FORM 10-KSB

                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

           [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
                  For the fiscal year ended December 31, 1997
                                      OR
           [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
             THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
          For the transition period from ____________ to ____________

                         GOLDEN QUEEN MINING CO. LTD.
            (Exact name of registrant as specified in its charter)

Province of British Columbia       0-21777               Not Applicable
(State or other jurisdiction     (Commission             (IRS Employer
 of incorporation)               File Number)          Identification No.)

                         104 South Freya, Suite 211-A
                               Green Flag Building
                            Spokane, Washington 99202 
                    (Address of principal executive offices)

     Registrant's telephone number, including area code: (509) 535-4022

     Securities registered pursuant to Section 12(b) of the Act:  None

   Securities registered pursuant to section 12(g) of the Act:  Common Stock, 
     without par value

Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes [ ]  No [X] 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or other information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendments to this Form 10-KSB.  [ ] 

The issuer's revenues for its most recent fiscal year were $154,704.  The
aggregate market value of the voting stock held by non-affiliates at March 18,
1998 was $8,815,605.  The number of shares of common stock outstanding at such
date was 29,560,641 shares.

Transitional Small Business Disclosure Format.  Yes [ ]  No [X]


<PAGE>

                         GOLDEN QUEEN MINING CO. LTD. 
                    ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR
                           ENDED DECEMBER 31, 1997

                              TABLE OF CONTENTS

SAFE HARBOR STATEMENT

GLOSSARY
                                                                           Page
PART I

     Item 1:  Description of Business                                       1

     Item 2:  Description of Property                                       8

     Item 3:  Legal Proceedings                                            12

     Item 4:  Submission of Matters to a Vote of Security Holders          12


PART II

     Item 5:  Market for Common Equity and Related Stockholder Matters     12

     Item 6:  Management's Discussion and Analysis or Plan of Operation    12

     Item 7:  Financial Statements                                         15

     Item 8:  Changes in and Disagreements with Accountants on 
               Accounting and Financial Disclosure                         15


PART III

     Item 9:  Directors and Executive Officers, Promoters and 
               Control Persons; Compliance with Section 16(a) of 
               the Exchange Act                                            16

     Item 10:  Executive Compensation                                      17

     Item 11:  Security Ownership of Certain Beneficial Owners 
                    and Management                                         21

     Item 12:  Certain Relationships and Related Transactions              22

     Item 13:  Exhibits and Reports on Form 8-K                            23

SIGNATURES




                                      (i)
<PAGE>
                             Safe Harbor Statement


This report contains both historical and prospective statements concerning the
Company and its operations.  Historical statements are based on events that
have already happened; examples include the reported financial and operating
results, descriptions of pending and completed transactions, and management and
compensation matters.  Prospective statements, on the other hand, are based on
events that are reasonably expected to happen in the future; examples include
the timing of projected operations, the likely effect or resolution of known
contingencies or other foreseeable events, and projected operating results.

Prospective statements (which are known as "forward-looking statements" under
the Private Securities Litigation Reform Act of 1995) may or may not prove true
with the passage of time because of future risks and uncertainties.  The risks
and uncertainties associated with prospective statements contained in this
report include, among others, the following:

THE LIKELIHOOD OF CONTINUED LOSSES FROM OPERATIONS.  The Company has no revenue
from mining operations and has incurred losses from inception through December
31, 1997 of approximately $2,970,000.  This trend is expected to continue for
at least the next two years and is expected to reverse only if, as and when
gold is produced from the Soledad Mountain Project.

THE NEED FOR SIGNIFICANT ADDITIONAL FINANCING.  The Company needs approximately
$77,600,000 in additional financing to put the Soledad Mountain Project into
production; $66,300,000 of this will be used for capital expenditures and
$11,300,000 will be used as working capital and for start-up expenditures. 
Although the Company expects to finance development from additional sales of
common stock, from bank or other borrowings (or, alternatively, through joint
development with another mining company), it has no commitment for bank
financing or for the underwriting of additional stock, and it is not a party to
any agreement or arrangement providing for joint development.  Whether and to
what extent financing can be obtained will depend on a number of factors, not
the least of which is the price of gold.  Gold prices fluctuate widely and are
affected by numerous factors beyond the Company's control, such as inflation,
the strength of the United States dollar and foreign currencies, global and
regional demand, and the political and economic conditions of major gold
producing countries throughout the world.  As of March 1, 1998, world gold
prices were approximately $299 per ounce, a reduction of approximately 18% from
prices a year ago.  If gold prices do not strengthen, it may not be economical
for the Company to put the Soledad Mountain Project into production.

RISKS AND CONTINGENCIES ASSOCIATED WITH THE MINING INDUSTRY GENERALLY.  The
Company is subject to all of the risks inherent in the mining industry,
including environmental risks, fluctuating metals prices, industrial accidents,
labor disputes, unusual or unexpected geologic formations, cave-ins, flooding
and periodic interruptions due to inclement weather.  These risks could result
in damage to, or destruction of, mineral properties and production facilities,
personal injury, environmental damage, delays, monetary losses and legal
liability.  Although the Company maintains or can be expected to maintain
insurance within ranges of coverage consistent with industry practice, no
assurance can be given that such insurance will be available at economically
feasible premiums.  Insurance against environmental risks (including pollution
or other hazards resulting from the disposal of waste products generated from
exploration and production activities) is not generally available to the
Company or other companies in the mining industry.  Were the Company subjected
to environmental liabilities, the payment of such liabilities would reduce the
funds available to the Company.  Were the Company unable to fund fully the cost
of remedying an environmental problem, it might be required to suspend
operations or enter into interim compliance measures pending completion of
remedial activities.



                                     (ii)
<PAGE>

                                   Glossary

Certain terms used throughout this report are defined below.  

     advanced minimum royalty.  Cash royalty payments made in advance of
production to hold a mining lease.  Advanced minimum royalties are usually but
not always credited against production royalties arising after production
commences.

     Ag.  The symbol for silver.

     Au.  The symbol for gold.

     AuEq.  Gold equivalent, being a measurement of gold and silver on a
combined basis calculated to reflect the price and recovery differentials
between the two metals.

     caldera.  A large diameter crater caused by the collapse or subsidence of
the central part of a volcano, or as the result of a violent explosion.  

     Company.  Golden Queen Mining Co. Ltd., a British Columbia corporation,
and its wholly-owned subsidiary, Golden Queen Mining Company, Inc., a
California corporation.
 
     Cretaceous Period.  A period in geologic time approximately 65 to 141
million years ago.

     development stage.  Activities related to the preparation of a
commercially minable deposit for extraction.  

     exploration stage.  Activities such as drilling, bulk sampling, assaying
and surveying related to the search for minable deposits.

     fault or faulting.  A fracture in the earth's crust accompanied by a
displacement of one side of the fracture with respect to the other and in a
direction parallel to the fracture.

     floating cone and inverted cone.  A computerized methodology used to
approximate the shape of a near-optimal economic open pit mine plan based on
applied cutoff grade criteria and pit slopes.

     grade.  A term used to assign value to reserves, such as ounces per ton or
carats per ton.  

     HDPE.  High density polyethylene, which is a plastic used to create an
impervious membrane.
 
     heap leaching.  A gold extraction process involving the percolation of
cyanide solution through crushed ore heaped on an impervious pad or base.

     hectare.  A metric measurement of area equivalent to 10,000 square meters. 


     linear kriging.  A geostatistical method of resource analysis.        

     magnetic surveying.  A mineral exploration technique which employs a
magnetometer to measure the magnetic intensity of an area to determine possible
mineralization.  

     Merrill-Crowe process.  A process used to recover soluble gold and silver
from a leaching solution by precipitating with zinc dust after the solution has
been clarified and deoxygenated by vacuum treatment.

     metallurgy.  The science and technology of extracting metals from their
ores.

     Middle Miocene Epoch.  A period in geologic time approximately 6 to 22
million years ago.



                                     (iii)
<PAGE>

     mineral deposit.  A mineral deposit is a mineralized underground body
which has been intersected by sufficient closely-spaced drill holes or
underground sampling to support sufficient tonnage and average grade(s) of
metal(s) to warrant further exploration or development activities.  A mineral
deposit is sometimes also referred to as mineralized material or as mineralized
material inventory.  A mineral deposit does not qualify as a commercially
minable ore body (reserves) under standards promulgated by the Securities and
Exchange Commission until a final, comprehensive economic, technical and legal
feasibility study based upon test results has been concluded.

     mineralization.  The presence of minerals in a specific area or geological
formation.  

     ore.  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.

     orogenic.  Of or pertaining to an orogen, which is a mountain mass that is
a unit with respect to origin or uplift.  

     overburden.  Waste rock and other materials which must be removed from the
surface in order to mine underlying mineralization.

     pit phasing analysis.  A method used to optimize the mining sequence in an
open pit mine design.  

     plutonic.  Originating or situated deep within the Earth.

     production stage.  Activities related to the actual exploitation or
extraction of a mineral deposit.  

     reserves.  That part of a mineral deposit which could be economically and
legally extracted or produced at the time of determination.  Reserves are
subcategorized as either proven (measured) reserves, for which (a) quantity is
computed from dimensions revealed in outcrops, trenches, workings or drill
holes, and grade and/or quality are computed from the results of detailed
sampling, and (b) the sites for inspection, sampling and measurement are spaced
so closely and geologic character is so well defined that size, shape, depth
and mineral content are well-established; or probable (indicated) reserves, for
which quantity and grade and/or quality are computed from information similar
to that used for proven (measured) reserves, yet the sites for inspection,
sampling and measurement are farther apart.  

     stripping ratio.  The tonnage of waste material removed to allow the
mining of one ton of ore in an open pit.

     trend.  The directional line of a rock bed or formation.  

     volcanics.  Rock composed of clasts or pieces that are of volcanic
composition.  

         [The balance of this page has been left blank intentionally.]




                                     (iv)
<PAGE>

                                    PART I


Item 1.  DESCRIPTION OF BUSINESS.

GENERAL DEVELOPMENT OF BUSINESS.  The Company was incorporated under the laws
of the Province of British Columbia in November 1985, and is presently engaged
in the development of mineral properties located in the Mojave Mining District
of Kern County, California known as the Soledad Mountain Project.  The Company
acquired its initial interest in the project in 1986; since then, it has
acquired additional interests in the area and explored for gold and other
minerals.  These activities are conducted through Golden Queen Mining Company,
Inc., a California corporation and wholly-owned subsidiary of the Company.  

The Company first outlined a gold deposit at the project in 1988, although the
size of the deposit was insufficient to justify further development.  Further
exploration work was conducted from 1989 through 1991.  Thereafter, the project
remained dormant, until 1994 when the Company renewed exploration activities
with funds derived from several offshore private placements of its common
stock.  Based on extensive drilling and other exploratory activities conducted
through 1997, proven and probable ore reserves at the project are estimated at
approximately 47.7 million tonnes (52.5 million tons), at an average grade of
0.86 grams per tonne (0.025 ounces per ton) of gold and 12.7 grams per tonne
(0.371 ounces per ton) of silver.  Total contained ounces are estimated at
1,314,000 ounces of gold and 19,609,000 ounces of silver, or approximately
1,577,000 ounces of gold equivalent.

Substantially all exploration activities have been completed, and the Company
has determined to develop the project using open pit mining methods and a
cyanide heap leach recovery process.  Development plans include the
construction of facilities capable of mining and processing precious metals
ores at a rate of up to 5.67 million tonnes (6.25 million tons) per year for at
least nine years, followed by heap detoxification and reclamation of the
project site.  The Company previously reported that it expected to begin
producing gold and silver from the project during the second half of 1998, once
permitting was completed.  Because of the downturn in world gold prices during
the second half of 1997, however, the Company was not able to obtain financing
for construction.  As a consequence, production will be delayed until gold
prices improve. 

The registered office of the Company is located at 1600 - 925 West Georgia
Street, Vancouver, British Columbia  V6C 3L2, and its executive offices of the
Company are located at 104 South Freya, Suite 211-A, Green Flag Building,
Spokane, Washington 99202.

PROJECT BACKGROUND.  The Soledad Mountain Project is located within the Mojave
Mining District, along with the nearby Cactus Gold Mine, Standard Hill Mine and
Tropico Mine.  Mining in the area dates back into the late 19th century, but
the most significant production occurred from the 1930s to 1942, when Gold
Fields Mining Company of South Africa operated a 272-ton per day cyanide mill,
evidenced by the large piled tailings on the north slope of Soledad Mountain. 
No historical operators attempted open pit mining in the project area.

The project was brought to the Company's attention in the mid-1980s by George
Phelps, who held an interest in mining properties in the area through Golden
Queen Mining Company, Inc., a California corporation.  Management obtained and
reviewed old maps of underground mining activities in the project area and was
impressed with the horizontal extent to which significant precious metals
extended into the foot and hanging walls of major veins.  The Company acquired
all of the outstanding shares of Golden Queen Mining Company, Inc. in 1986,
thereby obtaining Mr. Phelps' property interests in the project area.  Shortly
thereafter, the Company began consolidating its land position and commenced an
initial program of 12 diamond drill holes and limited underground check
sampling.  The next phases of exploration, lasting through 1990, consisted of
reverse circulation drilling and more extensive underground check sampling.

More extensive exploration activities commenced in 1994, and by the end of 1995
a total of 587 surface drill holes had probed the numerous structures of the
project area for ore reserves.  In addition, assay information from 7,435
meters (24,394 feet) of underground drilling and cross-cuts was used to bolster
the understanding of surface drilling results and provide assay data in deeper
portions of ore-bearing structures.  This was augmented in 1996 and 1997 by an
additional 142 surface drill holes and the sampling of 4,282 meters (14,050
feet) of additional underground drilling and cross-cuts.

                                       1
<PAGE>

EXPLORATION.

GENERAL.  Several major drilling campaigns and a program to resample the
underground workings have been completed, along with metallurgical testing for
process amenability.  Aerial survey topographic mapping and collection of
baseline data for environmental permitting have also been conducted.

High grade precious metal mineralization is associated with steeply-dipping
epithermal fissure veins occupying faults and fracture zones that cross-cut the
rock units in a general north-west trend.  This is the ore that was mined and
processed by the previous mining operation of Gold Fields Mining Company in the
1930s and early 1940s, but a considerable amount of this material remains and
is incorporated into the present reserves.  Surrounding the veins are siliceous
envelopes that contain lower grade, but still ore-grade, material that forms
the major portion of the reserve tonnage.

SAMPLING AND BLOCK MODEL CONSTRUCTION.  The economic viability of the mineral
deposit at the Soledad Mountain Project is based on industry-accepted sampling
and block model computer analysis:  the Company constructed a three-dimensional
computer model of the project area using simulated "blocks" of mineralized
material measuring 25-feet by 25-feet by 20-feet; substantial data derived from
drill hole samples, trenches and other exploratory methods was then introduced
into the model to determine the gold and silver content and average grades of
the simulated blocks; finally, different economic variables, such as metals
prices and mining and ore processing costs, were introduced to determine the
viability of mining all or a portion of the deposit.  

The data employed in the block model analysis was derived from Gold Fields
Mining Company's production records and the Company's more recent exploration
activities, and consists of 96,112.7 meters (315,329 feet) of assayed material
taken from fourteen different vein systems in the district.  The sources and
extent of this data are summarized as follows:


  Diamond drilling                  8,482.1 meters     (27,828 feet)
  Reverse circulation drilling     80,195.3 meters     (263,107 feet)
  Old cross-cuts (1930s)            3,167.3 meters     (10,392 feet)
  Underground drilling (1930s)      3,235.8 meters     (10,616 feet)
  Recent cross-cuts (1980s)         1,032.2 meters     ( 3,386 feet)
                                   ---------------     -------------
                                   96,112.7 meters     (315,329 feet)
                                   ===============     ==============

The model is based in part on the Company's geological interpretation of this
data.  Rock types, veins, low-grade disseminated surrounding envelopes, mined-
out stopes and zones of internal waste were delineated on cross-sections,
transferred to bench plans, digitized and loaded into the model.  Plan block
maps were plotted from the model to check the block code assignments and
corrections were made where necessary.  Veins were defined as outlined areas
containing grades greater than 3.43 grams per tonne (0.100 ounces per ton) of
gold equivalent and lower grade disseminated envelopes enclosed material that
ranged from 3.43 to 0.34 grams per tonne (0.100 to 0.010 ounces per ton) of
gold equivalent.  All the remaining blocks in the model that did not fall into
one of the described ore categories were considered waste.  Since ore and waste
zones were defined in the model blocks but not in the drill hole composites,
the code of the block penetrated by the drill hole was assigned back to the
composite to ensure a consistent one-to-one match during the grade assignment
process.

Linear kriging was used to estimate gold block grades in the model.  Grades
were estimated for the veins and disseminated areas independently to maintain
the integrity of each zone.  The separation of vein, disseminated and waste
zones was maintained by allowing only composites coded as vein to be used to
estimate a block designated as vein and, similarly, only disseminated
composites influenced disseminated blocks.  Each structural zone was kriged
separately.  A gold equivalent grade was then calculated based on assumed
prices for gold and silver and an expected silver recovery rate.  The
calculation was done for all blocks containing estimated gold and silver grades
and the resulting value was stored back into the block.  Minable reserves and
all subsequent mine planning work were based on this value.

The mineralized deposit includes all blocks within the model limits, but with
no assumptions as to economic viability.  The geological resource, based on a
cut-off grade of 0.342 grams per tonne (0.010 ounces per ton) of gold
equivalent, is comprised of 94,380,000 tonnes (104,172,000 tons) averaging 0.79
grams per tonne (0.023 ounces per ton) of gold and 12.44 grams per tonne (0.363
ounces per ton) of silver, or 0.93 grams per tonne (0.027 ounces per ton) of
gold equivalent.

                                     2
<PAGE>

FLOATING CONE AND PIT PHASING ANALYSES.  A floating cone analysis is a
computer-aided means of designing an optimal open pit mine plan.  The "floating
cone" is an inverted cone model that is first superimposed over the mine area
without regard for practical mining or economic considerations.  The model is
then refined to take into account cutoff grades, pit outlines, final ore
reserve calculations, until it resembles a minable pit, following which it is
refined further to reflect the smoothing of abrupt changes in pit wall
configuration for slope stability, and the smoothing of intermediate benches
and pit floors for efficient equipment utilization and the addition of haul
roads. 

Once these refinements have been made, further analysis is undertaken to
determine "pit phasing" or the sequence of mining operations.  Among the
factors considered in this analysis are haul profiles, load-haul match-ups of
mining equipment, and ore grades delivered to the crusher.  It is an iterative
process involving a comparison of multiple scenarios and having as its goal the
maximization of production at the lowest possible cost.  The analysis is
critical to the development of capital and operating costs.   

The ore reserve portion of the mineralized material inventory at the Soledad
Mountain Project was calculated by applying the following economic cut-off
criteria to the floating cone analyses for preliminary pit design:  a gold
price of $350 per ounce; a silver price of $5.00 per ounce; a development rock
mining cost per tonne of waste and ore of $0.68 per tonne ($0.62 per ton);
internal costs of $2.80 per tonne ($2.54 per ton), comprised of processing and
general/administrative costs of $2.24 and $0.56 per tonne ($2.03 and $0.51 per
ton), respectively; a design cost of $3.48 per tonne ($3.16 per ton), comprised
of processing, mining and general/administrative costs of $2.24, $0.68 and
$0.56 per tonne ($2.03, $0.62 and $0.51 per ton), respectively; a design cut-
off grade of 0.41 grams per tonne (0.012 ounces per ton) of gold equivalent and
an internal cut-off grade of 0.34 grams per tonne (0.010 ounces per ton) of
gold equivalent; a refining recovery rate of 100%; and process recovery rates
of 82% for gold and 70% for silver.

ORE RESERVES.  The Soledad Mountain Project contains a current minable ore
reserve, classified as proven and probable, totaling 48.6 million tonnes (53.7
million tons) averaging 0.86 grams per tonne (0.025 ounces per ton) of gold and
12.69 grams per tonne (0.370 ounces per ton) of silver.  Total contained ounces
are 1,340,000 ounces of gold and 19,800,000 ounces of silver, or approximately
1,560,000 ounces of gold equivalent.  The following table sets forth
information concerning proven and probable minable ore reserves, based on an
average cutoff grade of 0.34 grams per tonne (0.010 ounces per ton) of gold
equivalent.

                         Proven and Probable Reserves

<TABLE>
<CAPTION>

                            Ore         AuEq        AuEq         Au           Au        Ag        Ag
Category                   Tonnes       g/mt         oz          g/mt         oz       g/mt       oz
--------                 ----------     ----      ---------      ----      ---------   ----    ----------
<S>                      <C>            <C>       <C>            <C>       <C>         <C>     <C>
Proven and probable      48,600,000     1.01      1,560,000      0.86      1,340,000   12.69   19,800,000

</TABLE>

The Company estimates that the current minable ore reserve will support ore
production at a rate of up to 5.67 million tonnes (6.25 million tons) per year
for at least nine years.  Considering a possible four-year period of heap
detoxification, gold production could extend the life of the project to
thirteen years.  Further extension is a possibility if additional drilling
provides better definition of minable reserves in those areas that currently
have limited drilling intercepts and/or limited underground sampling.  The
average stripping ratio is projected to be approximately 4.08 to 1.  The
projected mine life, stripping ratios and ore production rates at the project
are believed by the Company to be well within industry standards.  

METALLURGY.  There are three principal types of ore represented in the mineral
deposit of the project:  quartz latite, rhyolites and pyroclastics. 
Metallurgical testing has been performed on more than 200 samples of these ore
types from the project area over a period of nine years.

Four ore processing methods were evaluated in developing an operating plan for
the Soledad Mountain Project:  slurry cyanide leaching, gravity separation,
flotation and heap leaching.  Tests confirmed heap leaching as the best
processing method for the project, largely because the ore deposit is of
relatively low grade.  The location and climate of the project area are well
suited to heap leaching, and the process has been successfully applied by other
mining companies to nearby ore bodies.  Because of the high ratio of silver to
gold in the deposits, recovery of these metals from the leaching solution will
be accomplished using the Merrill-Crowe process.  Trace elements of mercury in
the ore will be removed from the precipitate using a mercury retort. 

                                     3
<PAGE>

Test data indicate that crush size is the most important factor affecting metal
recovery, and that crushing the ore to a size of 8 mesh--which is about the
finest size attainable without milling--will be required to realize optimal
recoveries.  It is anticipated that the ore will be agglomerated with cement as
a binding agent at the rate of 5 kilograms of cement per tonne (12.4 pounds per
ton) of ore.  The average cyanide consumption rate for the project is expected
to average 0.2 kilograms of cyanide per tonne (0.44 pounds per ton) of ore
processed.  The tests indicate average expected ultimate gold and silver
recoveries of 82% and 70%, respectively.

MINING AND ORE RECOVERY PLAN.

MINING.  Mining at the Soledad Mountain Project will be conducted using
conventional open pit techniques.  It is anticipated that operations will be
carried out by the Company's own employees.  Open pit mining is generally
associated with a spiral haulage ramp that is extended as the pit deepens.  At
the project, the majority of the ore will be excavated by cutting back into
canyons or along hillsides; the ore is not in a single pit, but in a network of
smaller pits, with frequently overlapping pit walls.  The current mine plan
involves initial low elevation mining for the first two years of production,
followed by higher elevation mining in subsequent years.  The road extending
from the ore stockpile area at the processing plant site up to the highest
elevations of the mountain must be built before any excavation can begin on the
highest benches in each pit area.  A total of about 6,400 meters (20,992 feet)
of road will be required:  2,500 meters (8,200 feet) to facilitate the first
two years of mining at low elevations, followed by further extensions to the
highest benches of the mountain during the remaining mine life.

The Company plans to mine at a rate of up to 5.67 million tonnes (6.25 million
tons) of ore per year on the basis of three eight-hour shifts per day, 360 days
per year.  This schedule would provide ore to the crusher at a rate of 16,200
tonnes (17,881 tons) per day and an average of 64,260 tonnes (70,927 tons) of
waste per day.  All waste will be deposited on a series of dump sites east,
south and west of the pit areas.

Ground water has been reported only in the deepest gold mine workings below 823
meters (2,699 feet) in elevation.  All open pit mining is therefore expected to
be dry, except for occasional rains and very occasional winter snows.  Old
workings from historical underground mining will be encountered from time-to-
time, but are not expected to interfere significantly with mining operations.

CRUSHING, CONVEYING AND STACKING.  A 900 tonne (993 tons) per hour, four-stage
crushing circuit will be installed at the Soledad Mountain Project.  The
primary crushing system will be comprised of a vibrating grizzly feeder with
103 millimeter (4.0 inch) apertures and a 950 millimeter (37 inch) by 1,250
millimeter (49 inch) jaw crusher with a closed side setting of 103 millimeters
(4.0 inches).  The grizzly undersize and the jaw crusher product will be
combined and conveyed to a secondary crushing circuit.  Secondary crushing will
be done in a 2.13 meter (7 foot) short head cone crusher.  Third stage crushing
will be done in two 2.13 meter (7 foot) short head cone crushers and fourth
stage crushing will be done in seven 990 millimeter (38.5 inch) vertical shaft
impact crushers.  Third and fourth stage crushing will be done in closed
circuit with a double deck screen, producing a final product of 100% minus 2.36
millimeter (8 mesh) crushed ore.

Crushed ore will be combined on a single belt conveyor for sampling and
agglomeration.  Cement will be added to the belt conveyor by a variable speed
screw conveyor.  The belt conveyor will discharge directly into an
agglomeration drum.  Water and barren solution will be added in increments in
the agglomerator to bring the ore to an 8% moisture content.  A totalizing belt
scale on the final product belt will control the cement and water additions and
record daily tonnages.  The agglomeration drum will discharge onto a conveyor
that feeds the heap conveying and stacking system.

In the primary crushing circuit, dust will be controlled by low pressure water
sprays.  In the secondary, tertiary and quarternary crushing circuits, dust
will be controlled by central dry bag dust collectors.  Individual dry dust
collectors will be used on the cement silo and at outlying conveyor transfers.

The agglomerated ores will be conveyed to a radial stacking system by a series
of portable and semi portable conveyors.  The conveying system will consist of
a series of 0.914-meter (3-foot) wide semi-portable and portable conveyors. 
The semi-portable conveyors will transport the crushed ore to the central area
of the leach pad and the portable conveyors will transport crushed ore to the
stacker.  The stacking system will consist of a self-propelled bin conveyor and
a 39.6-meter (130-foot) long radial stacker with a 6.1-meter (20-foot) long
slinger.  The radial stacker will be equipped for lifting and hydraulic wheel
positioning.  The hydraulic drive will be sized for the slopes of the leach
pad.

                                     4

<PAGE>

LEACHING.  The initial heap leach pad will be located on the north slope of the
mountain, and a second leach pad will be located on the west slope.  Each will
be a side hill pad with a perimeter dike to support the toe of the heap and
create solution storage capacity.  In addition, each is designed to minimize
its effect on the surrounding environment, wildlife and waters.  Both pads are
designed as dedicated pads, meaning that the ore will be stacked, leached,
rinsed and left in place on the pads for reclamation.  The pads will be located
downslope of the proposed mine pit along the base of Soledad Mountain and will
be divided into cells to correspond to ore production and pad capacity
requirements.  The capacity of the pool in each cell is designed to have
sufficient storage for up to eight hours of solution application and 12 hours
of drain down in the event of a pump or power failure and to store the
estimated precipitation from a 100-year 24-hour storm event.

Leach solution will be distributed over the heap by a system of pipes and
emitters.  Once the solution is applied to the ore and percolates throughout
the heap, it will drain along the base of the heap.  The solution flow will be
intercepted and collected by 10-centimeter (4.0 in.) diameter perforated pipes
installed on top of the liner system and routed into one of three solid
manifold pipes.  The manifold pipe will then route the solution to the solution
collection sump.  This drainage system is designed to minimize the hydraulic
head applied over the composite liner system and increase the rate of solution
recovery. 

Solution will be recovered from the heap by a submerged sump pump in the low
area of the cell.  The sump pump will be used to recover solutions to a tank
and booster pump station that will then pump solution to the solution storage
tanks at the Merrill-Crowe plant.  The pipelines will be located within the
lined cell for containment in the event of a pipe leak.  The pad for the pump
will be designed to drain into the leach pad to control leaks from the pump.

The pad liner system will consist of four components:  the prepared subgrade,
the liner material, a solution collection system on top of the liner and a
protective overliner material.  The prepared subgrade will be a well-graded
material prepared and compacted to a permeability of at least 10(-6)
centimeters per second.  The pad liner will be constructed as a composite
system.  An 80 millimeter thick geomembrane HDPE material will overlay the
prepared soil subgrade, and a leak detection system will be installed under the
geomembrane.  Protective overliner material consisting of crushed ore or waste
will then be placed in a 460 millimeter (18 inch) thick lift over the lined
area.  This protective overliner will serve to secure the solution collection
piping and provide direct access in the pad area for lightweight vehicles and
the conveyor system.  Initial placement of the material will be integrated with
pad construction to create a working area of sufficient size for production. 
Pipe laying and spreading of the overliner will be done thereafter, in
conjunction with the pad loading plans.

The leach recovery schedule is based on three parameters:  the metallurgical
characteristics of the ore, physical delays in the handling of ore and
solutions and the retention of values in solution within the heap.  Once the
heap has been under leach for a complete leach cycle and a constant daily
tonnage is being stacked, estimated recoveries are as follows:


               Percentage of 82% Gold, 70% Silver

                    Days       Au        Ag
                    ----       --        --

                     30       83.5      79.4
                     60        5.8       7.2
                     90        3.2       4.0
                    360        5.7       7.1
                    400        1.8       2.3 
                               ---       ---
                               100       100
     
     
The modification for each year's production, particularly in the first year,
schedule must take into account the load-to-leach delays, delays from the
additional lifts and, most importantly, the values retained in heap solutions. 
The heaps will be detoxified prior to closure by a rinse of a combination of
fresh water and peroxide-treated recycled water.  The heap will be rinsed by
cells.  Each cell is estimated to require a two-year period to detoxify to
required cyanide levels.  The amount of fresh water available is limited by the
well source and the other demands of production: agglomeration and dust
suppression.  During the production years, 18.9 liters (5 gallons) per second
will be available.  After mining has ceased, 37.9 liters (10 gallons) per
second will be available.  The addition of fresh water must be matched by the
loss of water to evaporation.  Production during the detoxification period will
come from two sources.  Gold and silver will be recovered as a result of
extending the leach cycle and from the solutions entrained in the heap that are
rinsed during the period.

                                     5
<PAGE>

RECOVERY.  The gold recovery plant at the project will be a conventional
Merrill-Crowe circuit, due to the high silver content of the ore.  The average
silver content of the ore body is 12.69 grams per tonne (0.37 ounces per ton),
but the silver content of the feed will occasionally exceed 34.3 grams per
tonne (1.0 ounces per ton).  During heap detoxification, when cyanide levels
drop below levels suitable for Merrill-Crowe processing, a small carbon plant
will be used.
 
PERMITTING AND ENVIRONMENTAL ISSUES.  The Soledad Mountain Project is located
on private and federally-controlled lands in an incorporated area of Kern
County, California.  Current and proposed mining activities on these lands are
thus subject to extensive federal, state and local regulations.  These
regulations and the Company's compliance efforts are summarized below.
  
CEQA/NEPA ISSUES.  The project is subject to the California Environmental
Quality Act ("CEQA") and the National Environmental Policy Act ("NEPA"), each
of which requires written analysis of proposed mining activities and their
effect on the physical, biological, social and economic resources of the area. 
This analysis is known under CEQA as an environmental impact report, and under
NEPA as an environmental impact statement ("EIR").

The Company submitted its combined EIR/EIS to the Kern County Planning and
Development Department in February 1996, in accordance with a memorandum of
understanding between Kern County and the Bureau of Land Management ("BLM")
which gave the county department primary responsibility for review.  The
EIR/EIS took the form of a combined conditional use permit application,
environmental information statement, surface mining reclamation plan and plan
of operation.
  
Several comments were received in response to the EIR/EIS concerning ground
water quality and quantity, air quality, the effect of development on native
species of plants and animals, the visual impact of the project and the
potential hazards associated with transporting supplies and chemicals to the
project site.  These comments were incorporated into a revised EIR/EIS released
for public comment in June 1997.  In September 1997, the Company received a
favorable notice of determination regarding the EIR/EIS, as well as approval of
its conditional use permit application and surface mining reclamation plan
(required by the California Surface Mining and Reclamation Act and applicable
Kern County zoning ordinances).  This was followed in November 1997 by a record
of decision from the BLM approving the Company's plan of operation under NEPA. 

AIR QUALITY ISSUES.  The project lies within the Southeast Desert Air Basin,
which is under the jurisdiction of the Kern County Air Pollution Control
District.  The district is empowered to regulate stationary sources of air
pollution within the basis, pursuant to authority granted under the federal
Clean Air Act. 

The area is designated as unclassified for PM(10) emissions (that portion of
the total suspended particulates less than 10 microns in size) and as a non-
attainment area for ozone.  The typically windy conditions and very dry nature
of the area are probably responsible for the high PM(10) background levels
recorded at several nearby monitoring stations.  On-site air sampling was
conducted for approximately one year with high background PM(10) levels found.

Fugitive dust, when combined with the background dust, may cause unacceptable
levels of PM(10) emissions off-site, and may represent the greatest potential
environmental issue.  A PM(10) level of 44 micrograms per cubic meter is
projected by computer modelling utilizing a mining rate of 30 million tons per
year of ore and waste.  This level is below the California attainment standard
of 50 micrograms per cubic meter and the Federal standard of 150 micrograms per
cubic meter.  However, the Company believes that it will achieve compliance
with applicable standards by a greater margin, as a result of the fact that the
modelling methodology assumes worst likely case conditions which are considered
unlikely to be encountered in actual operations and based on the use by the
Company of commonly-accepted dust control techniques in all phases of mining
and crushing.  The Company submitted an application to the Kern County Air
Pollution Control District for authority to construct the project, and, based
upon the dispersion modeling discussed above, the application was approved in
February 1998.

WATER QUALITY ISSUES.  The project is in the northern portion of the Antelope
Valley ground water basin and experiences an average annual rainfall of less
than 14.5 centimeters (5.7 in.).  There are no surface waters of any kind,
other than the periodic runoff that follows the rare heavy rains that typically
occur during the winter months.  Drainage in the area of the project is
controlled by a series of deeply incised gullies and channels that ultimately
drain to the north-west into the Chaffee hydrologic area.  The water that does
not evaporate typically percolates into the Antelope Valley ground water.  No
water quality data are available for surface runoff.  Ground water in the
bedrock underlying the area is almost certainly very modest in quantity and is
restricted to fractures.  The alluvial cover on the valley fill are known
sources of important amounts of ground water.  Water in these cases is
typically at 55 to 61 meters (180 to 200 feet) in depth.

                                     6
<PAGE>

Wells in the shallow alluvium are historically low yield in nature, while those
in areas with a substantial amount of alluvial fill can be important producers. 
Water quality data are limited; however, sufficient data are available to
confirm that the water is acceptable for the process applications proposed.

Once mining at the project has commenced, control of surface water in the area
will be achieved through the construction of intercept trenches to preclude the
uncontrolled runoff from coming into contact with the leach heaps or other
materials that might degrade water quality.  Also, the heap leach process that
the Company intends to employ does not include direct or indirect waste water
discharges.  Ground water protection from leaching solutions will be achieved
through the use of a double liner system augmented by a leachate collection and
recovery system.  A monitoring system below the liner will also be incorporated
for leak detection.  Additional monitoring wells will be placed down gradient
in the direction of probable flow as an additional protective feature.

The Lahontan Water Quality Control Board is responsible for ensuring compliance
with the federal Clean Water Act and California's Porter-Cologne Water Quality
Act.  The Company submitted a comprehensive application to the control board in
June 1997, detailing waste characteristics of the project, the geology and
climate of the area, containment facility design specifications, operating
plans, drainage plans, mine closure procedures, and post-closure maintenance of
the project site.  The application has undergone technical and administrative
review, and was approved at the March 1998 meeting of the control board.

CLOSURE, RECLAMATION AND BONDING ISSUES.  Reclamation requirements for the
project include removal of all structures, shaping and seeding of the heaps,
seeding of portions of the waste dumps and the ripping up or removal of all
roads.  The mine pits will require little or no reclamation.  Reclamation
requirements are influenced by the fact that the project is located in a desert
climate, with less than 14.5 centimeters (5.7 in.) of annual rainfall.

In 1996 the Company commissioned Bamberg Associates to prepare a reclamation
plan for the project.  This plan was later submitted to the Kern County
Planning and Development Department, as part of the Company's conditional use
permit application and surface mining reclamation plan.  The reclamation plan
meets the requirements of California's Surface Mining and Reclamation Act and
applicable Kern County zoning ordinances, and federal requirements designed to
prevent degradation of federal lands.

The objective of the reclamation plan is to return the project site to its pre-
mining status as wildlife habitat and open space.  The plan obligates the
Company to demolish and remove physical mine structures; neutralize the leach
pads and detoxify and dispose of leachate solution; recontour the overburden
piles, leach pads, roads and production support facilities; and prepare the
surface of the project area for revegetation; and seed and replant the area
with native species.  Reclaimed slopes must be at an angle that is stable and
there is no requirement for demonstration of re-vegetation.  Growth media
(generally, the top 5.0 centimeters or 2 inches of cover) will be removed from
the waste dump and heap leach sites and stockpiled for final reclamation.  It
is expected that the growth media will contain most of the seeds necessary for
the reclamation.  The waste dumps and heaps will be benched by bulldozer upon
the completion of mining and roadways will be ripped up.  The growth media will
be distributed along the benches and in the roadways.

Understandably, a key component of the reclamation plan is neutralization of
the leach pads and detoxification and disposal of the leachate solution, also
known as leach pad closure.  The plan provides that closure will begin in the
sixth year of mine operation and continue for approximately four years after
active mining has ceased.  The leach pad closure process involves four steps: 
first, a fresh water rinse is periodically applied to those portions of the
leach pads that have completely leached, furthering the natural degradation of
the cyanide solution; next, the leachate solution is sequentially moved from
one active pad cell to another, minimizing the amount of solution required by
the system; once leaching operations are concluded, the remaining leachate
solution is chemically neutralized using hydrogen peroxide, and applied to
reclaimed waste rock pile surfaces.  The leach pad surfaces are then covered
with soil or other medium and revegetated.  Because the pad liners remain
intact, minor quantities of seepage can be expected to collect in the leach pad
sumps; this will be pumped out periodically during the post-closure monitoring
period and applied to revegetated areas, either directly or after additional
neutralizing has occurred.  Depending upon the quality and quantity of this
solution, the pad liners eventually may be perforated to allow direct seepage,
thereby alleviating the need for further pumping and application.  

The Company is required to obtain several bonds for the project:  a Surface
Mining and Reclamation Act bond, to be held by Kern County, to cover the
general reclamation of the site, including the waste dumps, roads, mine pits
and building removal; a detoxification and closure bond, to be held by the
Lahontan Regional Water Quality Control Board, relating to the heap back

                                     7

<PAGE>

process areas; and an "unforeseen event bond", to be held by the water quality
board, which is intended to bond for a catastrophe that would contaminate
surface or ground water with processed water.  Since there are no surface
streams at Soledad Mountain, the bond would apply to ground water only.  The
amounts of these bonds will be determined by the regulatory authorities when
permits are granted for the project.  The Company expects to meet these bonding
requirements by purchasing surety bonds from one or more insurers. 
Alternatively, the Company may post money market securities, such as
certificates of deposit, or bank letters of credit in lieu of, or in addition
to, such surety bonds.  Based on currently available information, the Company
estimates that the costs of complying with environmental requirements,
including land reclamation, will be approximately $3,000,000 once production at
the mine commences, increasing to $5,410,000 by the end of the life of the
mine.  

FACILITIES AND EMPLOYEES.  The Company's principal executive offices are
located in a 1,200-square foot facility at 104 South Freya Street in Spokane,
Washington, and its Soledad Mountain field office is located at the mine site
in Mojave, California.  At March 1, 1998, the Company employed three full-time
management, finance and administrative employees at its Spokane office, and 12
full-time employees at its Mojave office.

Item 2.  DESCRIPTION OF PROPERTY.

LOCATION AND ACCESS.  The Soledad Mountain Project is located in the Mojave
Mining District in Kern County in southern California, approximately
2.4 kilometers (1.5 miles) from Highway 14, a paved, four-lane highway.  Los
Angeles, California is about 100 kilometers (62 miles) south of the project and
the metropolitan area of Lancaster/Palmdale, California is less than 35
kilometers (22 miles) to the south by Highway 14.  Secondary paved access roads
extend from Highway 14 and encircle Soledad Mountain, providing access to the
project site.  Major power lines come to within a few hundred meters of the
plant electrical substation on the north-east corner of the project.  

There is no source of naturally-occurring water on the project site in
quantities deemed sufficient for mining operations.  The Company controls an
area to the north of Soledad Mountain, however, and believes sufficient water
can be found at an estimated depth of 61 to 122 meters (200 to 400 feet).  The
Company also controls an alternate site to the west of the mountain, and
believes water can be found there at a depth of approximately 213 meters (699
feet).

The population centers of Mojave, Lancaster, Bakersfield and Los Angeles, all
located within a 161-kilometer (100-mile) radius of the project, are sources
for the labor, supplies, material and equipment needed for the project.  The
Santa Fe Railway line runs parallel to, and just east of, Highway 14.  The town
of Mojave, California provides a convenient railhead for delivery of large
pieces of equipment.  Other aspects of regional infrastructure already in place
and available to support the Soledad Mountain Project include hospitals,
ambulance service, fire fighting service, garbage disposal, schools, living
accommodations, shopping, airline services and recreational areas.

Local climatic conditions reflect the high desert environment of the Mojave
Desert in southern California.  Conditions are variable, with temperatures
ranging from below freezing in the winter to more than 40.6 degrees Celsius
(105 degrees F) in the summer.  Wind is a factor with respect to structural
stability, as gusts frequently reach 100 to 130 kilometers (62 to 81 miles) per
hour.  Flora and fauna are sparse in the project area, reflective of the Mojave
Desert environment.  No perennial streams or springs exist in the project area
and the only surface run-off occurs during the heavy rainstorms that are most
prevalent from December through March of each year.




          [The balance of this page has been left blank intentionally.]


                                     8
<PAGE>

The Soledad Mountain Project is more particularly identified on the following
map.





                               [Map to be added]










                                     9

<PAGE>

LAND OWNERSHIP AND MINING RIGHTS.  The project area includes portions of
Sections 5, 6, 7 and 8 in Township 10 North, Range 12 West and Sections 1 and
12 in Township 10 North, Range 13 West, San Bernardino Baseline and Meridian. 
Most of the mining and processing facilities will be located in Section 6 in
Township 10 North, Range 12 West.  The project area is a 497-hectare (1,228
acres) contiguous block within an area of approximately 1,012 hectares (2,501
acres) held by the Company.  The project property is comprised of 33 patented
lode mining claims, 123 unpatented lode mining claims, one unpatented placer
mining claim, one patented mill site claim, six unpatented mill site claims and
379 hectares (937 acres) of fee land.  One hectare is approximately equal to
2.471 acres.

The project property is held by the Company (through its United States
subsidiary) under a variety of agreements with 79 property owners.  These
agreements include 64 mining leases, two exploration agreements with options to
purchase and five purchase agreements that are in various stages of completion. 
Most of these agreements were entered into during the four-year period
preceding the date of this report, at a total cost to the Company of
approximately $3,500,000.

The Company commissioned a formal title opinion covering the project property
which was rendered in August and September 1996.  With such a complicated
ownership history as is common in historic mining districts, it is typical for
title problems to exist with respect to properties in the area in which the
project is located.  The title opinion reveals that the few title questions
which exist with respect to title to the property do not present a material
threat to the project.  The Company is attempting to resolve the title issues
of which it is currently aware with the assistance of its California counsel, a
law firm with experience in title matters relating to properties in the Mojave
Mining District.

A comprehensive land survey of the project area has not yet been undertaken. 
Since 1993, the whole of the project area and much of the immediate surrounding
area has been segregated from appropriation under the United States General
Mining Law of 1872.  The segregation terminates May 8, 2000 and is additional
protection to the Company in the event open ground exists in the project area.

The various property purchase agreements to which the Company is a party
typically require payment by the Company of the purchase price over an extended
period of time.  In most cases, a somewhat larger advance payment was made at
the time the agreement was entered into and, in some instances, a larger
payment is due at the time the purchase is completed.  Certain of the property
purchase agreements require the payment by the Company of royalties upon the
commencement of commercial production from the project.  As of December 31,
1997, $1,902,000 remained to be paid by the Company under these various
property purchase agreements; $1,045,000 of this amount is due within the
ensuing twelve months. 

The leases to which the Company is a party typically require payment in the
form of advance minimum royalties.  With one exception, these payments are
subject to a credit when production from the project starts.  In both the
leases and the purchase agreements, applicable royalties are restricted to the
property covered by the lease or agreement, as the case may be.  Most of the
royalties are of the net smelter return ("NSR") type and are based on a sliding
scale, with the percentage amount of the royalty being a function of the ore
grade on the property to which the royalty relates.  Typically, the royalties
are 5% NSR or less, with an expected average of 3.1% NSR based on the sliding
scale royalty percentage and the modest grade of the deposit.  Many of the
leases provide that the royalty payable to the lessor is subject to adjustment
in the event that the interest of such 
lessor in the property leased to the Company is greater or less than
represented by the lessor in such lease.  A number of the agreements have an
additional modest royalty consideration which applies in the event that non-
mineral commodities, such as aggregates, from the property are sold.

In addition to these agreements, the Company is also obligated under the terms
of an April 1, 1995 option agreement to purchase all of the issued and
outstanding shares of a privately-held California corporation owning a 80.9
hectare (200 acre) tract of land near the Soledad Mountain project site.  The
Company has paid $850,000 toward the purchase of these shares as of the date of
this report, and is obligated to pay an additional $750,000 on July 1, 1999 or
upon reaching sustained production, whichever first occurs.  Once commercial
production begins, the Company is also to pay a royalty equal to 1% of gross
smelter returns.

The Company does not require additional properties to put the Soledad Mountain
Project into production, and has no present plans to acquire any properties
within the mine area.  The Company continually evaluates other precious metals
mining opportunities for possible acquisition or joint venture, and from time-
to-time engages in exploratory discussions regarding such opportunities.  As of
the date of this registration statement, the Company has no agreement,
undertaking or other arrangement with any person regarding the acquisition of
mining properties outside the Soledad Mountain Project area.

                                    10
<PAGE>

GEOLOGY.

REGIONAL GEOLOGY.  The structural history of the western United States is
complex, with orogenic events occurring from the Late Cretaceous Period to the
Middle Miocene Epoch (approximately 74.5 million to 16 million years ago).  The
Sierra Nevada Range and the San Bernardino Mountains, the principal arcs
surrounding the Soledad Mountain area, are relatively narrow, with well-defined
zones of calc-alkaline volcanic and plutonic activity.  Deposits of copper,
iron, molybdenum, tungsten, gold and silver are associated with these orogenic
events.  Miocene volcanic units rest unconformably on Late Cretaceous quartz
monzonite (Sierra Nevada Batholith) basement.  This suggests that the volcanic
center at Soledad Mountain may lie in a domed or tectonically-elevated area,
perhaps the topographic margin of a caldera with the central collapsed area
represented by the accumulation of tuffaceous sediments south of Soledad
Mountain in the Rosamond Hills area.

SITE GEOLOGY.  Soledad Mountain is a moderately-eroded silicic volcanic center
of Middle-to-Late Miocene Epoch (approximately 21.5 million to 16.9 million
years ago) and is interpreted as part of a large caldera.  Volcanics consist of
felsic flows, tuffs and breccias with rock types ranging from quartz latite to
rhyolite.  Faults have disrupted all major rock types with the major faults
trending N10 degrees E to N40 degrees W.  The faults dip from 70 degrees to 90
degrees near the surface and 45 degrees to 60 degrees at depth.  On the north-
east side of the project area, the faults tend to dip toward the north-east,
while the faults on the south-west side tend to dip towards the south-west. 
From east to west, the principal veins crop out within a north-west-trending
belt about 1,219 meters (3,998 feet) wide and about 1,981 meters (6,498 feet)
long.

The mountain consists of coalescing and interpenetrating volcanic domes, along
with lava flows and pyroclastic ash-fall tuffs and flows.  Volcanic
compositions range from quartz latite to rhyolites with ages ranging from
21.5 to 16.9 million years.  Other past gold producing structures in the
district show similar characteristics to Soledad Mountain.  Common features are
an epithermal hot spring style of mineralization, host rocks consisting of
calc-alkaline volcanics and structurally controlled mineralization.  The gold
mines within the Mojave Mining District appear to line the rim of a collapsed
caldera.  The center of the caldera is south-east of Soledad Mountain, north of
the Tropico Mine and south-east of the Cactus Gold Mine.  

The Standard Hill Mine, north-east of Soledad Mountain, consists of faults
filled with quartz veins that cross-cut quartz monzonite and quartz latite
volcanics.  The veins strike north to north-west with shallow dips towards the
east and north-east, respectively.  This deposit represents a mineralization
lower in the system than Soledad Mountain.  The Tropico Mine, seven miles to
the south, consists of Cretaceous quartz monzonite overlain by volcanics of
quartz latite flow-banded rhyolite and rhyolite porphyry similar to those of
Soledad Mountain.  The veins strike east to west and dip 65 to 70 degrees to
the south.  Quartz veins fill pre-mineral faults, with movement continuing
during and after mineralization.  The Cactus Gold Mine, five miles to the west,
consists of quartz latite to rhyolite flows, resting unconformably on quartz
monzonite.  The strikes of the veins vary from north-east to north-west, with
the dips varying from the south-east to north-east.  Mineralization is
associated with quartz-filled faults, fault breccia and zones of silicification
and argillization of the wall rock.

The mineralized faults at Soledad Mountain show two distinct dip directions. 
The faults on the north-east portion of Soledad Mountain dip 60 to 85 degrees
to the north-east.  Faults on the south-west portion of Soledad Mountain dip 60
to 85 degrees to the south-west.  The area between these sets of faults
represents a vent axis trending north-west, forming an elevated crest with an
underlying competent root system.  Upon the collapse of the caldera, block
faulting along the slopes was deflected away from the vent axis and its
competent root system.  Mineralization occurs in a series of epithermal veins,
faults and shear zones.  Vein widths vary up to fifteen meters and are
consistent along strike and down dip.  Some of them have been mined to a
vertical depth of 305 meters (1,000 feet).  Testing has shown that the
principal ore minerals are native gold, electrum and a suite of silver minerals
consisting of acanthite, native silver, pyrargyrite and polybasite in a gangue
of oxidized, brecciated, quartz with minor pyrite.  Traces of sphalerite,
chalcopyrite and galena are also present.

The lateral extent of mineralization in the different volcanic units at Soledad
Mountain varies.  Mineralization of the volcanic flow units of quartz latite,
flow-banded rhyolite and porphryitic rhyolite is generally confined to faults
and fault breccias and shows a weak lateral potential for mineralization into
the wall rock.  Where mineralized faults and veins cross-cut the middle and
upper pyroclastic units, a wider halo of mineralization into the host rock
occurs.  This indicates penetration of hydrothermal solutions into the more
permeable and porous tuffaceous units of the Soledad Mountain complex.

The Company believes the geology of the Soledad Mountain Project area is
conducive to its intended operations.

                                    11
<PAGE>

Item 3.  LEGAL PROCEEDINGS.

Neither the Company nor any of its mining properties are subject to any legal
proceedings.

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

No matters were submitted to a vote of the Company's shareholders during the
fourth quarter of 1997.


                                    PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

PRICE RANGE OF COMMON SHARES.  The common stock of the Company is listed and
traded on the Toronto Stock Exchange.  The following table sets out the price
range of the common stock as reported by the Toronto Stock Exchange for the
calendar periods indicated.  All prices are reported in Canadian dollars.


        Year Ended 
     December 31, 1996        High           Low  
               
     First Quarter       C$   2.55      C$   1.29 
     Second Quarter           3.20           2.09 
     Third Quarter            2.55           1.87 
     Fourth Quarter           2.90           2.27 


        Year Ended
     December 31, 1997

     First Quarter       C$   3.95      C$   1.90 
     Second Quarter           3.02           1.90 
     Third Quarter            2.50           1.50 
     Fourth Quarter           2.05           0.50 


DIVIDEND POLICY AND RECORD.  The Company has never paid dividends on its common
stock.  The Company's present policy is to retain any earnings for use in its
business and it does not intend to pay dividends on the common stock in the
foreseeable future.  Payment of any cash dividends in the future will depend
upon the earnings and financial condition of the Company, any covenants in loan
documents and other factors the board of directors of the Company may consider
to be appropriate.

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

INTRODUCTION.  On May 21, 1996, the board of directors of the Company approved
the adoption of a change in the fiscal year-end of the Company, from May 31st
to December 31st.  This change took effect with the year ending December 31,
1996.  The following is a discussion of the operating results of the Company
for the fiscal year ended December 31, 1997 and for the seven-month period
ended December 31, 1996.  Effective May 21, 1996, the Company changed the
currency in which it reports its financial results from the Canadian dollar to
the U.S. dollar.  All comparative figures in the Company's consolidated
financial statements included in this report and the discussion which follows
are in U.S. dollars.


                                    12
<PAGE>

STATEMENTS OF OPERATIONS AND DEFICIT AND CHANGES IN FINANCIAL POSITION DATA.

RESULTS OF OPERATIONS.

OVERVIEW.  During the periods indicated in the discussion which follows, the
Company has been in the exploration and development stage of its business and
therefore has earned no revenue from its operations.  Variations in the level
of expenses between periods have been as a result of the nature, timing and
cost of the activities undertaken in the various periods.  Financing of the
continued exploration and development of the Soledad Mountain Project during
such periods has been obtained through the sale of shares of common stock of
the Company in predominantly offshore transactions, and through borrowings. 
Please see "Plan of Operations" below.

Operating results of the Company are summarized as follows:

<TABLE>
<CAPTION>


                        Year Ended      Annualized Results  Seven Months Ended  Cumulative Since
                    December 31, 1997   December 31, 1996   December 31, 1996      Inception
                    -----------------   ------------------  ------------------  ----------------
<S>                 <C>                 <C>                 <C>                 <C>

General and 
 administrative
 expense            $  1,095,943        $  917,000          $  535,131          $  3,237,800
Interest expense          96,320            97,000              56,472               302,902
Interest income          154,704           408,000             238,289               865,724
Net loss              (1,047,869)         (598,000)           (348,948)           (2,968,908)

</TABLE>

For the year ended December 31, 1997, the Company incurred general and
administrative expenses of $1,095,943, as compared to $535,131 ($917,000 on an
annualized basis) for the seven month period ended December 31, 1996.  The
increase is primarily due to increased salaries resulting from the hiring of
additional management personnel in 1997.  Interest income for the year was
$154,704, as compared to $238,289 ($408,000 on an annualized basis) for the
seven month period.  The decrease is due to a decrease in the Company's average
cash balance during the year.  As a result of the foregoing factors, the
Company incurred a net loss of $1,047,869 for the year ended December 31, 1997,
as compared to a net loss of $348,948 ($598,000 on an annualized basis) for the
seven month period ended December 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES.

GENERAL.  The Company acquired the Soledad Mountain Project in 1986.  Since
then it has solidified its land position, conducted several drilling and
sampling programs to delineate ore reserves, and taken steps to secure permits
and approvals necessary to production activities.  The Company previously
reported that it expected to begin producing gold and silver from the project
during the second half of 1998, once permitting was completed.  Because of the
downturn in world gold prices during the second half of 1997, however, the
Company was not able to obtain financing for construction.  As a consequence,
production will be delayed until gold prices improve.

The Company has had no reported revenues from operations since inception, and
is in the exploration or development stage. During the period from inception
through December 31, 1997, the Company has used $2,140,000 in operating
activities, primarily as the result of cumulative losses of $2,970,000.  During
the same period, the Company has used $24,429,000 in investing activities;
these consisted of $23,144,000 in expenditures related to the Soledad Mountain
Project and fixed asset purchases of $1,293,000.  These operating and investing
activities were financed by net borrowings of $2,714,000 under various long-
term debt arrangements and from the sale of $24,982,000 of equity securities.

At December 31, 1997, the Company held $1,127,000 in cash and cash equivalents. 
As is discussed below under the heading "Plan of Operations", significant
additional funds will be needed to put the Soledad Mountain Project into
production.  These funds are expected to come from additional sales of common
stock and from bank or other borrowings.  Alternatively, the Company may decide
to enter into a joint development or other similar arrangement with another
mining company to develop the project.  The Company does not have a commitment
for bank financing or for the underwriting of additional shares of its common
stock, and is not a party to any agreement or arrangement providing for the
joint development of the Soledad Mountain Project.  Whether and to what extent
additional or alternative financing options are pursued by the Company will
depend on a number of important factors, including the results of further
development activities at the Soledad Mountain Project, 

                                    13
<PAGE>

management's assessment of the financial markets, the overall capital
requirements for development of the project, and the price of gold.  Gold
prices fluctuate widely and are affected by numerous factors beyond the
Company's control, such as inflation, the strength of the United States dollar
and foreign currencies, global and regional demand, and the political and
economic conditions of major gold producing countries throughout the world.  As
of March 1, 1998, world gold prices were approximately $299 per ounce, a
reduction of approximately 18% from prices a year ago.  The project is not
economical at current world gold prices and will not be economical until prices
strengthen.

On May 23, 1996, the Company issued 5,500,000 special warrants, at a price of
$1.37 (C$2.50) per warrant, and received aggregate gross proceeds of
$10,004,000 (C$13,750,000).  Each special warrant was exercisable for one share
of common stock of the Company and one-half of a warrant which, under its
original terms, entitled the holder to purchase one-half additional share of
common stock of the Company at the price of $2.13 (C$2.90) at any time prior to
November 28, 1997.  On November 18, 1997, the exercise price of these warrants
was reduced to $1.07 (C$1.525) and the exercise period extended to February 28,
1998, and on February 19, 1998, the exercise price was further reduced, to
$0.49 (C$0.68) per share.  Warrants for the purchase of 1,834,000 shares of
common stock were thereafter exercised, generating gross proceeds of $879,264
(C$1,247,324) to the Company.  These funds will be used to finance the 1998
development program described below, and as working capital.  

YEAR ENDED DECEMBER 31, 1997.  During the year ended December 31, 1997 the
Company used $937,000 in operating activities, primarily as a result of a
$1,049,000 net loss during the year.  $5,079,000 of this amount was provided by
financing activities, and consisted primarily of $5,444,000 raised through the
sale of equity securities.  $8,450,000 was used in investing activities:
$6,882,000 of this amount was expended on exploration, $1,020,000 was expended
on property acquisitions and $548,000 was expended on fixed asset purchases. 
As a result of the foregoing, the Company's cash balance decreased by
$4,309,000, to $1,127,000, at December 31, 1997.

SEVEN MONTH PERIOD ENDED DECEMBER 31, 1996.  The Company used $261,000 in its
operating activities during the seven month period ended December 31, 1996,
primarily as a result of a $349,000 net loss during the period.  $231,000 of
this amount was used in financing activities, and included $117,000 of debt
repayment and costs of $124,000 associated with issuing shares of common stock. 
$3,889,000 was used in investing activities:  $2,794,000 of this amount was
expended on exploration, $463,000 was expended on property acquisitions and
$632,000 was expended on fixed asset purchases.  As a result of the foregoing,
the Company's cash balance decreased by $4,382,000, to $5,436,000, at December
31, 1996.

PLAN OF OPERATIONS.

PROPOSED ACTIVITIES AND ESTIMATED COSTS.  As is more specifically disclosed in
Item 1 of this report, the Company has substantially completed exploration of
the Soledad Mountain Project and intends to develop the project as an open pit
gold and silver mine employing a cyanide heap leach recovery system. 
Development plans include the construction of infrastructure and processing
facilities, mining by open pit methods and processing precious metals ores at a
rate of up to 5.67 million tonnes (6.25 million tons) per year for at least
nine years.  Concurrent heap detoxification will be employed, followed by
reclamation of the project site.  

The initial capital costs of bringing the project into production are estimated
to be $78,000,000; these include costs associated with the purchase of all
necessary facilities and equipment, construction costs, start-up costs, working
capital and contingency costs over a projected thirteen-month construction
period.  The Company presently cannot secure the financing needed to bring the
project into production, and will not be able to do so unless gold prices and
the conditions in the gold equity markets improve.  Based on current project
cost information, the Company believes world gold prices would have to achieve
sustained levels of $340 per ounce or better before such financing could be
obtained.  The Company believes it is well-positioned to obtain this financing
when market conditions improve.

The Company estimates that total average operating costs will be $5.87 per
tonne ($5.32 per ton) of ore processed, based on a stripping ratio of 4.1 to 1. 
These operating costs consist of mining costs of $3.39 per tonne ($3.07 per
ton), processing costs of $1.78 per tonne ($1.61 per ton) and general and
administrative costs of $0.70 per tonne ($0.64 per ton).  The Company also
estimates that average annual production rates of 127,000 ounces of gold and
1,500,000 ounces of silver can be maintained for at least nine years, at an
average cash cost (consisting of operating and royalty costs) of $182 per ounce
of gold, net of silver credits.  With the benefit of these higher production
rates, the project is economically viable at a gold price of $340 per ounce and
a silver price of $5.00 per ounce. 

                                    14

<PAGE>

The Company had budgeted $1,950,000 for a additional development of the Soledad
Mountain Project in 1998 to delineate additional ore.  The program has three
components:  a 9,000 meter underground sampling of the major ore-bearing
structures now accessible through 22 kilometers of underground workings;
approximately 12,000 meters of reverse circulation drilling at five locations
on the perimeter of the known proven and probable reserve area; and up to 6,000
meters of core drilling to test several high-priority exploration targets
having the potential to improve overall grade or strip ratios.  The Company is
currently pursuing the additional financing necessary to fund the 1998 program.

The following table summarizes the activities proposed to be undertaken by the
Company during the twelve-month period commencing January 1, 1998, and the
estimated costs of such activities.

          Underground drilling               $   300,000
          Reverse circulation drilling         1,490,000
          Core drilling                          160,000
                                               ---------
                    Total                    $ 1,950,000
                                               =========

These development plans are based on a February 1998 feasibility study prepared
for the Company by M3 Engineering and Technology Corporation incorporating the
results of the Company's 1997 drilling program.  The study was commissioned by
the Company to obtain project financing, and to provide basic project
engineering information.  Ore reserve estimates and mine design features
incorporated into the study were prepared by Mine Reserve Associates, in
collaboration with the Company; basis engineering information was prepared by
Bateman Engineering, Inc., and supplemented by M3 Engineering and Technology. 
The total cost of the feasibility study was $1,036,000.       

The M3 Engineering and Technology study modifies and supersedes an earlier
feasibility study completed in January 1997 by Pincock, Allen & Holt of
Lakewood, Colorado, based on the Company's estimate of ore reserves prior to
the 1997 drilling program and a different throughput design.  The Pincock study
included initial designs of the crushing plant, ore heap, solution handling
systems, haul roads and associated surface infrastructure at the Soledad
Mountain Project, and was prepared at a cost of $2,000,000.

The Company is currently evaluating the production and sale of aggregates from
the Soledad Mountain Project.  The Company believes waste rock and leached ore
have several construction-related applications, and that the project's
proximity to major north-south and east-west railroad lines enhances the
potential of such a business.  Neither the feasibility studies referred to
above not any other revenue and cost figures contained in this report take such
business into account.   

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income,"
("SFAS 130") and Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," ("SFAS 131").  SFAS No. 130
requires that an enterprise report, by major components and as a single total,
the change in its net assets during the period from nonowner sources.  SFAS No.
131 establishes annual and interim reporting standards for an enterprise's
operating segments and related disclosures about its products, services,
geographic areas and major customers.  Adoption of these statements will not
materially effect the Company's financial position, results of operations or
cash flows; any effect will be limited to the form of its disclosures.  Both
statements are effective for years beginning after December 15, 1997, although
they may be applied earlier.

THE YEAR 2000 ISSUE.  The Company has conducted a comprehensive review of its
computer systems to identify those that could be affected by the "Year 2000"
issue.  The Company believes its existing software is programmed to handle the
Year 2000 issue.  Further, any software purchased by the Company in the future
will also be programmed to handle the issue.

Item 7.  FINANCIAL STATEMENTS.


See the Consolidated Financial Statements of the Company and the notes thereto
at pages 26 through 39 of this report.


                                    15
<PAGE>

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

On October 4, 1996, the audit committee of the board of directors of the
Company and the board of directors itself, each acting in accordance with the
prior determination of the Company's management, determined to replace
Chambers, Phillips & Co., (now Mackay & Partners), the Company's then current
accountants, with BDO Dunwoody.  Such change was approved by the Company's
shareholders at the annual general meeting of shareholders held on November 13,
1996.  

This change was recommended by management based upon the fact that BDO
Dunwoody's United States affiliated firm, BDO Seidman LLP, maintains offices in
Spokane, Washington, where the Company's executive offices are located. 

During the fiscal years ended May 31, 1996 and 1995, Chambers, Phillips & Co.'s
reports on the financial statements of the Company contained no adverse opinion
or disclaimer of opinion, or were qualified or modified as to uncertainty,
audit scope or accounting principles.  During such periods, there were no
disagreements with Chambers, Phillips & Co. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to the satisfaction of such firm, would have
caused them to make reference to the subject matter of such disagreement in
their reports on such financial statements.




         [The balance of this page has been left blank intentionally.]




                                    16

<PAGE>
                                   PART III

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

The names, ages, business experience for at least the past five years and
positions of the directors and executive officers of the Company as of March 1,
1998, are as follows.  The Company's board of directors consists of six
directors.  All directors serve until the next annual meeting of the Company's
stockholders or until their successors are elected and qualified.  Executive
officers of the Company are appointed by the board of directors. 

<TABLE>
<CAPTION>

Name and Age of                         Position with
Director or Executive Officer           the Company                   Principal Occupation
-----------------------------           -------------                 --------------------
<S>                                <C>                                <C>
Steven W. Banning (1)              President, Chief Executive         Officer of the Company
Age: 46                            Officer and Director

Bernard F. Goodson                 Vice-President - Administration    Officer of the Company
Age: 60                            and Controller

Richard W. Graeme                  Vice-President - Operations        Officer of the Company
Age: 56

Gordon C. Gutrath (1)              Director                           Geological Consultant
Age: 60                                                               

Jerrold W. Schramm (2)             Director                           Partner, Lawson Lundell 
Age: 37                                                               Lawson & McIntosh (barristers 
                                                                      and solicitors)

Chester Shynkaryk (2)              Secretary and Director             President of Visionary Mining
Age: 53                                                               Corporation (a mineral exploration
                                                                      company)

Edward G. Thompson (2)             Director and Chairman              President of E.G. Thompson
Age: 61                                 of the Board                  Mining Consultants Inc.

Christopher M.T. Thompson (1)      Director                           President of Castle Group, Inc.
Age: 50   
____________________

     (1)  Member of the audit of the board of directors.
     (2)  Member of the compensation committee of the board of directors.

</TABLE>

BIOGRAPHICAL INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS.  

STEVEN W. BANNING has been president and chief executive officer of the Company
since 1995.  From 1984 through 1995, he was employed by Pegasus Gold Inc., last
serving as its vice president of operations.  Mr. Banning graduated from
Montana College of Mineral Science and Technology in 1974 with a degree in
mineral dressing engineering.

BERNARD F. GOODSON has been vice president of administration and controller of
the Company since April 1996.  From May 1991 to January 1996, he was vice
president of finance of Pintlar Corporation, a mining company headquartered in
Kellogg, Idaho.  Mr. Goodson graduated from Lewis and Clark State College in
1981 with a degree in management technology.

RICHARD W. GRAEME has been executive vice president of operations of the
Company since November 1996, and for ten month prior to that was vice president
of operations.  From January 1994 to February 1996, he was principal mine
engineer for Mine Development Associates, and from January 1991 to January
1994, he served as chief executive officer of Mining Remedial Recovery Corp. 
Mr. Graeme graduated from the University of Arizona in 1972 with a degree in
Geological Engineering.

                                    17
<PAGE>

GORDON C. GUTRATH has been a director of the Company since 1987.  Since
November of 1995, he has also served as chairman of Queenstake Resources, which
he founded in 1977; he served as its president from 1977 until November 1995. 
Mr. Gutrath is a professional geologist and a registered professional engineer
in British Columbia.  He graduated from the University of British Columbia in
1960 with a degree in Geology.

JERROLD W. SCHRAMM has been a director of the Company since 1996.  He is also a
partner in the law firm Lawson Lundell Lawson & McIntosh, a position he has
held since February 1994, and for approximately six and one-half years prior to
that was an associate of the firm.  He obtained an undergraduate degree in
commerce from the University of British Columbia in 1983 and a law degree from
the University of Toronto in 1986.

CHESTER SHYNKARYK has been a director of the Company since 1985, and from 1985
to 1995, served as its president.  Since 1996, he has also served as president
of Visionary Mining Corporation, a mineral exploration company. 

EDWARD G. THOMPSON has been a director of the Company since 1994, and was
elected its chairman effective January 29, 1997.  Since 1990 he has also served
as president of E. G. Thompson Mining Consultants, Inc., which he owns.  Mr.
Thompson graduated from the University of Toronto in 1959 with a degree in
mining geology and in 1960 earned a degree in economic geology.

CHRISTOPHER M. T. THOMPSON has been a director of the Company since January
1997.  Since 1992 he has also served as president of Castle Group, Inc., and
from January 1984 to October 1992, he was employed by Fulcrum Management, Inc.,
last serving as its chief financial officer.  Mr. Thompson received a degree in
law and economics from Rhodes University in South Africa in 1969 and a Master
of Science degree from Bradford University in the United Kingdom in 1971.

Item 10.  EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE.

The following table discloses compensation received by the Company's president
and chief executive officer, its vice president of administration and
controller, and its vice president of operations for the year ended December
31, 1997, the seven month period ended December 31, 1996 and the prior fiscal
year ended May 31 1996.  The Company had no other executive officers during
1997.  


                          Annual Compensation
-----------------------------------------------------------------------------
                                                                    Other
                                                                    Annual
Executive Officer             Year (1)  Salary      Bonus        Compensation
-----------------             --------  ------      -----        ------------

Steven W. Banning (2)         1997      $220,000      -          $ 3,600 (3)
President and Chief           1996       116,667      -            2,100
 Executive Officer            1996       100,000      -            1,800

Bernard F. Goodson (5)        1997        86,000      -            3,600 (3)
Vice President of             1996        46,669      -            2,100
 Administration and           1996         6,667      -              300
 Controller    

Richard W. Graeme (7)         1997       125,000      -                -
Vice President of             1996        64,167      -                -
 Operations                   1996        36,667      -                -
___________________

<TABLE>
<CAPTION>


                                      Long-Term Compensation
-----------------------------------------------------------------------------------------------
                                        Dollar Value    Securities                   All Other
                                        of Restricted   Underlying     LTIP           Compen-
Executive Officer             Year (1)  Stock Awards   Options/SARS   Payouts          ation
-----------------             --------  ------------   ------------   --------       ----------
<S>                           <C>       <C>            <C>            <C>            <C>

Steven W. Banning (2)         1997           -                  -        -              -
President and Chief           1996           -            190,000 (4)    -              -
 Executive Officer            1996           -            810,000        -              -

Bernard F. Goodson (5)        1997           -                  -        -              -
Vice President of             1996           -                  -        -              -
 Administration and           1996           -            100,000 (6)    -              -
 Controller    

Richard W. Graeme (7)         1997           -                  -        -              -
Vice President of             1996           -                  -        -              -
 Operations                   1996           -            200,000 (8)    -              -
___________________

</TABLE>

(1)  The first year shown in the foregoing table for each of the named
     executive officers covers the year ended December 31, 1997.  The second
     and third years shown in the table are for the seven month period ended
     December 31, 1996 and the year ended May 31, 1996, respectively.

                    [Footnotes continued on following page.]

                                     18
<PAGE>

(2)  Mr. Banning was employed by the Company for six months during the fiscal
     year ended May 31, 1996.

(3)  Represents automobile allowances paid to Mr. Banning and Mr. Goodson.

(4)  These options were granted pursuant to the terms of Mr. Banning's
     employment agreement:  options for the purchase of 680,000 shares,
     exercisable at C$1.35 ($0.99) per share, were granted on December 1, 1995;
     options for the purchase of an additional 130,000 shares, exercisable at
     C$1.51 ($1.11) per share, were granted on February 21, 1996; and options
     to purchase the remaining 190,000 shares, exercisable at C$2.43 ($1.79)
     per share, were granted in November 1996 following shareholder of certain
     amendments to the Company's stock option plan.

(5)  Mr. Goodson was employed by the Company for one month during the fiscal
     year ended May 31, 1996.

(6)  These options were granted on May 21, 1996 and are exercisable at C$3.00
     ($2.18) per share.

(7)  Mr. Graeme was not employed by the Company until February 1, 1996 and,
     accordingly, was employed by the Company for four months during the fiscal
     year ended May 31, 1996.

(8)  These options were granted on February 21, 1996 and are exercisable at
     C$1.51 ($1.10) per share.

TABLE OF AGGREGATE OPTIONS EXERCISED DURING THE FISCAL YEAR ENDED DECEMBER 31,
1996 AND FISCAL YEAR-END OPTION VALUES.  The following table sets out certain
information with respect to options to purchase shares of the common stock of
the Company exercised during the year ended December 31, 1997 by the Company's
named executive officers, and options held by such persons at the end of such
year.  Values are set forth in Canadian dollars, which is the currency in which
the options are denominated.  At March 1, 1998, each Canadian dollar was
approximately equal to $1.4237.

<TABLE>
<CAPTION>
                                                        Unexercised               Value of Unexercised
                         Securities     Aggregate       Options at              in-the-Money Options at
                          Acquired        Value      December 31, 1997             December 31, 1997
                         on Exercise    Realized            (#)                           (C$)
                             (#)          (C$)    Exercisable/Unexercisable   Exercisable/Unexercisable (1)
                         ------------   --------  -------------------------   -----------------------------
<S>                      <C>            <C>       <C>                           <C>

Steven W. Banning             0             0       893,334 / 106,666                     (See note 1)
Bernard F. Goodson            0             0        66,667 /  33,333                     (See note 1)
Richard W. Graeme             0             0       133,334 /  66,666                     (See note 1)
____________________

</TABLE>

(1)  The closing price of the common stock of the Company on The Toronto Stock
     Exchange on December 31, 1997 was C$0.90 ($0.63).  None of the options
     were in-the-money at such date and, consequently, none had any value.  

TABLE OF OPTIONS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1997.  No options
were granted to the named executive officers during the year ended December 31,
1997.

TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS. 

EMPLOYMENT AGREEMENTS WITH STEVEN W. BANNING, BERNARD F. GOODSON AND RICHARD W.
GRAEME.  The Company has entered into employment agreements with Mr. Banning,
its president and chief executive officer, Mr. Goodson, its vice president of
administration and controller, and Mr. Graeme, its vice president of operations
in May 1996.  The agreements with Mr. Goodson and Mr. Graeme were amended in
March 1997.  

Each agreement provides for the payment of salary and bonuses, the grant of
options to purchase shares of common stock, and the provision of certain other
benefits, including those offered to employees generally.  Mr. Banning receives
an annual salary of $220,000 pursuant to his employment agreement with the
Company.  Mr. Goodson and Mr. Graeme receive annual salaries of $86,000 and
$125,000, respectively, pursuant to their agreements.

The employment agreements also provide for compensation in the event the
employee is terminated other than for cause; should this occur, the Company is
required to pay the terminated employee an amount equal to 24 months' salary. 
The agreements provide that if there is a "change in control" (as defined in
the agreements) of the Company and the employee's employment is subsequently
terminated (unless such termination is for cause or by the employee for other
than "good reason" as defined in the agreements), the employee is entitled to
receive a lump sum severance payment equal to two times the employee's then
current annual base salary, plus continued benefits for a period of 24 months. 
The agreements also provide that any existing stock options held by the
terminated employee vest immediately upon termination and may be exercised by
the employee for three months thereafter.  The employment agreement with Mr.
Banning is for a term of three years and the agreements with Mr. Goodson and
Mr. Graeme are for an unspecified period.  Each provides that the employee may
terminate his employment upon six months' prior written notice to the Company.

                                     19
<PAGE>

CONSULTING AGREEMENT WITH ERIC W. KINNEBERG.  Pursuant to the terms of a
consulting agreement dated February 1, 1996 between the Subsidiary and Mr.
Kinneberg, Mr. Kinneberg has agreed to serve as a consultant to the Subsidiary
with respect to financial and related matters, and to perform such other
consulting services to the Subsidiary, as the Subsidiary may propose.  As
consideration for such services, the Subsidiary has agreed to pay Mr. Kinneberg
at the rate of $1,000 per day for services rendered and has further agreed to
reimburse him for out-of-pocket expenses incurred in the performance of his
services.  The consulting agreement obligates Mr. Kinneberg to submit invoices
to the Subsidiary no less often than monthly, specifying the services rendered
during the month, and allows the Company to deduct $325 per month from amounts
otherwise payable to Mr. Kinneberg for use of the Company's offices.  The
consulting agreement with Mr. Kinneberg is for a term of one month and is
thereafter renewable, unless terminated either by the Company or Mr. Kinneberg,
on a month-to-month basis.  Since February 1, 1996, the Company has paid Mr.
Kinneberg approximately $126,000 pursuant to the agreement.        

REPORT ON REPRICING OF OPTIONS.  The Company did not adjust or amend the
exercise price of options previously awarded to any of the named executive
officers during the year ended December 31, 1997.  However, on January 28, 1998
the board of directors approved a resolution reducing, to $0.69 (C$1.00) per
share, the exercise price of all outstanding options held by directors and
employees of the Company or its subsidiaries having a greater exercise price. 
The resolution was proposed and adopted by the board in recognition of
historically low gold prices and their effect on the market price of the
Company's common stock, and out of concern that the Company could lose key
employees during a critical stage of its development in the absence of such an
incentive.  The repricing provision will not take effect unless and until it is
approved by the Company's stockholders and the Toronto Stock Exchange.  The
Company expects to submit the proposal to its stockholders at the annual
general meeting of stockholders to be held later this year.      

COMPENSATION OF DIRECTORS.  The Company's articles of incorporation provide
that the directors are entitled to be paid reasonable travelling, hotel and
other expenses incurred by them in the performance of their duties as
directors.  The articles also provide that if a director is called upon to
perform any professional or other services for the Company that are outside of
the ordinary duties of a director, the director may be paid remuneration to be
fixed by the directors, and such remuneration may be in addition to or in
substitution for any other remuneration the director may be entitled to
receive.

The Company does not pay directors' fees, and while it has no written policy or
standard arrangement in this regard, its current policy is to grant options to
its directors pursuant to the stock option plan described below.  Generally,
each director has been granted options to purchase an aggregate of 90,000
shares of common stock, and such additional options as the plan's compensation
committee deems appropriate, taking into account the responsibilities and
contributions of the directors.  During the year ended December 31, 1997 the
Company granted options to purchase 90,000 shares of its common stock to Mr.
Schramm and options to purchase 40,000 shares to Edward G. Thompson, each of
whom is a director.  The options are exercisable on or before January 29, 2002,
at an exercise price of C$2.70 ($2.01) per share.  No other compensation was
paid or given during the year for services rendered by the directors in such
capacity, and no additional amounts were payable at year-end under any standard
arrangements for committee participation or special assignments.

STOCK OPTION PLAN.  The shareholders of the Company approved the establishment
of a stock option plan for directors, officers and employees of the Company and
its subsidiaries in November 1992.  A maximum of 10% of the number of shares of
common stock issued and outstanding from time to time are reserved for issuance
pursuant to options granted under the plan, and no person is entitled to be
granted options constituting more than 5% of the number of then outstanding
shares.

The exercise price of each option granted under the plan is not be less than
the market price of the common stock on the Toronto Stock Exchange as of the
date of grant.  All options granted under the plan expire not later than five
years after the date of grant.  The options are not transferable, other than by
will or other testamentary instrument or pursuant to the laws of succession. 
If an optionee is dismissed, removed or otherwise ceases to be a director,
officer or employee of the Company or its subsidiaries (other than for cause or
as a result of his or her death), then his or her unexercised options
terminate; termination is effective on the normal expiration date of the
unexercised options or 30 days after the person's relationship with the Company
or its subsidiaries has ended, whichever is earlier.  In the event an optionee
is dismissed as a director, officer or employee of the Company or one of its
subsidiaries for cause, all unexercised options terminate immediately.

In February 1996 the board of directors approved an amendment to the plan,
replacing the current "rolling maximum" limitation on the number of shares of
common stock issuable pursuant to options granted under the plan with a fixed
maximum of 3,300,000 shares of common stock.  The directors also approved a
"vesting" amendment to the plan which provided that one-third of the options
granted to officers of the Company and its subsidiaries would vest, or become
exercisable, on the date of

                                    20
<PAGE> 

grant and that an additional one-third would vest on each of the next two
anniversaries of the date of grant.  These amendments were approved by the
stockholders of the Company at the annual general meeting held on November 13,
1996, and were also subsequently approved by the Toronto Stock Exchange.

The plan is administered by the compensation committee of the board of
directors, currently comprised of directors Schramm, Shynkaryk and director
Edward G. Thompson.

OPTIONS TO PURCHASE SECURITIES.  As at December 31, 1997, options to acquire an
aggregate of 2,300,000 shares of common stock were outstanding under the
Company's stock option plan, as follows:

<TABLE>
<CAPTION>
                                                                            Number of
                                                                              Common      Exercise Price
                                                                           Shares Under    Per Common
Class of Optionees                 Date of Grant       Expiry Date         Options (1)    Share (C$-US$)
------------------                 -------------       -----------         ------------   ----------------
<S>                                <C>                 <C>                 <C>            <C>       <C>

Executive officers of Golden       December 1, 1995    December 1, 2000    680,000        C$1.35    (0.99)
  Queen (three persons)            February 21, 1996   February 21, 2001   330,000          1.51    (1.11)
                                   May 21, 1996        May 21, 2001        100,000          3.00    (2.18)
                                   October 4, 1996     October 4, 2001     190,000          2.43    (1.79)

Directors of Golden Queen who are  December 21, 1993   December 21, 1998    75,000        C$0.592   (0.44)
  not also executive officers of   August 24, 1994     August 24, 1999     100,000           0.55   (0.40)
  Golden Queen                     September 21, 1994  September 21, 1999   90,000           1.50   (1.10)
  (five persons)                   December 2, 1994    December 2, 1999     70,000           1.45   (1.07)
                                   February 21, 1996   February 21, 2001    20,000           1.51   (1.11)
                                   January 29, 1997    January 29, 2002    130,000           2.70   (2.01)

Executive officers of the          February 21, 1996   February 21, 2001    90,000        C$1.51    (1.11)
  Subsidiary who are not           
  also executive officers
  or directors of Golden
  Queen (one person)

All other employees of the         August 24, 1994     August 24, 1999      30,000        C$0.55    (0.40)
  Subsidiary                       July 20, 1995       July 20, 2000        60,000          1.35    (0.99)
  (nine persons)                   June 27, 1996       June 27, 2001        50,000          2.30    (1.69)
                                   November 19, 1996   November 19, 2000    85,000          2.60    (1.94)
                                   March 25, 1997      June 25, 2000        70,000          3.20    (2.32)
____________________

</TABLE>

(1)  Consists of all shares of common stock issuable upon the exercise of
     options granted as at December 31, 1997, including those that had not
     vested at such date.


         [The balance of this page has been left blank intentionally.]

                                    21
<PAGE>

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth as of March 18, 1998, the names of, and number
of shares of common stock of the Company beneficially owned by, persons known
to the Company to own more than five percent (5%) of the Company's common
stock; the names of, and number of shares beneficially owned by each director
and executive officer of the Company; and the number of shares beneficially
owned by, of all directors and executive officers as a group.  At such date,
the number of shares of common stock of the Company outstanding or deemed
outstanding pursuant to presently exercisable options, warrants and conversion
privileges was 31,813,975 shares.

                              Amount and Nature of
                              Beneficial Ownership
                              (all direct unless            Percent
Name of Owner                 otherwise noted)              of Class
-------------                 --------------------          --------

Steven W. Banning (1), (2)         1,062,000                3.34 %

Bernard Goodson (3)                  100,000                0.31 %

Richard W. Graeme (4)                200,000                0.63 %

Gordon C. Gutrath (1), (5)           220,000                0.69 %

Jerrold W. Schramm (1), (6)          115,000                0.36 %

Chester Shynkaryk (1), (7)           414,508                1.30 %

Edward G. Thompson (1), (8)          213,300                0.67 %

Christopher M.T. Thompson (9)        310,300                0.98 %

All directors and executive officers
  as a group (8 persons) (10)      2,635,108                8.28 %

Harris Clay (11)                   2,469,639                7.76 %
Landon T. Clay (12)                1,702,622                5.35 %

Goodman and Company (13)           4,585,800                14.41%
__________________

(1)  A director of the Company.
(2)  Includes presently exercisable options for the purchase of 893,334 shares. 
(3)  Includes presently exercisable options for the purchase of 66,667 shares. 
(4)  Includes presently exercisable options for the purchase of 133,333 shares. 
(5)  Includes presently exercisable options for the purchase of 115,000 shares. 
(6)  Includes presently exercisable options for the purchase of 115,000 shares. 
(7)  Includes presently exercisable options for the purchase of 200,000 shares. 
(8)  Includes presently exercisable options for the purchase of 155,000 shares. 
(9)  Includes presently exercisable options for the purchase of 155,000 shares.
(10) See notes 2 through 9 above.       
(11) Consists of:  1,094,172 shares held directly by Mr. Clay; 577,250 shares
     held by Arctic Coast Petroleum Ltd, with which Mr. Clay is affiliated; and
     798,217 shares held by the estate of an individual of which Mr. Clay is
     the executor.  Harris Clay and Landon T. Clay are brothers.
(12) Consists of:  1,094,595 shares held directly by Mr. Landon T. Clay; 4,663
     shares held by the LTC Corp. Profit Sharing and Retirement Plan, of which
     Mr. Clay is a trustee; 26,114 shares held by LTC Corp., with which Mr.
     Clay is affiliated; and 577,250 shares held by Arctic Coast Petroleum
     Ltd., with which Mr. Clay is affiliated.  In addition, Mr. Clay is related
     to two charitable trusts, The Landon T. Clay Charitable Lead Trust Dated
     11/30/83 and The Landon T. Clay Charitable Lead Trust II, which hold an
     aggregate 3,039,842 shares.  Mr. Clay has no beneficial interest in the
     trusts, and does not directly or indirectly exercise control over the
     direction of either of the trusts, and therefore disclaims beneficial
     ownership of these shares.  Landon T. Clay and Harris Clay are brothers.
(13) Goodman and Company is a Canadian investment dealer.  The shares noted in
     this table are held by various funds that are managed by Goodman and
     Company.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.  Based solely upon its
review of Forms 3 and 4, as amended, furnished to it during its most recent
fiscal year, and Forms 5, as amended, furnished to it with respect to such
year, the Company believes all directors and executive officers timely filed
all reports required to be filed pursuant to section 16(a) of the Securities
Exchange Act of 1934.  


                                    22
<PAGE>

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

TRANSACTIONS WITH LANDON T. CLAY AFFILIATES.  In August 1995, the Company
completed a private placement of 1,929,160 shares of common stock at a price of
C$1.25 ($0.92) per share.  272,600 of these shares were issued to the Landon T.
Clay Charitable Lead Trust and 163,560 shares were issued to the Landon T. Clay
Charitable Lead Trust II.

On March 19, 1996, the Subsidiary issued two debentures in the aggregate
principal amount of $1,000,000 to the Landon T. Clay Charitable Lead Trust II
and the Landon T. Clay Charitable Lead Trust dated 11/30/83.  The debentures
bear interest at a rate of 9.5% per annum and mature March 19, 1998.  Each is
convertible into shares of common stock of the Company, at the option of the
holder, at a conversion price of C$2.00 ($1.46) per share, subject to customary
"anti-dilution" provisions set out in the debenture instruments.  

Mr. Clay has agreed to convert the debentures into shares of common stock
provided the conversion price is reduced to C$0.68 ($0.49) to reflect the
current price of the stock.  If the debentures were converted into shares of
common stock at the reduced conversion price, an aggregate of 2,017,941 shares
of common stock would be issued, compared to 686,100 shares at the current
conversion price.  On January 28, 1998, the board of directors approved a
resolution reducing the conversion price, which was approved by the Toronto
Stock Exchange.  On March 18, 1998 the debentures were converted to common
shares.

TRANSACTIONS WITH CHESTER SHYNKARYK.  During the fiscal year ended May 31,
1996, the Company paid consulting fees of C$50,000 ($37,000) to Mr. Shynkaryk
for services rendered by him as the Company's president, pursuant to the terms
of a management agreement dated June 30, 1986, as amended January 30, 1990. 
The agreement obligated Mr. Shynkaryk to perform services for the Company
consistent with his title as president, including investigating opportunities
for the Company to participate in the exploration and development of resource
properties, procuring financing for the Company, when required, and, in
general, assisting in the general administration of the Company.  These fees
were payable to Mr. Shynkaryk at the rate of C$3,500 per month.  The agreement
was terminated in December 1995, when Mr. Banning replaced Mr. Shynkaryk as
president.

TRANSACTIONS WITH LAWSON LUNDELL LAWSON & MCINTOSH.  Jerrold W. Schramm, a
director of Golden Queen, is a partner of the law firm of Lawson Lundell Lawson
& McIntosh, counsel to the Company.  During the year ended December 31, 1997,
the seven month period ended December 31, 1996 and the fiscal year ended May
31, 1996, the Company paid Lawson Lundell Lawson & McIntosh $104,749, $133,841
and $15,506 for legal services rendered on behalf of the Company and its
subsidiary.  No members of the firm of Lawson Lundell Lawson & McIntosh other
than Mr. Schramm owned any shares of common stock of the Company, or rights or
options to purchase such stock, at December 31, 1997.



         [The balance of this page has been intentionally left blank.]


                                    23
<PAGE>

Item 13.  EXHIBITS AND REPORTS ON FORM 8-K.

EXHIBITS.  The following exhibits filed as part of this report.  Exhibits
previously filed are incorporated by reference, as noted. 

   Exhibit
   -------

     3.1            Certificate and Articles of Incorporation of the registrant
                    under the Company Act of British Columbia, as amended. 
                    Previously filed as Exhibit 3.1 to the registrant's
                    registration statement on Form 10-SB and incorporated by
                    reference herein.   

     10.1           Warrant Indenture dated May 23, 1996 between the registrant
                    and Montreal Trust Company of Canada, as trustee. 
                    Previously filed as Exhibit 10.1 to the registrant's
                    registration statement on Form 10-SB and incorporated by
                    reference herein.

     10.2           Employment agreement dated April 2, 1996 among the
                    registrant, Castle Group, Inc. and Steven W. Banning. 
                    Previously filed as Exhibit 10.2 to the registrant's
                    registration statement on Form 10-SB and incorporated by
                    reference herein.

     10.3           Employment agreement dated May 8, 1996 between the
                    registrant and Richard W. Graeme.  Previously filed as
                    Exhibit 10.3 to the registrant's registration statement on
                    Form 10-SB and incorporated by reference herein.

     10.4           Employment agreement dated May 24, 1996 between the
                    registrant and Bernard F. Goodson.  Previously filed as
                    Exhibit 10.4 to the registrant's registration statement on
                    Form 10-SB and incorporated by reference herein.  

     10.5           Lease dated October 20, 1994 between the Subsidiary and
                    William J. Warner with respect to certain property within
                    the project area.  Previously filed as Exhibit 10.5 to the
                    registrant's registration statement on Form 10-SB and
                    incorporated by reference herein.

     10.6           Lease dated September 19, 1994 between the Subsidiary and
                    Western Centennials, Inc. with respect to certain property
                    within the project area.  Previously filed as Exhibit 10.6
                    to the registrant's registration statement on Form 10-SB
                    and incorporated by reference herein.

     10.7           Purchase agreement dated March 8, 1995 between the
                    Subsidiary and William and Dorothy Meier with respect to
                    the acquisition by the Subsidiary of certain property
                    within the project area.  Previously filed as Exhibit 10.7
                    to the registrant's registration statement on Form 10-SB
                    and incorporated by reference herein. 




                                    24
<PAGE>

     10.8           Stock option purchase agreement dated April 1, 1995 between
                    the Subsidiary and Grace W. Meehl, Madge W. Wolff,
                    Stephen G. Wegmann, Michael L. Wegmann, John G. Hodgson,
                    Virginia L. Sigl, Patrick L. Wolff and George P. Wolff with
                    respect to the acquisition by the Subsidiary of an option
                    to purchase all of the outstanding shares of KWC. 
                    Previously filed as Exhibit 10.8 to the registrant's
                    registration statement on Form 10-SB and incorporated by
                    reference herein.

     10.9           Purchase agreement dated September 22, 1995 between the
                    Subsidiary and the Paveen Gupta Medical Corporate Defined
                    Benefit Pension Plan with respect to the acquisition by the
                    Subsidiary of certain property within the project area. 
                    Previously filed as Exhibit 10.9 to the registrant's
                    registration statement on Form 10-SB and incorporated by
                    reference herein.

     10.10          Purchase agreement dated March 29, 1996 between the
                    Subsidiary and the Meehl Family Trust and others with
                    respect to the acquisition by the Subsidiary of certain
                    property within the project area.  Previously filed as
                    Exhibit 10.10 to the registrant's registration statement on
                    Form 10-SB and incorporated by reference herein.

     10.11          Mineral exploration agreement and option to lease or
                    purchase dated January 25, 1996 between the Soledad-Mojave
                    Mining Syndicate and the Subsidiary with respect to the
                    potential acquisition by the Subsidiary of 129.5 hectares
                    of fee land within the project area.  Previously filed as
                    Exhibit 10.11 to the registrant's registration statement on
                    Form 10-SB and incorporated by reference herein.

     10.12          Purchase agreement dated August 1, 1996 between the
                    Subsidiary and Southwestern Refining Corporation with
                    respect to the acquisition by the Subsidiary of certain
                    property and mill tailings within the project area. 
                    Previously filed as Exhibit 10.12 to the registrant's
                    registration statement on Form 10-SB and incorporated by
                    reference herein. 

     10.13          Stock option plan of the registrant, as amended.  Filed as
                    Exhibit 10.13 to the registrant's registration statement on
                    Form 10-SB and incorporated by reference herein. 

     10.14          Management agreement dated June 30, 1986, as amended
                    January 30, 1990, between the registrant and Chester
                    Shynkaryk.  Filed as Exhibit 10.14 to the registrant's
                    registration statement on Form 10-SB and incorporated by
                    reference herein.

     10.15          Forms of debentures issued by the registrant to Landon T.
                    Clay Charitable Lead Trust II and Landon T. Clay Charitable
                    Lead Trust dated November 30, 1983.  Filed as Exhibit 10.15
                    to the registrant's registration statement on Form 10-SB
                    and incorporated by reference herein. 


                                    25
<PAGE>

     10.16          Consulting agreement dated February 1, 1996 between the
                    registrant and Eric E. Kinneberg.  Filed as Exhibit 10.16
                    to the registrant's registration statement on Form 10-SB
                    and incorporated by reference herein.

     10.17          Amendment to employment agreement dated March 28, 1997
                    between the registrant and Richard W. Graeme.  Filed
                    herewith.

     10.18          Amendment to employment agreement dated March 28, 1997
                    between the registrant and Bernard F. Goodson.  Filed
                    herewith.

     1.0            Subsidiaries of the Registrant.  Previously filed as
                    Exhibit 21.0 to the registrant's registration statement on
                    Form 10-SB and incorporated by reference herein.  

     2.40           Power of attorney and consent on Form F-X.  Previously
                    filed as Exhibit 24.0 to the registrant's registration
                    statement on Form 10-SB and incorporated by reference
                    herein.

     27.0           Financial Data Schedule.  Filed herewith.

     99.0           Report of MacKay & Partners with respect to May 31, 1996
                    financial statements of the Registrant.  Filed herewith.

FORM 8-K REPORTS.  No reports on Form 8-K were filed by the registrant during
the fourth quarter of 1996.




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                                    26

<PAGE>

Report of Independent Auditors

To the Shareholders of
Golden Queen Mining Co. Ltd.
Vancouver, B.C.

We have audited the accompanying consolidated balance sheets of Golden Queen
Mining Co. Ltd. and Subsidiary (a development stage company) as of December 31,
1997 and 1996, and the related consolidated statements of loss, changes in
shareholders' equity, and cash flows for the year and seven month period then
ended.  We have also audited the statements of loss, shareholders' equity and
cash flows for the period from inception (November 21, 1985) through December
31, 1997, except that we did not audit these financial statements for the
period from inception (November 21, 1985) through May 31, 1996; those
statements were audited by other auditors whose report dated July 12, 1996,
expressed an unqualified opinion on those statements.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.  Our opinion, insofar as it relates to the
amounts for the period from inception (November 21, 1985) through May 31, 1996,
is based solely on the report of the other auditors.

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

In our opinion, based on our audit and the report of other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Golden Queen Mining Co. Ltd. and
Subsidiary as of December 31, 1997 and 1996, and the results of its operations
and its cash flows for the year and seven month period then ended and the
period from inception (November 21, 1985) through December 31, 1997, in
conformity with generally accepted accounting principles in the United States.

BDO Dunwoody
Chartered Accountants
(Internationally BDO Binder)
                    
March 18, 1998
Vancouver, British Columbia




                                    27
<PAGE>

                         GOLDEN QUEEN MINING CO. LTD.
                        (a development stage company)
                         Consolidated Balance Sheets
                                (U.S. dollars)




                                   December 31,             December 31,
                                      1997                     1996
                                   ------------             ------------
Assets

Current Assets:
 Cash and cash equivalents         $    1,127,234           $    5,436,497
 Receivables                               14,798                  133,164
 Prepaid expenses and 
     other current assets                  77,773                   55,603
                                    -------------            -------------
Total current assets                    1,219,805                5,625,264

Property and equipment, net (Note 1)    1,164,651                  683,310
Mineral properties (Notes 2, 5 and 8)  22,104,335               14,741,678
Other assets (Note 3)                     892,928                  353,500
                                    -------------            -------------
                                   $   25,381,719           $   21,403,752
                                    =============            =============

Liabilities and Shareholders' Equity

Current Liabilities:
 Accounts payable                  $      384,388           $      507,713
 Accrued liabilities                       69,427                   69,046
 Current maturities of long-term 
     debt (Note 5)                         45,034                  203,175
                                    -------------            -------------
Total current liabilities                 498,849                  779,934

Long-term debt, less current 
     maturities (Note 5)                1,857,189                1,901,520
                                    -------------            -------------
Total liabilities                       2,356,038                2,681,454
                                    -------------            -------------

Commitments and Contingencies 
     (Notes 3 and 8)

Shareholders' Equity:

Preferred shares, no par, 
     3,000,000 shares authorized; 
     no shares outstanding                      -                        -
     Common shares, without par, 
     100,000,000 shares authorized; 
     25,708,400 and 22,051,400
     shares issued (Notes 6 and 7)     26,400,594               20,886,029
Deficit accumulated during 
     the development stage             (3,374,913)              (2,163,731)
                                        ---------                ---------
Total shareholders' equity             23,025,681               18,722,298
                                       ----------               ----------
                                   $   25,381,719           $   21,403,752
                                       ==========               ==========


         See Accompanying Summary of Accounting Policies and Notes to
                      Consolidated Financial Statements.


                                    28
<PAGE>

                         GOLDEN QUEEN MINING CO. LTD.
                        (a development stage company)
                       Consolidated Statements of Loss
                               (U.S. dollars)

<TABLE>
<CAPTION>
                                                                                       Cumulative Amounts
                                                                                     From Date of Inception
                                                                                      (November 21, 1985)
                                           Year Ended            Seven Months Ended         through 
                                        December 31, 1997        December 31, 1996     December 31, 1997
                                        -----------------        ------------------  -----------------------
<S>                                     <C>                      <C>                 <C>

General and administrative expenses     $    1,095,943           $    535,131        $    3,237,800
Interest expense                                96,320                 56,472               302,902
Interest income                               (154,704)              (238,289)             (865,724)
Abandoned mineral interests                          -                      -               277,251
Other (income) expense                          10,310                 (4,366)               16,679
                                         -------------            -----------         -------------

Net loss                                $   (1,047,869)          $   (348,948)       $   (2,968,908)
                                         =============            ===========         =============

Net loss per share                      $        (0.04)          $      (0.02)
                                         =============            ===========

Weighted average shares outstanding         23,325,823             19,446,428
                                            ==========             ==========
</TABLE>










             See Accompanying Summary of Accounting Policies and
                  Notes to Consolidated Financial Statements



                                    29
<PAGE>

                         GOLDEN QUEEN MINING CO. LTD.
                        (a development stage company)
          Consolidated Statements of Changes in Shareholders' Equity
                               (U.S. dollars)

<TABLE>
<CAPTION>

                                                                   Deficit
                                                                 Accumulated
From the Date of Inception                                       During the
  (November 21, 1985)                  Common Shares             Development
through December 31, 1997          Shares            Amount         Stage       Total Equity
--------------------------------------------------------------------------------------------
<S>                                <C>            <C>            <C>            <C>
                                       
November 21, 1985
 Issuance of common shares 
     for cash                      1,425,001      $    141,313   $         -    $    141,313
 Net loss for the year                     -                 -       (15,032)        (15,032)
                                   ---------------------------------------------------------

Balance, May 31, 1986              1,425,001           141,313       (15,032)        126,281
 Issuance of common shares 
     for cash                        550,000           256,971             -         256,971
 Issuance of common shares for 
   mineral property                   25,000            13,742             -          13,742
 Net loss for the year                     -                 -       (58,907)        (58,907)
                                   ---------------------------------------------------------


Balance, May 31, 1987              2,000,001           412,026       (73,939)        338,087
 Issuance of common shares 
     for cash                      1,858,748         1,753,413             -       1,753,413
 Net income for the year                   -                 -        38,739          38,739
                                   ---------------------------------------------------------

Balance, May 31, 1988              3,858,749         2,165,439       (35,200)      2,130,239
 Issuance of common shares 
     for cash                      1,328,750         1,814,133             -       1,814,133
 Issuance of common shares for 
   mineral property                  100,000           227,819             -         227,819
 Net loss for the year                     -                 -      (202,160)       (202,160)
                                   ---------------------------------------------------------

Balance, May 31, 1989              5,287,499         4,207,391      (237,360)      3,970,031
 Issuance of common shares 
     for cash                      1,769,767         2,771,815             -       2,771,815
 Issuance of common shares for 
   mineral property                    8,875            14,855             -          14,855
 Net loss for the year                     -                 -      (115,966)       (115,966)
                                   ---------------------------------------------------------

Balance, May 31, 1990              7,066,141         6,994,061      (353,326)      6,640,735
 Net income for the year                   -                 -        28,706          28,706
                                   ---------------------------------------------------------

Balance, May 31, 1991              7,066,141         6,994,061      (324,620)      6,669,441
 Net loss for the year                     -                 -      (157,931)       (157,931)
                                   ---------------------------------------------------------

Balance, May 31, 1992              7,066,141         6,994,061      (482,551)      6,511,510
 Net loss for the year                     -                 -      (285,391)       (285,391)

See Accompanying Summary of Accounting Policies and Notes to Consolidated Financial Statements.

                                    30

<PAGE>
                         GOLDEN QUEEN MINING CO. LTD.
                        (a development stage company)
          Consolidated Statements of Changes in Shareholders' Equity
                              (U.S. dollars)

                                                                   Deficit
                                                                 Accumulated
From the Date of Inception                                       During the
  (November 21, 1985)                  Common Shares             Development
through December 31, 1997          Shares            Amount         Stage          Total Equity
-----------------------------------------------------------------------------------------------
          
Balance, May 31, 1993              7,066,141         6,994,061      (767,942)      6,226,119
 Issuance of common shares 
     for cash                      5,834,491         1,536,260             -       1,536,260
 Share issue costs                         -                 -       (18,160)        (18,160)
 Issuance of common shares for 
   mineral property                  128,493            23,795             -          23,795
 Loss for the year                         -                 -      (158,193)       (158,193)
                                   ---------------------------------------------------------

Balance, May 31, 1994             13,029,125         8,554,116      (944,295)      7,609,821
 Issuance of common shares 
     for cash                        648,900           182,866             -         182,866
 Loss for the year                                                  (219,576)       (219,576)
                                   ---------------------------------------------------------

Balance, May 31, 1995             13,678,025         8,736,982    (1,163,871)      7,573,111
 Issuance of common shares 
     for cash                      2,349,160         2,023,268             -       2,023,268
 Issuance of common shares 
     for debt                        506,215           662,282             -         662,282
 Issuance of 5,500,000 special 
   warrants                                -         9,453,437             -       9,453,437
 Special warrants issue cost               -                 -      (100,726)       (100,726)
 Loss for the year                         -                 -      (426,380)       (426,380)
                                   ---------------------------------------------------------

Balance, May 31, 1996             16,533,400        20,875,969    (1,690,977)     19,184,992
 Issuance of common shares 
     for cash                         18,000            10,060             -          10,060
 Issuance of common shares for 
   special warrants                5,500,000                 -             -               -
 Special warrants issue cost               -                 -      (123,806)       (123,806)
 Net loss for the period                   -                 -      (348,948)       (348,948)
                                   ---------------------------------------------------------

Balance, December 31, 1996        22,051,400        20,886,029    (2,163,731)     18,722,298
 Issuance of common shares 
     for cash                        157,000           157,050             -         157,050
 Issuance of 3,500,000 special
   warrants                                -         5,287,315             -       5,287,315
 Issuance of common shares for 
   special warrants                3,500,000                 -             -               -
 Options to non-employee directors         -            70,200             -          70,200
 Special warrants issue cost               -                 -      (163,313)       (163,313)
 Loss for the year                         -                 -    (1,047,869)     (1,047,869)
                                   ---------------------------------------------------------

Balance, December 31, 1997        25,708,400      $ 26,400,594   $(3,374,913)   $ 23,025,681
                                  ==========================================================

</TABLE>



             See Accompanying Summary of Accounting Policies and
                  Notes to Consolidated Financial Statements.

                                    31
<PAGE>

                         GOLDEN QUEEN MINING CO. LTD.
                         (a development stage company)
                       Consolidated Statements of Cash Flows
                                 (U.S. dollars)

                 Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
                                                                                       Cumulative Amounts
                                                                                     From Date of Inception
                                                                                      (November 21, 1985)
                                           Year Ended            Seven Months Ended         through 
                                        December 31, 1997        December 31, 1996     December 31, 1997
                                        -----------------        ------------------  -----------------------
<S>                                     <C>                      <C>                 <C>

Operating Activities:
  Net loss                              $    (1,047,869)         $    (348,948)      $    (2,968,908)
  Adjustments to reconcile net loss to
     cash used in operating activities:
       Write-off of mineral properties                -                      -               277,251
       Amortization and depreciation             66,962                 19,236               108,872
       Loss on disposition of property 
            and equipment                             -                    214                10,949
  Options to directors                           70,200                      -                70,200
  Changes in assets and liabilities:
       Receivables                              118,366               (125,949)              (14,798)
       Prepaid expenses and other 
            current assets                      (22,170)                 7,171               (77,773)
       Accounts payable and accrued 
            liabilities                        (122,944)               186,944               453,815
                                         --------------           ------------        --------------
Cash used in operating activities              (937,455)              (261,332)           (2,140,392)
                                         --------------           ------------        --------------

Investment Activities:
  Deferred exploration and development
      expenditures                           (6,881,711)            (2,793,637)          (17,861,495)
  Deposits on mineral properties               (539,428)                (3,500)             (892,928)
  Purchase of mineral properties               (480,946)              (459,824)           (4,389,880)
  Purchase of property and equipment           (548,303)              (632,328)           (1,292,964)
  Proceeds from sale of property and 
   equipment                                          -                      -                 8,492
                                         --------------           ------------        --------------

Cash used in investment activities           (8,450,388)            (3,889,289)          (24,428,775)
                                         --------------           ------------        --------------

Financing Activities:
     Borrowing under long-term debt                   -                      -             3,766,502
     Payment of long-term debt                 (202,472)              (117,139)           (1,051,997)
     Issuance of common stock for cash          157,050                 10,060            10,647,149
     Share issue costs                         (163,313)              (123,806)             (406,005)
     Issuance of special warrants             5,287,315                      -            14,740,752
                                         --------------           ------------        --------------
Cash provided by (used in) financing 
  activities                                  5,078,580               (230,885)           27,696,401

</TABLE>

             See Accompanying Summary of Accounting Policies and
                  Notes to Consolidated Financial Statements.


                                    32
<PAGE>

                         GOLDEN QUEEN MINING CO. LTD.
                         (a development stage company)
                    Consolidated Statements of Cash Flows
                               (U.S. dollars)

               Increase (Decrease) in Cash and Cash Equivalents

<TABLE>
<CAPTION>
                                                                                       Cumulative Amounts
                                                                                     From Date of Inception
                                                                                      (November 21, 1985)
                                           Year Ended            Seven Months Ended         through 
                                        December 31, 1997        December 31, 1996     December 31, 1997
                                        -----------------        ------------------  -----------------------
<S>                                     <C>                      <C>                 <C>

Net change in cash and cash equivalents      (4,309,263)              (4,381,506)           1,127,234

Cash and cash equivalents, beginning 
  balance                                     5,436,497                9,818,003                    -
                                           ------------             ------------           ----------

Cash and cash equivalents, 
  ending balance                        $     1,127,234          $     5,436,497     $      1,127,234
                                           ============             ============         ============

Non-cash financing and investing activities:
  Conversion of long-term debt to 
     common shares                      $             -          $             -     $        662,282
  Mineral property acquired through 
     the issuance of long-term debt     $             -          $     1,084,833     $      1,084,833
  Exchange of note for future royalty 
     payments                           $             -          $             -     $        150,000
  Shares for mineral property           $             -          $             -     $        280,211

Cash paid during the period for:
  Interest                              $       199,114          $        88,361     $        548,719
  Income taxes                          $             -          $             -     $              -

</TABLE>









             See Accompanying Summary of Accounting Policies and
                  Notes to Consolidated Financial Statements.


                                    33

<PAGE>
                         GOLDEN QUEEN MINING CO. LTD.
                        (a development stage company)
                        Summary of Accounting Policies

NATURE OF BUSINESS AND PRINCIPLES OF CONSOLIDATION.  Golden Queen Mining Co.
Ltd. ("Golden Queen" or the "Company") is engaged in acquiring and maintaining
gold mining properties for exploration, future development and production.  The
Company was formed on November 21, 1985.  Since its inception the Company has
been in the development stage. Planned activities involve bringing to operation
a precious metals mine located in Kern County, California.  These consolidated
financial statements include the accounts of Golden Queen Mining Co. Ltd.
("Golden Queen"), a British Columbia corporation, and its wholly-owned
subsidiary, Golden Queen Mining Company, Inc. (the "Subsidiary"), a United
States, (State of California) corporation.

The underlying value of the Company's mineral properties and related deferred
exploration and development expenditures is dependent on the existence and
economic recovery of ore reserves, confirmation of the Company's interest in
the underlying mineral claims, the ability to obtain necessary financing to
complete the development, and future profitable production or proceeds from the
disposition thereof.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.  The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles in the United States.

FISCAL-YEAR CHANGE.  The board of directors approved a change in the Company's
fiscal year end from May 31 to December 31, effective calendar year beginning
January 1, 1997.  A seven-month fiscal transition period from June 1, 1996
through December 31, 1996 preceded the start of the new calendar-year cycle. 
Fiscal years presented and referred to in these consolidated financial
statements and notes thereto are on a December 31 fiscal-year basis unless
otherwise noted.

CASH AND CASH EQUIVALENTS.  For purposes of balance sheet classification and
the statements of cash flows, the Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.

PROPERTY AND EQUIPMENT.  Property and equipment are stated at cost. 
Depreciation is provided by the straight-line method with a half-year
convention over the estimated service lives of the respective assets, which
range from 5 to 29-1/2 years.

MINERAL PROPERTIES.  Mineral properties include the cost of advance minimum
royalty payments, the cost of capitalized property leases, share payments, and
the cost of property acquired either by cash payment or the issuance of term
debt.  Expenditures for exploration and development on specific proven
properties are also capitalized.  These costs will be amortized against
subsequent revenues, or charged to operations at the time the related property
is determined to have an impairment of value.

In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for Impairment of Long-lived Assets and
for Long-lived Assets to be Disposed Of", management of the Company reviews the
carrying value of its mineral properties on a regular basis.  Estimated
undiscounted future cash flow from the mineral properties is compared with the
current carrying value.  Reductions to the carrying value, if necessary, are
recorded to the extent the net book value of the property exceeds the estimate
of future undiscounted cash flow. 

FOREIGN CURRENCY TRANSLATION.  Golden Queen has adopted the United States
dollar as its reporting currency for its financial statements prepared after
May 21, 1996 as the United States dollar is the currency of the primary
economic environment in which Golden Queen and the Subsidiary conduct business
and is considered the appropriate functional currency for the Company's
operations.  Balances held in Canadian dollars are translated into U.S. dollars
in accordance with Statement of Financial Accounting Standards No. 52, "Foreign
Currency Translation," ("SFAS 52").  Assets and liabilities in foreign
currencies are translated into dollars at the rates ruling at the balance sheet
date.  Revenues and expenses are translated at average rates for the year.  The
net exchange differences resulting from these transactions are dealt with as
shareholder's equity.  Where amounts denominated in a foreign currency are
converted into dollars by remittance or repayment, the realized exchange
differences are included in other income.

                                    34
<PAGE>

The exchange rates prevailing at both December 31, 1997 and December 31, 1996
were 1.43 and 1.37, respectively.  The average rates of exchange during the
year ended December 31, 1997 and the seven month period ended December 31, 1996
were 1.39 and 1.36, respectively.

NET LOSS PER SHARE.  In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128, "Earnings per
Share," ("SFAS 128"), which requires dual presentation of basic earnings per
share and diluted earnings per share on the face of all income statements
issued after December 15, 1997 for all entities with complex capital
structures.  Adoption of this statement did not materially effect the Company's
financial position, results of operations or cash flows.  Basic earnings per
share is computed as net income divided by the weighted average number of
common shares outstanding for the period.  Diluted earnings per share reflects
the potential dilution that could occur from common shares issuable through
stock options, warrants and convertible debt.  Since the Company's stock
options, warrants and convertible debt are anti-dilutive for all periods
presented, only basic earnings per share is presented.  A total of 5,735,000
common shares were issuable pursuant to such stock options, warrants and
convertible debt at December 31, 1997.

ENVIRONMENTAL AND RECLAMATION COSTS.  The Company currently has no active
reclamation projects, but expenditures relating to ongoing environmental and
reclamation programs would either be expensed as incurred or capitalized and
depreciated depending on the status of the related mineral property and their
future economic benefits.  The recording of provisions generally commences when
a reasonably definitive estimate of cost and remaining project life can be
determined.

ESTIMATES.  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that effect 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 period.  Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS.  The carrying amount reported in the
balance sheets for cash and cash equivalents, accounts receivables, accounts
payable and accrued expenses approximate fair value because of the immediate or
short-term maturity of these financial instruments.  The fair value of long-
term debt approximates its carrying value because the stated rates of the debt
reflect recent market conditions or because the rates are variable in nature.

NEW ACCOUNTING PRONOUNCEMENTS.  In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," ("SFAS 130") and Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related
Information," ("SFAS 131").  SFAS No. 130 requires that an enterprise report,
by major components and as a single total, the change in its net assets during
the period from nonowner sources.  SFAS No. 131 establishes annual and interim
reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas and major customers. 
Adoption of these statements will not materially effect the Company's financial
position, results of operations or cash flows; any effect will be limited to
the form of its disclosures.  Both statements are effective for years beginning
after December 15, 1997, although they may be applied earlier.

RECLASSIFICATIONS.  Certain amounts in the December 31, 1996 financial
statements have been reclassified to conform to the December 31, 1997
presentation. 



                                    35
<PAGE>
                         GOLDEN QUEEN MINING CO. LTD.
                        (a development stage company)
                 Notes to Consolidated Financial Statements


1.   PROPERTY AND EQUIPMENT.

Property and equipment consists of:

                              December 31,        December 31,
                                 1997                1996
                              ------------        ------------
     Building                 $    145,948        $         -
     Furniture and fixtures         74,186             67,320
     Equipment                     243,533             82,916
     Automobiles                   129,986            108,495
     Rental properties             707,600            262,886
     Construction in progress            -            231,333
                                 ---------          ---------
                                 1,301,253            752,950
     Less accumulated 
       depreciation                136,602             69,640
                                 ---------          ---------
     Property and equipment, 
       net                    $  1,164,651        $   683,310
                                ==========          =========

2.   MINERAL PROPERTIES.  The Company has capitalized the amounts which have
been paid to acquire property rights and for services rendered in the
exploration, drilling, sampling, engineering and other related technical,
managerial and professional services toward the evaluation and development of
certain mining claims known as the Soledad Property ("Soledad"), Mojave Mining
District, Kern County, California.

The Company's investment in mineral properties consists of the following:

                                        December 31,             December 31,
                                           1997                     1996
                                        ------------             ------------
     Deferred exploration and
      development expenditures,
      beginning of period               $ 9,799,839              $ 7,006,202
     Costs capitalized during the year:
      Engineering                         1,226,118                  368,160
      Geology/drilling                    3,739,064                1,279,775
      Permitting/environmental              671,362                  504,915
      Metallurgical testing                  96,582                   31,552
      Other direct costs                  1,148,585                  609,235
                                         ----------               ----------
     Deferred exploration and
      development expenditures,
      end of period                      16,681,550                9,799,839
     Properties                           3,813,270                3,619,364
     Advance minimum royalties            1,609,515                1,322,475
                                         ----------               ----------
     Mineral properties                 $22,104,335              $14,741,678
                                         ==========               ==========



                                    36
<PAGE>

3.   OTHER ASSETS.  On April 1, 1995, the Company acquired an option to
purchase all of the issued and outstanding shares of a privately held
California corporation holding an interest in a previously uncontracted tract
of land located near the Soledad site.  The option called for an initial non-
refundable payment of $100,000 in exchange for access to the property for a
period of nine months to evaluate the presence of mineral reserves.  At the end
of the nine month period, the Company chose to exercise its option to purchase
the shares of the corporation by making the initial purchase payment of
$250,000.  This was followed by a second payment of $500,000 on July 1, 1997. 
An additional $750,000 is due upon reaching sustained production or July 1,
1999 whichever comes first.  The Company has no legal obligation to continue
making payment and cannot perfect its rights as a shareholder of the
corporation until full payment under the option is made.  Upon commencement of
commercial production, the Company will pay a royalty of 1% of gross smelter
returns for a period of up to 60 years, not to exceed $60,000,000.

4.   INCOME TAXES.  At December 31, 1997 and December 31, 1996, the Company had
deferred tax assets of approximately $364,000 and $127,000, respectively,
principally arising from net operating carryforwards for income tax purposes,
offset by development costs expended for income tax purposes but capitalized
for financial reporting purposes.  As management of the Company cannot
determine if it is more likely than not that the Company will receive the
benefit of this asset, a valuation allowance equal to the deferred tax asset
has been established at both December 31, 1997 and December 31, 1996.

As at December 31, 1997, the Company had net operating loss carryforwards
available to reduce taxable income in future years as follows:

               Country                  Amount         Expiration Dates

          United States                 $14,500,000    2002 - 2012
          Canada                        $ 1,000,000    1998 - 2004


The potential effect on future income taxes which may result from the
application of these losses has not been reflected in these financial
statements.






     [The balance of this page has been left blank intentionally.]



                                    37
<PAGE>

5.   LONG-TERM DEBT.  

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                                 December 31,             December 31,
                                                                    1997                     1996

<S>                                                              <C>                      <C>
Debenture convertible at the option of the holder into 
  common shares at a conversion price of C$2.00 ($1.46) 
  per common share.  The debenture bears interest at 9.5%,
  due March 19, 1998, unsecured, subsequently converted.         $  1,000,000             $  1,000,000

Note due to a corporation, payable in monthly installments
  of $9,275, including interest at prime plus 2% (10.5% at
  December 31, 1997), estimated to mature in June 2012 and
  collateralized by mineral property.                                 826,694                  850,000

9% note due, payable in monthly installments of $600
  including interest, maturing June 2006, 
  collateralized by mineral property.                                  42,638                   45,838

10% note due to a collective group of individuals, payable in 
  monthly installments of $1,500 including interest, maturing 
  at the earlier of April 1999 or commencement of production, 
  collateralized by mineral property.                                  28,891                   42,074

Non-interest bearing note payable to an individual, due on
  July 1, 1999, secured by a grant deed, collateralized by 
  well and related water rights.                                        4,000                    9,000

12% note due, payable in monthly installments of $16,659 
  including interest, maturing November 1997, collateralized 
  by mineral property.                                                      -                  157,783
                                                                   ----------               ----------

Total long-term debt                                                1,902,223                2,104,695
Current maturities                                                     45,034                  203,175
                                                                   ----------               ----------
Long-term debt, less current maturities                          $  1,857,189             $  1,901,520
                                                                   ==========               ==========

</TABLE>

Scheduled long-term debt maturities at December 31,1997 are as follows:

          Year ending December 31,         Amount  

          1998                          $    45,034
          1999                               49,440
          2000                               35,877
          2001                               39,763
          2002                               44,070
          Thereafter                        688,039
                                         ----------
                                        $   902,223
          Conversion of debentures
            into common shares            1,000,000
                                          ---------
                                        $ 1,902,223
                                         ==========

On March 18, 1997, the convertible debentures were retired through the issuance
of 2,017,941 shares of the Company's common stock.  Accordingly, the
convertible debentures are reported as a non-current liability at December 31,
1997.

                                    38
<PAGE>

6.   SHARE CAPITAL.  On May 23, 1996 the Company issued 5,500,000 Special
Warrants under a Special Warrant indenture in exchange for $9,453,437.  All of
the special warrants were exercised on September 10, 1996, without additional
payment, for one common share and one-half of one warrant.  Each full warrant
issued upon exercise of the special warrants entitles its holder to purchase
one common share at a price of C$1.525 ($1.07 U.S. dollars).  All of the
2,750,000 warrants are outstanding at December 31, 1997 and were exercisable
through February 28, 1998 (subject to the application of certain "accelerated"
expiry provisions).

On May 29, 1997 the Company issued 3,500,000 special warrants in exchange for
$5,287,315.  All of the special warrants were exercised on September 6, 1997,
without any additional payment for one common share.

7.   STOCK OPTION PLAN.  Under its amended 1996 stock option plan, the Company
may grant options to purchase up to 3,300,000 shares of common stock to
officers, directors and employees.  The exercise price for all stock options is
the closing price of the Company's common shares (in Canadian dollars) as
traded on the Toronto Stock Exchange on the date of grant.  Options issued to
directors who are not employees vest immediately.  For all other options, the
right to exercise vests over a two year period in equal increments on the date
of grant and on each of the first two anniversaries of such date.  All stock
options issued and outstanding as of December 31, 1997 expire at a date
determined by the Company's Board of Directors, not exceeding five years from
the date of grant, or after 39 months from the date of grant if not specified.

The following is a summary of stock option activity: 

                              Year Ended               Seven Month Period Ended
                          December 31, 1997                December 31, 1996
                         --------------------          ------------------------
                         Shares / Price Range            Shares / Price Range

Options outstanding, 
  beginning of period    2,257,000 / $0.40-2.18        1,950,000 / $0.40-2.18
Options granted            200,000 / $2.01-2.32          325,000 / $1.69-1.90
Options exercised        (157,000) / $0.40-1.11         (18,000) / $0.56     
                         ----------------------        ----------------------
Options outstanding, 
  end of period          2,300,000 / $0.40-2.32        2,257,000 / $0.40-2.18

Options exercisable      2,018,334 / $0.40-2.32        1,560,332 / $0.40-2.18


The following table summarizes information about fixed-price stock options
outstanding at December 31, 1997:

<TABLE>
<CAPTION>



                                     Options Outstanding                Options Exercisable
                                   ------------------------           ------------------------
                                    Weighted-     Weighted-                          Weighted-
                                     Average      Average                            Average
     Range of           Number     Contractual    Exercise              Number       Exercise
      Prices         Outstanding      Life         Price              Exercisable     Price
     -----------------------------------------------------------------------------------------
     <S>             <C>            <C>           <C>                  <C>           <C>
     $0.40 -$ .44     205,000      1.5            $ 0.41              205,000        $ 0.41
     $0.99            740,000      2.9            $ 0.99              740,000        $ 0.99
     $1.07 -$1.11     730,000      2.7            $ 1.10              620,000        $ 1.10
     $1.69 -$1.79     240,000      3.7            $ 1.77              176,667        $ 1.76
     $1.94             85,000      2.2            $ 1.94               56,666        $ 1.94
     $2.01            130,000      4.1            $ 2.01              130,000        $ 2.01
     $2.18            100,000      3.4            $ 2.18               66,667        $ 2.18
     $2.32             70,000      2.5            $ 2.32               23,334        $ 2.32
     -----------------------------------------------------------------------------------------
     $0.40 -$2.32   2,300,000      2.9            $ 1.24            2,018,334        $ 1.17

</TABLE>

The Company accounts for stock-based compensation plans by applying APB Opinion
No. 25, Accounting for Stock Issued to Employees, and related Interpretations. 
Under APB Opinion No. 25, because the exercise price of the Company's employee
stock options approximates the market price of the underlying stock at the date
of grant, no compensation cost is recognized.  The weighted average fair value
at date of grant for options granted to employees in 1997 and 1996 was $2.32
and $1.81 per option.

                                    39
<PAGE>

FASB Statement No. 123, "Accounting for Stock-Based Compensation" (FAS 123)
requires the Company to provide pro forma information regarding net income and
earnings per share as if compensation cost for the Company's stock option plans
had been determined in accordance with the fair value based method prescribed
in FAS 123.  The Company estimates the fair value of each stock option at the
grant date by using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants in 1997 and 1996, respectively: 
no dividend yield for each year; expected volatility of 40 percent; and risk-
free interest rates of 5.0 percent.

Under the accounting provisions of FAS 123, the Company's net loss and loss per
share would have been reduced to the pro forma amounts indicated below:

                            Year Ended                 Seven Months Ended
                         December 31, 1997             December 31, 1996

Net loss:
 As reported             $(1,047,869)                  $ (348,948)    
 Pro forma                (1,085,669)                    (420,348)

Loss per share:
 As reported                   (0.04)                       (0.02)
 Pro forma                     (0.05)                       (0.02)


8.   COMMITMENTS AND CONTINGENCIES.  The Company's investment in mineral
properties includes an exclusive lease to explore, develop and mine the Soledad
site.  The lease is for a minimum twenty year period, continuing on as long as
the property remains in production subject to processing a minimum of 12,000
tons of ore per year.  The lease is also subject to production royalties of 3%
to 7.5% of net smelter returns depending on the quality of ore eventually
extracted.  All advance minimum royalties paid, amounting to $100,000 per year,
are applied against any future production royalties.  
The Company has agreed to issue 100,000 common shares upon commencement of
commercial production in connection with certain property acquisitions.

The Company has entered into various exploration right, lease option and
property acquisition agreements on the above claims.  The lease agreements have
various terms and expiration dates, and require annual payments of
approximately $275,000.  All are subject to a sliding scale royalty on net
smelter returns beginning at 3%.

During the year ended May 31, 1996 the Company entered into employment
contracts with three of its executive officers. The agreements provide for the
payment of salary and bonus, the granting of options, and certain employee
benefits. The agreements also contain provisions for lump-sum payments based on
the employee's salary upon termination for reasons other than for cause, up to
an aggregate amount of $862,000.

On September 19, 1994 the Company entered into a mining lease agreement
granting exclusive exploration and development rights on property adjacent to
claims previously described.  The term of the agreement is for 20 years and
consideration included a cash payment of $30,000 and annual minimum lease
payments of $10,000.

On November 8, 1995, the Company signed an option to purchase certain mining
claims and millsites for a total purchase price of $65,000.  $13,000 has been
paid and a note payable for $52,000 at 10% interest with monthly payments of
$1,500 is outstanding.  All principal will be due in three years or at the
start of production, whichever occurs first.  The Company will pay a 3% net
smelter return royalty not to exceed $500,000.

On December 30, 1994, the Company signed an amendment to a September 25, 1989
agreement of purchase for certain leasehold interests and unpatented claims. 
Under the terms of the amendment, the outstanding balance on the $150,000 note
was canceled and production royalty granted on all products produced from the
property up to a maximum payment of $300,000 plus simple interest.  The
outstanding balance on the canceled note was credited to mineral properties.

                                    40
<PAGE>

9.   RELATED PARTY TRANSACTIONS.  Jerrold W. Schramm, a director of Golden
Queen, is a partner of the law firm of Lawson Lundell Lawson & McIntosh,
counsel to the Company.  During the year ended December 31, 1997, the seven
month period ended December 31, 1996 and the fiscal year ended May 31, 1996,
the Company paid Lawson Lundell Lawson & McIntosh $104,749, $133,841 and
$15,506 for legal services rendered on behalf of the Company and its
subsidiary.  No members of the firm of Lawson Lundell Lawson & McIntosh other
than Mr. Schramm owned any shares of common stock of the Company, or rights or
options to purchase such stock, at December 31, 1997.

10.  SUBSEQUENT EVENTS.

(a)  On January 28, 1998, additional stock options to purchase up to 25,000
shares of common stock were granted to each of the Company's five non-employee
directors.  The options are exercisable at the price of C$1.00 ($0.69) per
share and expire on January 28, 2003.

(b)  Also, on January 28, 1998 the exercise price of all outstanding options
held by directors and employees of the Company and its subsidiary with an
exercise price of more than C$1.00 ($0.69) per share was reduced to C$1.00
($0.69) per share, subject to the approval of the Toronto Stock Exchange and
the Company's shareholders.  The Toronto Stock Exchange approved the repricing
of the options, subject to the satisfaction of customary conditions. 
Shareholder approval will be sought at the next annual general meeting of
shareholders of the Company.

(c)  Also, on January 28, 1998, the conversion price of the debentures in the
principal amount of US $1,000,000, referred to in Note 5, was reduced from
C$2.00 ($1.46) per share to C$0.68 ($0.50) per share.  The conversion price
reduction was subsequently approved by the Toronto Stock Exchange and on March
18, 1998, the convertible debentures were converted to 2,017,941 common shares.

(d)  Effective February 19, 1998, the exercise price of the common share
purchase warrants issued by the Company pursuant to a special warrant offering
completed in May 1996, was reduced to C$ 0.68 ($0.49) per share from C$1.525
($1.07) per share.  The exercise price reduction was subsequently approved by
the Toronto Stock Exchange.  1,834,000 warrants were exercised at C$0.68
($0.49) for 1,834,000 common shares.  The Company received gross proceeds of
C$1,247,324 ($879,264).









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<PAGE>

                                SIGNATURES


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

GOLDEN QUEEN MINING CO. LTD.

By:   /s/ Steven W. Banning
     ------------------------------
     its President 
                              
     Date: March 25, 1998


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


By:  /s/ Gordon C. Gutrath
     ------------------------------
     a Director

     Date: March 25, 1998

By:  /s/ Jerrold W. Schramm
     ------------------------------
     a Director

     Date: March 25, 1998

By:  /s/ Edward G. Thompson
     ------------------------------
     a Director

     Date: March 25, 1998

By:  /s/ Chester Shynkaryk
     ------------------------------
     a Director

     Date: March 25, 1998

By:  /s/ Christopher M.T. Thompson
     ------------------------------
     a Director

     Date: March 25, 1998

By:  /s/ Bernard F. Goodson
     ------------------------------
     its Principal Financial and 
      Accounting Officer

     Date: March 25, 1998


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