lease for its office premises with the
following aggregate minimum lease payments to the expiration of the lease on
January 31, 2009. During Fiscal 2005, the Company intends to pay $1,995
cash-in-lieu of work on its Cabin Lake claims to keep them in good standing. The
Company must pay $1,500 yearly for mineral lease rent on its Elk property. The
Company renewed its Rock River coal licenses in Fiscal 2004 for a three-year
term. The cost to Almaden (50%) will be $9,385 in Fiscal 2005 and $18,770 in
Fiscal 2006. Should the Company not option its Galeana and As de Oro prospects
in Mexico by the time their next option payments are due, the Company intends to
make the payments of $14,250 each (U.S.$10,000 plus value added tax). All other
property options payments on the Company’s projects have been assumed by third
parties who are earning their interests in the projects. In January 2005, the
Company entered into a letter agreement to fund the purchase of a man portable
drill at an estimated cost of $200,000 of which $105,000 has been advanced to
date. Table No. 4 lists these contractual obligations as at February 28, 2005.
 
 **Table
No. 4**
 **Contractual
Obligations of the Company**
 Payments
      due by periodTotal
    
    lessthan
      1year
    
    1 -
      3years
    
    3 -
      5Years
    
    morethan
      5yearsOperating
      lease obligations
    
    $
    145,935
    
    $
    34,155
    
    $
    111,780
    
    
    -
    
    
    -Mineral
      property acquisition/ maintenance payments
    
    
    61,650
    
    
    41,380
    
    $
    20,270
    
    
    -
    
    
    -Property,
      plant and equipment acquisition
    
    
    95,000
    
    
    95,000
  ***U.S.
Generally Accepted Accounting Principles***
 See
Note 17 to the Consolidated Financial Statements for the differences between
Canadian and United States generally accepted accounting principles as
applicable to the Company’s operations. Under U.S. GAAP, the Company is
considered a exploration stage company. Consequently, U.S. GAAP requires that
mineral property costs that are deferred under Canadian GAAP be expensed until
there is substantial evidence of the existence of a mineable ore deposit that
can be commercially exploited by the Company. Under U.S. GAAP the Company
classifies its equity securities and long-term investments as available-for-sale
securities with any net realized holding gains to be included in other
comprehensive income whereas under Canadian GAAP securities are carried at cost
unless there is evidence of an impairment which is other than
temporary.
 
 ***Critical
Accounting Policies***
 The
Company’s significant accounting policies are set out in Note 2 of the audited
consolidated financial statements. There are two policies that due to the nature
of the mining business may not be readily understood. These policies relate to
the capitalizing of mineral exploration expenditures and the use of
estimates.
 
 The
Company defers all costs relating to the acquisition and exploration of its
mineral properties. Any revenues received from such properties are credited
against the costs of the property. If commercial production commenced on any of
the Company’s properties, all costs would be charged to operations on a
unit-of-production method. The Company’s management periodically reviews the
results of its exploration programs. Any decisions to abandon or reduce
exploration efforts on any of its properties would result in a charge to
operations when such decision is made. There is not a predetermined hold period
for any property as geological or economic circumstances render each property
unique.
  ***Critical
accounting estimates***
  A
detailed summary of all the Company’s significant accounting policies is
included in Note 2 to the audited consolidated financial statements for the year
ended December 31, 2004. Significant estimates used in the preparation of these
consolidated financial statements include, amongst other things, depreciation,
determination of net recoverable value of assets, determination of fair value on
taxes, contingencies and share compensation.
 
 ***Changes
in accounting principles***
 ***Stock-based
compensation***
 The
Canadian Institute of Chartered Accountants (“CICA”) amended the stock option
compensation and other stock based payments accounting standard during 2003. The
Company early adopted the standard and the consolidated financial statements for
the years ended December 31, 2004 and 2003 reflect this. This change has been
applied retroactively and the consolidated financial statements for 2002 have
been restated. The effect of this change was to increase the net loss for the
year ended December 31, 2002 by $162,000 for a net loss of $3,198,025. Please
see Note 2(j) and 3 to the audited consolidated financial statements for the
year ended December 31, 2004 for further details.
 ******
 85
 ***Flow-through
shares***
 The
Emerging Issues Committee - 146 amended the accounting standard with respect to
flow-through shares during 2004. The standard requires, for all flow-through
shares issued subsequent to December 31, 2003, the recognition of the future
income tax liability and a corresponding increase to deficit on the date the
company renounces the tax credits associated with the expenditures, provided
there is a reasonable assurance that the expenditures will be made. The
recognition of any portion of previously unrecognized future income tax assets
will be recorded as a reduction of income tax expenses. The Company adopted the
standard and the consolidated financial statements for the year ended December
31, 2004 reflect this.
 ***Asset
retirement***
 The
CICA issued a new standard relating to asset retirement obligations effective
for fiscal years beginning on January 1, 2004. The standard requires the
recognition in the financial statements of the liability associated with the net
present value of future site reclamation costs when the liability is incurred.
These obligations are initially measured at fair value and subsequently adjusted
for the accretion of discount and any changes to the underlying costs. The asset
retirement cost is to be capitalized and amortized into operations over time.
Please see Note 3(c) to the audited consolidated financial statements for
further details.
 
 **Item
6. Directors, Senior Management and Employees**
 
 Table
No. 5 lists the directors and senior management of the Company. The directors
have served in their respective capacities since their election and/or
appointment and will serve until the next annual general meeting or until a
successor is duly elected, unless the office is vacated in accordance with the
Articles of the Company. All directors are residents and citizens of Canada.
 
 **Table
No. 5**
 **Directors
of the Company**
 **Name**
    **Age**
    **Date
      First Elected or Appointed**James
      Duane Poliquin
      James
      E. McInnes(1)
      John
      D. McCleary(2)
      Joseph
      Montgomery
      Morgan
      Poliquin(2)
      Gerald
      G. Carlson(1)
      Donald
      Lorimer(1) (2)
    64
      67
      64
      77
      33
      59
      71
    February
      1, 2002(3)
      February
      1, 2002(3)
      February
      1, 2002(3)
      February
      1, 2002(3)
      February
      1, 2002(3)
      February
      1, 2002(3)
      November
      17, 2003
 (1)Member of Audit Committee
 (2)Member of Corporate Governance Committee
 (3)Date of issue of the Certificate of Amalgamation
 
 Duane
Poliquin has been a director of Almaden Resources Corporation since September
1980, James E. McInnes since December 1985, Jack McCleary since June 1991 and
Morgan Poliquin since June 1999
 
 Duane
Poliquin and James E. McInnes were directors of Fairfield Minerals Ltd., the
Company’s predecessor, since June 1996, Joseph Montgomery since July 2000 and
Gerald G. Carlson since July 1998.
 
 Table
No.6 lists the Executive Officers of the Company. The Executive Officers serve
at the pleasure of the Board of Directors. All Executive Officers are residents
and citizens of Canada.
 
  86
  **Table
No. 6**
 **Executive
Officers of the Company**
 **Name**
    **Position**
    **Age**
    **Date
      First Appointed**James
      Duane Poliquin
      Dione
      Bitzer
    President
      and Chief Executive
      Chief
      Financial Officer
    64
      44
    February
      1, 2002(4)
      February
      1, 2002(4)
 (4)Date of issue of the Certificate of Amalgamation
 
 Duane
Poliquin was appointed an Officer of Almaden Resources Corporation in September
1980 and of Fairfield Minerals Ltd. in June 1996. Dione Bitzer was appointed an
Officer of Fairfield Minerals Ltd. in March 2001.
 
 **Duane
Poliquin** is a registered professional geological engineer with over 40 years experience
in mineral exploration and the founding shareholder of Almaden Resources
Corporation. He gained international experience with major mining companies
where he participated in several important mine discoveries. Mr. Poliquin has
held executive positions with several junior resource companies over his career
and was President of Westley Mines Ltd. when that company discovered the Santa
Fe gold deposit in Nevada. He also serves as a director of Motapa Diamonds Inc.,
a public company exploring for diamonds in Africa. Mr. Poliquin spends all of
his time of the affairs of the Company and is the father of Morgan
Poliquin.
 
 **James
E. McInnes** is a retired lawyer and a geologist with over 40 years experience in mineral
exploration and mining law. He has held executive positions with several junior
resource companies over his career. He also serves as a director and President
of Williams Creek Explorations Limited, a gold, copper and diamond exploration
company listed on the TSX Venture Exchange (“TSX-V) and Horseshoe Gold Mining
Inc., a diamond exploration company listed on the TSX-V. Mr. McInnes spends
about one-third of his time on the affairs of the Company.
 ****
 **Jack
McCleary** is
a registered professional geologist with 40 years experience in petroleum and
mineral exploration. He has held executive positions with several junior
resource companies over his career and for several years was a Vice President of
Dominion Securities Ltd. He served as a director and President of Canadian Hydro
Developers Inc. until December 1995 at which time he retired and as a director
and President of Troymin Resources Ltd. until April 2003 at which time Troymin
amalgamated with Santoy Resources Ltd. where he serves as a director. Santoy
Resources Ltd. is a precious and base metals, coal and coal bed methane and
diamond exploration company listed on the TSX-V.
 
 **Joseph
Montgomery,** Ph.D.,
P.Eng. is a professional engineer registered with the Association of
Professional Engineers and Geoscientists of B.C. He has over 40 years experience
in the mineral industry primarily as a consultant in base and precious metals,
industrial metals and gemstones. He is President of Montgomery Consultants Ltd.
and is on the Advisory Board of the Canadian Institute of Gemology. Mr.
Montgomery also serves as a director of the following junior resource
companies:
 
 a.
    Abitibi
      Mining Corp., a company with lead and zinc property holdings listed on the
      TSX-V.
 b.
    Sedex
      Mining Corp., a company with lead and zinc property holdings listed on the
      TSX-V.
 c.
    Anglo
      Minerals Ltd., a company with coal and tar sands deposits listed on the
      TSX-V.
 d.
    Better
      Resources Ltd., a copper exploration company listed on the
      TSX-V.
 e.
    Comcorp
      Ventures Inc., a gold and base metals exploration company listed on the
      TSX-V.
 f.
    Klondike
      Gold Corp., a gold and base metals exploration company listed on the
      TSX-V.
 
 **Morgan
Poliquin** ,
M.Sc. **,** is a registered professional geological engineer with 10 years experience in
mineral exploration. He is the son of Duane Poliquin. He has a B.A.Sc. degree in
geological engineering from the University of British Columbia and a M.Sc. in
geology from the University of Auckland, 1996. He also serves as a director of
Williams Creek Explorations Limited, a gold, copper and diamond exploration
company listed on the TSX-V.
 
 **Gerald
G. Carlson,** Ph.D.,
P.Eng **,** has been involved in mineral exploration and junior exploration company
management for over 30 years. Mr. Carlson has a B.A.Sc. from the University of
Toronto, a M.Sc. from Michigan Technological University and Ph. D. from
Dartmouth College. He is past President of ConSil Corp. and past Vice President
of Exploration for Dentonia Resources Ltd. Mr. Carlson became President, Chief
Executive Officer and a director of La Teko Resources Ltd. in December 1996, a
position he held until the acquisition of La Teko by Kinross Gold Corporation in
February 1999. Since 1999, he has been President and CEO of Copper Ridge
Explorations Inc. and he holds the position of Chairman of IMA Exploration Inc.
He is a past President of the B.C. and Yukon Chamber of Mines, President of the
Society of Economic Geologists Canada Foundation and a member of the
Professional Engineers and Geoscientists of British Columbia, the Professional
Engineers of the Yukon Territory and the Canadian Institute of Mining,
Metallurgy & Petroleum. Mr. Carlson also serves as a director or officer of
the following junior resource companies:
 
 87
 a.
    President
      of Copper Ridge Explorations Inc., a gold and copper exploration company
      listed on the TSX-V.
 b.
    Director
      of Nevada Star Resource Corp., a platinum, nickel and copper exploration
      company listed on theTSX-V
      and NASDAQ Bulletin Board.
 c.
    Chairman
      of IMA Exploration Inc., a silver, gold exploration company listed on the
      TSX-V.
 d.
    Director
      of Dentonia Resources Ltd., a diamond exploration company listed on the
      TSX-V.
 e.
    Director
      of Orphan Boy Resources Inc., a gold and base metals exploration company
      listed on the TSX-V.
 
 **Donald
M. Lorimer** is a portfolio manager with Odlum Brown Ltd. Mr. Lorimer qualified as a
Chartered Accountant with Price Waterhouse & Co. and subsequently was a
financial executive with Patino Mining Corporation and Little Long Lac Gold
Mines Ltd. In 1971 he joined A.E. Ames & Co. and became a director and vice
president responsible for corporate and government underwriting in British
Columbia.
 
 **Dione
Bitzer** is
a Certified Management Accountant with over 20 years accounting experience with
junior exploration companies. She has held executive positions with several
junior resource companies. She also serves as Secretary of Williams Creek
Explorations Limited, a gold, copper and diamond exploration company listed on
the TSX-V. Miss Bitzer spends about three-quarters of her time on the affairs of
the Company.
 
 No
director and/or executive officer has been the subject of any order, judgment,
or decree of any governmental agency or administrator or of any court or
competent jurisdiction, revoking or suspending for cause any license, permit or
other authority of such person or of any corporation of which he is a director
and/or executive officer, to engage in the securities business or in the sale of
a particular security or temporarily or permanently restraining or enjoining any
such person or any corporation of which he is an officer or director from
engaging in or continuing any conduct, practice, or employment in connection
with the purchase or sale of securities, or convicting such person of any felony
or misdemeanor involving a security or any aspect of the securities business or
of theft or of any felony. Seine River Resources Inc. (now Trinity Plumas
Capital Corp.), of which James E. McInnes was a director was subject to a
cease-trade order as of July 24, 1996, subject to the submission of overdue
documentation, which was revoked on August 8, 1996. Williams Creek Explorations
Limited, of which James E. McInnes and Morgan Poliquin are directors and Dione
Bitzer an officer, was subject to a cease-trade order as of July 22, 1999,
subject to the submission of overdue documentation, which was revoked on August
5, 1999. Joseph Montgomery was subject to a cease trade order in the securities
of Home Ventures Ltd. as of May 23, 1996 for failure to file insider reports,
which was revoked on June 14, 1996.
 
 There
are no arrangements or understandings with any two or more directors or
executive officers pursuant to which he was selected as a director or executive
officer.
 
 The
Company has no formal plan for compensating its directors for their service in
their capacity as directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The Board of Directors may
award special remuneration to any director undertaking any special services on
behalf of the Company other than services ordinarily required of a director.
Other than indicated below no director received any compensation for his
services as a director, including committee participation and/or special
assignments.
 
 Total
compensation paid by the Company directly and/or indirectly to all directors and
executive officers during Fiscal 2004 ended December 31, 2004 was
$232,579.
  88
  **Table
No. 7**
 **Summary
Compensation Table**
 **Annual
      Compensation**
    
    **Awards**
    **Long-Term
      Compensation****Name
      and Principle Position**
    **Fiscal
      Year**
    **Salary**
    **Bonus**
    **Other
      Annual Compensation**
    
    **Restricted
      Stock Awards**
    **Options/
      SARS Granted (#)**
    **LTIP
      Payouts**
    **All
      Other Compensation**Duane
      Poliquin
    2004
    Nil
    Nil
    Nil
    
    Nil
    236,000
    Nil
    $110,400President,
      Director &
    2003
    Nil
    Nil
    Nil
    
    Nil
    Nil
    Nil
    110,400Chief
      Executive Officer
    2002
    Nil
    Nil
    Nil
    
    Nil
    375,000
    Nil
    102,000James
      E. McInnes
    2004
    Nil
    Nil
    Nil
    
    Nil
    135,000
    Nil
    NilSecretary
      & Director
    2003
    Nil
    Nil
    Nil
    
    Nil
    Nil
    Nil
    Nil2002
    Nil
    Nil
    Nil
    
    Nil
    25,000
    Nil
    NilJack
      McCleary
    2004
    Nil
    Nil
    Nil
    
    Nil
    35,000
    Nil
    NilDirector
    2003
    Nil
    Nil
    Nil
    
    Nil
    Nil
    Nil
    Nil2002
    Nil
    Nil
    Nil
    
    Nil
    50,000
    Nil
    NilJoseph
      Montgomery
    2004
    Nil
    Nil
    Nil
    
    Nil
    50,000
    Nil
    NilDirector
    2003
    Nil
    Nil
    Nil
    
    Nil
    Nil
    Nil
    Nil2002
    Nil
    Nil
    Nil
    
    Nil
    25,000
    Nil
    NilMorgan
      Poliquin
    2004
    Nil
    Nil
    Nil
    
    Nil
    350,000
    Nil
    $66,542Director
    2003
    Nil
    Nil
    Nil
    
    Nil
    250,000
    Nil
    80,0642002
    Nil
    Nil
    Nil
    
    Nil
    375,000
    Nil
    68,300Gerald
      G. Carlson
    2004
    Nil
    Nil
    Nil
    
    Nil
    50,000
    Nil
    NilDirector
    2003
    Nil
    Nil
    Nil
    
    Nil
    Nil
    Nil
    Nil2002
    Nil
    Nil
    Nil
    
    Nil
    25,000
    Nil
    NilDonald
      M. Lorimer
    2004
    Nil
    Nil
    Nil
    
    Nil
    110,000
    Nil
    NilDirector
    2003
    Nil
    Nil
    Nil
    
    Nil
    50,000
    Nil
    Nil2002
    N/A
    N/A
    N/A
    
    N/A
    N/A
    N/A
    N/ADione
      Bitzer
    2004
    Nil
    Nil
    Nil
    
    Nil
    100,000
    Nil
    $55,637Chief
      Financial Officer
    2003
    Nil
    Nil
    Nil
    
    Nil
    112,000
    Nil
    53,0752002
    Nil
    Nil
    Nil
    
    Nil
    40,000
    Nil
    48,400
 (1)For geological services provided to the Company and management of the
Company’s web-site by Hawk Mountain Resources Ltd., a company
 owned by
Duane Poliquin and his wife.
 (2)
For geological services provided by Kohima Pacific Gold Corp., a company owned
by Morgan Poliquin.
 
 ***Stock
options***
 Incentive
stock options to purchase securities from the Company are granted to directors,
executive officers, employees and contractors of the Company on terms and
conditions acceptable to the regulatory authorities in Canada, notably the
Toronto Stock Exchange and the Ontario Securities Commission.
 
 Incentive
stock options previously granted by the Company and its predecessor, which, by
the terms of the amalgamation, become options granted by the Company, are not
options granted under the Company’s formal stock option plan.
 
 Under
the Company’s formal written stock option plan,
incentive stock options for up to 2,900,000 shares of common stock are reserved
for issuance and may be granted from time to time provided that incentive stock
options in favour of any one individual not exceed 5% of the issued and
outstanding shares of common stock. No incentive stock option granted under the
stock option program  is  transferable
by the optionee other than by will or the laws of descent and distribution, and
each incentive stock option is exercisable during the lifetime of the optionee
only by such optionee.
 
 The
exercise price of all incentive stock options granted under the stock option
plan are determined in accordance with Ontario Securities Commission guidelines
and must be calculated using the average of the daily high and low board lot
trading prices of the common shares over the five days immediately preceding and
including the date of grant, but shall not be lower than the closing price on
the trading day immediately preceding the day on which the option is granted.
The maximum term of each incentive stock option may not exceed five
years.
 
 The
names and titles of the directors and executive officers of the Company or the
Company’s predecessor to whom outstanding stock options have been granted and
the number of common shares subject to such options as of March 11, 2005 are
set forth in Table No. 8, as well as the number of options granted to directors,
executive officers, employees and contractors as a group.
 
 89
 **Table
No. 8**
 **Stock
Options Outstanding**Name**
    **Number
      of Options Outstanding**
    **Exercise
      Price CDN$**
    **Expiry
      Date**Duane
      Poliquin,
    290,000
    $0.30
    3/1/2006President,
      Director & Chief Executive Officer
    91,092
    0.27
    8/23/2006375,000
    0.55
    2/28/2007324,371
    0.45
    10/7/2008236,000
    1.67
    12/14/2009James
      E. McInnes,
    160,000
    0.3
    3/1/2006Director
    25,000
    0.55
    2/28/2007135,520
    0.45
    10/7/2008135,000
    1.67
    12/14/2009Jack
      McCleary
    50,000
    0.55
    2/28/2007Director
    53,900
    0.45
    10/7/200835,000
    1.67
    12/14/2009Morgan
      Poliquin
    375,000
    0.55
    2/28/2007Director
    250,000
    0.8
    2/26/200867,900
    0.45
    10/7/2008154,000
    0.388
    12/1/2009350,000
    1.67
    12/14/2009Gerald
      G. Carlson
    50,000
    0.3
    3/1/2006Director
    25,000
    0.55
    2/28/200750,000
    1.67
    12/14/2009Joseph
      Montgomery
    50,000
    1.67
    12/14/2009DirectorDonald
      Lorimer
    40,000
    1.37
    9/26/2008Director
    110,000
    1.67
    12/4/2009Dione
      Bitzer
    37,000
    0.8
    2/26/2008Chief
      Financial Officer
    50,000
    0.74
    4/7/2008100,000
    1.67
    12/14/2009Total
      Directors/Officers (7persons)
    3,619,783Total
      Employees/Consultants (6persons)
    557,000**Total
      Directors/Officers/Employees/Consultants**
    **4,176,783****
 
  No
funds were set aside or accrued by the Company during Fiscal 2004 to provide
pension, retirement or similar benefits for directors or executive officers
  ***Board
Practices***
  This
Statement of Board Practices has been prepared by the Corporate Governance
Committee of the Board and has been approved by the Board.
 ****
 **General**
  The
Toronto Stock Exchange (“TSX”) has established a series of recommended
guidelines for effective corporate governance of companies listed on the TSX.
The guidelines deal with matters such as the constitution and independence of
corporate boards, their functions, the effectiveness and education of the board
members and other matters. The TSX now requires that each listed company
disclose on an annual basis its approach to corporate governance with reference
to those guidelines. The Company’s approach to corporate governance is set forth
below.
  90
 In
this Statement, “unrelated director” has the meaning given to the term in the
TSX Company Manual Corporate Governance Guidelines (the “TSX Guidelines”),
namely, a director who is independent from management or free from any interest
and any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the director’s ability to act with a
view to the best interests of the Company, other than interests arising from
their shareholding. As well, the term “independent director” means an unrelated
director who is free from any interest in or relationships with any significant
shareholder of the Company or any affiliate of a “significant shareholder” (that
is, a shareholder with the ability to exercise the majority of the votes for the
election of the directors attached to the outstanding shares of the
corporation).
  **Corporate
Governance**
  The
Company’s Board and management are committed to the highest standards of
corporate governance. The Company’s corporate governance practices are in
accordance with the TSX Guidelines. The Company is also cognizant of and
compliant with various corporate governance requirements in Canada and is in
compliance with applicable U.S. requirements.
 
 The
Company’s prime objective in directing and managing its business and affairs is
to enhance shareholder value. The Company views effective corporate governance
as a means of improving corporate performance and accordingly of benefit to the
Company and all shareholders.
 
 In
accordance with recommendations in Canadian Securities Administrators (“CSA”)
National Policy 51-201 the Company has adopted a Corporate Communications
Policy.
 
 The
Company also believes that director and management honesty and integrity are
essential factors in ensuring good and effective corporate governance. To that
end the Company’s directors have adopted code of ethics for the Company, its
directors and its Chief Executive Officer and Chief Financial Officer. The Code
of Ethics may be viewed on the Company’s website at www.almad e nminerals.com .
  **Mandate
of the Board**
  The
mandate of the Board is to supervise the management of the business and affairs
of the Company and to act with a view to the best interests of the Company. In
fulfilling its mandate, the Board, among other matters, is responsible
for:
  (i)
    adoption
      of a strategic planning process for the
Company;
 (ii)
    identification
      of the principal risks of the Company’s business and ensuring the
      implementation of the appropriate systems to manage these
      risks;
 (iii)
    succession
      planning for the Company including appointing, training and monitoring
      senior management;
 (iv)
    a
      communications policy for the Company; and
 (v)
    the
      integrity of the Company’s internal control and management information
      systems.
 
 In
the fiscal year ended December 31, 2004 there were seven meetings of the Board.
The frequency of meetings as well as the nature of agenda items change,
depending upon the state of the Company’s affairs and in light of opportunities
or risks which the Company is subject to.
 
 In
carrying out its mandate, the Board relies primarily on management and its
employees to provide it with regular detailed reports on the operations of the
Company and its financial position. Certain members of management are also on
the Board and provide the Board with direct access to information concerning
their areas of responsibility. Management personnel are also regularly asked to
attend Board meetings to provide information, answer questions and receive the
direction of the Board. The reports and information provided to the Board enable
them to monitor and manage the risks associated with the Company’s operations
and its compliance with legal and safety requirements, environmental issues and
the financial position and liquidity of the Company. At least annually the Board
prepares a strategic plan for implementation by management.
 
 91
 The
Board discharges its responsibilities directly and through committees. At
regularly scheduled meetings, members of the Board and management discuss the
broad range of matters and issues relevant to the Company’s business interests
and the Board is responsible for the approval of the Company’s Strategic Plan.
In addition, the Board receives reports from management on the Company’s
operational and financial performance. Between scheduled meetings, matters
requiring Board authorization is effected by means of signed Consent
Resolutions.
  **Board
Assessment**
  The
Governance Committee reports to the Board annually on the evaluation of the
Board’s performance and that of the individual directors. The Performance of the
Chief Executive Officer is evaluated by the Governance Committee
  **Composition
of the Board**
  The
TSX Guidelines recommend that a board of directors be constituted with a
majority of individuals who qualify as “unrelated directors”. The TSX Guidelines
also recommend that the Board should also include a number of independent
directors which fairly reflect the investment in the Company by shareholders
other than any significant shareholders.
  In
deciding whether a particular director is a “related director’ or an “unrelated
director”, the Board examined the factual circumstances of each director and
considered them in the context of many factors. In this regard, the definitions
in the TSX Guidelines are broad and, in some cases, difficult to apply. The
proposed Board is composed of seven members. The Board believes that 6 directors
would be considered “unrelated directors”, and Duane Poliquin is a “related
director”, within the meaning of the TSX Guidelines. Accordingly, the Board is
constituted with a majority of individuals who qualify as “unrelated directors”
within the meaning of the TSX Report.
  **Proportionate
Representation**
  The
Company does not have a controlling or significant shareholder. The Board
believes that the membership on the Board fairly reflects the investment in the
Company by minority shareholders.
  The
Board considers its size and composition to be appropriate and effective for
carrying out its responsibilities. However, the Board may consider adding an
additional director if a suitable candidate can be found who may bring
additional experience or knowledge to the Board.
  **Board
Committees**
  The
Board currently has two committees: the Audit Committee and the Corporate
Governance Committee.
 
 All
of the members of the committees have been determined by the Board to be
unrelated directors, such determination being made in accordance with the TSX
Guidelines, taking into consideration any relationship an individual director
may have with the Company and if such relationship could be perceived to
materially interfere with the director’s ability to act with a view to the best
interest of the Company. Mandates of each of the committees will undergo review
to bring them into line with any new Canadian and U.S. governance requirements
as these requirements are finalized and determined by the Board to be applicable
and appropriate to the Company and its operations. Any revisions to the mandates
will available on the Company’s website at www.almadenminerals.com .
  **Audit
Committee**
  The
members of the Audit Committee are Messrs. Donald Lorimer, James E. McInnes and
Gerald Carlson, The committee is responsible for reviewing the Company’s
financial reporting procedures, internal controls and the performance of the
Company’s external auditors. In addition, that committee is also responsible for
reviewing the annual financial statements prior to their approval by the full
Board and is available for consultation by management or the Independent
Registered Chartered Accountants of the Company. The Audit Committee has met two
(2) times this year. The full text of the Audit Committee Charter was filed as
an exhibit to the 2003 20F Annual Report with the Commission on May 11, 2004 and
is available on EDGAR.
  **Corporate
Governance Committee**
  Members
of the Corporate Governance Committee are Messrs. Donald Lorimer, Jack McCleary
and Morgan Poliquin. That committee was responsible for making recommendations
to the Board with respect to developments in the area of corporate governance,
the practices of the Board, and appropriate candidates for nomination to the
Board, and for evaluating the performance of the Board and the Chief Executive
Officer. The full text of the Audit Committee Charter was filed as an exhibit to
the 2003 20F Annual Report with the Commission on May 11, 2004 and is available
on EDGAR.
  92
 **Decisions
Requiring Board Approval**
  In
addition to those matters which must by law be approved by the Board, management
is also required to seek Board approval for any major acquisition, disposition
or expenditure. Management is also required to consult with the Board before
entering into any venture which is outside of the Company’s existing line of
business.
  Changes
in officers are to be approved by the Board including changes in officers of the
Company’s principal operating subsidiaries.
  **Other**
  The
Company considers its orientation and education program for new directors to be
an important element of ensuring responsible corporate governance. In addition
to extensive discussions with existing directors and the President with respect
to the business and the operations of the Company, new directors will, if they
so request, receive a record of historical public information on the Company
together with the mandates and prior minutes of the applicable board and
committees of the Board. In addition, meetings with the directors are regularly
held at the Company’s locations in order to assist the directors in better
understanding the Company’s operations.
  In
certain circumstances it may be appropriate for an individual director to engage
an outside advisor at the expense of the Company. The engagement of the outside
advisor would be subject to the approval of the Corporate Governance
Committee.
  **Investor
Relations**
  Senior
management of the Company receives and responds to shareholder enquiries.
Shareholder enquiries and concerns are dealt with promptly by senior management
of the Company. To date the Board has not needed to take an active role in
responding to shareholder enquiries and concerns.
  **Communications,
Insider Trading, Confidential Information and Disclosure
Policies**
  The
Board is committed to an effective communications policy with all stakeholders
including shareholders and members of the investment community and to complying
with all applicable laws, regulations and policies. The Board or the Audit
committee reviews in advance all press releases which disclose financial
results.
  In
accordance with the recommendations of the TSX and the CSA, the Company has also
established policies on whistle blowing procedures, insider trading and the
confidential treatment of information.
  ***Employees***
 The
Company currently operates with six persons in Canada, of which two are
administrative personnel and four are exploration personnel, some of which are retained on a contractual basis.
There are no full time employees in the United States or Mexico. None of the
Company’s employees are covered by a collective bargaining agreement. There are
no plans to add any additional personnel, other than independent contractors
retained to assist in the exploration of the Company’s mineral
properties.
 
 ***Share
Ownership***
 Table
No. 9 lists, as of March 11, 2005, directors and executive officers who
beneficially own the Company's voting securities and the amount of the Company’s
voting securities owned by the directors and executive officers as a
group.
  93
  **Table
No. 9**
 **Shareholdings
of Directors and Executive Officers**
 
 **Title
      of**
    
    **Amounts
      and Nature of**
    **Percent
      of****Class**
    **Name
      of Beneficial Owner**
    **Beneficial
      Ownership**
    **Class***Common
      Common
      Common
      Common
      Common
      Common
      Common
      Common
      Common
    Duane
      Poliquin
      James
      E. McInnes
      Jack
      McCleary
      Morgan
      Poliquin
      Gerald
      G. Carlson
      Joseph
      Montgomery
      Donald
      Lorimer
      Dione
      Bitzer
      **Total
      Directors/Officers**
    2,977,637(1)
      859,580(2)
      327,550(3)
      1,574,579(4)
      126,000(5)
      50,000(6)
      160,000(7)
      216,355(8)
      **6,291,701**
    9.17%
      2.72%
      1.05%
      4.86%
      0.40%
      0.16%
      0.51%
      0.69%
      **18.08%**
 (1)
    Of
      these shares 1,316,463 represent currently exercisable stock options.
      69,300 of these shares are held indirectly by Hawk Mountain Resources
      Ltd., a company owned by Mr. Poliquin and his
wife.
 (2)
    Of
      these shares 455,520 represent currently exercisable stock options.
      239,470 of these shares are held indirectly through Laredo Investments
      Ltd., private company controlled by Mr.
McInnes.
 (3)
    Of
      these shares 138,900 represent currently exercisable stock options. 38,500
      of these shares are held indirectly by Connemara Resource Ventures Ltd., a
      company owned by Mr.
McCleary.
 (4)
    Of
      these shares 1,196,900 represent currently exercisable stock options.
 (5)
    Of
      these shares 125,000 represent currently exercisable stock
      options.
 (6)
    Of
      these shares 50,000 represent currently exercisable stock
      options.
 (7)
    Of
      these shares 150,000 represent currently exercisable stock
      options.
 (8)
    Of
      these shares 187,000 represent currently exercisable stock
      options.
 
 *Based
on 31,172,767 shares outstanding as of March 11, 2005 and stock options held by
each beneficial owner.
 
 At
the Annual & Special General Meeting of the Company scheduled for May 18,
2005, shareholders will be asked to consider and if deemed advisable to pass
appropriate resolutions to change the Company’s Stock Option Plan from a fixed
maximum number of 2,900,000 shares to a number not to exceed 10% of the issued
and outstanding shares of the Company.
 
 **Item
7. Major Shareholders and Related Party Transactions**
 
 The
Company is a publicly owned Canadian corporation, the shares of which are owned
by residents of the United States, residents of Canada and other foreign
residents. To the extent known by the directors and executive officers of the
Company, the Company is not directly or indirectly owned or controlled by
another corporation. Table No. 10 lists, as of January 31, 2005, the only other
persons or companies beneficially owning more than 5% of the Company’s voting
securities other than the Directors and Executive Officers described above in
Table No. 9.
 . **Table No. 10**
 **Shareholdings
of Beneficial Owners**
 
 **Title
      of**
    
    **Amounts
      and Nature of**
    **Percent
      of****Class**
    **Name
      of Beneficial Owner**
    **Beneficial
      Ownership**
    **Class***Common
      Common
    Exploration
      Capital Partners Limited Partnership
      Global
      Resource Investments Ltd.
    3,020,000(1)
      453,000(2)
    9.40%
      1.45%
 (1)
    Of
      these shares, 990,000 represent currently exercisable warrants. The
      General Partner of Exploration Capital Partners Limited Partnership
      (“Exploration Capital”) is Resource Capital Investment Corporation
      (“Resource Capital”), the Rule Family Trust udt 12/17/98 (“the Trust”)
      through its indirect ownership and control of Exploration Capital (as
      owner of 90% of Resource Capital) and Global Resource Investments Ltd.
      (“Global Resource”), a direct beneficial owner of common shares, as set
      forth below, and Mr. Arthur Richards Rule through his positions with
      Resource Capital and ownership interest in the Trust. Mr. Rule is
      President and a Director of Resource Capital and, with his wife, is
      co-Trustee of the Trust, which owns 90% of Resource Capital.
 (2)
    Of
      these shares 119,000 represent currently exercisable warrants. The
      corporate General Partner of Global Resource is Rule Investments, Inc.,
      which is owned 100% by the
Trust.
 
 *Based
on31,172,767 shares outstanding as of March 11, 2005 and warrants held by the
beneficial owner.
 
 94
 Certain
geological and technical services were provided to the Company and its
subsidiary by two directors and/or companies controlled by directors. These
directors and the companies controlled by them are as follows:
 
 (a)
Duane Poliquin operates through the private company Hawk Mountain Resources
Ltd.
 (b)
Morgan Poliquin operates through the private company Kohima Pacific Gold
Corp.
 
 The
costs of such services for Fiscal 2004 ended December 31, 2004 were $176,942,
$190,464 in Fiscal 2003 and $170,300 in Fiscal 2002.
 
 Certain
officers and directors of the Company are also officers or directors of
companies with which the Company has agreements and may not be considered at
arm's-length to such agreements. However, any agreement or any to be negotiated
between the Company and such other companies has been or will be approved by
independent directors of the Company, in accordance with the common law and the
provisions of the *B.C.
Business Corporations Act* (and the predecessor legislation, the Company Act).
 
 The
Company and Williams Creek Explorations Limited are shareholders in ATW
Resources Ltd. and hold an interest in the ATW property. As confirmed by a
declaration of trust dated January 1, 2001, ATW Resources Ltd. acts as trustee
holding the Company’s beneficial 30% interest in the project. The declaration of
trust was amended January 21, 2004 to reflect the Company and Williams Creek’s
recent purchase of Santoy Resources Ltd.’s (Santoy’s) 20% shareholdings in ATW.
The Company and Santoy each hold a 50% interest in the Rock River Coal leases
and the Company and Santoy each hold an interest, 40% and 60% respectively, in
the Tropico prospect. The Company has 100% interest in the Fuego prospect to
which Horseshoe Gold Mining Inc. has an option to earn an interest.
 
 Other
than as disclosed above, there have been no transactions or proposed
transactions, which have materially affected or will materially affect the
Registrant in which any director, executive officer, or beneficial holder of
more that 10% of the outstanding common stock, or any of their respective
relatives, spouses, associates or affiliates has had or will have any direct or
material indirect interest. As stated above, management believes the
transactions referenced above were on terms at least as favorable to the Company
as the Company could have obtained from unaffiliated parties.
 
 **Item
8. Financial Information**
 
 The
financial statements as required under Item 8 are attached hereto and found
immediately following the text of this Annual Report. The audit report of
Deloitte & Touche LLP, independent registered Chartered Accountants, is
included immediately preceding the financial statements.
 
 ***Legal
Proceedings***
 The
Company’s predecessor (“Fairfield”) was involved in legal proceedings resulting
from a charge by a shareholder that Fairfield made false statements with regard
to the estimated contained gold in the Siwash gold deposit. The plaintiff also
charged that Fairfield did not reveal details of the underground development and
test mining operations that he felt should have been made public. The plaintiff
was claiming $100,000 in damages. This action was commenced on October 20, 1997
in British Columbia in the Supreme Court, Action No. C975641. The matter went to
trial in November 1999. On July 4, 2000 the plaintiff’s claims were dismissed
with costs.
 
 The
original owner of the El Encuentro, Mexico prospect has sued the Company’s
wholly owned subsidiary, Almaden de Mexico, S.A. de C.V., to have the property
returned on grounds that he is not receiving a royalty. He was paid U.S.$100,000
by Eldorado Gold Corporation which was payment in full for the property and
retains a net smelter return royalty. The agreement with the original owner does
not provide for a royalty if there is no mine in operation. The Company
considers the lawsuit trivial and is defending this action.
 
 Other
than the above, the Company knows of no other material, active or pending legal
proceedings against them; nor is the Company involved as a plaintiff in any
material proceeding or pending litigation.
 
 Other
than the above, the Company knows of no active or pending proceedings against
anyone that might materially adversely affect an interest of the
Company.
 
  95
  ***Dividends***
 The
Company has not declared any dividends since inception and does not anticipate
that it will do so in the foreseeable future. The present policy of the Company
is to retain future earnings for use in its operations and the expansion of its
business.
 
 ***Significant
Changes***
 There
have been no significant changes of financial condition since the most recent
audited financial statements included within this Annual Report.
 
 **Item
9. Offer and Listing of Securities**
 
 The
Company's common shares trade on The Toronto Stock Exchange ("TSX") in Toronto,
Ontario, Canada having the symbol "AMM” and CUSIP #020283107. The Company’s
common shares commenced trading on February 11, 2002. On February 8, 2002, the
common shares of the Company's predecessor, Fairfield Minerals Ltd., were
delisted from both the TSX and the Canadian Venture Exchange and the common
shares of Almaden Resources Corporation were delisted from the Canadian Venture
Exchange.
 
 Table
No. 11 lists the high and low prices for shares of Almaden Minerals Ltd. common
stock for the three years since amalgamation. Table
No. 12 lists the high and low prices for shares of Almaden Resources Corporation
common stock for the two years prior to amalgamation. Table No. 13 lists the
high and low prices for the shares of Fairfield Minerals Ltd. common stock for
the two years prior to amalgamation.
 
 **Table
No. 11**
 **Almaden
Minerals Ltd.**
 **Stock
Trading Activity**
 **The
Toronto Stock Exchange**
 
 **Year
      Ended**
    **High**
    **Low**12/31/2004
      12/31/2003
      12/31/2002
    $2.75
      $2.42
      $0.87
    $1.45
      $0.61
      $0.32
 
 **Table
No. 12**
 **Almaden
Resources Corporation**
 **Stock
Trading Activity**
 **The
Canadian Venture Exchange**
 
 **Year
      Ended**
    **High**
    **Low**12/31/2001
      12/31/2000
    $0.30
      0.50
    $0.12
      0.15
 
 **Table
No. 13**
 **Fairfield
Minerals Ltd.**
 **Stock
Trading Activity**
 **The
Toronto Stock Exchange**
 
 **Year
      Ended**
    **High**
    **Low**12/31/2001
      12/31/2000
    $0.30
      0.55
    $0.17
      0.20
 
 Table
No. 14 lists the quarterly high and low prices for shares of Almaden Minerals
Ltd. common stock for the two most recent full financial years.
  
   96
  **Table
No. 14**
 **Almaden
Minerals Ltd.**
 **Stock
Trading Activity**
 **The
Toronto Stock Exchange**
 
 **Quarter
      Ended**
    **High**
    **Low**12/31/2004
    $2.15
    $1.5609/30/2004
    2.24
    1.5106/30/2004
    2.63
    1.4503/31/2004
    2.75
    1.9512/31/2003
    2.42
    1.2709/30/2003
    1.49
    0.6606/30/2003
    0.90
    0.6103/31/2003
    0.92
    0.63
 
  Table
No. 15 lists the high and low prices for shares of Almaden Minerals Ltd. common
stock for the most recent six months.
  **Table
No. 15**
 **Almaden
Minerals Ltd.**
 **Stock
Trading Activity**
 **The
Toronto Stock Exchange**
 
 **Month
      Ended**
    **High**
    **Low**02/28/2005
      01/31/2005
      
      12/31/2004
      11/30/2004
      10/31/2004
      09/30/2004
    $2.30
      1.95
      
      1.94
      2.10
      2.15
      1.87
    $1.75
      1.60
      
      1.56
      1.76
      1.70
      1.60
 
 The
closing price of the Company’s common stock was $1.97 on February 28,
2005.
 
 In
recent years, securities markets in Canada have experienced a high level of
price and volume volatility, and the market price of many resource companies,
particularly those considered speculative exploration companies, have
experienced wide fluctuations in price which have not necessarily been related
to operating performance or underlying asset values on prospects of such
companies. Exploration for gold and other minerals is considered high risk and
highly speculative in the resource industry and the trading market for precious
and base metal exploration companies is characteristically volatile, with wide
fluctuations of price and volume only in part related to progress of
exploration. There can be no assurance that continual fluctuations in the
Company’s share price and volume will not occur.
  The
Company's common stock is issued in registered form and the following
information is from the Company’s registrar and transfer agent, Pacific
Corporate Trust Company located in Vancouver, British Columbia and Toronto,
Ontario, Canada.
 
 On
February 11, 2005, the shareholders' list for the Company’s common shares showed
210 registered shareholders and 31,172,767 shares outstanding. 173 of these
registered shareholders are U.S. residents, owning 7,514,476 shares representing
24.1% of the issued and outstanding shares of common stock. 34 of these
registered shareholders are Canadian residents, owning 23,631,152 shares
representing 75.8% of the issued and outstanding shares of common stock. 3 of
these registered shareholders are of other countries, owning 27,139 shares
representing 0.1% of the issued and outstanding shares of common
stock.
 
 The
Company has researched the indirect holdings by depositories and other financial
institutions and believes it has in excess of 300 shareholders of its common
stock.
 
 97
 The
Company is unaware of any active market in the United States for its common
shares. The Registrant's common shares are not registered to trade in the United
States in the form of American Depository Receipts (ADR's) or similar
certificates.
  **Item
10. Additional Information**
 
 ***Share
purchase warrants***
 At
March 11, 2005, there were non-transferable share purchase warrants outstanding
to acquire a total of 1,848,105 shares of the Company's common stock. These
share purchase warrants were issued pursuant to private placement financings. If
the shares purchase warrants are exercised during the first four months
following their issuance, the shares issued will be subject to a hold period
imposed by the Toronto Stock Exchange and the Ontario Securities Commission
expiring at the end of the four month period.
 
 Table
No. 16 lists, as of March 11, 2005, share purchase warrants outstanding, the
exercise price, and the expiration date of the warrants.
 
 **Table
No. 16**
 **Outstanding
Share Purchase Warrants**
 
 **Amount**
    **Exercise
      Price**
    **Expiry
      Date****CDN$**103,750
      27,000
      140,000
      68,355
      1,509,000
    $0.80
      $2.25
      $1.85
      $2.25
      $1.50/$1.75/$2.00/$2.25(1)
    08/07/2005
      08/16/2005
      12/30/2005
      12/30/2005
      09/18/2008
 (1)In
the event that anytime after September 18, 2004, the weighted average trading
price of the Company’s common shares for any 20 consecutive trading days is
$0.50 or more above the then current exercise price (the twentieth such trading
day being the “Determination”), the Company agrees to immediately notify the
Holder (the “Notice of Expiry”) of the accelerate expiry date, which is a date
not less than the thirtieth calendar day following the date of the Notice of
Expiry (the “Accelerated Expiry Date”). All warrants not exercised by the
expiration of the Accelerated Expiry Date shall be deemed cancelled without
further notice of the Holders.
 
 ***Flow-Through
Shares***
 The
Company’s common shares are not normally flow-through shares but the Company has
issued flow-through shares pursuant to private placements of the Company’s
common shares. Flow-through shares differ from other common shares in one aspect
only, all other rights of the shareholder remain unchanged. Companies must
specifically identify the expenditures associated with the funds raised through
the sale of flow-through shares. Companies raising capital through flow-through
shares must expend the funds on natural resources/exploration development in
Canada. The tax benefits (depreciation, amortization, etc.) connected with the
expenditures flow through to the shareholder rather than corporation. These tax
benefits are available only to shareholders residing in Canada. Shareholders
residing in the United States and other non-Canadian shareholders, receive no
tax benefits through the purchase of flow-through shares.
 
 On
August 16, 2004, the Company closed a private placement of 270,000 flow-through
common shares at a price of $2.25 per share. All purchasers are Canadian
residents.
 
 On
August 30, 2004, the Company closed a private placement of 150,000 flow-through
common shares at a price of $2.25 per share. In addition, 2,250 flow-through
common shares were issued to an agent in consideration of its services. All
purchasers are Canadian residents.
 
 ***Memorandum
and Articles***
 The
Memorandum and Articles of the Company remain unchanged from the Annual Report
for the fiscal year ended December 31, 2001 as filed with the United States
Securities and Exchange Commission on May 17, 2002.
  At
the Annual and Special General meeting of the Company scheduled for May 18, 2005
shareholders will be asked to consider and if deemed advisable to pass
appropriate resolutions to, among other things, to complete transition
procedures in accordance with the *Business
Corporations Act (British Columbia)* ,
(the “New Act”), increase the number of common shares which the Company is
authorized to issue to an unlimited number of common shares and to cancel the
Company’s present Articles and adopt new Articles to take advantage of
provisions of the New Act. The New Act was adopted in British Columbia on March
29, 2004 replacing the *Company
Act* (the “Former Act”). The New Act requires the provisions formerly required in the
Memorandum to be in the Articles and the Memorandum ceases to exist.
  98
 ***Material
Contracts***
 The
following is a summary of each material contract, other than contracts entered
into in the ordinary course of business, to which we or any member of the group
is a party, for the two years preceding the date of this document.
  1. Purchase
agreement dated April 27, 2004 between the Company and Eldorado Gold Corporation
(“Eldorado”) whereby the Company purchased certain data referred to as the
“Alumac Project Files” for $50,000 cash payment.
  2. Summary
of option agreement signed June 22, 2004 and July 2, 2004, between the Company
and Abelardo Garza Hernandez whereby the Company has the right to earn a 100%
interest in the As de Oro concession for US$50,000 plus value added tax by June
22, 2007 payable in four installments as follows: i) U.S.$10,000 plus IVA at the
moment of signing the agreement; ii) U.S.$10,000 plus IVA 12 months after the
signing of the agreement; iii) U.S.$10,000 plus IVA 24 months after the signing
of the agreement; iv) U.S.$20,000 plus IVA 36 months after the signing of the
agreement.
  3. Agreement
dated December 21, 2004, whereby the Company agreed to sell to Ross River
Minerals Ltd. (“Ross River’) 100% of its right, title and interest in the El
Pulpo concessions and the underlying agreements for an initial issuance of
2,200,000 shares of Ross River, an additional 1,000,000 shares when exploration
and development expenditures meet or exceed U.S.$10,000,000, and a further
1,000,000 shares on the delivery of a positive feasibility study recommending
production on any part of the property. The Company will retain a 2% NSR
regarding any minerals from its formerly 100% owned concessions. Should Ross
River give notice to the Company that a decision has been made to place all or
any part of the concessions into commercial production, Ross River can then
purchase one-half of the NSR (such that the NSR would be reduced to 1% of the
NSR) for consideration equal to the fair market value of the 1% royalty based
upon the feasibility study, such value to be determined by an internationally
recognized engineering firm mutually acceptable to both parties. The agreement
is subject to regulatory approval which has been applied for but not yet granted
(granted March 24, 2005).
 
 4. Agreement
dated January 21, 2005 between the Company (on behalf of itself and on behalf of
Williams Creek Explorations Limited (“Williams Creek”), each as to 50%) and
Santoy Resources Ltd. (“Santoy”) whereby the Company and Williams Creek
purchased Santoy’s beneficial holdings of 20% of the issued and outstanding
shares of ATW Resources Ltd. (“ATW”) for the full price of $21,174.10 consisting
of $11,174.10 owed by Santoy to ATW and cash payment of $10,000.
 
 5. Agreement
dated January 21, 2005 whereby Santoy Resources Ltd. transferred and quit
claimed to the Company its beneficial holdings of a 25% undivided but unrecorded
interest in the Prospector Mountain prospect.
 
 6. Amendment
to Option Agreement dated January 31, 2005 between the Company and Horseshoe
Gold Mining Inc. (“Horseshoe”) whereby the Company agreed to amend previous Work
Requirements and Share Requirements as follows:
 (a)
    expending
      in Mining Work upon the Property the following
amounts
 i.
on or before August 31, 2005, U.S.$200,000 (this is a firm
commitment)
 ii
on or before December 31, 2005 a further U.S.$400,000
 iii
on or before December 31, 2006 a further U.S.$700,000
 iv
on or before December 31, 2007 a further U.S.$700,000
 (b)
    issuing
      the following fully paid and non-assessable common
  shares
 i
200,000 shares upon acceptance of the original option agreement by the Toronto
Stock Exchange
 ii
200,000 shares upon acceptance of this amending Option Agreement by the Toronto
Stock Exchange
 iii
200,000 shares on or before the expiration of each six month period commencing
with the issuance in (b)ii above until the issuance of an aggregate of 1,000,000
shares.
 
 99
 ***Exchange
controls***
 Except
as discussed above, the Company is not aware of any Canadian federal or
provincial laws, decrees or regulations that restrict the export or import of
capital, including foreign exchange controls, or that affect the remittance of
interest, dividends or other payments to non-Canadian holders of the common
shares. There are no limitations on the right of non-Canadian owners to hold or
vote the common shares imposed by Canadian federal or provincial law or by the
charter or other constituent documents of the Company.
 
 The *Investment
Canada Act* (the *"IC
Ac* t")
governs acquisitions of Canadian business by a non-Canadian person or entity.
The *IC
Act* requires
a non-Canadian (as defined in the *IC
Ac* t)
making an investment to acquire control of a Canadian business, the gross assets
of which exceed certain defined threshold levels, to file an application for
review with the Investment Review Division of Industry Canada. The *IC
Act* provides,
among other things, for a review of an investment in the event of acquisition of
"control" in certain Canadian businesses in the following
circumstances:
 
 1.
If the investor is a non-Canadian and is a national of a country belonging to
the North American Free Trade Agreement ("NAFTA") and/or the World Trade
Organization ("WTO") ("NAFTA or WTO National"), any direct acquisition having an
asset value exceeding $179,000,000 is reviewable. This amount is subject to an
annual adjustment on the basis of a prescribed formula in the *IC
Act* to
reflect inflation and real growth within Canada. This threshold level does not
apply in certain sections of Canadian industry, such as uranium, financial
services (except insurance), transportation services and cultural services (i.e.
the publication, distribution or sale of books, magazines, periodicals (other
than printing or typesetting businesses), music in print or machine readable
form, radio, television, cable and satellite services; the publication,
distribution, sale or exhibition of film or video recordings on audio or video
music recordings), to which lower thresholds as prescribed in the *IC
Act* are
applicable.
 
 2.
If the investor is a non-Canadian and is not a NAFTA or WTO National, any direct
acquisition having an asset value exceeding $5,000,000 and any indirect
acquisition having an asset value exceeding $50,000,000 is
reviewable.
 
 3.
If the investor is a non-Canadian and is NAFTA or WTO National, an indirect
acquisition of control is reviewable if the value of the assets of the business
located in Canada represents more than 50% of the asset value of the transaction
or the business is involved in uranium, financial services, transportation
services or cultural services (as set forth above).
 
 Finally,
certain transactions prescribed in the *IC
Act* are
exempted from review altogether.
 
 In
the context of the Company, in essence, three methods of acquiring control of a
Canadian business are regulated by the *IC
Ac* t:
(i) the acquisition of all or substantially all of the assets used in carrying
on business in Canada; (ii) the acquisition, directly or indirectly, of voting
shares of a Canadian corporation carrying on business in Canada; or (iii) the
acquisition of voting shares of an entity which controls, directly or
indirectly, another entity carrying on business in Canada.
 
 An
acquisition of a majority of the voting shares of a Canadian entity, including a
corporation, is deemed to be an acquisition of control under the *IC
Ac* t.
However, under the *IC
Ac* t,
there is a rebuttable presumption that control is acquired if one-third of the
voting shares of a Canadian corporation or an equivalent undivided interest in
the voting shares of such corporation are held by a non-Canadian person or
entity. An acquisition of less than one-third of the voting shares of a Canadian
corporation is deemed not to be an acquisition of control. An acquisition of
less than a majority, but one-third or more, of the voting shares of a Canadian
corporation is presumed to be an acquisition of control unless it can be
established that, on the acquisition, the Canadian corporation is not, in fact,
controlled by the acquirer through the ownership of voting shares. For
partnerships, trusts, joint ventures or other unincorporated Canadian entities,
an acquisition of less than a majority of the voting interests is deemed not to
be an acquisition of control.
 
 In
addition, if a Canadian corporation is controlled by a non-Canadian, the
acquisition of control of any other Canadian corporation by such corporation may
be subject to the prior approval of the Investment Review Division, unless it
can be established that the Canadian corporation is not in fact controlled by
the acquirer through the ownership of voting shares.
 
 Where
an investment is reviewable under the *IC
Ac* t,
the investment may not be implemented unless it is likely to be of net benefit
to Canada. If an applicant is unable to satisfy the Minister responsible for
Industry Canada that the investment is likely to be of net benefit to Canada,
the applicant may not proceed with the investment. Alternatively, an acquirer
may be required to divest control of the Canadian business that is the subject
of the investment.
 
 100
 In
addition to the foregoing, the *IC
Act* provides
for formal notification under the *IC
Act* of
all other acquisitions of control by Canadian businesses by non-Canadian
investors. The notification process consists of filing a notification within 30
days following the implementation of an investment, which notification is for
information, as opposed to review, purposes.
 
 ***Taxation***
 The
following summary of the material Canadian federal income tax consequences
generally applicable in respect of the common stock reflects the Company’s
opinion. The tax consequences to any particular holder of common stock will vary
according to the status of that holder as an individual, trust, corporation or
member of a partnership, the jurisdiction in which that holder is subject to
taxation, the place where that holder is resident and, generally, according to
that holder’s particular circumstances. This summary is applicable only to
holders who are resident in the United States, have never been resident in
Canada, deal at arm’s length with the Company, hold their common stock as
capital property and who will not use or hold the common stock in carrying on
business in Canada. Special rules, which are not discussed in this summary, may
apply to a United States holder that is an issuer that carries on business in
Canada and elsewhere.
 
 This
summary is based upon the provisions of the Income Tax Act of Canada and the
regulations thereunder (collectively, the "Tax Act" or “ITA”)and the
Canada-United States Tax Convention (the “Tax Convention”) as at the date of the
Registration Statement and the current administrative practices of Canada
Customs and Revenue Agency. This summary does not take into account Provincial
income tax consequences.
 
 Each
holder should consult his own tax advisor with respect to the income tax
consequences applicable to him in his own particular circumstances.
 
 **Certain
Canadian Federal Income Tax Consequences**
 The
discussion under this heading summarizes the principal Canadian federal income
tax consequences of acquiring, holding and disposing of shares of common stock
of the Corporation for a shareholder of the Corporation who is not a resident of
Canada but is a resident of the United States and who will acquire and hold
shares of common stock of the Corporation as capital property for the purposes
of the *Income
Tax Act* (Canada) (the “Canadian 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 through a fixed
base in Canada if the shareholder’s holding in the Corporation is effectively
connected with such permanent establishment or fixed base. This summary is based
on the provisions of the Canadian Tax Act and the regulations thereunder and on
an understanding of the administrative practices of Canada Customs & Revenue
Agency, and takes into account all specific proposals to amend the Canadian Tax
Act or regulations made by the Minister of Finance of Canada as of the date
hereof. 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
discussion is general only and is not a substitute for independent advice from a
shareholder’s own Canadian and U.S. tax advisors.
 The
provisions of the Canadian Tax Act are subject to income tax treaties to which
Canada is a party, including the Canada-United States Income Tax Convention
(1980), as amended (the “Convention”).
 
 **Dividends
on Common Shares and Other Income**
 Under
the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian
withholding tax at the rate of 25 percent on dividends paid or deemed to have
been paid to him or her by a corporation resident in Canada. The Corporation is
responsible for withholding of tax at the source. The Convention limits the rate
to 15 percent if the shareholder is a resident of the United States and the
dividends are beneficially owned by and paid to such shareholder, and to 5
percent if the shareholder is also a corporation that beneficially owns at least
10 percent of the voting stock of the payor corporation.
  The
amount of a stock dividend (for tax purposes) would generally be equal to the
amount by which the paid up or stated capital of the Corporation had increased
by reason of the payment of such dividend. The Corporation will furnish
additional tax information to shareholders in the event of such a dividend.
Interest paid or deemed to be paid on the Corporation’s debt securities held by
non-Canadian residents may also be subject to Canadian withholding tax,
depending upon the terms and provisions of such securities and any applicable
tax treaty.
 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 a resident
of the United States and is exempt from income tax under the laws of the United
States.
 
 101
 **Dispositions
of Common Shares**
 Under
the Canadian Tax Act, a taxpayer’s capital gain or capital loss from a
disposition of a share of common stock of the Corporation is the amount, if any,
by which his or her proceeds of disposition exceed (or are exceeded by,
respectively) the aggregate of his or her adjusted cost base of the share and
reasonable expenses of disposition. The capital gain or loss must be computed in
Canadian currency using a weighted average adjusted cost base for identical
properties. The capital gains net of losses included in income are as follows.
For gains net of losses realized before February 28, 2000, as to 75%. For gains
net of losses realized after February 27, 2000 and before October 18, 2000, as
to 66 2/3%. For gains net of losses realized after October 17, 2000, as to 50%.
There are special transitional rules to apply capital losses against capital
gains that arose in different periods. The amount by which a shareholder’s
capital loss exceeds the capital gain in a year may be deducted from a capital
gain realized by the shareholder in the three previous years or any subsequent
year, subject to certain restrictions in the case of a corporate
shareholder.
 
 Under
the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on
taxable capital gains, and may deduct allowable capital losses, realized on a
disposition of "taxable Canadian property." Shares of common stock of the
Corporation will constitute taxable Canadian property of a shareholder at a
particular time if the shareholder used the 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 Corporation belonged to one or more persons in a group
comprising the shareholder and persons with whom the shareholder and persons
with whom the shareholder did not deal at arm’s length and in certain other
circumstances.
 
 The
Convention relieves United States residents from liability for Canadian tax on
capital gains derived on a disposition of shares unless
 
 (a)
the value of the 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 shares were owned by him when he or she
ceased to be resident in Canada, or
 
 (c)
the shares formed part of the business property of a “permanent establishment”
that the holder has or had in Canada within the 12 months preceding the
disposition.
 
 **Certain
United States Federal Income Tax Consequences**
 The
following is a discussion of material United States federal income tax
consequences generally applicable to a U.S. Holder (as defined below) of common
shares of the Company. This discussion does not cover any state, local or
foreign tax consequences.
 
 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, possible on a retroactive basis, at any time. In
addition, the discussion does not consider the potential effects, both adverse
and beneficial, or recently proposed legislation which, if enacted, could be
applied, possibly on a retroactive basis, at any time. Holders and prospective
holders of common shares of the Company are urged to 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.
 
 **U.S.
Holders**
 As
used herein, a U.S. Holder includes a holder of common shares of the Company who
is a citizen or resident of the United States, a corporation (or an entity which
has elected to be treated as a corporation under Treasury Regulation Sections
301.7701-3) created or organized in or under the laws of the United States or of
any political subdivision thereof, any estate other than a foreign estate (as
defined in Section 7701(a)(31)(A) of the Code or, a trust subject to the primary
supervision of a court within the United States and control of a United States
fiduciary as described in Section 7701(a)(30)(E) of the Code. This summary does
not address the tax consequences to, and U.S. Holder does not include, persons
subject to special provisions of Federal income tax law, such as tax-exempt
organizations, qualified retirement plans, 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 conversion transaction, and
shareholders who acquired their common shares through the exercise of employee
stock options or otherwise as compensation for services. This summary is limited
to U.S. Holders who own common shares as capital assets. This summary does not
address the consequences to a person or entity holding an interest in a
shareholder of the Company or the consequences to a person of the ownership,
exercise or disposition of any options, warrants or other rights to acquire
common shares of the Company.
 
 102
 **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 distributions 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 United States federal income tax liability or, alternatively, may be
deducted in computing the U.S. Holder’s United States federal taxable income.
(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. Dividend income will be taxed at marginal tax
rates applicable to ordinary income while 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. Gain or loss may be recognized upon a subsequent sale of other
disposition of the foreign currency, including the exchange for U.S.
dollars.
 
 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% 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 shares
representing at least 10% 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.
 
 **Foreign
Tax Credit**
 A
U.S. Holder who pays (or has withheld from 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 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 income taxes (or taxes in lieu of income tax) paid by (or withheld from)
the U.S. Holder during the 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 source income bears to his/her or
its worldwide taxable income. 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 holders and prospective holders of common shares of the Company
should consult their own tax advisors regarding their individual
circumstances.
 
 For
individuals whose entire income from sources outside the United States consists
of qualified passive income whose the total amount of creditable foreign taxes
paid or accrued during the taxable year does not exceed $300 ($600 in the case
of a joint return) and for whom an election is made under section 904(j), the
limitation on credit does not apply.
 
 103
 **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 of U.S. Holders which are individuals, estates or trusts. This
gain or loss will be capital gain or loss if the common shares are capital
assets in the hands of the U.S. Holder, which will be a short-term or long-term
capital gain or loss depending upon the holding period of the U.S. Holder. Gains
and losses are netted and combined according to special rules in arriving at the
overall capital gain or loss for a particular tax year. Deductions for net
capital losses are subject to significant limitations. For U.S. Holders which
are not corporations, any unused portion of such net capital loss may be carried
over to be used in later tax years until such net capital loss is thereby
exhausted, but individuals may not carry back capital losses. For U.S. Holders
which are corporations (other than corporations subject to Subchapter S of the
Code), an unused net capital loss may be carried back three years from the loss
year 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 the discussion may not
describe the United States federal income tax consequences resulting from the
holding and disposition of common shares of the Company.
 
 **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 shares is owned, actually
or constructively, by five or fewer individuals who are citizens or residents of
the United States and 60% (50% after the first tax year) or more of the
Company’s gross income for such year was derived from certain passive sources,
the Company would be treated as a “foreign personal holding company.” In that
event, U.S. Holders that hold common shares of the Company 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.
 
 The
Company does not believe that it currently has the status of a “foreign personal
holding company”. However, there can be no assurance that the Company will not
be considered a foreign personal holding company for any future taxable
year.
 
 **Passive
Foreign Investment Company**
 As
a foreign corporation with U.S. Holders, the Company could potentially be
treated as a passive foreign investment company (“PFIC”), as defined in Section
1297 of the Code, depending upon the percentage of the Company’s income which is
passive, or the percentage of the Company’s assets which are held for the
purpose of producing passive income.
 
 **Certain
United States Income Tax Legislation**
 The
rule governing PFICs can have significant tax effects on U.S. shareholders of
foreign corporations. These rules do not apply to non-U.S. shareholders. Section
1297 of the Code defines a PFIC as a corporation that is not formed in the
United States and, for any taxable year, 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, by adjusted
tax basis), of its assets that produce or are held for the production of
“passive income” is 50% or more. The taxation of a US shareholder who owns stock
in a PFIC is extremely complex and is therefore beyond the scope of this
discussion. U.S. shareholders should consult with their own tax advisors with
regards to the impact of these rules.
 
 **Controlled
Foreign Corporation**
 If
more than 50% of the voting power of all classes of stock entitled to vote is
owned, actually or constructively, by citizens or residents of the United
States, United States partnerships, corporations or estates or trusts other than
foreign estates or trusts, each of whom own actually or constructively 10% or
more of the total combined voting power of all classes of stock of the Company
(“United States Shareholders”) requires the Company would be a “controlled
foreign corporation” (CFC). This classification would effect many complex
results, one of which certain income of a CFC to be subject to current U.S. tax.
The United States generally taxes United States Shareholders of a CFC currently
on their pro rata shares of the Subpart F income of the CFC. Such United States
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 Corporation which 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 (accumulated only while the shares were held by the United States
Shareholder and while the Company was a CFC attributable to the 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 the 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. The PFIC provisions continue to apply in the case of a PFIC
that is also a CFC with respect to the U.S. Holders that are less than 10%
shareholders. Because of the complexity of Subpart F, a more detailed review of
these rules is outside of the scope of this discussion.
 
 104
 **Filing
of Information Returns**
 Under
a number of circumstances, United States persons acquiring shares of the Company
may be required to file an information return with the Internal Revenue Service
Center where they are required to file their tax returns with a duplicate copy
to the Internal Revenue Service Center, Philadelphia, PA 19255. In particular,
under Section 6046 of the Code, any United States person who becomes the owner,
directly or indirectly, of 10% or more of the shares of the Company will be
required to file such a return. Other filing requirements may apply, such United
States persons should consult their own tax advisors concerning these
requirements.
 
 ***Documents
on Display***
  Any
of the documents referred to above can be viewed at the registered office of the
Company located at 1185 West Georgia Street, Suite 1150, Vancouver, British
Columbia, Canada, V6E 4E6.
  This
Annual Report and the Company’s recent 6-K filings can be viewed on the U.S.
Securities and Exchange EDGAR web-site at www.s e c.gov .
All regulatory filings in Canada can be viewed on the System for Electronic
Document Analysis and Retrieval (SEDAR) web-site at www.sedar.com .
 
 **Item
11. Quantitative and Qualitative Disclosures about Market
Risk**
 
 Not
Applicable
  **Item
12. Description of Securities Other than Equity Securities**
 
 Not
Applicable
 
 **PART
II**
 
 **Item
13. Defaults, Dividend Arrearages and Delinquencies**
 
 Not
Applicable
 
 **Item
14. Material Modifications to the Rights of Securities Holders and Use of
Proceeds**
 
 Not
Applicable
 
 **Item
15. Controls and Procedures**
 
 The
Company’s chief executive officer, Duane Poliquin, and chief financial officer,
Dione Bitzer, have evaluated and reviewed our disclosure controls and procedures
within 90 days of the filing date of this Annual Report on Form 20-F. Based upon
this evaluation and review, the officers have concluded that the Company’s
disclosure controls and procedures are effective and sufficient to comply with
Rules 13a-15(c) and 15d-15(c) of the Securities Exchange Act of
1934.
 
 There
have been no significant changes in the Company’s internal controls that could
significantly affect these controls subsequent to the date of the Company’s most
recent evaluation.
 
  105
  **Item
16A. Audit Committee Financial Expert**
 The
Company’s Board of Directors has determined that the Company has one audit
committee financial expert serving on its audit committee who is independent.
Mr. Donald Lorimer qualified as a Chartered Accountant with Price Waterhouse
& Co. and subsequently was a financial executive with Patino Mining
Corporation and Little Long Lac Gold Mines Ltd. In 1971 he joined A.E. Ames
& Co. and became a director and vice president responsible for corporate and
government underwriting in British Columbia, Canada. Mr. Lorimer is currently a
portfolio manager with Odlum Brown Ltd.
 
 **Item
16B. Code of Ethics**
 The
Company adopted several codes of conduct, including a Code of Business Ethics, a
Code of Business Conduct Ethics for Directors, a Communications Policy and an
Audit Committee Charter. All codes remain unchanged from the Annual Report for
the fiscal year ended December 31, 2003 as filed with the United States
Securities and Exchange Commission on May 11, 2004.
 
 **Item
16C. Principal Accountant Fees and Services**
 Table
No. 17 lists the aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of the
Company’s annual financial statements or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years.
 
 **Table
No. 17**
 **Principal
Accountant Fees**
 
 Years
      ended December 312004
    2003Audit
      fees
    $39,500
    $36,000Audit
      related fees
    -
    -Tax
      fees
    2,000
    6,500Other
      fees
    -
    -
 
 Fiscal
2004 and Fiscal 2003 audit fees relate to the annual audit of the Company’s
financial statements, tax fees relate to the completion of income and mineral
tax filings and review of the Form 20-F.
 
 **Item
16D. Exemptions from the Listing Standards for Audit
Committees**
 
 Not
applicable.
 
 **Item
16E. Purchases of Equity Securities by the Issuer and Affiliated
Purchasers**
 
 Not
applicable.
  106
  **PART
III**
 
 **Item
17. Financial Statements**
 
 The
Company’s consolidated financials statements are stated in Canadian Dollars
(CDN$) and are prepared in accordance with Canadian GAAP, the application of
which, in the case of the Company, conforms in all material respects for the
periods presented with U.S. GAAP, except as disclosed in Note 17 to the
financial statements.
 
 The
financial statements and notes thereto as required under Item 17 are attached
hereto and found immediately following the text of this Annual Report. The audit
report of Deloitte & Touche LLP, Independent Registered Chartered
Accountants, is included herein immediately preceding the financial statements.
 
 **Item
18. Financial Statements**
 
 The
Company has elected to provide financial statements pursuant to Item
17.
 
 **Item
19. Exhibits**
 
 A.
The financial statements and notes thereto as required under Item 17 are
attached hereto and found immediately following the text of this Annual Report.
The audit report of Deloitte & Touche LLP, Independent Registered Chartered
Accountants, for the audited financial statements and notes thereto is included
herein immediately preceding the audited financial statements.
 
 Audited
Financial Statements
 Report
of Independent Registered Chartered Accountants, dated March 11,
2005
 Comments
by Independent Registered Chartered Accountants on Canada - United States of
America Reporting Differences, dated  March
11, 2005
 Consolidated
Balance Sheets at December 31, 2004 and 2003
 Consolidated
Statements of Operations and Deficit for the years ended December 31, 2004, 2003
and 2002 and
 cumulative
amounts since incorporation
 Consolidated
Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002
and cumulative
 amounts
since incorporation
 Notes
to Consolidated Financial Statements
 
  107
  B.
Index to Exhibits
 1.
    Certificate
      of AmalgamationAmalgamation
      AgreementMemorandumArticles--Incorporated
      by reference to the Company’s Form 20-F Annual Report for the year ended
      December 31, 2001, as
      filed with the Commission on May 17, 2002--2.
    Instruments
      defining the rights of holders of equity of debt securities being
      registered--Refer
      to Exhibit No. 1--3.
    Voting
      trust agreements - N/A4.1
    -
      Purchase Agreement dated April 27, 2004 with Eldorado
      Gold Corporation4.2
    -
      Summary of Option Agreement dated June 22, 2004 and
      July 2, 2004 with Abelardo Garza Hernandez4.3
    -
      Agreement dated December 21, 2004 with Ross River
      Minerals Ltd.4.4
    -
      Agreement dated January 21, 2005 with Santoy Resources
      Ltd.4.5
    -
      Agreement dated January 21, 2005 with Santoy Resources
      Ltd.4.6
    -
      Amendment to Option Agreement dated January 31, 2005
      with Horseshoe Gold Mining Inc.5.
    List
      of foreign patents - N/A6.
    Calculation
      of earnings per share - N/A7.
    Explanation
      of calculation of ratios - N/A8.
    List of subsidiaries9.
    Statement
      pursuant to the instruction to Item 8.A.4, regarding the financial
      statement filed in registrationStatements
      for initial public offerings of securities - N/A10.
    Any
      notice required by Rule 104 of Regulation BTR - N/A11.1
    Code
      of Business Ethics11.2
    Code
      of Business Conduct Ethics for Directors11.3
    Communications
      Policy11.4
    Audit
      Committee Charter11.5
    Corporate
      Governance Charter--Incorporated
      by reference to the Company’s Form 20-F Annual Report for the year ended
      December 31, 2003,as
      filed with the Commission on May 11, 2004--31.1
    Certification of CEO Pursuant to Securities Exchange Act,
      Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
    Certification of CFO Pursuant to Securities Exchange Act,
      Rules 13a-14 and 15d-14 as Adopted Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
    Certification of CEO Pursuant to the Sarbanes-Oxley Act,
      18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 200232.2
    Certification of CFO Pursuant to the Sarbanes-Oxley Act,
      18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002
  108
 *Report
of Independent Registered Chartered Accountants and Consolidated Financial
Statements*
 
 
 **ALMADEN
MINERALS LTD.**
 *(An
exploration stage company)*
 
 
 *December
31, 2004 and 2003*
 
 
   109
   ****
 **Report
of Independent Registered Chartered Accountants**
 
 To
the Shareholders of
 Almaden
Minerals Ltd.
 
 We
have audited the consolidated balance sheets of Almaden Minerals Ltd. (an
exploration stage company) as at December 31, 2004 and 2003 and the consolidated
statements of operations and deficit and cash flows for each of the years in the
three year period ended December 31, 2004 and the cumulative amount from
incorporation, September 25, 1980, to December 31, 2004. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
 We
conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States). 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. We believe that our audits provide a reasonable basis for our
opinion.
 
 In
our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 2004
and 2003 and the results of its operations and its cash flows for each of the
years in the three year period ended December 31, 2004 and the cumulative amount
from incorporation, September 25, 1980, to December 31, 2004 in accordance
with Canadian generally accepted accounting principles.
 
 The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion.
 
 ***(Signed)
Deloitte & Touche LLP***
 
 Independent
Registered Chartered Accountants
 Vancouver,
Canada
 March
11, 2005
 
 **Comments
by Independent Registered Chartered Accountants on Canada - United States of
America Reporting Differences**
 
 The
standards of the Public Company Accounting Oversight Board (United States)
require the addition of an explanatory paragraph (following the opinion
paragraph) when there are changes in accounting principles that have a material
effect on the comparability of the Company’s financial statements, such as the
change described in Note 3 to the consolidated financial statements. Our report
to the shareholders dated March 11, 2005 is expressed in accordance with
Canadian reporting standards which do not require a reference to such changes in
accounting principles in the auditors’ report when the changes are properly
accounted for and adequately disclosed in the financial statements.
 
 ***(Signed)
Deloitte & Touche LLP***
 
 Independent
Registered Chartered Accountants
 Vancouver,
Canada
 March
11, 2005
 
 
   110
   **ALMADEN
      MINERALS LTD.****(An
      exploration stage company)****Consolidated
      Balance Sheets****December
      31,****(Expressed
      in Canadian dollars)****2004**
    
    2003**ASSETS**CURRENTCash
      and cash equivalents
    
    **$**
    **4,125,706**
    
    $
    4,838,914Accounts
      receivable and prepaid expenses
    
    
    **213,176**
    
    
    105,106Marketable
      securities (Note 4)
    
    
    **504,754**
    
    
    369,286Inventory
      (Note 5)
    
    
    **274,768**
    
    
    274,768TOTAL
      CURRENT ASSETS
    
    
    **5,118,404**
    
    
    5,588,074PROPERTY,
      PLANT AND EQUIPMENT (Note 6)
    
    
    **575,142**
    
    
    474,521RECLAMATION
      DEPOSIT
    
    
    **81,500**
    
    
    81,500MINERAL
      PROPERTIES (Note 7)
    
    
    **4,440,229**
    
    
    4,197,675TOTAL
      ASSETS
    
    **$**
    **10,215,275**
    
    $
    10,341,770**LIABILITIES**CURRENTAccounts
      payable and accrued liabilities
    
    **$**
    **79,134**
    
    $
    49,625Deferred
      exploration advances (Note 8)
    
    
    **-**
    
    
    58,011Mineral
      taxes payable
    
    
    **379,653**
    
    
    379,653TOTAL
      CURRENT LIABILITIES
    
    
    **458,787**
    
    
    487,289**SHAREHOLDERS'
      EQUITY**Share
      capitalAuthorized100,000,000common
      shares without par valueIssued
      (Note 9)31,142,767shares
      - December 31, 200427,627,079shares
      - December 31, 2003
    
    
    **25,258,538**
    
    
    21,476,722Subscription
      for shares (Note 9)
    
    
    **-**
    
    
    1,699,435Contributed
      surplus (Note 9)
    
    
    **1,598,354**
    
    
    374,525Deficit
      accumulated during the exploration stage
    
    
    **(17,100,404**
    **)**
    
    (13,696,201
    )TOTAL
      SHAREHOLDERS' EQUITY
    
    
    **9,756,488**
    
    
    9,854,481TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
    
    **$**
    **10,215,275**
    
    $
    10,341,770
   COMMITMENTS
      AND CONTINGENCIES (Note 16)ON
      BEHALF OF THE BOARD:***(Signed)
      Duane Poliquin***
    ***(Signed)
      James E. McInnes***Duane
      Poliquin, Director
    James
      E. McInnes, Director
   ****
 111
 
 **ALMADEN
      MINERALS LTD.****(An
      exploration stage company)****Consolidated
      Statements of Operations and Deficit****(Expressed
      in Canadian dollars)**Cumulative amount
      since incorporation September
      25, 1980 toDecember
      31,
    
    Years
      ended December 31,2004
    
    **2004**
    
    2003
    
    2002REVENUEMineral
      properties
    
    $
    814,380
    
    **$**
    **104,027**
    
    $
    26,335
    
    $
    20,815Interest
      income
    
    
    865,197
    
    
    **74,265**
    
    
    34,267
    
    
    40,251Other
      income
    
    
    194,795
    
    
    **64,604**
    
    
    49,628
    
    
    61,4721,874,372
    
    
    **242,896**
    
    
    110,230
    
    
    122,538EXPENSESGeneral
      and administrativeexpenses
      (Schedule 1)
    
    
    5,150,432
    
    
    **705,826**
    
    
    605,763
    
    
    598,753General
      exploration expenses
    
    
    2,829,257
    
    
    **539,794**
    
    
    439,503
    
    
    332,485Write-down
      of interests inmineral
      properties
    
    
    7,417,900
    
    
    **903,358**
    
    
    105,666
    
    
    2,180,738Stock
      option compensation (Note 9)
    
    
    1,616,783
    
    
    **1,234,783**
    
    
    220,000
    
    
    162,00017,014,372
    
    
    **3,383,761**
    
    
    1,370,932
    
    
    3,273,976(15,140,000
    )
    
    **(3,140,865**
    **)**
    
    (1,260,702
    )
    
    (3,151,438
    )WRITE-DOWN
      OF MARKETABLESECURITIES
    
    
    (117,276
    )
    
    **(117,276**
    **)**
    
    -
    
    
    -(LOSS)
      GAIN ON SALE OFSECURITIES
    
    
    (1,693,120
    )
    
    **(117**
    **)**
    
    13,980
    
    
    (54,980
    )GAIN
      (LOSS) ON SALE OF PROPERTY,PLANT
      AND EQUIPMENT
    
    
    1,410
    
    
    **(12,800**
    **)**
    
    -
    
    
    15,144FOREIGN
      EXCHANGE LOSS
    
    
    (151,418
    )
    
    **(133,145**
    **)**
    
    (79,583
    )
    
    (6,751
    )LOSS
      BEFORE INCOME TAXES
    
    
    (17,100,404
    )
    
    **(3,404,203**
    **)**
    
    (1,326,305
    )
    
    (3,198,025
    )INCOME
      TAX RECOVERY
    
    
    338,400
    
    
    **338,400**
    
    
    -
    
    
    -NET
      LOSS
    
    
    (16,762,004
    )
    
    **(3,065,803**
    **)**
    
    (1,326,305
    )
    
    (3,198,025
    )DEFICIT,
      ACCUMULATEDDURING
      EXPLORATIONSTAGE,
      BEGINNING OF PERIOD
    
    
    -
    
    
    **(13,696,201**
    **)**
    
    (12,369,896
    )
    
    (9,171,871
    )RENOUNCEMENT
      OF TAXDEDUCTIBILITY
      RELATING TOFLOW-THROUGH
      SHARES
    
    
    (338,400
    )
    
    **(338,400**
    **)**
    
    -
    
    
    -DEFICIT,
      ACCUMULATEDDURING
      EXPLORATIONSTAGE,
      END OF PERIOD
    
    $
    (17,100,404
    )
    **$**
    **(17,100,404**
    **)**
    $
    (13,696,201
    )
    $
    (12,369,896
    )NET
      LOSS PER SHAREBasic
      and fully diluted
    
    
    
    
    **$**
    **(0.11**
    **)**
    $
    (0.06
    )
    $
    (0.16
    )BASIC
      AND DILUTED WEIGHTED AVERAGENUMBER
      OF SHARES OUTSTANDING
    
    
    
    
    
    **30,232,499**
    
    
    23,378,693
    
    
    19,524,034
  112
 
 **ALMADEN
      MINERALS LTD.****(An
      exploration stage company)****Consolidated
      Statements of Cash Flows****(Expressed
      in Canadian dollars)**Cumulative
      amount since incorporation September 25, 1980 to December
    31,
    
    Years
      ended December 31,2004
    
    **2004**
    
    2003
    
    2002OPERATING
      ACTIVITIESNet
      loss
    
    $
    (17,100,404
    )
    **$**
    **(3,065,803**
    **)**
    $
    (1,326,305
    )
    $
    (3,198,025
    )Items
      not affecting cashIncome
      tax recovery
    
    
    -
    
    
    **(338,400**
    **)**
    
    -
    
    
    -Depreciation
    
    
    408,595
    
    
    **60,326**
    
    
    38,852
    
    
    43,166Loss
      (gain) on marketable securities
    
    
    1,693,120
    
    
    **117**
    
    
    (13,980
    )
    
    54,980Write-down
      of marketable securities
    
    
    117,276
    
    
    **117,276**
    
    
    -
    
    
    -Write-down
      of interests in mineral properties
    
    
    7,417,900
    
    
    **903,358**
    
    
    105,666
    
    
    2,180,738Stock-option
      compensation
    
    
    1,616,783
    
    
    **1,234,783**
    
    
    220,000
    
    
    162,000(Gain)
      loss on sale of property, plant and equipment
    
    
    (1,410
    )
    
    **12,800**
    
    
    -
    
    
    (15,144
    )Write-off
      of incorporation costs
    
    
    3,298
    
    
    **-**
    
    
    -
    
    
    -Changes
      in non-cash working capital componentsAccounts
      receivable and prepaid expenses
    
    
    (218,652
    )
    
    **(108,070**
    **)**
    
    30,979
    
    
    (29,281
    )Accounts
      payable and accrued liabilities
    
    
    44,032
    
    
    **29,509**
    
    
    (12,189
    )
    
    (66,052
    )Deferred
      exploration advances
    
    
    -
    
    
    **(58,011**
    **)**
    
    58,011
    
    
    -Mineral
      taxes payable
    
    
    (669
    )
    
    **-**
    
    
    (12,800
    )
    
    12,131(6,020,131
    )
    
    **(1,212,115**
    **)**
    
    (911,766
    )
    
    (855,487
    )FINANCING
      ACTIVITIESIssuance
      of shares, net of share issue costs
    
    
    22,695,297
    
    
    **2,071,427**
    
    
    5,779,301
    
    
    2,378,605INVESTING
      ACTIVITIESCash
      acquired upon business combination
    
    
    198,131
    
    
    **-**
    
    
    -
    
    
    -Long-term
      investment
    
    
    (1,891,315
    )
    
    **-**
    
    
    -
    
    
    -Reclamation
      deposit
    
    
    (5,000
    )
    
    **-**
    
    
    -
    
    
    (5,000
    )Marketable
      securitiesPurchases
    
    
    (4,437,414
    )
    
    **(162,227**
    **)**
    
    (352,526
    )
    
    (575,226
    )Net
      proceeds
    
    
    4,135,331
    
    
    **184,916**
    
    
    597,294
    
    
    410,860Property,
      plant and equipmentPurchases
    
    
    (997,114
    )
    
    **(173,747**
    **)**
    
    (247,879
    )
    
    (200,443
    )Proceeds
    
    
    62,287
    
    
    **-**
    
    
    -
    
    
    48,587Mineral
      propertiesCosts
    
    
    (10,982,973
    )
    
    **(1,421,462**
    **)**
    
    (990,477
    )
    
    (873,935
    )Gold
      sales
    
    
    362,906
    
    
    **-**
    
    
    -
    
    
    362,906Net
      proceeds
    
    
    1,008,999
    
    
    **-**
    
    
    -
    
    
    -Incorporation
      costs
    
    
    (3,298
    )
    
    **-**
    
    
    -
    
    
    -(12,549,460
    )
    
    **(1,572,520**
    **)**
    
    (993,588
    )
    
    (832,251
    )NET
      CASH INFLOW (OUTFLOW)
    
    
    4,125,706
    
    
    **(713,208**
    **)**
    
    3,873,947
    
    
    690,867CASH
      AND CASH EQUIVALENTS,BEGINNING
      OF PERIOD
    
    
    -
    
    
    **4,838,914**
    
    
    964,967
    
    
    274,100CASH
      AND CASH EQUIVALENTS,END
      OF PERIOD
    
    $
    4,125,706
    
    **$**
    **4,125,706**
    
    $
    4,838,914
    
    $
    964,967SUPPLEMENTARY
      CASH FLOW INFORMATION (Note 11)
 113
 **ALMADEN
MINERALS LTD.**
**(An
exploration stage company)**
**Notes
to the Consolidated Financial Statements**
**(Expressed
in Canadian dollars)**
 **1.**
    **NATURE
      OF OPERATIONS**
 
 Almaden
Minerals Ltd. (the “Company”) is in the process of exploring its mineral
properties and has not yet determined whether these properties contain reserves
that are economically recoverable. The recoverability of amounts shown for
mineral properties is dependent upon the establishment of a sufficient quantity
of economic recoverable reserves, the ability of the Company to obtain necessary
financing to complete the development and upon future profitable production or
proceeds from the disposition of mineral properties.
 
 
 **2.**
    **SIGNIFICANT
      ACCOUNTING POLICIES**
 
 These
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles, which in respect of these financial
statements are different in some respects from generally accepted accounting
principles in the United States of America as discussed in Note 17 and include
the following policies:
 
 *(a)*
    *Basis
      of consolidation*
 
 The
consolidated financial statements include the accounts of the Company and its
subsidiaries as follows:
 Almaden
      America Inc.
    NevadaRepublic
      Resources Ltd.
    British
      ColumbiaAlmaden
      de Mexico, S.A. de C.V.
    MexicoMinera
      Gavilan, S.A. de C.V.
    MexicoCompania
      Minera Zapata, S.A. de C.V.
    Mexico
 *(b)*
    *Foreign
      exchange*
 
 The
functional currency of the Company’s subsidiaries has been determined to be the
Canadian dollar. U.S. dollar and Mexican peso denominated amounts in these
financial statements are translated into Canadian dollars on the following
basis:
 
 (i)
    Monetary
      assets and liabilities - at the rate of exchange prevailing at the
      year-end.
 
 (ii)
    Non-monetary
      assets - at the rates of exchange prevailing when the assets were acquired
      or the liabilities assumed.
 
 (iii)
    Income
      and expenses - at the rate approximating the rates of exchange prevailing
      on the dates of the transactions.
 
 (iv)
    Gains
      and losses on translation are credited or charged to
      operations.
 
 
  114
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **2.**
    **SIGNIFICANT
      ACCOUNTING POLICIES (Continued)**
 
 *(c)*
    *Cash
      and cash equivalents*
 
 Cash
equivalents include money market instruments which are readily convertible into
cash or have maturities at the date of purchase of less than ninety
days.
 
 *(d)*
    *Marketable
      securities*
 
 Investment
in marketable securities is recorded at the lower of cost and quoted market
value.
 
 *(e)*
    *Inventory*
 
 Inventory
is valued at the lower of the average cost of mining and estimated net
realizable value.
 
 *(f)*
    *Property,
      plant and equipment*
 
 Property,
plant and equipment are stated at cost and are depreciated annually on a
declining-balance basis at the following rates:
 
 Automotive
      equipment
    30%Computer
      hardware and software
    30%Field
      equipment
    20%Furniture
      and fixtures
    20%Geological
      data library
    20%Mill
      equipment
    10%
 
 On
a quarterly basis the Company compares the carrying value of property, plant and
equipment to estimated net recoverable amounts, based on estimated future cash
flows, to determine whether there is any indication of impairment. An impairment
loss is recognized when the carrying value of the assets is not recoverable and
exceeds their fair value. During the periods covered by these financial
statements there was no indication of impairment.
 
  115
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **2.**
    **SIGNIFICANT
      ACCOUNTING POLICIES (Continued)**
 
 *(g)*
    *Mineral
      properties*
 
 The
Company is in the exploration stage with respect to its investment in mineral
claims and accordingly follows the practice of capitalizing all costs relating
to the acquisition of, exploration for and development of mineral claims and
crediting all revenues received against the cost of the related claims. At such
time as commercial production commences, these costs will be charged to
operations on a unit-of-production method based on proven and probable reserves.
The aggregate costs related to abandoned mineral claims are charged to
operations at the time of any abandonment or when it has been determined that
there is evidence of a permanent impairment.
 
 The
recoverability of amounts shown for mineral properties is dependent upon the
discovery of economically recoverable reserves, the ability of the Company to
obtain financing to complete development of the properties and on future
production or proceeds of disposition.
 
 *(h)*
    *Income
      taxes*
 
 Future
income tax liabilities and future income tax assets are recorded based on
differences between the financial reporting basis of the Company’s assets and
liabilities and their corresponding tax basis. The future benefits of income tax
assets, including unused tax losses are recognized, subject to a valuation
allowance, to the extent that it is more likely than not that such losses will
be ultimately utilized. These future income tax assets and liabilities are
measured using enacted tax rates and laws that are expected to apply when the
tax liabilities or assets are to be either settled or realized.
 
 *(i)*
    *Revenue
      recognition*
 
 Recovery
of costs incurred are determined in accordance with agreements related to a
mineral property acquisition, exploration and development. Amounts recovered in
excess of costs incurred are reflected as revenue when receivable and collection
is probable.
 
 *(j)*
    *Stock-based
      compensation plans*
 
 The
Company accounts for options granted under its fixed stock option plan (Notes 3
and 9) using the fair value based method of accounting for stock-based
compensation. Accordingly, the fair value of the options at the date of grant is
accrued and charged to operations, with an offsetting credit to contributed
surplus, on a straight-line basis over the vesting period. If and when the stock
options are ultimately exercised, the applicable amounts of contributed surplus
are transferred to share capital.
 
  116
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **2.**
    **SIGNIFICANT
      ACCOUNTING POLICIES (Continued)**
 
 *(k)*
    *Loss
      per share*
 
 The
loss per share is based on the weighted average number of common shares of the
Company that were outstanding each year.
 
 *(l)*
    *Use
      of estimates*
 
 The
preparation of financial statements in conformity with the Canadian generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates. Significant
estimates used in the preparation of these consolidated financial statements
include, amongst other things, depreciation, determination of net recoverable
value of assets, determination of fair value on taxes and
contingencies.
 
 
 **3.**
    **ACCOUNTING
      CHANGES**
 
 (a)
    Effective
      January 1, 2003, the Company adopted the recommendations of the Canadian
      Institute of Chartered Accountants (the “CICA”) for stock-based
      compensation and other stock-based payments. These recommendations
      established standards for the recognition, measurement and disclosure of
      stock-based compensation and other stock-based payments in exchange for
      goods and services. The Company adopted the fair value based method of
      accounting for stock-based compensation, as described in Note 2 (j),
      on a retroactive basis with restatement of the 2002 financial statements.
      The effect of this change was to increase the net loss for the year ended
      December 31, 2002 by $162,000 for a net loss of $3,198,025 (no change to
      loss per share). The contributed surplus balance at December 31, 2002
      increased to $162,000 and the deficit at January 1, 2003 increased to
      $12,369,896.
 
  117
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **3.**
    **ACCOUNTING
      CHANGES**
 
 (b)
    Effective
      January 1, 2004 the Company adopted, on a prospective basis, the
      recommendations of Emerging Issues Committee - 146 with respect to
      flow-through shares. For all flow-through shares issued subsequent to
      December 31, 2003, the Company will recognize the future income tax
      liability and a corresponding increase to deficit on the date the company
      renounces the tax credits associated with the expenditures, provided there
      is reasonable assurance that the expenditures will be made. The
      recognition of any portion of previously unrecognized future income tax
      assets will be recorded as a reduction of income tax expenses. The impact
      of this adoption was a future income tax recovery of $338,400 in
      2004.
 
 (c)
    Effective
      January 1, 2004 the Company adopted the new accounting standard for asset
      retirement obligations, a standard that applies to future site reclamation
      costs for the Company’s mineral properties. Under this standard, the
      Company recognizes and records the liability for dismantling and
      remediation at the fair value of the date the liability is incurred. The
      liability is accreted over time to the estimate amount ultimately payable
      through periodic charges to earnings. In addition, the asset retirement
      obligation is capitalized as part of the carrying value of the related
      mineral properties and amortized to operations. Adoption of this standard
      did not have a material impact on the financial position of the Company at
      December 31, 2004.
 
 
 **4.**
    **MARKETABLE
      SECURITIES**
 **2004**
    
    2003Money
      market investments
    
    **$**
    **-**
    
    $
    163,049Equity
      securities
    
    
    **504,754**
    
    
    206,237**$**
    **504,754**
    
    $
    369,286
 The
market value of the investments as at December 31, 2004 was $1,045,147 (2003 -
$1,268,497).
 
 
 **5.**
    **INVENTORY**
 
 Inventory
consists of gold bullion which is valued at the lower of average cost of mining
and estimated net realizable value. The market value of the gold at
December 31, 2004 is $843,599.
 
 
  118
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **6.**
    **PROPERTY,
      PLANT AND EQUIPMENT**
 
 **2004**
    
    2003Accumulated
    
    Net
      Book
    
    Net
      BookCost
    
    Depreciation
    
    Value
    
    ValueAutomotive
      equipment
    
    **$**
    **171,652**
    
    **$**
    **105,125**
    
    **$**
    **66,527**
    
    $
    44,221Furniture
      and fixtures
    
    
    **108,408**
    
    
    **90,235**
    
    
    **18,173**
    
    
    19,193Computer
      hardware
    
    
    **157,718**
    
    
    **119,752**
    
    
    **37,966**
    
    
    28,687Computer
      software
    
    
    **23,321**
    
    
    **12,397**
    
    
    **10,924**
    
    
    6,097Geological
      data library
    
    
    **65,106**
    
    
    **19,445**
    
    
    **45,661**
    
    
    4,139Field
      equipment
    
    
    **160,533**
    
    
    **92,930**
    
    
    **67,603**
    
    
    48,920Mill
      equipment
    
    
    **323,264**
    
    
    **-**
    
    
    **323,264**
    
    
    323,264Leasehold
      improvements
    
    
    **6,280**
    
    
    **1,256**
    
    
    **5,024**
    
    
    -**$**
    **1,016,282**
    
    **$**
    **441,140**
    
    **$**
    **575,142**
    
    $
    474,521
 At
December 31, 2004 the mill equipment was not available for use. Depreciation
will be charged once the equipment is put into use.
 
 
  119
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **7.**
    **MINERAL
      PROPERTIES**
 **2004**
    
    2003**Canada**Elk100%
      interest in mineral claims in British Columbiawhich
      includes the Siwash gold deposit
    
    **$**
    **2,557,245**
    
    $
    1,644,696ATWNet
      30% interest in mineral claims near Lac De Gras,Northwest
      Territories
    
    
    **196,944**
    
    
    171,461PV100%
      interest in mineral claims in British Columbia
    
    
    **130,897**
    
    
    124,421MOR100%
      interest in minerals claims in the Yukon Territory
    
    
    **31,524**
    
    
    62,024SAM100%
      interest in mineral claims in British Columbia
    
    
    **57,599**
    
    
    10,539Rock
      River Coal50%
      interest in 187,698 acre coal prospect in the YukonTerritory
    
    
    **39,339**
    
    
    43,707Cabin
      Lake100%
      interest in minerals claims in the Yukon Territory
    
    
    **1**
    
    
    35,000Caribou
      Creek100%
      interest in minerals claims in the Yukon Territory
    
    
    **1**
    
    
    35,000**Mexico**Caballo
      BlancoOption
      to purchase 100% interest in mineral claims inVeracruz
      State
    
    
    **524,885**
    
    
    522,756El
      Pulpo100%
      interest in mineral claims in Sinaloa State
    
    
    **1**
    
    
    95,203San
      Carlos / San Jose100%
      interest in the San Carlos and San Jose mineral claimsin
      Tamaulipas State
    
    
    **203,142**
    
    
    244,590GaleanaOption
      to purchase 100% interest in mineral claims inChihuahua
      State
    
    
    **1**
    
    
    118,272Yago
      / La Sarda100%
      interest in mineral claim in Nayarit State
    
    
    **223,479**
    
    
    799,505Fuego100%
      interest in mineral claims in Oaxaca State
    
    
    **58,135**
    
    
    30,372**Interests
      in various other mineral claims**
    
    
    **417,036**
    
    
    260,129**$**
    **4,440,229**
    
    $
    4,197,675
  120
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **7.**
    **MINERAL
      PROPERTIES (Continued)**
 
 The
following is a description of the Company’s most significant property interests
and related spending commitments.
 
 *(a)*
    *Caballo
      Blanco*
 
 In
terms of the original agreement, to earn a 60% interest in the property, the
Company had to issue a total of 200,000 shares and pay U.S.$500,000 plus value
added tax over four and a half years. To earn the remaining 40% interest, the
Company had to pay an additional U.S.$500,000 plus value added tax within a year
of earning its 60% interest, plus a 2.5% net smelter return (“NSR”). The Company
could have reduced this NSR to 1.5% for a fixed payment of U.S.$2,000,000 plus
value added tax payable equally over 10 years.
 
 The
agreement was amended in January 2003. To earn a 100% interest, the Company must
issue a total of 200,000 common shares and must pay U.S.$668,500 plus value
added tax by February 26, 2007. The underlying owner would also receive a NSR of
2.5% to 1% based on the rate of production. The Company can purchase 50% of this
NSR for a fixed payment of U.S.$750,000 plus value added tax. As at
December 31, 2004, the Company had issued the required 200,000 common
shares and paid U.S.$341,000 of this obligation.
 
 During
2003, the Company entered into an agreement with Comaplex Minerals Corp.
(“Comaplex”). To earn a 60% interest, Comaplex must keep the property in good
standing and incur exploration expenditures totalling U.S.$2,000,000 by January
16, 2007.
 
 *(b)*
    *El
      Pulpo*
 
 The
Company acquired a 100% interest in the Gavilan claims by staking. Two
additional claims, which are surrounded by the Gavilan claims, are held under
option. To earn a 100% interest, the Company must pay U.S.$162,000 plus value
added tax by February 2005. The claims are subject to a 1% NSR which can be
purchased for a fixed payment of U.S.$500,000 plus value added tax. As at
December 31, 2004, U.S.$33,000 of the obligation had been
satisfied.
 
 During
2003, the Company entered into an agreement with Ross River Minerals Ltd. (“Ross
River”). To earn an initial 50.1% interest, Ross River must maintain the
property in good standing, incur exploration expenditures totalling
U.S.$2,000,000 and issue 425,000 common shares to the Company by April 30, 2008.
Ross River can increase its interest to 60% by incurring a further
U.S.$1,000,000 of exploration expenditures by April 30, 2010.
 
  121
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **7.**
    **MINERAL
      PROPERTIES (Continued)**
 
 *(b)*
    *El
      Pulpo (continued)*
 
 In
December 2004, the Company entered into an agreement with Ross River whereby the
Company will sell 100% of its right, title and interest in the El Pulpo
concessions and the underlying agreements for an initial issuance of 2,200,000
shares of Ross River, an additional 1,000,000 shares when exploration and
development expenditures meet or exceed U.S.$10,000,000, and a further 1,000,000
shares on the delivery of a positive feasibility study recommending production
on any part of the property. The Company will retain a 2% NSR regarding any
minerals from its formerly 100% owned concessions. Should Ross River give notice
to the Company that a decision has been made to place all or any part of the
concessions into commercial production, Ross River can then purchase one-half of
the NSR (such that the NSR would be reduced to 1% of the NSR) for consideration
equal to the fair market value of the 1% royalty based upon the feasibility
study, such value to be determined by an internationally recognized engineering
firm mutually acceptable to both parties. The agreement is subject to regulatory
approval.
 
 *(c)*
    *San
      Carlos*
 
 The
Company acquired a 100% interest in the San Carlos claims by staking and
purchased a 100% interest in the San Jose claim, subject to a 2% NSR. The
Begonia claims, which are surrounded by the San Carlos claims, were held under
option. During 2004, the Company abandoned its option on these
claims.
 
 During
2004, the Company entered into an agreement with Hawkeye Gold & Diamond Inc.
(“Hawkeye”). To earn an initial 51% interest, Hawkeye must maintain the property
in good standing, incur exploration expenditures totalling U.S.$2,000,000 by
March 15, 2008 and issue 500,000 shares to the Company by March 15, 2007.
Hawkeye can increase its interest to 60% by incurring an additional $2,000,000
of exploration expenditures by March 15, 2011 and issuing a further 300,000
shares to the Company by March 15, 2010.
 
 *(d)*
    *Galeana*
 
 The
Galeana claims are held under option. To earn a 100% interest, the Company must
pay U.S.$100,000 plus value added tax over seven years. The Company must also
pay U.S.$400,000 plus value added tax should the property go into production.
The claims are subject to a NSR of 3% to 1% based on the rate of production. The
Company can purchase 50% of this NSR for a fixed payment of U.S.$500,000 plus
value added tax at any time. As at December 31, 2004, U.S.$15,000 of this
obligation had been satisfied.
 
  122
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **7.**
    **MINERAL
      PROPERTIES (Continued)**
 
 *(d)*
    *Galeana
      (continued)*
 
 During
2002, the Company entered into an agreement with Grid Capital Corporation
(“Grid”). To earn an initial 50% interest, Grid must maintain the property in
good standing, incur exploration expenditures totalling U.S.$1,000,000 and issue
400,000 shares to the Company by July 31, 2006. Grid can increase its interest
to 60% by incurring an additional U.S.$1,000,000 of exploration expenditures and
issuing a further 100,000 shares to the Company by July 31, 2007. Subsequent to
year end, Grid abandoned its option on the property. The property was written
down to $1 at December 31, 2004.
 
 *(e)*
    *Yago
      / La Sarda*
 
 The
Company acquired a 100% interest in the Tepic claim by staking and purchased a
100% interest in the La Sarda claims. The adjoining Guadalupe and Sagitario
claims were held under option. To earn a 100% interest in the Guadalupe claim,
the Company had to pay U.S.$30,000 plus value added tax over six years. To earn
a 100% interest in the Sagitario claim the Company had to pay U.S.$250,000 plus
value added tax by January 1, 2005.
 
 During
2004, the Company purchased a 100% interest in the Guadalupe claim for
U.S.$15,000 plus value added tax and a 100% interest in the Sagitario claim for
U.S.$10,000 plus value added tax.
 
 *(f)*
    *Fuego*
 
 The
Company acquired a 100% interest in the Fuego claim by staking. During 2004, the
Company entered into an agreement with Horseshoe Gold Mining Inc. (“Horseshoe”).
To earn an initial 50% interest, Horseshoe must maintain the property in good
standing, incur exploration expenditures totalling U.S.$2,000,000 and issue
1,000,000 shares to the Company by December 31, 2006. Horseshoe can increase its
interest to 60% by incurring an additional $1,000,000 of exploration
expenditures by December 31, 2007. Once Horseshoe has earned a 60% interest,
Almaden has the right, but not the obligation, to exchange its remaining 40%
interest in the property for 40% of the then issued capital of
Horseshoe.
 
 *(g)*
    *Guadalupe*
 
 The
Company acquired a 100% interest in the Guadalupe claim by staking. During 2004,
the Company entered into an agreement with Grid Capital Corporation (“Grid”). To
earn an initial 50% interest, Grid must maintain the property in good standing,
incur exploration expenditures totalling U.S.$1,000,000 and issue 400,000 shares
to the Company by June 30, 2007. Grid can increase its interest to 60% by
incurring an additional $1,000,000 of exploration expenditures and issuing a
further 100,000 shares to the Company by December 31, 2008.
  123
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **7.**
    **MINERAL
      PROPERTIES (Continued)**
 
 *(h)*
    *Gallo
      de Oro*
 
 During
2004, the Company entered into an agreement to acquire a 100% interest in As de
Oro claim. To earn its interest, the Company must pay U.S.$50,000 plus value
added tax by 2007. At December 31, 2004, U.S.$10,000 of this obligation had been
paid. The Company acquired a 100% interest in additional claims in the
surrounding area by staking.
 
 *(i)*
    *PV
      and Nic*
 
 The
Company acquired the PV and Nic claims by staking. During 2004, the Company
entered into an agreement with Consolidated Spire Ventures Ltd. (“Spire”). To
earn a 60% interest, Spire must incur exploration expenditures totalling
U.S.$1,300,000 by December 31, 2007 and issue 600,000 shares to the Company by
January 10, 2007.
 
 *(j)*
    *BHP
      Billiton Joint Venture*
 
 On
May 9, 2002, the Company entered into a joint venture agreement with BHP
Billiton World Exploration Inc. (“BHP”) to undertake exploration in eastern
Mexico. Each company committed to fund U.S.$200,000 of exploration in the first
phase. To earn a 51% interest in any property which may be acquired, BHP must
fund an initial U.S.$1,000,000 of exploration, after which both companies are
committed to fund a further U.S.$750,000 of exploration. If either company fails
to make its contribution, it would be diluted to a 2% net smelter return
royalty. If both companies maintain their interest of funding, BHP can earn a
further 19% interest in each project by completing a feasibility study. A final
10% interest can be earned by BHP by funding the property into production. At
December 31, 2004, each company had incurred U.S.$200,000 of exploration
expenditures. BHP is reviewing the results of the first phase program. The
Company is currently renegotiating the agreement with BHP which would decrease
the amount of funding required to earn an interest in any properties
acquired.
 
 *(k)*
    *Other*
 
 *(i)*
    *Tropico*
 
 The
Company acquired a 100% interest in the property. During 2001, Santoy Resources
Ltd. (“Santoy”) completed its obligations and earned a 60% interest in the
property. The property is subject to a 2.25% NSR.
 
 *(ii)*
    *Goz
      Creek*
 
 The
Company has a 100% interest in the Goz Creek property, Yukon Territory, which is
subject to a 5% net profits interest.
 
 
  124
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **8.**
    **DEFERRED
      EXPLORATION ADVANCES**
 
 At
December 31, 2004, the Company has expended all funds received from BHP Billiton
World Exploration Inc. on the first phase of exploration in eastern Mexico (2003
- $58,011).
 
 
 **9.**
    **SHARE
      CAPITAL**
 
 The
changes in issued shares for the years ended December 31, 2004, 2003 and 2002
are as follows:
 Number
    
    AmountBalance,
      December 31, 2001
    
    
    17,123,006
    
    $
    15,010,776For cash
      pursuant to private placements
    
    
    4,150,000
    
    
    1,897,943For cash on
      exercise of share purchase warrants
    
    
    134,750
    
    
    51,312For
      purchase of mill
    
    
    122,077
    
    
    79,350For mineral
      properties
    
    
    388,889
    
    
    350,000Balance,
      December 31, 2002
    
    
    21,918,722
    
    
    17,389,381For cash
      pursuant to private placements
    
    
    2,773,800
    
    
    2,362,704For cash on
      exercise of share purchase warrants
    
    
    2,771,807
    
    
    1,648,664For cash on
      exercise of stock options
    
    
    162,750
    
    
    75,973Balance,
      December 31, 2003
    
    
    27,627,079
    
    
    21,476,722For cash
      pursuant to private placements
    
    
    1,722,250
    
    
    2,553,913For cash on
      exercise of share purchase warrants
    
    
    1,503,438
    
    
    1,088,919For cash on
      exercise of stock options
    
    
    290,000
    
    
    138,984Balance,
      December 31, 2004
    
    
    31,142,767
    
    $
    25,258,538
 (i)
    The
      Company issued 1,300,000 units on January 12, 2004 on a private placement
      basis at a price of $1.32 per share, after incurring issue costs of
      $16,565. These funds were received by the Company prior to December 31,
      2003 and were recorded as a subscription for
shares.
 
 (ii)
    The
      Company issued 270,000 flow-through common shares on August 16, 2004 on a
      private placement basis at a price of $2.25 per share, after incurring
      issue costs of $77,864. Also, 27,000 warrants exercisable at $2.25 per
      share until August 16, 2005 were issued to an agent in consideration of
      its services.
 
 (iii)
    The
      Company issued 150,000 flow-through common shares on August 30, 2004 on a
      private placement basis at a price of $2.25 per share, after incurring
      issue costs of $17,721. Also, 2,250 shares were issued to an agent in
      consideration of its services.
 
  125
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **9.**
    **SHARE
      CAPITAL (Continued)**
 
 *Warrants*
 Number
      of
    
    
    
    ExerciseWarrants
    
    Expiry
      Date
    
    Price
      RangeOutstanding,
    
    
    
    
    
    January
      9, 2002 toDecember
      31, 2001
    
    
    1,357,510
    
    
    October
      1, 2004
    
    $
    0.38
      to 6.52Granted
    
    
    2,925,000
    
    
    -
    
    
    0.51
      to 0.70Exercised
    
    
    (134,750
    )
    
    -
    
    
    0.38Expired
    
    
    (310,310
    )
    
    -
    
    
    3.95
      to 6.52Outstanding,
    
    
    
    
    
    April
      2, 2003 toDecember
      31, 2002
    
    
    3,837,450
    
    
    October
      15, 2004
    
    
    0.42
      to 0.70Granted
    
    
    2,258,900
    
    
    -
    
    
    0.95
      to 2.25Exercised
    
    
    (2,771,807
    )
    
    -
    
    
    0.42
      to 0.95Outstanding,
    
    
    
    
    
    March
      13, 2004 toDecember
      31, 2003
    
    
    3,324,543
    
    
    September
      18, 2008
    
    
    0.47
      to 2.25Granted
    
    
    27,000
    
    
    August
      16, 2005
    
    
    2.25Exercised
    
    
    (1,503,438
    )
    
    -
    
    
    0.47
      to 1.60Outstanding,
    
    
    
    
    
    August
      7, 2005 toDecember
      31, 2004
    
    
    1,848,105
    
    
    September
      18, 2008
    
    $
    0.80
      to $2.25
 At
December 31, 2004, the following share purchase warrants were
outstanding:
 
 Number
      of
    
    
    
    ExerciseWarrants
    
    Expiry
      Date
    
    Price
      Range1,509,000
    
    September
      18, 2005/2006/2007/2008
    
    $1.50/1.75/2.00/2.25103,750
    
    August
      7, 2005
    
    0.80140,000
    
    December
      30, 2005
    
    1.8568,355
    
    December
      30, 2005
    
    2.2527,000
    
    August
      16, 2005
    
    2.251,848,105
 At
December 31, 2004, none of the warrants outstanding are held by directors (2003
- 77,000).
 
  126
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **9.**
    **SHARE
      CAPITAL (Continued)**
 
 *Options*
 
 The
Company has a fixed stock option plan which permits the issuance of options up
to 10% of the Company’s issued share capital. During 2002, the maximum number of
shares reserved for issuance under this plan was increased from 1,000,000 to
2,000,000. During 2003 the maximum number of shares reserved for issuance under
this plan was increased from 2,000,000 to 2,900,000. At December 31, 2004, the
Company has no reserved stock options that may be granted. The exercise price of
an option cannot be less than the closing price of the common shares on the
Toronto Stock Exchange on the day immediately preceding the grant of the option
and the maximum term of all options is ten years. The Company also has stock
options outstanding relating to the period before the introduction of the fixed
stock option plan.
 
 The
Board of Directors determines the term of the option (to a maximum of five
years) and the time during which any option may vest. All options granted during
2004 vested on the date granted.
 
 The
following table presents the outstanding options as of December 31, 2004, 2003
and 2002 and changes during the years ended on those dates:
 
 **2004**
    
    2003
    
    2002Weighted
    
    
    
    Weighted
    
    
    
    WeightedAverage
    
    
    
    Average
    
    
    
    AverageExercise
    
    
    
    Exercise
    
    
    
    ExerciseFixed
      Options
    
    Shares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding
      at beginning ofyear
    
    
    **3,075,783**
    
    **$**
    **0.53**
    
    
    2,734,533
    
    $
    0.44
    
    
    1,759,533
    
    $
    0.38Granted
    
    
    **1,421,000**
    
    
    **1.69**
    
    
    504,000
    
    
    0.85
    
    
    975,000
    
    
    0.55Exercised
    
    
    **(290,000**
    **)**
    
    **0.44**
    
    
    (162,750
    )
    
    0.42
    
    
    -
    
    
    -Outstanding
      andexercisable at end of year
    
    
    **4,206,783**
    
    **$**
    **0.91**
    
    
    3,075,783
    
    $
    0.53
    
    
    2,734,533
    
    $
    0.44
  127
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **9.**
    **SHARE
      CAPITAL (Continued)**
 
 *Options
(continued)*
 
 The
following table summarizes information about stock options outstanding at
December 31, 2004:
 Options
      Outstanding and ExercisableNumber
    
    Expiry
    
    Exerciseof
      Shares
    
    Date
    
    Price35,000
    
    January
      28, 2006
    
    $
      2.35560,000
    
    March
      1, 2006
    
    0.3091,092
    
    August
      23, 2006
    
    0.27905,000
    
    February
      28, 2007
    
    0.55379,000
    
    February
      26, 2008
    
    0.8075,000
    
    April
      7, 2008
    
    0.7440,000
    
    September
      26, 2008
    
    1.37581,691
    
    October
      7, 2008
    
    0.45154,000
    
    December
      1, 2009
    
    0.391,386,000
    
    December
      14, 2009
    
    1.674,206,783
 The
weighted average grant date fair value of stock options granted in 2004 was
$0.87 (2003 - $0.43; 2002 - $0.17). The fair value of these options were
determined on the date of the grant using the Black-Scholes option pricing model
with the following weighted average assumptions:
 
 **2004**
    
    2003
    
    2002Risk
      free interest rate
    
    
    **3.3**
    **%**
    
    3.3
    %
    
    4.2
    %Expected
      life
    
    
    **4.5
      years**
    
    
    4.5
      years
    
    
    5
      yearsExpected
      volatility
    
    
    **61**
    **%**
    
    62
    %
    
    60
    %Expected
      dividends
    
    $
    Nil
    
    $
    Nil
    
    $
    Nil
 *Contributed
surplus*
 **2004**
    
    2003
    
    2002Balance,
      beginning of year
    
    **$**
    **374,525**
    
    $
    162,000
    
    $
    -Stock-based
      compensation on issueof
      options
    
    
    **1,234,783**
    
    
    220,000
    
    
    162,000Exercise
      of stock options
    
    
    **(10,954**
    **)**
    
    (7,475
    )
    
    -Balance,
      end of year
    
    **$**
    **1,598,354**
    
    $
    374,525
    
    $
    162,000
 
  128
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **10.**
    **RELATED
      PARTY TRANSACTIONS**
 
 A
company controlled by the founding shareholder of the Company was paid $110,400
for technical services and website management services during 2004 (2003 -
$110,400; 2002 - $102,000).
 
 A
company controlled by a relative of the founding shareholder of the Company was
paid $66,542 for geological services during 2004 (2003 - $80,064; 2002 -
$68,300).
 
 An
officer of the Company was paid $55,637 for professional services rendered
during 2004 (2003 - $53,075; 2002 - $48,800).
 
 The
above transactions were recorded at the amounts agreed to between the
parties.
 
 
 **11.**
    **SUPPLEMENTAL
      CASH FLOW INFORMATION**
 
 Supplemental
information regarding non-cash transactions is as follows:
 
 Years
      ended December 31,**2004**
    
    2003
    
    2002Investing
      activitiesAcquisition
      of fixed assetsin
      exchange for mineralproperties
      recoveries
    
    **$**
    **-**
    
    $
    25,000
    
    $
    -Acquisition
      of marketable securitiesin
      exchange for recoveries onmineral
      properties
    
    
    **275,550**
    
    
    -
    
    
    -Reversal
      of contributed surpluson
      exercise of options
    
    
    **10,954**
    
    
    -
    
    
    -Proceeds
      on disposal of equipmentapplied
      to acquisition of otherequipment
    
    
    **23,712**
    
    
    -
    
    
    -Financing
      activitiesIssuance
      of common sharesfor
      mineral properties
    
    
    **-**
    
    
    -
    
    
    350,000Issuance
      of common sharesfor
      purchase of mill
    
    
    **-**
    
    
    -
    
    
    79,350
 Other
supplementary information:
 Years
      ended December 31,**2004**
    
    2003
    
    2002Interest
      paid
    
    **$**
    **-**
    
    $
    2,436
    
    $
    -Income
      and mining taxes paid
    
    
    **-**
    
    
    34,461
    
    
    110,154
  129
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **12.**
    **SEGMENTED
      INFORMATION**
 
 The
Company operates in one reportable operating segment, being the acquisition and
exploration of mineral resource properties.
 
 The
Company’s revenues arose primarily from gold sales, interest income on corporate
cash reserves and revenue from mineral properties. The Company has long-lived
assets in the following geographic locations:
 **2004**
    
    2003Canada
    
    **$**
    **3,586,578**
    
    $
    2,606,115Mexico
    
    
    **1,428,793**
    
    
    2,066,081**$**
    **5,015,371**
    
    $
    4,672,196
 The
Company earns revenue in the following geographic locations as determined by the
location of their mineral properties:
 **2004**
    
    2003
    
    2002Canada
    
    **$**
    **185,080**
    
    $
    110,230
    
    $
    122,538Mexico
    
    
    **57,816**
    
    
    -
    
    
    -**$**
    **242,896**
    
    $
    110,230
    
    $
    122,538
 
 **13.**
    **FINANCIAL
      RISK**
 
 The
Company is exposed to financial risk arising from fluctuations in foreign
exchange rates and the degree of volatility of these rates. The Company does not
use derivative instruments to reduce its exposure to foreign currency
risk.
 
 
 **14.**
    **FAIR
      VALUE**
 
 The
Company’s financial instruments include cash and cash equivalents, accounts
receivable, marketable securities and accounts payable and accrued liabilities.
The fair values of these financial instruments approximate their carrying
values.
 
 
  130
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **15.**
    **INCOME
      TAXES**
 
 The
Company’s Canadian income tax rate is approximately 35.6% (2003 - 37.6%; 2002 -
39.6%) while the Mexico income tax rate is approximately 35%. The provision for
income taxes differs from the amounts computed by applying the statutory rates
to the loss before tax provision due to the following:
 **2004**
    
    2003
    
    2002Statutory
      rate
    
    
    35.6
    %
    
    37.6
    %
    
    39.6
    %Income
      taxes recovered at theCanadian statutory
rate
    
    **$******
    ******1,212,600**
    
    $
    425,000
    
    $
    1,207,300Effect
      of lower tax rates in foreign jurisdiction
    
    
    (200
    )
    
    (1,200
    )
    
    (3,900
    )Non-deductible
      expenses
    
    
    (440,000
    )
    
    (83,000
    )
    
    (61,000
    )Tax
      losses not recognized inperiod benefit arose
    
    
    (434,000
    )
    
    (340,800
    )
    
    (1,142,400
    )**$******
    ******338,400**
    
    $
    -
    
    $
    -
 The
approximate tax effects of each type of temporary difference that gives rise to
future tax assets are as follows:
 **2004**
    
    2003
    
    1999Future
      income tax assetsOperating
      loss carryforwards
    
    **$**
    **2,302,000**
    
    $
    2,241,000
    
    $
    1,595,968Canadian
      exploration expenditures and foreign exploration and development costs in
      excess of book value of resource properties
    
    
    **2,831,600**
    
    
    3,616,000Impairment
      of long-term investment
    
    
    **21,800**
    
    
    21,800Undeducted
      capital cost allowance on property, plantand
      equipment
    
    
    **93,000**
    
    
    71,000**5,248,400**
    
    
    5,949,800Valuation
      allowance
    
    
    **(5,248,400**
    **)**
    
    (5,949,800
    )Future
      income taxes, net
    
    **$**
    **-**
    
    $
    -
 At
December 31, 2003, the Company had operating loss carryforwards available for
tax purposes in Canada and Mexico of $6,549,000 which expire between 2005 and
2014.
 
 
  131
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **16.**
    **COMMITMENTS
      AND CONTINGENCIES**
 
 (a)
    The
      Company was assessed additional mineral tax of $197,233 plus interest of
      $84,638 by the British Columbia Ministry of Energy and Mines (the
      “Ministry”). The assessment relates to the deductibility of certain
      expenditures between February 1, 1995 and January 31, 1997. While
      management intends to defend its position, the outcome of this issue is
      uncertain. In order to reduce the exposure to interest charges, the
      Company paid $281,871. This amount will be refunded with interest if the
      Company is successful in defending its position.
 
 In
addition, should the Company be unsuccessful in defending its position,
approximately $353,000 will be payable in respect of gold sales in fiscal 2000
to 2002. The Company has provided for the liability arising from the assessment.
Any recovery will be credited to operations when received.
 
 (b)
    The
      Company has, in the normal course of business, entered into various
      long-term contracts which include commitments for future operating
      payments for the rental of premises as
follows:
 
 2005
    
    $
    37,2602006
    
    
    37,2602007
    
    
    37,2602008
    
    
    37,2602009
    
    
    3,105$
    152,145
 
 
 **17.**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES**
 
 These
consolidated financial statements have been prepared in accordance with Canadian
generally accepted accounting principles (“Canadian GAAP”) which, in these
financial statements are different in some respects from those in the United
States (“US GAAP”). The following is a reconciliation:
 **2004**
    
    2003**Consolidated
      Balance Sheets**Total
      assets under Canadian GAAP
    
    **$**
    **10,215,275**
    
    $
    10,341,770Write-off
      of deferred exploration costs (a)
    
    
    **(2,072,496**
    **)**
    
    (1,358,352
    )Adjustment
      to marketable securities (c)
    
    
    **540,393**
    
    
    899,211Total
      assets under US GAAP
    
    **$**
    **8,683,172**
    
    $
    9,882,629Shareholders'
      equity under Canadian GAAP
    
    **$**
    **9,756,488**
    
    $
    9,854,481Write-off
      of deferred exploration costs (a)
    
    
    **(2,072,496**
    **)**
    
    (1,358,352
    )Adjustment
      to marketable securities (c)
    
    
    **540,393**
    
    
    899,211Shareholders'
      equity under US GAAP
    
    **$**
    **8,224,385**
    
    $
    9,395,340
  132
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **17.**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES (Continued)**
 
 **2004**
    
    2003
    
    2002**Consolidated
      Statements of****Loss
      and Deficit**Net
      loss under Canadian GAAP
    
    **$**
    **(3,065,803**
    **)**
    $
    (1,326,305
    )
    $
    (3,198,025
    )Write-off
      of current period deferred exploration costs (a)
    
    
    **(915,483**
    **)**
    
    (742,857
    )
    
    (780,647
    )Add
      back of deferred explorationcosts written off in the current year
      (a)
    
    
    **201,339**
    
    
    68,441
    
    
    1,265,869Gold
      recoveries in the currentyear applied to reduce deferred
      exploration costs (a)
    
    
    **-**
    
    
    -
    
    
    140,886Reversal
      of retroactive applicationof accounting change
      (b)
    
    
    **-**
    
    
    -
    
    
    162,000Net
      loss under US GAAP
    
    **$**
    **(3,779,947**
    **)**
    $
    (2,000,721
    )
    $
    (2,409,917
    )Net
      loss per share under US GAAP
    
    **$**
    **(0.13**
    **)**
    $
    (0.09
    )
    $
    (0.13
    )
 **2004**
    
    2003
    
    2002**Consolidated
      Statements of **Cash
      Flows****Operating
      activitiesOperating
      activities under Canadian GAAP
    
    **$**
    **(1,212,115**
    **)**
    $
    (911,766
    )
    $
    (855,487
    )Exploration
      (a)
    
    
    **(915,483**
    **)**
    
    (742,857
    )
    
    (780,647
    )Operating
      activities under US GAAP
    
    
    **(2,127,598**
    **)**
    
    (1,654,623
    )
    
    (1,636,134
    )Investing
      activitiesInvesting
      activities under Canadian GAAP
    
    
    **(1,572,520**
    **)**
    
    (993,588
    )
    
    (832,251
    )Deferred
      exploration (a)
    
    
    **915,483**
    
    
    742,857
    
    
    780,647Investing
      activities under US GAAP
    
    
    **(657,037**
    **)**
    
    (250,731
    )
    
    (51,604
    )
 *(a)*
    Canadian
      GAAP allows exploration costs and costs of acquiring mineral rights to be
      capitalized during the search for a commercially mineable body of ore.
      Under US GAAP, exploration expenditures can only be deferred subsequent to
      the establishment of mining reserves. For US GAAP purposes, the Company
      therefore expensed its exploration
expenditures.
  133
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **17.**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES (Continued)**
 
 *(b)*
    During
      2003, the Company adopted the fair value based method of accounting under
      Canadian GAAP for stock-based compensation, as described in Notes 2 (j)
      and 3, with retroactive application with restatement of the prior year’s
      income statement. Statement of Financial Accounting Standards (“SFAS”) No.
      148,*Accounting
      for Stock-based Compensation - Transition and Disclosure*,
      issued by the United States Financial Accounting Standards Board (“FASB”)
      provides alternative methods of transition for entities that voluntarily
      change to the fair value based method of accounting and amends the
      disclosure provisions of SFAS No. 123,*Accounting
      for Stock-based Compensation*.
      For US GAAP purposes, the Company has adopted SFAS No. 123 prospectively
      as of January 1, 2003. As a result, the stock option compensation expense
      recognized in 2002 under Canadian GAAP has been reversed for US GAAP
      purposes.
 
 Prior
to 2002, in accordance with SFAS No. 123 and Accounting Principles Board Opinion
No. 25, which specifies use of the intrinsic value method, since stock options
were granted at the quoted market value of the Company’s common shares at the
date of grant, no compensation cost was recognized by the Company under US
GAAP.
 
 Had
the fair value assigned to the stock options granted during the year ended
December 31, 2002 been charged to net earnings, the net loss for US GAAP
purposes for the year ended December 31, 2002 would have been $2,571,917 while
the basic and diluted loss per share would remain unchanged. The weighted
average assumptions used for this calculation are consistent with those
disclosed in Note 9.
 
 Under
Canadian GAAP, the measurement of the recorded stock-based compensation, as well
as the assumptions and methodology, are consistent with those prescribed by SFAS
No. 123.
 
  134
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **17.**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES (Continued)**
 
 *(c)*
    In
      May 1993, the FASB issued SFAS No. 115,*Accounting
      for Certain Investments in Debt and Equity Securities*(“SFAS No. 115”). Under SFAS No. 115, management determines the
      appropriate classification of investments in debt and equity securities at
      the time of purchase and re-evaluates such designation as of each balance
      sheet date. Under SFAS No. 115, equity securities and long-term
      investments are classified as available-for-sale securities and
      accordingly, is required to include the net unrealized holding gain on
      these securities in other comprehensive income. SFAS No. 130,*Reporting
      Comprehensive Income*,
      establishes standards for the reporting and display of comprehensive
      income and its components (revenue, expenses, gains and losses) in a full
      set of general purpose financial statements. Details would be disclosed as
      follows:
 
 **2004**
    
    2003
    
    2002Net
      loss under US GAAP
    
    **$**
    **(3,779,947**
    **)**
    $
    (2,000,721
    )
    $
    (2,409,917
    )Other
      comprehensive (loss) incomeAdjustment
      to unrealized (losses) gains on available-for-sale
    securities
    
    
    **(223,350**
    **)**
    
    718,451
    
    
    119,530Comprehensive
      loss under US GAAP
    
    **$**
    **(4,003,297**
    **)**
    $
    (1,282,270
    )
    $
    (2,290,387
    )
 *(d)*
    Under
      Canadian GAAP, future income taxes are calculated based on enacted or
      substantially enacted tax rates applicable to future years. Under US GAAP,
      only enacted rates are used in the calculation of future income taxes.
      This difference in GAAP did not result in a difference in the financial
      position, results of operations or cash flows of the Company for the years
      ended December 31, 2004, 2003 and 2002.
 
 *(e)*
    Under
      Canadian income tax legislation, a company is permitted to issue shares
      whereby the company agrees to incur qualifying expenditures and renounce
      the related income tax deductions to the investors. The Company has
      accounted for the issue of flow-through shares using the method in
      accordance with Canadian GAAP. At the time of issue, the funds received
      are recorded as share capital. For US GAAP, the premium paid in excess of
      the market value is credited to other liabilities and included in income
      as the qualifying expenditures are made. There was no premium on the
      flow-through shares issued for all periods
presented.
 
 Also,
notwithstanding whether there is a specific requirement to segregate the funds,
the flow through funds which are unexpended at the consolidated balance sheet
dates are considered to be restricted and are not considered cash or cash
equivalents under US GAAP. As at December 31, 2004, unexpended flow through
funds were $370,172 (2003 - $393,481).
 
  135
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **17.**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES (Continued)**
 
 *(f)*
    *Recent
      accounting pronouncements*
 
 In
May 2003, the FASB issued Statement No. 150 (“SFAS No. 150”), *Accounting
for Certain Financial Instruments with Characteristics of both Liabilities and
Equity* .
SFAS No. 150 establishes standards for classifying and measuring as liabilities
certain financial instruments that embody obligations of the issuer and have
characteristics of both liabilities an equity. SFAS No. 150 represents a
significant change in practice in the accounting for a number of financial
instruments, including mandatorily redeemable equity instruments and certain
equity derivatives. SFAS No. 150 is effective for all financial instruments
created or modified after May 31, 2003, and to other instruments as of September
1, 2003. The Company has not issued any financial instruments that fall under
the scope of SFAS No. 150 and the adoption of this statement did not have a
material impact on the Company’s financial position or results of
operations.
 
 In
April 2003, SFAS No. 149, *Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities* ,
was issued. In general, this statement amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities under SFAS No. 133. This statement
is effective for contracts entered into or modified after June 30, 2003, and for
hedging relationships designated after June 30, 2003. As the Company has no
derivative transactions the impact of the adoption of SFAS No. 149 had no effect
on its consolidated financial position or results of operations.
 
 In
January 2003, the FASB issued FIN No. 46, *Consolidation
of Variable Interest Entities, an interpretation of ARB No. 51* .
FIN No. 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 No. 46 is
effective for all new variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN No. 46 must be applied for the first
interim or annual period beginning after June 15, 2003. The adoption of FIN No.
46 had no effect on the Company’s financial position or results of
operations.
 
 During
2004, EITF formed a committee (“Committee”) to evaluate certain mining industry
accounting issues, including issues arising from the application of SFAS
No. 141, *Business
Combinations* (“SFAS No. 141”) to business combinations within the mining industry and the
capitalization of costs after the commencement of production, including deferred
stripping.
 
  136
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **17.**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES (Continued)**
 
 *(f)*
    *Recent
      accounting pronouncements (continued)*
 
 In
March 2004, the EITF reached a consensus, based upon the Committee's
deliberations and ratified by the FASB, that mineral interests conveyed by
leases should be considered tangible assets. On April 30, 2004, the FASB issued
a FASB Staff Position (“FSP”) amending SFAS No. 141 and SFAS No. 142 to provide
that certain mineral use rights are considered tangible assets and that mineral
use rights should be accounted for based on their substance. The FSP is
effective for the first reporting period beginning after April 29, 2004,
with early adoption permitted. The Company does not expect that the adoption of
this statement will have a material impact on the Company's financial position
or results of operation.
 
 The
Emerging Issues Task Force (“EITF”) reached a consensus, Issue No 04-2, *Whether
Mineral Rights are Tangible or Non-Tangible Assets* .
The conclusion is that mineral rights are tangible assets and should be
amortized over the productive life of the asset. Previously, mineral rights were
regarded as intangible assets and were amortized over their life on a
straight-line basis. The Company has adopted this new guidance with effect from
2004 on a prospective basis with no effect to the Company’s reported financial
position or results of operation.
 
 The
EITF published Issue No. 04-03, *Mining
Assets: Impairment and Business Combinations* .
The consensus provided guidance with respect to commodity prices and value
attributable to mineral resources other than proven and probable reserves to be
used in the conduct of impairment tests and in the allocation of purchase price
arising from a business combination. The Company has applied EITF Issue No.
04-03 when performing the impairment review conducted at December 31,
2004.
 
  137
 **ALMADEN
MINERALS LTD.**
 **(An
exploration stage company)**
 **Notes
to the Consolidated Financial Statements**
 **(Expressed
in Canadian dollars)**
  **17.**
    **DIFFERENCES
      BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
      PRINCIPLES (Continued)**
 
 *(f)*
    *Recent
      accounting pronouncements (continued)*
 
 During
2004, deliberations began on EITF Issue No. 04-6, *Accounting
for Stripping Costs Incurred during Production in the Mining
Industry* .
In the mining industry, companies may be required to remove overburden and other
mine waste materials to access mineral deposits. The costs of removing
overburden and waste materials are often referred to as "stripping costs."
During the development of a mine (before production begins), it is generally
accepted in practice that stripping costs are capitalized as part of the
depreciable cost of building, developing, and constructing the mine. Those
capitalized costs are typically amortized over the productive life of the mine
using the units-of-production method. A mining company may continue to remove
overburden and waste materials, and therefore incur stripping costs, during the
production phase of the mine. Questions have been raised about the appropriate
accounting for stripping costs incurred during the production phase, and
diversity in practice exists. In response to these questions, the EITF has
undertaken a project to develop an Abstract to address the questions and clarify
the appropriate accounting treatment for stripping costs under US GAAP. The EITF
issued EITF 04-6, *Accounting
for Stripping Costs in the Mining Industry* ,
which recommends that stripping costs are considered development costs that
should be recognized as investments in the mine. The Company is currently
evaluating the impact, if any, the adoption of EITF 04-6 will have on the
Company's financial position or results of operation.
 
 During
2004, EITF Issue No. 03-1, *The
Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments* ,
was issued and establishes guidance to be used in determining when an investment
is considered impaired, whether that impairment is other than temporary, and the
measurement of an impairment loss. The Company does not expect that the adoption
of this statement will have a material impact on the Company's financial
position or results of operation.
  138
 **ALMADEN
      MINERALS LTD.**
    
    
    
    
    
    
    
    **Schedule
      1****(An
      exploration stage company)****Consolidated
      Schedules of General and Administrative Expenses****(Expressed
      in Canadian dollars)**Cumulative
      amount since incorporation September 25, 1980 to December
    31,
    
    Years
      ended December 31,2004
    
    **2004**
    
    2003
    
    2002Bad
      debts
    
    $
    130,551
    
    **$**
    **-**
    
    $
    -
    
    $
    -Bank
      charges and interest
    
    
    44,868
    
    
    **6,392**
    
    
    5,823
    
    
    4,732B.C.
      mineral taxes
    
    
    36,897
    
    
    **-**
    
    
    36,897
    
    
    -Depreciation
    
    
    408,595
    
    
    **60,326**
    
    
    38,852
    
    
    43,166Employee
      benefits
    
    
    10,512
    
    
    **-**
    
    
    -
    
    
    -Insurance
    
    
    31,872
    
    
    **6,446**
    
    
    6,035
    
    
    5,826Management
      services
    
    
    16,775
    
    
    **-**
    
    
    -
    
    
    -Office
      and licenses
    
    
    1,000,553
    
    
    **116,763**
    
    
    112,087
    
    
    97,255Professional
      fees
    
    
    1,909,392
    
    
    **182,995**
    
    
    201,356
    
    
    222,950Rent
    
    
    508,001
    
    
    **103,178**
    
    
    89,168
    
    
    87,208Stock
      exchange fees
    
    
    198,525
    
    
    **24,441**
    
    
    21,930
    
    
    55,196Telephone
    
    
    146,501
    
    
    **15,026**
    
    
    14,212
    
    
    12,686Transfer
      agent fees
    
    
    156,414
    
    
    **13,783**
    
    
    11,674
    
    
    12,437Travel
      and promotion
    
    
    547,678
    
    
    **176,476**
    
    
    67,729
    
    
    57,297Write-off
      of incorporation costs
    
    
    3,298
    
    
    **-**
    
    
    -
    
    
    -$
    5,150,432
    
    **$**
    **705,826**
    
    $
    605,763
    
    $
    598,753
  139
 **ALMADEN
      MINERALS LTD.**
    
    
    
    
    
    **Schedule
      2****(An
      exploration stage company)****Consolidated
      Schedule of Share Capital Since Inception****(Expressed
      in Canadian dollars)**Number
    
    Price
    
    AmountFor
      cash upon incorporation
    
    
    1
    
    $
    1.00
    
    $
    1For cash from
      principal (founder's shares)
    
    
    750,000
    
    
    0.01
    
    
    7,500For
      cash
    
    
    1,010,528
    
    
    0.15
    
    
    151,579For
      cash
    
    
    292,500
    
    
    0.25
    
    
    73,925For cash from
      related company of principal
    
    
    180,000
    
    
    0.25
    
    
    45,000Balance
      December 31, 1985
    
    
    2,233,029
    
    
    
    
    
    278,005For cash
      pursuant to public offering, net of issue expenses
    
    
    700,000
    
    
    0.56
    
    
    392,568For mineral
      property
    
    
    40,000
    
    
    0.70
    
    
    28,000Balance
      December 31, 1986
    
    
    2,973,029
    
    
    
    
    
    698,573For cash
      pursuant to private placement, net of issue expense
    
    
    200,000
    
    
    0.83
    
    
    165,750For cash
      pursuant to private placement
    
    
    300,000
    
    
    1.00
    
    
    300,000For cash
      pursuant to private placement, net of issue expense
    
    
    150,000
    
    
    1.34
    
    
    201,432Balance
      December 31, 1987
    
    
    3,623,029
    
    
    
    
    
    1,365,755For cash
      pursuant to private placement
    
    
    171,000
    
    
    1.75
    
    
    299,250For cash
      pursuant to private placement, net of issue expenses
    
    
    297,803
    
    
    0.90
    
    
    267,734For
      cash
    
    
    40,000
    
    
    1.10
    
    
    44,000For mineral
      property
    
    
    40,000
    
    
    1.00
    
    
    40,000Balance
      December 31, 1988
    
    
    4,171,832
    
    
    
    
    
    2,016,739For cash
      pursuant to private placement, net of issue expenses
    
    
    112,055
    
    
    1.10
    
    
    123,260Balance
      December 31, 1989
    
    
    4,283,887
    
    
    
    
    
    2,139,999For cash
      pursuant to private placement
    
    
    177,778
    
    
    0.45
    
    
    80,000For
      cash on exercise of stock options
    
    
    49,500
    
    
    0.68
    
    
    33,660For
      100,000 common shares of Pacific Sentinel Gold Corp.
    
    
    300,000
    
    
    0.73
    
    
    219,000For
      cash on exercise of stock options
    
    
    26,000
    
    
    0.75
    
    
    19,500For
      cash on exercise of stock options
    
    
    10,000
    
    
    0.72
    
    
    7,200Balance
      December 31, 1990
    
    
    4,847,165
    
    
    
    
    
    2,499,359For
      cash on exercise of stock options
    
    
    40,000
    
    
    0.72
    
    
    28,800Balance
      December 31, 1991
    
    
    4,887,165
    
    
    
    
    
    2,528,159For
      mineral property
    
    
    28,000
    
    
    0.71
    
    
    20,000For
      cash on exercise of stock options
    
    
    50,000
    
    
    0.68
    
    
    12,500For
      cash on exercise of stock options
    
    
    10,000
    
    
    0.73
    
    
    7,500For
      cash on exercise of stock options
    
    
    10,000
    
    
    0.28
    
    
    2,800For
      cash pursuant to private placement
    
    
    137,000
    
    
    0.50
    
    
    68,500Balance
      December 31, 1992 (carried forward)
    
    
    5,122,165
    
    
    
    
    
    2,639,459Balance
      December 31, 1992 (brought forward)
    
    
    5,122,165
    
    
    
    
    $
    2,639,459For
      cash on exercise of stock options
    
    
    290,000
    
    
    0.28
    
    
    81,200For
      cash on exercise of stock options
    
    
    50,000
    
    
    0.33
    
    
    16,500For
      mineral property
    
    
    24,827
    
    
    1.45
    
    
    36,000For
      cash pursuant to private placement
    
    
    85,000
    
    
    2.34
    
    
    198,900For
      cash pursuant to private placement, net of issue expense
    
    
    235,046
    
    
    2.13
    
    
    500,930For
      cash on exercise of stock options
    
    
    64,000
    
    
    1.08
    
    
    69,120For
      finders' fee
    
    
    8,857
    
    
    0.70
    
    
    6,200For
      mineral property
    
    
    10,000
    
    
    0.50
    
    
    5,000For
      finders' fee
    
    
    5,000
    
    
    3.30
    
    
    16,500Balance
      December 31, 1993
    
    
    5,894,895
    
    
    
    
    
    3,569,809For
      cash on exercise of stock options
    
    
    110,000
    
    
    1.08
    
    
    118,800For
      cash pursuant to private placement, net of issue expense
    
    
    200,000
    
    
    1.18
    
    
    236,800For
      finders' fee
    
    
    10,642
    
    
    0.70
    
    
    7,449For
      finders' fee
    
    
    12,307
    
    
    1.56
    
    
    19,200Balance
      December 31, 1994
    
    
    6,227,844
    
    
    
    
    
    3,952,058For
      cash pursuant to private placement, net of issue expense
    
    
    200,000
    
    
    1.50
    
    
    285,000For
      cash pursuant to private placement, net of issue expense
    
    
    75,000
    
    
    1.30
    
    
    94,575For
      cash on exercise of stock options
    
    
    120,000
    
    
    1.28
    
    
    153,800For
      cash on exercise of stock options
    
    
    250,000
    
    
    1.13
    
    
    282,100For
      cash on exercise of share purchase warrants
    
    
    100,000
    
    
    1.28
    
    
    128,000For
      finders' fee
    
    
    6,428
    
    
    0.70
    
    
    4,500For
      mineral property
    
    
    39,308
    
    
    1.59
    
    
    62,500For
      mineral property
    
    
    37,037
    
    
    1.35
    
    
    50,000Balance
      December 31, 1995
    
    
    7,055,617
    
    
    
    
    
    5,012,533For
      cash on exercise of stock options
    
    
    672,000
    
    
    1.08
      - 1.49
    
    
    899,100For
      cash on exercise of share purchase warrants
    
    
    275,000
    
    
    1.40
      - 1.50
    
    
    405,000For
      cash pursuant to private placement, net of issue expense
    
    
    120,000
    
    
    2.00
    
    
    240,000For
      cash pursuant to private placement, net of issue expense
    
    
    620,000
    
    
    3.25
    
    
    1,894,100For
      cash on exercise of stock options
    
    
    720,000
    
    
    1.43
      - 1.86
    
    
    1,221,050For
      mineral property
    
    
    10,000
    
    
    3.20
    
    
    32,000Balance
      December 31, 1996
    
    
    9,472,617
    
    
    
    
    
    9,703,783For
      cash on exercise of stock options
    
    
    60,000
    
    
    1.66
      - 2.63
    
    
    109,300For
      cash on exercise of share purchase warrants
    
    
    50,000
    
    
    2.00
    
    
    100,000For
      cash pursuant to private placements, net of issue expenses
    
    
    388,000
    
    
    1.87
    
    
    725,560For
      mineral property
    
    
    50,000
    
    
    2.90
    
    
    145,000For
      cash pursuant to private placement, net of issue expenses
    
    
    296,000
    
    
    3.14
      - 3.53
    
    
    1,013,371Balance
      December 31, 1997 (carried forward)
    
    
    10,316,617
    
    
    
    
    
    11,797,014Balance
      December 31, 1997 (brought forward)
    
    
    10,316,617
    
    
    
    
    $
    11,797,014For
      cash on exercise of share purchase warrants
    
    
    359,000
    
    
    1.05
    
    
    376,950For
      mineral property
    
    
    50,000
    
    
    2.90
    
    
    145,000Balance,
      December 31, 1998
    
    
    10,725,617
    
    
    
    
    
    12,318,964For
      cash pursuant to private placement
    
    
    1,370,000
    
    
    0.23
    
    
    308,250For
      mineral property
    
    
    50,000
    
    
    2.90
    
    
    145,000Balance,
      December 31, 1999
    
    
    12,145,617
    
    
    
    
    
    12,772,214For
      cash on exercise of stock options
    
    
    100,000
    
    
    0.35
    
    
    35,000For
      cash pursuant to private placement
    
    
    1,000,000
    
    
    0.345
    
    
    345,000For
      cash on exercise of share purchase warrants
    
    
    10,000
    
    
    0.225
    
    
    2,250For
      mineral properties
    
    
    25,000
    
    
    2.90
    
    
    72,500Balance,
      December 31, 2000
    
    
    13,280,617
    
    
    
    
    
    13,226,964For
      mineral properties
    
    
    25,000
    
    
    2.90
    
    
    72,500Issuance
      to acquire Fairfield Minerals Ltd.
    
    
    6,877,681
    
    
    0.25
    
    
    1,711,312Adjustment
      to issued shares on amalgamation
    
    
    (3,060,292
    )
    
    -
    
    
    -Balance,
      December 31, 2001
    
    
    17,123,006
    
    
    
    
    
    15,010,776For
      cash pursuant to private placements
    
    
    4,150,000
    
    
    0.43-0.55
    
    
    1,897,943For
      cash on exercise of share purchase warrants
    
    
    134,750
    
    
    0.38
    
    
    51,312For
      purchase of mill
    
    
    122,077
    
    
    0.65
    
    
    79,350For
      mineral properties
    
    
    388,889
    
    
    0.90
    
    
    350,000Balance,
      December 31, 2002
    
    
    21,918,722
    
    
    
    
    
    17,389,381For
      cash pursuant to private placements
    
    
    2,773,800
    
    
    0.70-2.15
    
    
    2,362,704For
      cash on exercise of share purchase warrants
    
    
    2,771,807
    
    
    0.42-0.95
    
    
    1,648,664For
      cash on exercise of stock options
    
    
    162,750
    
    
    0.30-0.55
    
    
    75,973Balance,
      December 31, 2003
    
    
    27,627,079
    
    
    
    
    
    21,476,722For
      cash pursuant to private placements
    
    
    1,722,250
    
    
    1.32-2.25
    
    
    2,553,913For
      cash on exercise of share purchase warrants
    
    
    1,503,438
    
    
    0.47-1.60
    
    
    1,088,919For
      cash on exercise of stock options
    
    
    290,000
    
    
    0.30-1.37
    
    
    138,984Balance,
      December 31, 2004
    
    
    31,142,767
    
    
    
    
    $
    25,258,538
 140
  
 
 **SIGNATURE**
 
 
 
 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.
 
 
 
 
 Almaden
Minerals Ltd.
 Registrant
 
 
 
 
 Dated: March
28, 2005       By /s/Duane
Poliquin
 Duane
Poliquin, President
  141