FORM 10-KSB


                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

   [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934
                   For the fiscal year ended December 31, 2000
                                       OR
   [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934
        For the transition period from                 to
                                       ---------------    ---------------

                          GOLDEN QUEEN MINING CO. LTD.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

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

                               11847 Gempen Street
                            Mojave, California 93501
                    ----------------------------------------
                    (Address of principal executive offices)

                    Issuer's telephone number: (661) 824-1054

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under section 12(g) of the Exchange Act:
                         Common Stock without par value


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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

The issuer's revenues for its most recent fiscal year were $32,062 in interest
income. The aggregate market value of the voting stock held by non-affiliates at
March 7, 2001 was $8,498,530. The number of shares of common stock outstanding
at such date was 49,991,352.

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, 1999


                                TABLE OF CONTENTS


SAFE HARBOR STATEMENT

GLOSSARY

                                                                           Page

PART I

           Item 1:   Description of Business..................................1
           Item 2:   Description of Property.................................10
           Item 3:   Legal Proceedings.......................................14
           Item 4:   Submission of Matters to a Vote of Security Holders.....14


PART II

           Item 5:   Market for Common Equity and Related Stockholder
                     Matters.................................................14
           Item 6:   Management's Discussion and Analysis and Plan of
                     Operation...............................................15
           Item 7:   Financial Statements....................................18
           Item 8:   Changes in and Disagreements with Accountants and
                     Financial Disclosure....................................18


PART III

           Item 9:   Directors and Executive Officers, Promoters and Control
                     Persons; Compliance with Section 16(a) of the Exchange
                     Act.....................................................19
           Item 10:  Executive Compensation..................................20
           Item 11:  Security Ownership of Certain Beneficial Owners and
                     Management..............................................24
           Item 12:  Certain Relationships and Related Transactions..........25
           Item 13:  Exhibits and Reports on Form 8-K........................26


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, 2000 of approximately $33,213,000. 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 Company is currently in care and
maintenance with a "burn" rate of approximately $23,000 per month.

Some of the conditions noted raise substantial doubt about the Company's ability
to continue as a going concern. The ability of the Company to obtain financing
and adequately manage its expenses, and thus maintain solvency, is dependent on
equity market conditions, the ability to find a joint venture partner, the
market for precious metals, and / or the willingness of other parties to lend
the Company money. While the Company has been successful at certain of these
efforts in the past, there can be no assurance that current efforts will be
successful.

The Need for Significant Additional Financing. The Company anticipates that it
will need approximately $86,300,000 in additional financing to put the Soledad
Mountain Project into production; an anticipated $82,500,000 will be used for
capital expenditures and $4,800,000 will be used as working capital and for
start-up expenditures. These estimates are based on certain assumptions
contained in the 2000 feasibility study. 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.
However, 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 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 December 31, 2000, world gold prices were approximately $273 per ounce, a
decrease of approximately 6% from prices for the past two years. If gold prices
remain weak, it may not be economical for the Company to put the Soledad
Mountain Project into production. Currently the market is poor for raising
additional capital for the Company.

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 company, 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
mineable deposit for extraction.

Exploration stage. Activities such as drilling, bulk sampling, assaying and
surveying related to the search for mineable 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 and resources, 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>
                                    GLOSSARY


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 mineable 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.

Resources. The term Mineral Resource covers mineralization and natural material
of intrinsic economic interest which has been identified and estimated through
exploration and sampling and within which Mineral Reserves may subsequently be
defined by the consideration and application of technical, economic, legal,
environmental, socio-economic, and governmental factors. The phrase `reasonable
prospects for economic extraction' implies a judgement by the Qualified Person
in respect of the technical and economic factors likely to influence the
prospect of economic extraction. A Mineral Resource is an inventory of
mineralization that under realistically assumed and justifiable technical and
economic conditions, might become economically extractable. These assumptions
must be presented explicitly in both public and technical reports. Mineral
Resources are sub-divided, in order of increasing geological confidence, into
Inferred, Indicated, and Measured categories.

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.

                                       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.
A mineable ore reserve was generated as part of a feasibility study completed by
M3 Engineering and Technology of Tucson, Arizona in early 1998. This study
estimated the mineable ore reserves, based on a gold price of $350 per ounce and
a silver price of $5.00 per ounce, at 48.6 million tonnes (53.6 million tons)
averaging 0.86 grams of gold per tonne (0.025 ounces per ton) and 12.7 grams of
silver per tonne (0.371 ounces per ton) for a gold equivalent grade of 1.04
grams per tonne (0.030 ounces per ton), or a total of 1.585 million ounces of
gold equivalent. Based on extensive sampling and other exploratory activities
conducted through 1998, an update of proven and probable mineable ore reserves
at the project was estimated internally at a gold price of $325 per ounce and a
silver price of $6.00 per ounce. This reserve update totals 45.0 million tonnes
(49.6 million tons), at an average grade of 0.99 grams per tonne (0.029 ounces
per ton) of gold and 14.34 grams per tonne (0.42 ounces per ton) of silver for a
gold equivalent grade of 1.21 grams per tonne (0.035 ounces per ton). Total
contained ounces are estimated at 1,437,000 ounces of gold and 20,757,000 ounces
of silver, or approximately 1,748,000 ounces of gold equivalent.

With the continuing depressed price of gold in recent years, the Company
performed additional drill and cross-cut sampling in order to expand the
mineralization, confirm previous results, and analyze the by-product value of
the crushed waste rock for aggregate use. A new feasibility study was done in
2000 utilizing $300 per ounce gold and $5.50 per ounce silver and assuming sales
of 6.3 million tons per year of aggregate product. Cases were also done assuming
limited aggregate sales and one with more limited cutting of assays which
produced a higher gold grade.

The new study, estimated a geologic resource at a cut-off grade of 0.274 grams
per tonne (0.008 ounces per ton) of 122.16 million tonnes (134.66 million tons)
averaging 0.669 grams gold per tonne (0.020 ounces gold per ton), or 0.842 grams
gold equivalent (0.024 ounces gold equivalent per ton). Contained within this
geologic resource is a mineable proven, and probable resource1 at metal prices
of $300 per ounce gold and $5.50 per ounce silver totaling 57.3 million tonnes
(63.3 million tons) averaging 0.83 grams gold per tonne (0.024 ounces per ton)
and 13.5 grams silver per tonne (0.030 ounces per ton). This mineable resource
is estimated to contain 59 tonnes (1.9 million ounces) of gold equivalent.

The Company plans 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 5.76 million tonnes (6.35 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 and/or aggregate markets
are developed.

--------------------------------
1 Over the past several years new guidelines have been developed on the
terminology of Mineral Resources and Reserves. These guidelines were finally
adopted in late 2000. In effect, they recommend that the terminology "reserve"
be only used when a deposit has undergone at least a Preliminary Feasibility
Study which demonstrated that economic extraction can be justified. While
economic extraction is not defined, it implies that the project can be financed
to production. Over the past several years, the Company has completed three
Feasibility Studies that showed an economic return at gold prices of $350 in
1998, $325 in 1999, and $300 in 2000 (with by-product waste rock sales).
However, with gold prices in the US$270 per ounce range and the poor market for
junior companies raising funds, it is unlikely that the company can raise
production financing at this time. Therefore, the term "mineable resource" not
"mineable reserve" is used in discussing the mineralized tonnages in the mining
plan.

                                       1
<PAGE>
In December 2000, the Company's Board of Directors voted to move the Company
into care and maintenance status. Due to sustained depressed gold and silver
prices during 2000, and an inability to secure financing in order to place the
Company's assets in service for their intended use, the Company recorded an
asset impairment loss of $28,547,592 for the year ended December 31, 2000. The
asset impairment loss reduced the carrying value of fixed assets, mineral
properties, and other assets to their estimated net realizable value.

The registered office of the Company is located at 1600 - 925 West Georgia
Street, Vancouver, British Columbia V6C 3L2, and its executive offices are
located at 11847 Gempen Street, Mojave, California 93501.

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, and in 1999 by 399
meters (1,273 ft.) of diamond drilling, 9,309 meters (30,540 ft) of RC drilling,
and 818 meters (2,682 ft) of cross-cut sampling.

EXPLORATION.

General. Several major drilling campaigns and a program to re-sample 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 resource. Surrounding the veins are siliceous
envelopes that contain lower grade material that forms the major portion of the
resource tonnage.

Sampling and Block Model Construction. The economic viability of the mineral
deposit at the Soledad Mountain Project is based on industry-accepted and block
model computer analysis. The Company constructed a three dimensional computer
model of the project area using simulated "blocks" of mineralized material
measuring 7.6 meters (25 feet) by 7.6 meters (25 feet) by 6.1 meters (20 feet);
substantial data derived from drill hole samples, underground crosscuts, 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.

                                       2
<PAGE>
The data employed in the block model analysis was derived from Gold Fields
Mining Company's production records and the Company's exploration activities
through 1999, consists of 113,585 meters (372,649 ft) of assayed material taken
from more than fourteen different vein systems in the district. The sources and
extent of this data are summarized below:

   -------------------------------------------------------------------------
    Diamond drilling                      9,802.1 meters        32,127 feet
   -------------------------------------------------------------------------
    Reverse circulation drilling         89,912.0 meters       294,987 feet
   -------------------------------------------------------------------------
    Old cross-cuts (1930s)                6,813.0 meters        22,352 feet
   -------------------------------------------------------------------------
    Underground drilling (1930s)          4,909.7 meters        16,108 feet
   -------------------------------------------------------------------------
    Recent cross-cuts (1980s)             2,156.6 meters         7,075 feet
   -------------------------------------------------------------------------
                                        113,593.4 meters       372,649 feet
   -------------------------------------------------------------------------

The Company retained Mintec, Inc. (Mintec) for a collaboration effort with the
Company staff in preparing a computer model representation of the Soledad
Mountain deposit. The database incorporates the aforementioned 113,585 meters
(372,647 ft.) of sample information, topographic information, and geologic
interpretation of rock units and mineralized zones.

Rock types, high grade zones, low grade zones, mined-out stopes and zones of
internal waste were delineated on cross sections, transferred to bench plans,
digitized, and loaded into the model. Plan maps were plotted from the block
model to check the block code assignments and corrections were made where
necessary. High grade zones were defined as outlined areas containing grades
greater than 3.43 grams per tonne (0.100 ounces per ton) of gold equivalent and
low grade zones enclosing areas that ranged from 3.43 to 0.41 grams per tonne
(0.100 to 0.012 ounces per ton) of gold equivalent. Each mineralized block was
then assigned a percentage for their volume of high grade, low grade, and stope
material. 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 interpolation process.

Linear kriging was used to estimate gold and silver grades in the model. Grades
were interpolated for the high grade and low grade zones independently, to
maintain the integrity of each zone. The separation of high grade, low grade and
waste zones was maintained by allowing only composites coded as high grade to be
used to interpolate high grade zones and similarly, only low grade composites
were used to interpolate low grade zones. Gold equivalent grade for each block
was calculated based on the following equation:

        AuEq = AuKrg + [(AgKrg/54.17)*(65%Ag recovery/80% Au recovery)].

This calculation was done for all blocks containing interpolated gold and silver
grades and the resulting value was stored back into the block. Mineable reserves
and all subsequent mine planning work were based on kriged gold and kriged
silver values.


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

                                       3
<PAGE>

  Geologic resource estimates includes all blocks within the model limits, but
    no assumptions as to economic viability. The resources model used in the
  feasibility study case, reduced (cut) historic underground sample values and
        a separate resource model without adjustments to the underground
        data is labeled "Upside Case". The geologic resources at selected
                            cut-off are listed below.

--------------------------------------------------------------------------------
                     Geologic Resource at Selected Cut-offs
-------------------------------------------------------------------------------
    Cut-Off gpt           Tonnes         AuEq gpt       Au gpt      Ag gpt
-------------------------------------------------------------------------------
       0.274            122,162,843       0.842          0.669      12.213
-------------------------------------------------------------------------------
       0.686             57,547,013       1.239          0.998      16.968
-------------------------------------------------------------------------------
       1.029             24,830,244       1.793          1.471      22.673
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
   Cut-Off oz pt          Tons          AuEq oz pt     Au oz pt    Ag oz pt
-------------------------------------------------------------------------------
       0.008            134,662,187       0.0244        0.0195      0.3562
-------------------------------------------------------------------------------
       0.020             64,435,055       0.0359        0.0291      0.4949
-------------------------------------------------------------------------------
       0.030             27,370,802       0.0519        0.0429      0.6613
-------------------------------------------------------------------------------


An independent manual estimate of mineralized material (cross section polygonal
resource estimate) was also completed and validates the Company's block model
mineralized material. The data employed in the manual estimate was also derived
from Gold Fields Mining Company's production records and the Company's more
recent exploration activities.

The manual mineralized material estimation is based, in part, on an independent
geological interpretation of this data. Rock types, mineralized zones, mined-out
stopes and zones of internal waste were delineated on cross sections.
Mineralized polygonal shapes were defined as areas of at least 6.1 meters (20
feet) width and containing grades equal to or greater than 0.34 grams per tonne
(0.010 ounces per ton) of gold equivalent. A polygonal shape was drawn (along
dip) around each mineralized portion of a drill hole or cross cut to
mid-distance to the nearest intercept or up to 400 feet, whichever was less.
Average gold and silver grades, along with volume of mineralization were then
calculated for each polygon.

The manual estimate of mineralized material includes all mineralized polygons
within the project area, but with no assumptions as to economic viability. Based
on a cut-off grade of 0.34 grams per tonne (0.010 ounces per ton) of gold
equivalent, the manual estimate of mineralized material is 82,037,406 tonnes
(90,431,233 tons) averaging 1.013 grams per tonne (0.030 ounces per ton) of gold
and 14.850 grams per tonne (0.433 ounces per ton) of silver, or 1.224 grams per
tonne (0.036 ounces per ton) of gold equivalent.

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 cut-off grades, pit outlines, final ore
reserve calculations, until it resembles a mineable 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 internally-generated ore resource portion of the recently updated
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 $300 per ounce; a silver price of
$5.50 per ounce; mining costs for waste and ore of $0.66 per tonne ($0.60 per
ton); processing costs of $1.50 per tonne ($1.30 per ton); general/
administrative costs of $0.41 per tonne ($0.37 per ton); process recovery rates
of 80% for gold and 65% for silver; a refining recovery rate of 100%; a design
cut-off grade of 0.41 grams per tonne (0.012 ounces per ton) of gold equivalent.

                                       4
<PAGE>
An internal cut-off grade of 0.25 grams per tonne (0.007 ounces per ton) of gold
equivalent was calculated by deleting mining costs from the above on the premise
that material within the pit that must be removed needs only to support the
incremental costs for processing to be considered ore.

Resources in Pit Plan. The Soledad Mountain Project Lerchs-Grossman Cone pits
for 6 different cases and classified as proven and probable are listed below
with the base case used being No. 3

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------------------
                                        LERCHS-GROSSMAN CONE SUMMARY

--------------------------------------------------------------------------------------------------------------
                                                  SI UNITS
--------------------------------------------------------------------------------------------------------------
   Case          Description       Approx.                Resource                 Waste      Total     Strip
             --------------------            -----------------------------------  --------
    No.       $/oz Au   $/oz Ag    Cut-off   Ktonnes    AuEq      Au       Ag     Ktonnes    Ktonnes    Ratio
                                                         gpt      gpt      gpt
--------------------------------------------------------------------------------------------------------------
<S>          <C>        <C>       <C>        <C>       <C>      <C>      <C>      <C>       <C>        <C>
1            350        6.50      0.21       68,347    1.00     0.80     13.41    220,889   289,237    3.23
--------------------------------------------------------------------------------------------------------------
2            325        6.00      0.23       62,271    1.03     0.82     13.78    194,521   256,792    3.12
--------------------------------------------------------------------------------------------------------------
"upside"     300        5.50      0.25       63,526    1.09     0.89     13.47    208,770   272,296    3.29
--------------------------------------------------------------------------------------------------------------
3            300        5.50      0.25       56,837    1.04     0.84     13.65    168,279   225,115    2.96
--------------------------------------------------------------------------------------------------------------
4            275        5.00      0.27       37,209    1.10     0.87     15.29    72,537    109,746    1.95
--------------------------------------------------------------------------------------------------------------
5            250        4.50      0.30       31,599    1.15     0.93     15.63    57,642    89,242     1.82
--------------------------------------------------------------------------------------------------------------
6            200        3.50      0.30       21,218    1.33     1.08     17.90    37,161    58,380     1.75
--------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                                English Units
--------------------------------------------------------------------------------------------------------------
   Case          Description       Approx.                Resource                 Waste      Total    Strip
             --------------------            ------------------------------------ --------
    No.       $/oz Au   $/oz Ag    Cut-off    Ktons     AuEq      Au       Ag      Ktons      Ktons    Ratio
                                                        oz pt    oz pt    oz pt
--------------------------------------------------------------------------------------------------------------
<S>          <C>        <C>       <C>        <C>       <C>      <C>      <C>      <C>       <C>        <C>
1            350        6.50      .006       75,341    0.029    0.023    0.39     243,490   318,831    3.23
--------------------------------------------------------------------------------------------------------------
2            325        6.00      .007       68,642    0.030    0.024    0.40     214,424   283,066    3.12
--------------------------------------------------------------------------------------------------------------
"upside"     300        5.50      .007       70,026    0.032    0.026    0.39     230,130   300,156    3.29
--------------------------------------------------------------------------------------------------------------
3            300        5.50      .007       62,652    0.030    0.024    0.40     185,497   248,149    2.96
--------------------------------------------------------------------------------------------------------------
4            275        5.00      .008       41,016    0.032    0.025    0.45     79,959    120,975    1.95
--------------------------------------------------------------------------------------------------------------
5            250        4.50      .009       34,832    0.034    0.027    0.46     63,540    98,373     1.82
--------------------------------------------------------------------------------------------------------------
6            200        3.50      .009       23,389    0.039    0.032    0.52     40,964    64,353     1.75
--------------------------------------------------------------------------------------------------------------
</TABLE>

The Company estimates that the current mineable resources will support
production at a rate of up to 5.76 million tonnes (6.35 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 mineable resources in those areas that currently have limited
drilling intercepts and/or limited underground sampling. The average stripping
ratio is projected to be approximately 3.0 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 ten 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

                                       5
<PAGE>
the ore will be removed from the precipitate using a mercury retort. 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 4.5 kilograms of cement per tonne (10.0 pounds per ton) of ore
processed. The tests indicate average expected ultimate gold and silver
recoveries of 80% and 65% 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 5.76 million tonnes (6.35 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 74,034 tonnes (81,715 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.

                                       6
<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 inch) 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 80% Gold, 65% Silver

                        Days             Au              Ag
                        ----           -----           -----
                         30             83.5            79.4
                         60              5.8             7.2
                         90              3.2             4.0
                        275              5.7             7.1
                        400              1.8             2.3
                                       -----           -----
                                       100.0           100.0

The modification for each year's production schedule, particularly in the first
year, 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

                                       7
<PAGE>
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.

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 14.34 grams per tonne (0.42 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.

Raw Materials. Electricity will be delivered to the project site using a
dedicated line by the utility company which currently supplies power in the
vicinity. A process water well has been developed from underground sources on
land controlled by the Company. Other materials necessary for mining and
processing, such as sodium cyanide, cement, diesel fuel and ammonium nitrate,
are available for purchase from more than one supplier and management believes
that there will not be a problem in securing these materials.

PERMITTING AND ENVIRONMENTAL ISSUES. The Soledad Mountain Project is located on
private and federally-controlled lands in an unincorporated 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 ("EIR"), and under NEPA as
an environmental impact statement ("EIS").

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 basin, pursuant to authority granted under the federal
Clean Air Act.

The Area is designated as unclassified for PM10 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 PM10 background levels
recorded at several nearby monitoring stations. On-site air sampling was
conducted for approximately one year with high background PM10 levels found.

Fugitive dust, when combined with the background dust may cause unacceptable
levels of PM10 emissions off-site, and may represent the greatest potential
environmental issue. A PM10 level of 44 micrograms per cubic meter is projected
by computer modeling 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

                                       8
<PAGE>
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
modeling 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 in the Antelope Valley ground water. No water quality data
is 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.

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 is limited; however, sufficient data is 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; 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.

                                       9
<PAGE>
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 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 at the time production at the mine commences,
increasing to a total of $5,410,000 by the end of the life of the mine.

FACILITIES AND EMPLOYEES. The Company's principal executive offices are located
at its Soledad Mountain field office located at 11847 Gempen Street in Mojave,
California. The Company employs one half-time accountant at its Mojave office.

MISCELLANEOUS. Three of the Company's directors, Edward G. Thompson, Gordon C.
Gutrath, and Chester Shynkaryk, are residents of Canada. Consequently, it may be
difficult for United States investors to effect service of process within the
United States upon those directors, or to realize in the United States upon
judgments of United States courts predicated upon civil liabilities under the
United States securities laws. A judgment of a U.S. court predicated solely upon
such civil liabilities would probably be enforceable in Canada by a Canadian
court if the U.S. court in which the judgment was obtained had jurisdiction, as
determined by the Canadian court, in the matter. There is substantial doubt
whether an original action could be brought successfully in Canada against any
of such directors predicated solely upon such civil liabilities.

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 proposed 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. However, the Company
controls an area to the north of Soledad Mountain and because of previous

                                       10
<PAGE>
testing, 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 40.6o Celsius (105o 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

LAND OWNERSHIP AND MINING RIGHTS. Golden Queen's property is west of California
State Highway 14 and largely south of Silver Queen Road in Kern County,
California covering all of section 6 and portions of sections 5, 7 and 8 in
Township 10 North, Range 12 West; portions of sections 1 and 12 in Township 10
North, Range 13 West; portions of section 18 in Township 9 North, Range 12 West
and portions of section 32 in Township 11 North, Range 12 West, all from the San
Bernardino Baseline and Meridian. Most of the mining 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 2.471 acres.

The project property is held by the Company (through its United States
subsidiary) under a variety of agreements with 60 property owners. These
agreements include 56 mining leases, two exploration agreements with options to
purchase and two purchase agreements that are in various stages of completion.
Most of these agreements were entered into during a six-year period from 1990 -
1996, at a total cost to the Company of approximately $3,800,000. The Company is
currently renegotiating many of the agreements, and requesting a moratorium on
payments for 3 years or until financing can be arranged. There is no guarantee
that all of these leases can be successfully renegotiated.

The Company commissioned a formal title summary covering the project property
which was rendered in August and September 1996. It was updated in February 1998
and again in March 1999. 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 within the project area. On May 15, 1999 the Company
obtained a quiet title judgement which resolved a majority of the title
questions. The Company has determined that the remaining title questions do not
present a material threat to the project, however the Company is attempting to
resolve the title issues through 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. For 2000 and 2001, one-year extensions of a Congressional
moratorium on mining patents provided 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, 2000, $770,000
remained to be paid by the Company under these various property purchase
agreements; $32,000 of this amount is due within the ensuing twelve months.

                                       11
<PAGE>
Certain of these agreements are currently in negotiations with the request for a
three year moratorium of payments. Without moratorium agreements, the Company
will be unable to fulfill the payment obligations of the original contracts.

The Company ceased making payments to landowners in October of 2000, and has
since been in the process of negotiating various moratorium agreements with its
landowners. In the meantime, the Company is technically in default on the
agreements which have not been paid or re-negotiated. While the Company has
successfully reached agreement with landowners in the past, there can be no
assurance that these agreements will be successfully negotiated under the
current conditions.

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. The Company acquired, through its
subsidiary, Golden Queen Mining Company, Inc. (the "Subsidiary"), 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, to evaluate the
presence of mineral reserves, for a period of nine months. 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 was due upon reaching sustained production or July 1, 1999, whichever
came first. In June 1999, the Subsidiary and the shareholders of the private
corporation signed an amendment to the original stock purchase agreement. The
amendment provides that if the full purchase price of $1,600,000 was not made on
or before July 1, 1999, all rights of the Subsidiary to purchase the stock would
terminate, unless the Subsidiary paid $75,000, which would extend the
termination date to July 1, 2000. If, on or before July 1, 2000, the Subsidiary
paid an additional $75,000, the termination date will be extended to July 1,
2001. These additional payments are to extend the option period and will not
apply to the balance of the $1,600,000 purchase price. In addition, the
amendment provides for the payment of the balance of the purchase price upon the
earlier of a determination of sustained production, or the termination date,
which may be extended to July 1, 2001. On July 7, 2000, the Subsidiary made the
required $75,000 payment to extend the termination date to July 1, 2001. 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. This agreement is also under renegotiation with no guarantee
that it can be successfully renegotiated.

The Company does not require additional properties to put the Soledad Mountain
Project into production, but has historically endeavored to acquire property
adjacent to the project site which holds high potential for extension of known
mineralized trends. 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 report, the Company has no agreement, undertaking or other
arrangement with any person regarding the acquisition of mining properties
outside the Soledad Mountain Project area.

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 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

                                       12
<PAGE>
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 N10OE to N40OW. The faults dip from 70O to 99O near the surface and 45O
to 60O 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 80 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 porphyitic 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.

                                       13
<PAGE>
ITEM 3.  LEGAL PROCEEDINGS.

A wholly-owned subsidiary of the Company has been named in a complaint filed on
December 9, 1997 (although the Company did not become aware of the complaint
until September of 1998) in the Superior Court of the state of California for
the county of Kern. The principal parties in the complaint are George Creque, Jr
(plaintiff) and Cactus Gold Mines Company, Inc. (defendant). The complaint
contains a claim for unspecified compensatory and punitive damages associated
with the introduction of various toxic substances into the general environment
by a mining property located approximately five miles from the Soledad Mountain
project and unrelated to the Company. The Company believes that the complaint is
without merit, and, furthermore, is not applicable to the Company.

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 2000.


                                     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, 1999                  High              Low
     ----------------------------                  ----              ---
     First Quarter                     C$           .63              .36
     Second Quarter                                 .65              .30
     Third Quarter                                  .55              .16
     Fourth Quarter                                 .52              .30

     Year Ended December 31, 2000                  High              Low
     ----------------------------                  ----              ---
     First Quarter                     C$           .49              .21
     Second Quarter                                 .40              .28
     Third Quarter                                  .45              .22
     Fourth Quarter                                 .35              .17


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. As of January 31, 2001 there were 281 holders of record of
the Company's common stock.

SALES OF UNREGISTERED SECURITIES. There were no sales of securities by the
Company in 2000. However, in December 2000, the Company received $65,000 from
two shareholders of the Company pursuant to terms of an unsecured promissory
note. The note is convertible into shares of the Company's stock at a per share
rate of $0.16 (USD$), at the option of the noteholder. In January 2001, the note
was converted into 406,250 common shares.

Also, in December 2000, two shareholders advanced the Company $200,000 pursuant
to a private placement completed in January 2001. The terms of the private
placement call for the issuance of an aggregate of 1,538,462 shares at US$0.13
per share. In addition, an aggregate of 1,656,250 Common Shares will be reserved
for issuance as warrants with a fixed price of US$0.16 per share. Until the
share issuance is approved by the Toronto Stock Exchange, the entire balance is
reflected as a stock subscription.

                                       14
<PAGE>
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.


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:


                           Year Ended          Year Ended       Cumulative Since
                        December 31, 2000   December 31, 1999       Inception
                       ---------------------------------------------------------
Asset Impairment          $ 28,547,592        $         --        $ 28,547,592
General and
  administrative
  expense                 $    367,451        $    649,406        $  5,255,719
Interest expense          $         --        $         --        $    323,485
Interest income           $     32,062        $    102,234        $  1,074,666

Net loss                  $(28,708,276)       $   (564,657)       $(33,213,436)


Due to sustained depressed gold and silver prices during 2000, and an inability
to secure financing in order to place the Company's assets in service for their
intended use, the Company recorded an asset impairment loss of $28,547,592 for
the year ended December 31, 2000. The asset impairment loss reduced the carrying
value of fixed assets, mineral properties, and other assets to their estimated
net realizable value. The Company incurred general and administrative expenses
of $367,451 for the year ended December 31, 2000, as compared to $649,406 for
the year ended December 31, 1999. The decrease is primarily due to reduced
staffing and associated expenditures. There was no interest expense for the year
ended December 31, 1999 or for the year ended December 31, 2000. Interest income
for the year was $32,062, as compared to $102,234 for the year ended December
31, 1999. 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 $28,708,276 for the year ended December 31, 2000, as
compared to a net loss of $564,657 for the year ended December 31, 1999.

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 for 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, 2000, the Company has used $3,970,000 in operating
activities, primarily as a result of cumulative losses of $33,213,000. During
the same period, the Company has used $29,969,000 in investing activities; these
consisted of $27,664,000 in expenditures related to the Soledad Mountain Project
and fixed asset purchases of $1,314,000. These operating and investing

                                       15
<PAGE>
activities were financed by net borrowings of $2,588,000 under various long-term
debt arrangements and from the sale of $31,657,000 of equity securities. As of
December 31, 2000, the Company recorded an asset impairment loss of $26,834,131
on mineral properties which adjusted the assets to management's estimate of net
realizable value or salvage value.

At December 31, 2000, the Company held $371,000 in cash and cash equivalents. As
discussed below under the heading "Plan of Operations", significant additional
funds will be needed to place 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
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, 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 December 31, 2000, world gold prices were approximately $273
per ounce. The project is not economical as a stand-alone precious metals
operation at current world gold prices and will not be economical until prices
strengthen. A combination precious metals-aggregates operation is expected to
have more robust economics and may be viable at relatively lower market prices
for each of these commodities.

Some of the conditions noted above raise substantial doubt about the Company's
ability to continue as a going concern. As noted above, the ability of the
Company to obtain financing and adequately manage its expenses, and thus
maintain solvency, is dependent on equity market conditions, the ability to find
a joint venture partner, the market for precious metals, and / or the
willingness of other parties to lend the Company money. While the Company has
been successful at certain of these efforts in the past, there can be no
assurance that current efforts will be successful.

On July 20, 1999, the Company completed a private placement of 13,250,000 shares
of common stock at an issue price of $0.26 (C$0.40) per share for gross proceeds
of $3,472,450 (C$5,300,000).

In December 2000, the Company received $65,000 from two shareholders of the
Company pursuant to terms of an unsecured promissory note. The note is
convertible into shares of the Company's stock at a per share rate of $0.16
(USD$), at the option of the noteholder. In January 2001, the note was converted
into 406,250 common shares.

In December 2000, two shareholders advanced the Company $200,000 pursuant to a
private placement completed in January 2001. The terms of the private placement
call for the issuance of an aggregate of 1,538,462 shares at US$0.13 per share.
In addition, an aggregate of 1,656,250 Common Shares will be reserved for
issuance as warrants with a fixed price of US$0.16 per share. Until the share
issuance is approved by the Toronto Stock Exchange, the entire balance is
reflected as a stock subscription.

Year Ended December 31, 2000. During the year ended December 31, 2000, the
Company used $250,000 in operating activities, primarily as a result of a
$28,708,000 net loss during the year, offset by the asset impairment loss
recorded by the Company of $28,547,592. $235,000 was provided by financing
activities, and $1,084,000 was used in investing activities: $903,000 of this
amount was expended on exploration, $185,000 was expended on property
acquisitions and $1,000 was expended on fixed asset purchases. As a result of
the foregoing, the Company's cash balance decreased by $1,099,000, to $371,000,
at December 31, 2000.

Year Ended December 31, 1999. During the year ended December 31, 1999, the
Company used $488,000 in operating activities, primarily as a result of a
$565,000 net loss during the year. $3,131,000 of this amount was provided by
financing activities, primarily as a result of 3,131,000 raised through the sale
of equity securities. $2,371,000 was used in investing activities: $1,861,000 of
this amount was expended on exploration, $516,000 was expended on property
acquisitions and $7,000 was expended on fixed asset purchases. As a result of
the foregoing, the Company's cash balance increased by $273,000, to $1,470,000,
at December 31, 1999.

                                       16
<PAGE>
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 5.76 million tonnes (6.35 million tons) per year for at least nine years.
Concurrent heap detoxification will be employed by reclamation of the project
site.

The initial capital costs of bringing the project into production are estimated
to be $86,000,000; 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 the current project
cost information, the Company believes world gold prices would have to achieve
sustained levels of $325 per ounce or better before such financing could be
obtained.

The Company estimates that total average operating costs will be $5.77 per tonne
($5.23 per ton) of ore processed, based on a stripping ratio of 3.5 to 1. These
operating costs consist of mining costs of $3.14 per tonne ($2.85 per ton),
processing costs of $1.72 per tonne ($1.56 per ton) and general and
administrative costs of $0.68 per tonne ($0.62 per ton). The Company also
estimates that average annual production rates of 110,000 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 $185 per ounce
of gold, net of silver credits. The Company estimates that total average
aggregates operating costs will be $0.55 per tonne ($0.50 per ton).

These development plans are based on a February 1998 feasibility study that was
updated by the Company in December 2000. The 1998 study was 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. The updated study included the results of the 1998 and 1999
sampling programs. Ore reserve estimates and mine design features incorporated
into the study were prepared by Mine Reserves Associates, in collaboration with
the Company. Basic engineering information was prepared by Bateman Engineering,
Inc. The total cost of the feasibility study and update was $1,549,618.

The M3 Engineering and Technology study modifies and supersedes an earlier
feasibility study completed in January 1997 by Pincock, Allen and 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.

At December 31, 2000, the Company had a deferred tax asset of $1,480,000, from
which the Company has provided a 100% valuation allowance as management cannot
determine that it is more likely than not that the Company will receive the
benefit of the asset.

The Company is 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.

New Accounting Pronouncements. In June 1998 the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which requires companies to recognize all derivative contracts as
either assets or liabilities in the balance sheet and to measure them at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of gain or
loss recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged asset or liability that are attributable
to the hedged risk, or (ii) the earnings effect of the hedged forecasted

                                       17
<PAGE>
transaction. For a derivative not designated as a hedging instrument, the gain
or loss is recognized in income in the period of change. In July 1999, the FASB
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the effective date of SFAS No. 133." SFAS No. 137
amends the effective date of SFAS No. 133 to now be for all fiscal quarters of
fiscal years beginning after June 15, 2000. In June 2000, the FASB also issued
SFAS No. 138, "Accounting for certain Derivative Instruments - an Amendment of
SFAS 133" which includes provisions for certain commodity contracts, interest
rate hedges, foreign currency receivable and payables, and inter-company foreign
currency derivatives. SFAS 138 is effective concurrent to the adoption date of
SFAS No. 133. Adoption of these accounting principles is not expected to have a
material effect on the Company's financial position.


ITEM 7.  FINANCIAL STATEMENTS.

See the Consolidated Financial Statements of the Company and the notes thereto
at pages 29 through 45 of this report.


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

None.


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

                                       18
<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,
2001 are as follows. The Company's board of directors consists of five
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 Director or
     Executive Officer                   Position with the Company                Principal Occupation
---------------------------------------------------------------------------------------------------------------

<S>                                 <C>                                    <C>
Edward G. Thompson (1), (2)         President, Chief Executive Officer,    President of E.G. Thompson Mining
Age:  64                            Chairman, and Director                 Consultants, Inc.

Gordon C. Gutrath (1)               Director                               President of Atled Exploration
Age:  62                                                                   Management Ltd.

Jerrold W. Schramm (2), (3)         Director                               Partner, Lawson Lundell Lawson &
Age:  40                                                                   McIntosh (barristers and solicitors)

Chester Shynkaryk (2)               Secretary and Director                 President of Visionary Mining
Age 56                                                                     Corporation (a mineral exploration
                                                                           company)

H. Lutz Klingmann(4)                Director                               President of Minto Explorations Inc.
</TABLE>

(1) Audit committee member - board of directors. (2) Compensation committee
member - board of directors. (3) Mr. Schramm resigned as a Director 1/22/01. (4)
Mr. Klingmann was appointed as a Director effective 3/01/01.

Biographical Information Concerning Directors and Executive Officers.

Edward G. Thompson has been a director of the Company since 1994. He was elected
its chairman effective January 29, 1997 and was appointed president and chief
executive officer of the Company February 29, 2000. 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. He is also
president of Sparton Resources Inc. and Consolidated Thompson-Lundmark Gold
Mines Ltd. He serves on the board of directors of Adrian Resources Ltd., Aurogin
Resources, Freewest Resources (Canada), Geomaque Explorations Ltd., Laminco
Resources, Inc., Sparton Resources, Inc., Western Troy Capital Resources, Inc.,
Visionary Mining Corporation, and Windy Mountain Exploration, Ltd.

Chester Shynkaryk has been a director of the Company since 1985. He served as
its president from 1985 to 1995, then was elected Secretary in 1996. Since 1996,
he has also served as president of Visionary Mining Corporation, a mineral
exploration company. In addition he serves as a director of Pacific Star
Resources Corporation and Markatech Industries Corporation.

Gordon C. Gutrath has been a director of the Company since 1987. As the founder
of Queenstake Resources in 1977, he served as its president from 1977 until
November 1995 and has since served as its chairman. 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. Mr. Gutrath is President of Atled Exploration Management Ltd.
and serves on the board of directors of AME Resource Capital Corp., Americana
Gold & Diamond Holdings, Inc. and Visionary Mining Corporation.

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. Mr. Schramm resigned as a director of the Company
January 22, 2001.

                                       19
<PAGE>
H. Lutz Klingmann was appointed as a director effective March 1, 2001. He has
been the President of Minto Explorations, Inc. since it's inception in 1993.

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.


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, its vice president of operations, and its General Manager - Project
Site, for the years ended December 31, 2000, 1999, 1998. The Company had no
other executive officers during this period.
<TABLE>
<CAPTION>

    Annual Compensation                                                  Long-Term Compensation

                                                                                         Securities
                                                                         Other           Underlying
        Executive                                                        Annual           Options/
         Officer                          Year          Salary        Compensation (1)      SARS
----------------------------------        ----       ------------     ----------------   ----------
<S>                                       <C>        <C>                 <C>                 <C>
Steven W. Banning (2)                     2000       $  60,179(3)        $   600
President &Chief Executive Officer        1999         220,000             3,600             --
                                          1998         220,000             3,600

Bernard F. Goodson (4)                    2000          89,000(5)             --             --
Vice President Administration &           1999         132,799(5)          2,400             --
Controller                                1998          86,000             3,600             --

Richard W. Graeme (6)                     2000              --                --             --
Vice President of Operations              1999         101,442                --             --
                                          1998         125,000                --             --

David M. Rubio(7), (8)                    2000          92,674(9)             --             --
General Manager - Project Site            1999              --                --             --
                                          1998              --                --             --
</TABLE>

(1)  Represents automobile allowances paid to Mr. Banning and Mr. Goodson.
(2)  Effective February 29, 2000, Mr. Banning resigned as President and CEO of
     the Company. (see "TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES
     AND EMPLOYMENT CONTRACTS" below.)
(3)  Includes $23,513 accrued vacation pay.
(4)  On August 31, 1999, Mr. Goodson was laid off as an officer of the Company.
     (see "TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT
     CONTRACTS" below.)
(5)  Includes $71,000 severance pay.
(6)  On October 15, 1999, Mr. Graeme resigned as Vice President of the Company.
     (see "TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT
     CONTRACTS" below.)
(7)  On March 15, 2000, Mr. Rubio was appointed General Manager - Project Site,
     an officer of the Company with no changes to his employment agreement.
(8)  Effective October 31, 2000, Mr. Rubio resigned as General Manager - Project
     Site. (see "TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND
     EMPLOYMENT CONTRACTS" below.)
(9)  Includes $21,375 severance pay and $5,338 accrued vacation pay. Table of
     Aggregate Options Exercised During the Fiscal Year Ended December 31, 2000
     and Fiscal Year-End Option Values. No options were exercised by the named
     executive officers during the year ended December 31, 2000. In addition,
     there were no options held by executive officers at December 31, 2000. At
     December 31, 2000, each Canadian dollar was approximately equal to $0.67.
     The closing price of the common stock of the Company on The Toronto Stock
     Exchange on December 31, 2000 was C$0.17 ($0.11).

                                       20
<PAGE>
Table of Options Granted During the Year Ended December 31, 2000. No options
were granted to executive officers during the year ended December 31, 2000.

TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS.

Employment Agreements with Steven W. Banning, Bernard F. Goodson and Richard W.
Graeme. The Company had 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 and the agreement with Mr. Banning was amended effective in December
1998.

Each agreement provided 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 received
an annual salary of $220,000 pursuant to his employment agreement with the
Company. Mr. Goodson and Mr. Graeme received annual salaries of $86,000 and
$125,000, respectively, pursuant to their agreements.

The employment agreements also provided 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 was 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 provided 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 agreements were for an
unspecified period. Each provided that the employee may terminate his employment
upon six months' prior notice to the Company.

On August 31, 1999, Mr. Goodson was laid off as an officer of the Company. He
was paid a severance of $71,000 on September 1, 1999 and $71,000 on January 7,
2000. He is employed by contract as an accounting clerk at $1,500 per month for
the period of September 1, 1999 through April 30, 2001.

On October 15, 1999, Mr. Graeme resigned as Vice President of the Company and
received no severance pay. He is a Director of the Subsidiary, but receives no
compensation.

Subsequent to December 31, 1999, and effective February 29, 2000, Mr. Banning
resigned as president and chief executive officer of the Company and received no
severance pay. He remained a Director of the Company until February 29, 2000 but
received no compensation.

Effective October 31, 2000, Mr. Rubio was laid off as an officer of the Company.
He was paid a severance of $21,375 on November 15, 2000.

Compensation of Directors. The Company's articles of incorporation provide that
the directors are entitled to be paid reasonable travel, 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 typically does not pay directors' fees, and while it has no written
policy or standard arrangement in this regard, its policy has been 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
115,000 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. For the year ended December
31, 2000, C$22,500 was paid to Mr. Thompson for his services as President of the
Company, and C$5,000 was paid to Mr. Shynkaryk for his efforts in moving
landowners toward moratorium agreements. 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.

                                       21
<PAGE>
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 to be less than
the market price of the common stock on The Toronto Stock Exchange as of the
trading day preceding 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 "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 and employees of the Company and its subsidiaries would vest, or become
exercisable, on the date of 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, comprised of directors Schramm, Shynkaryk and Thompson.


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


                                       22
<PAGE>
Options to Purchase Securities. As at December 31, 2000, options to acquire an
aggregate of 1,145,000 shares of common stock were outstanding under the
Company's stock option plan, as follows:
<TABLE>
<CAPTION>

                                                                                    Number of       Exercise Price
                                                                                  Common Shares       Per Common
      Class of Optionees               Date of Grant          Expiry Date         Under Option (1)     Share C$
---------------------------------     -----------------     -----------------     ----------------  --------------
<S>                                   <C>                   <C>                        <C>               <C>
Executive officers of Golden          February 21, 1996     February 21, 2001           20,000           $1.00
  Queen (one person)                  January 29, 1997      January 29, 2002            40,000           $1.00
                                      January 28, 1998      January 28, 1998            25,000           $1.00
                                      October 14, 1999      October 14, 2004            70,000           $0.60
                                      February 4, 2000      February 4, 2005           200,000           $0.23

Directors of Golden Queen and         February 21, 1996     February 21, 2001          290,000           $1.00
  of its Subsidiary who are not       January 29, 1997      January 29, 2002            90,000           $1.00
  also executive officers             January 28, 1998      January 28, 2003            75,000           $1.00
  of Golden Queen (five persons)      January 19, 1999      January 19, 2004            75,000           $0.50
                                      October 14, 1999      October 14, 2004           180,000           $0.60
                                      February 4, 2000      February 4, 2004            10,000           $0.23

Executive officers of the             October 14, 1999      February 15, 2001           25,000           $0.60
  Subsidiary who are not also
  executive officers or directors
  of Golden Queen (one person)

All other employees of the            August 4, 1999        March 15, 2001              25,000           $0.28
  Subsidiary (two persons)            August 4, 1999        March 31, 2001              20,000           $0.28
</TABLE>

(1) Consists of all shares of common stock issuable upon the exercise of options
granted as at December 31, 1998. including those that had not vested at such
date.

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


                                       23
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth as of January 31, 2001, 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
all directors and executive officers as a group. At such date, the number of
shares of common stock of the Company's outstanding or deemed outstanding
pursuant to presently exercisable options, warrants and conversion privileges
was 49,551,224 shares.
<TABLE>
<CAPTION>

                                         Amount and Nature of Beneficial
                                          ownership (all direct unless
          Name of Owner                         otherwise noted)            Percent of Class
------------------------------------     -------------------------------    ----------------
<S>                                                <C>                            <C>
Edward G. Thompson (1), (2)
  55 University Ave., Suite 1210
  Toronto, ON M5J 2H7                                413,300                       0.83%
Chester Shynkaryk (1), (3)
  900 W Hastings Street, Suite 700
  Vancouver, B.C. V6C 1E5                            414,508                       0.84%
Gordon C. Gutrath (1), (4)
  1111 Melville Street, Suite 250
  Vancouver, B.C. V6E 3V6                            220,000                       0.44%
Jerrold W. Schramm (1), (4)
  925 W Georgia Street, Suite 1600
  Vancouver, B.C. V6C 3L2                            115,000                       0.23%
All directors and executive officers
  as a group (5 persons) (5)                       1,162,808                       2.35%

Harris Clay (6)                                    7,149,785                      14.43%
Landon T. Clay (7)                                 6,859,122                      13.84%
Goodman and Company (8)                            5,621,800                      11.35%
Continental Casualty Company                       3,750,000                       7.57%
BGR Precious Metals Fund, Inc.                     2,800,000                       5.65%
</TABLE>

(1)  A director of the Company.
(2)  Includes presently exercisable options for the purchase of 355,000 shares
(3)  Includes presently exercisable options for the purchase of 200,000 shares.
(4)  Includes presently exercisable options for the purchase of 115,000 shares.
(5)  See notes 2 through 4 above.
(6)  Consists of: 5,544,318 shares held directly by Mr. Clay; 807,250 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.
(7)  Consists of: 6,021,095 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 807,250 shares held by Arctic Coast Petroleum Ltd., with
     which Mr. Clay is affiliated. In addition, Mr. Clay is related to three
     charitable trusts, The Landon T. Clay Charitable Lead Trust Dated 11/30/83,
     The Landon T. Clay Charitable Lead Trust II and the Monadnock Charitable
     Lead Annuity Trust which hold an aggregate of 6,439,842 shares. Mr. Clay
     has no beneficial interest in the trusts, and does not directly or
     indirectly exercise control over the direction of the trusts, and therefore
     disclaims beneficial ownership of these shares.
(8)  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.

                                       24
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Transactions with Landon T. Clay Affiliates. In July 1999, the Company completed
a private placement of 13,250,000 shares of common stock at a price of C$0.40
($0.26) per share. Of these shares 3,350,000 were issued directly to Landon T.
Clay.

In December 2000, the Company received $65,000 from two shareholders of the
Company pursuant to terms of an unsecured promissory note. The note is
convertible into shares of the Company's common stock at a per share rate of
$0.16 (USD$), at the option of the noteholder. The note was converted into
406,250 common shares.

In December 2000, two shareholders advanced the Company $200,000 pursuant to a
private placement to be completed in January 2001. The terms of the private
placement called for the issuance of an aggregate of 1,538,462 shares at US$0.13
per share. In addition, an aggregate of 1,656,250 Common Shares will be reserved
for issuance as warrants with a fixed price of US$0.16 per share. Until the
share issuance is approved by the Toronto Stock Exchange, the entire balance is
reflected as a stock subscription.

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 years ended December 31, 2000, and
December 31, 1999, the Company paid Lawson Lundell Lawson & McIntosh $52,041 and
$35,820, 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, 2000.


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


                                       25
<PAGE>

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


Exhibits. The following exhibits are 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.

         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.

                                       26
<PAGE>

         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.

         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 as Exhibit 10.17 to
                  the registrant's registration statement on Form 10KSB for the
                  year ended December 31, 1997 and incorporated by reference
                  herein.

         10.18    Amendment to employment agreement dated March 28, 1997 between
                  the registrant and Bernard F. Goodson filed as Exhibit 10.18
                  to the registrant's registration statement on Form 10KSB for
                  the year ended December 31, 1997 and incorporated by reference
                  herein.

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

         24.0     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.

         99.0     Report of MacKay & Partners with respect to May 31, 1996
                  financial statements of the registrant filed as Exhibit 99.0
                  to the registrant's registration statement on Form 10KSB and
                  incorporated by reference herein.


Form 8-K Reports. No reports on Form 8-K were filed by the registrant during the
fourth quarter of 2000.

                                       27
<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., as of December 31, 2000 and 1999, and the consolidated
statements of loss, changes in shareholders' equity, and cash flows for the
years then ended. We have also audited the statements of loss, changes in
shareholders' equity, and cash flows for the period from inception (November 21,
1985) through December 31, 2000, 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 audits. 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 auditing standards generally accepted
in the United States of America. 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 financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, based on our audits 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., as of
December 31, 2000 and 1999, and the results of their operations and their cash
flows for the years then ended and for the period from inception (November 21,
1985) through December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 9 to the consolidated financial statements, the Company
changed its method of accounting for stock options issued to non-employee
directors in 2000.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has had no revenues since
inception and has been unable to obtain the necessary financing to complete
current development activities or exit the development stage. Also, the Company
recorded a $28,547,592 asset impairment loss during the year ended December 31,
2000. These conditions raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



/s/ BDO DUNWOODY, LLP
----------------------------

BDO Dunwoody LLP
Chartered Accountants
April 4, 2001
Vancouver, British Columbia

                                       28
<PAGE>


                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                                 (U.S. DOLLARS)

                                                   December 31,    December 31,
                                                       2000            1999
                                                   ------------    ------------
Assets  (Note 1)

  Current assets:
   Cash and cash equivalents                       $    371,123    $  1,469,855
   Receivables                                            1,859           6,664
   Prepaid expenses and other current assets             33,485          58,759

   Total current assets                                 406,467       1,535,278

   Property and equipment, net (Note 2)                 317,313       1,013,338
   Mineral properties (Notes 3, 6 and 10)               682,687      26,428,791
   Other assets (Note 4)                                     --       1,017,551
                                                   ------------    ------------

                                                   $  1,406,467    $ 29,994,958
                                                   ============    ============

Liabilities and Shareholders' Equity  (Note 1)

  Current liabilities:
   Accounts payable                                $     46,514    $     84,493
   Royalty and mining rights payable                    103,250              --
   Accrued liabilities                                   28,808          31,886
   Current maturities of long-term debt (Note 6)        750,130          39,986
   Convertible debt (Note 7)                             65,000              --
                                                   ------------    ------------
  Total current liabilities                             993,702         156,365

  Long-term debt, less current maturities (Note 6)       26,541         766,449
                                                   ------------    ------------

  Total liabilities                                   1,020,243         922,814
                                                   ------------    ------------

  Commitments and contingencies (Notes 4 and 10)

Shareholders' equity:
  Preferred shares, no par, 3,000,000 shares
   authorized; no shares outstanding                         --              --
  Common shares, no par, 100,000,000 shares
   authorized; 48,046,641 shares issued and
   outstanding (Notes 7 and 8)                       33,978,345      34,155,989
  Stock subscription (Note 8)                           200,000              --
  Deficit accumulated during the development stage  (33,792,121)     (5,083,845)
                                                   ------------    ------------

  Total shareholders' equity                            386,224      29,072,144
                                                   ------------    ------------

                                                   $  1,406,467    $ 29,994,958
                                                   ============    ============

    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 LOSS
                                 (U.S. DOLLARS)

<TABLE>
<CAPTION>

                                                                                           Cumulative Amounts
                                                                                                 From Date of
                                                                                          Inception (November
                                                Year Ended             Year Ended           21, 1985) through
                                             December 31, 2000      December 31, 1999       December 31, 2000
                                              ---------------        ---------------         ---------------
<S>                                           <C>                    <C>                     <C>
General and administrative expense            $       367,451        $       649,406         $     5,255,719
Interest expense                                           --                     --                 323,485
Interest income                                       (32,062)              (102,234)             (1,074,666)
Other expense, net                                      2,939                 17,485                  61,699
Asset impairment loss                              28,547,592                     --              28,547,592
Abandoned mineral interests                                --                     --                 277,251
                                              ---------------        ---------------         ---------------

Net loss before cumulative effect of change
in accounting principle                            28,885,920                564,657              33,391,080
Cumulative effect of change in accounting
for stock options (Note 9)                           (177,644)                    --                (177,644)
                                              ---------------        ---------------         ---------------
Net loss                                      $    28,708,276        $       564,657         $    33,213,436
                                              ===============        ===============         ===============


Net loss per share before cumulative effect
of change in accounting principle             $          0.60        $          0.01
Cumulative effect of change in accounting
principle                                     $            --        $            --
                                              ---------------        ---------------

Net loss per share                            $          0.60        $          0.01
                                              ===============        ===============

Weighted average shares outstanding                48,046,641             40,750,066
                                              ---------------        ---------------
</TABLE>

    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)
<TABLE>
<CAPTION>

    From the Date                                                       Deficit
     of Inception                                                      Accumulated
  (November 21, 1985)                                                  During the        Total
       through               Common                        Stock       Development    Shareholders'
   December 31, 2000         Shares         Amount      Subscription      Stage          Equity
-----------------------   ------------   ------------   ------------   ------------   ------------
<S>                          <C>         <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
</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 CHANGES IN SHAREHOLDERS' EQUITY
                                 (U.S. DOLLARS)

<TABLE>
<CAPTION>

    From the Date                                                          Deficit
     of Inception                                                         Accumulated
  (November 21, 1985)                                                     During the        Total
       through                  Common                        Stock       Development    Shareholders'
   December 31, 2000            Shares         Amount      Subscription      Stage          Equity
------------------------     ------------   ------------   ------------   ------------   ------------
<S>                          <C>            <C>            <C>            <C>            <C>
Net loss for the year                  --             --       (285,391)      (285,391)            --
                             ------------   ------------   ------------   ------------   ------------
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
Net 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
Net 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)
Net 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
</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 CHANGES IN SHAREHOLDERS' EQUITY
                                 (U.S. DOLLARS)

<TABLE>
<CAPTION>

    From the Date                                                      Deficit
     of Inception                                                     Accumulated
  (November 21, 1985)                                                 During the        Total
       through              Common                        Stock       Development    Shareholders'
   December 31, 2000        Shares         Amount      Subscription      Stage          Equity
-----------------------  ------------   ------------   ------------   ------------   ------------
<S>                      <C>            <C>            <C>            <C>            <C>
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)
Net 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

Issuance of common
  shares upon exercise
  of warrants               1,834,300        857,283             --             --        857,283
Issuance of common
  shares through
  conversion of debt        2,017,941      1,000,000             --             --      1,000,000
Share issuance cost                --             --             --         (6,060)        (6,060)
Issuance of common
  shares for cash           5,236,000      2,439,753             --             --      2,439,753
Options and re-priced
  options to non-
  employee directors               --        107,444             --             --        107,444
Net loss for the year              --             --             --       (971,595)      (971,595)
                         ------------   ------------   ------------   ------------   ------------
Balance, December 31,
  1998                     34,796,641     30,805,074             --     (4,352,568)    26,452,506
</TABLE>


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

                                       33
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                 (U.S. DOLLARS)


<TABLE>
<CAPTION>

    From the Date                                                              Deficit
     of Inception                                                             Accumulated
  (November 21, 1985)                                                         During the         Total
       through                    Common                         Stock        Development     Shareholders'
   December 31, 2000              Shares         Amount       Subscription       Stage           Equity
-----------------------        ------------   ------------    ------------    ------------    ------------
<S>                            <C>            <C>             <C>             <C>             <C>
Issuance of 13,250,000
   special warrants (Note 8)             --   $  3,350,915              --    $         --    $  3,350,915
Special warrants issue
   cost                                  --             --              --        (166,620)       (166,620)
Issuance of common
   shares for special
   warrants                      13,250,000             --              --              --              --
Net loss for the year                    --             --              --        (564,657)       (564,657)
                               ------------   ------------    ------------    ------------    ------------
Balance, December 31, 1999
                                 48,046,641     34,155,989              --      (5,083,845)     29,072,144

Cumulative effect of change
in accounting for stock
options (Note 9)                         --       (177,644)             --              --        (177,644)
Stock subscription                       --             --         200,000              --         200,000
Net loss for the year                    --             --              --     (28,708,276)    (28,708,276)
                               ------------   ------------    ------------    ------------    ------------
Balance, December 31, 2000
                                 48,046,641   $ 33,978,345    $    200,000    $(33,792,121)   $    386,224
                               ============   ============    ============    ============    ============
</TABLE>

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

                                       34
<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,
                                      Year Ended      Year Ended     1985) through
                                      December 31,    December 31,    December 31,
                                          2000            1999             2000
                                      ------------    ------------    ------------
<S>                                   <C>             <C>             <C>
Operating activities
 Net loss                             $(28,708,276)   $   (564,657)   $(33,213,436)
 Adjustments to reconcile net
  loss to cash used in operating
  activities:
    Asset Impairment                    28,547,592              --      28,547,592
    Abandoned mineral interests                 --              --         277,251
    Amortization and depreciation           81,574          82,803         360,218
    Loss (Gain) on disposition of
    property and equipment                   1,316         (11,111)          1,154
 Options to directors (Note 9)                  --              --         177,644
 Cumulative effect of change in
 accounting principle (Note 9)            (177,644)             --        (177,644)
 Changes in assets and liabilities:
    Receivables                              4,805           6,028          (1,859)
    Prepaid expenses and other
     assets                                (61,636)         14,183        (120,395)
    Accounts payable and accrued
     liabilities                            62,193         (14,770)        178,572
                                      ------------    ------------    ------------

Cash used in operating activities         (250,076)       (487,524)     (3,970,093)
                                      ------------    ------------    ------------

Investment activities:
 Deferred exploration and
  development expenditures                (903,320)     (1,860,854)    (22,395,449)
 Purchase of mineral properties           (184,707)       (419,621)     (5,268,409)
 Deposits on mineral properties                 --         (95,975)     (1,017,551)
 Purchase of property and
  equipment                                 (1,200)         (6,820)     (1,313,838)
 Proceeds from sale of property
  and equipment                              5,335          12,326          26,153
                                      ------------    ------------    ------------

Cash used in investment
  activities                            (1,083,892)     (2,370,944)    (29,969,094)
                                      ------------    ------------    ------------

 Financing activities:
 Borrowing under long-term debt                 --              --       3,766,502
 Payment of long-term debt                 (29,764)        (53,001)     (1,177,549)
 Issuance of convertible debt               65,000              --          65,000
 Stock subscriptions                       200,000              --         200,000
</TABLE>

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

                                       35
<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,
                                               Year Ended     Year Ended     1985) through
                                               December 31,   December 31,    December 31,
                                                   2000           1999            2000
                                               ------------   ------------    ------------
<S>                                            <C>             <C>             <C>
  Issuance of common shares for cash                     --             --      13,086,902
  Share issuance costs                                   --       (166,620)       (578,685)
  Issuance of special warrants                           --      3,350,915      18,091,667
  Issuance of common shares upon
   exercise of warrants                                  --             --         857,283
                                               ------------   ------------    ------------
Cash provided by financing activities               235,236      3,131,294      34,311,120
                                               ------------   ------------    ------------

Net change in cash and cash
  equivalents                                     1,098,732)       272,826         371,123

Cash and cash equivalents,
  beginning balance                               1,469,855      1,197,029              --
                                               ------------   ------------    ------------

Cash and cash equivalents,
  ending balance                               $    371,123   $  1,469,855    $    371,123
                                               ============   ============    ============

Supplemental disclosures of cash
  flow information:

Cash paid during period for:
  Interest                                     $     82,924   $     84,958    $    843,059
  Income taxes                                 $         --   $         --    $         --

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

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

                                       36
<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, 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 accounting principles generally accepted
in the United States of America.

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 the lower of cost
or net realizable value. Depreciation is provided by the straight-line method
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 in order to determine if an impairment exists. Reductions
to the carrying value, if necessary, are recorded to the extent the net book
value of the property exceeds the estimate of future discounted cash flow or
liquidation value. As discussed in Notes 1, 2, 3, and 4, the Company recorded a
$28,547,592 asset impairment at December 31, 2000.

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 re-measured into the functional currency
in accordance with SFAS No. 52, "Foreign Currency Translation," ("SFAS 52").
Assets and liabilities in foreign currencies are generally translated into
dollars at the rates ruling at the balance sheet date. Revenues and expenses are
translated at average rates for the year. Where amounts denominated in a foreign
currency are converted into dollars by remittance or repayment, the realized
exchange differences are included in other income. The exchange rates prevailing
at December 31, 2000 and December 31, 1999 were 1.50 and 1.44, respectively
stated in Canadian dollars per one U.S. dollar. The average rates of exchange
during both years ended December 31, 2000 and December 31, 1999 were 1.49.

                                       37
<PAGE>

                           GOLDEN QUEEN MINING CO. LTD
                          (A DEVELOPMENT STAGE COMPANY)
                         SUMMARY OF ACCOUNTING POLICIES


Net Loss Per Share. The Company computes and discloses earnings and loss per
share in accordance with SFAS 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 presented for all entities with
complete capital structures. 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 convertible debt, stock options and
warrants are antidilutive for all periods presented, only basic earnings per
share is presented. A total of 1,551,250 and 2,185,000 common shares were
issuable pursuant to such convertible debt and stock options at December 31,
2000 and 1999 respectively.

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. Significant estimates have been made by management in several
areas including the ability to realize mineral properties and certain other
assets. 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 receivable, 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 June 1998 the Financial Accounting Standards
Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which requires companies to recognize all derivative contracts as
either assets or liabilities in the balance sheet and to measure them at fair
value. If certain conditions are met, a derivative may be specifically
designated as a hedge, the objective of which is to match the timing of gain or
loss recognition on the hedging derivative with the recognition of (i) the
changes in the fair value of the hedged asset or liability that are attributable
to the hedged risk, or (ii ) the earnings effect of the hedged forecasted
transaction. For a derivative not designated as a hedging instrument, the gain
or loss is recognized in income in the period of change. In July 1999, the FASB
issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the effective date of SFAS No. 133." SFAS No. 137
amends the effective date of SFAS No. 133 to now be for all fiscal quarters of
fiscal years beginning after June 15, 2000. In June 2000, the FASB also issued
SFAS No. 138, "Accounting for certain Derivative Instruments - an Amendment of
SFAS 133" which includes provisions for certain commodity contracts, interest
rate hedges, foreign currency receivable and payables, and inter-company foreign
currency derivatives. SFAS 138 is effective concurrent to the adoption date of
SFAS No. 133. Adoption of these accounting principles is not expected to have a
material effect on the Company's financial position.

                                       38
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       Financial Condition and Liquidity:

Due to sustained depressed gold and silver prices during 2000 and subsequent to
the balance sheet date, the Company recorded an asset impairment loss of
$28,547,592 during December 2000. Also, the Company has had no revenues from
operations since inception, has a deficit accumulated during the development
stage of $33,792,121, and has been unable to obtain the necessary financing to
complete current development activities or exit the development stage. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern.

Management believes that its ability to control current costs and its continued
efforts at obtaining equity based financing to complete current development
activities will provide sufficient cash to fund Company activities over the next
12 months. In addition, management believes the Company will ultimately be
successful at securing debt, equity, or joint venture financing to fund
construction of the operating facility at the Kern County, California precious
metals mine site.

The ability of the Company to obtain financing and adequately manage its
expenses, and thus maintain solvency, is dependant on equity market conditions,
the ability to find a joint venture partner, the market for precious metals, and
the willingness of other parties to lend the Company money, While the Company
has been successful at certain of these efforts in the past, there can be no
assurance that current efforts will be successful.


2.       Property and Equipment.

Property and equipment consists of:

                                      December 31, 2000        December 31, 1999
                                      -----------------        -----------------
Building                              $          26,360        $         145,948
Furniture and fixtures                           56,090                   72,944
Equipment                                       170,027                  256,691
Automobiles                                      83,490                  108,852
Rental properties                               313,635                  709,292
                                      -----------------        -----------------
                                                649,602                1,293,727
Less accumulated depreciation                   332,289                  280,389
                                      -----------------        -----------------

Property and equipment, net           $         317,313        $       1,013,338
                                      =================        =================


In December 2000, The Company determined that its carrying value of property and
equipment was impaired due to sustained depressed gold and silver prices and an
inability to secure adequate financing which would allow the assets to be
employed for their intended use. The Company recorded a $609,000 asset
impairment loss on property and equipment which adjusted the assets to
management's estimate of net realizable value or salvage value, including an
allowance for the cost of disposal.


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


                                       39
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.       Mineral Properties.

The Company has capitalized the amounts which have been paid to acquire property
rights and for professional 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, 2000   December 31, 1999
                                           -----------------   -----------------
Deferred exploration and development
   expenditures, beginning of year         $      20,312,184   $      18,451,330
Costs capitalized during the year:
   Engineering                                            --              18,834
   Geology/drilling                                   53,122             845,024
   Permitting/environmental                           77,136              56,344
   Metallurgical testing                               2,850              12,930
Other direct costs                                   570,214             927,722
                                           -----------------   -----------------
Deferred exploration and development
   expenditures, end of year                      21,015,506          20,312,184

Properties                                         4,113,738           3,988,245
Advance minimum royalty                            2,387,574           2,128,362

Asset impairment loss                            (26,834,131)                 --
                                           -----------------   -----------------

Mineral properties                         $         682,687   $      26,428,791
                                           =================   =================


In December 2000, the Company determined that the carrying value of mineral
properties, including property costs, advanced minimum royalties, and deferred
exploration and development expenditures relating to the Soledad site was
impaired due to sustained depressed gold and silver prices and an inability to
secure adequate financing which would allow the assets to be employed for their
intended use. The Company recorded a $26,834,131 asset impairment loss on
mineral properties which adjusted the assets to management's estimate of net
realizable value.


4.       Other Assets.

On April 1, 1995, the Company acquired, through the Subsidiary, 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 to evaluate the
presence of mineral reserves for a period of nine months. 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 was due upon reaching sustained production or July 1, 1999, whichever
came first. In June 1999, the Subsidiary and the private corporation amended the
original agreement to allow for a one year extension in exchange for $75,000
which was paid by the Subsidiary on June 30, 1999. The Company extended the

                                       40
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


amended agreement to July 2001 with another extension payment on July 7, 2000 of
$75,000. These extension payments do not apply to the overall purchase price.
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, if any, the
Company would be required to pay a royalty of 1% of gross smelter returns for a
period of up to 60 years, not to exceed $60,000,000.

In connection with the asset impairment loss discussed in Note 3, the Company
determined that this asset was also impaired in value due to its inseparable
relationship to the Soledad site. Without a clear source of financing,
management is uncertain it will be able to complete the necessary steps to
finalize the agreement and the entire $1,104,461 of carrying value has been
impaired.


5.       Income Taxes.

At December 31, 2000 and December 31, 1999, the Company had deferred tax assets
of approximately $11,595,000 and $720,000, respectively, principally arising
from net operating loss carry-forwards for income tax purposes offset by
development costs expended for income tax purposes but capitalized for financial
reporting purposes. As management of the Company does not currently believe that
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, 2000 and December 31, 1999.

As at December 31, 2000, the Company had net operating loss carry-forwards
available to reduce taxable income in future years as follows:

             Country                            Amount       Expiration Dates
             -------                            ------       ----------------
             United States - Federal       $20,500,000            2003 - 2020
             United States - AMT           $14,500,000            2003 - 2020
             Canada                        $ 1,125,000            2001 - 2006

     These financial statements do not reflect the potential effect on future
income taxes of the application of these losses.

6.       Long-Term Debt.
<TABLE>
<CAPTION>

Long-term debt consists of the following:
                                               December 31, 2000    December 31, 1999
                                               ------------------   -----------------
<S>                                            <C>                  <C>
Note due to a corporation, payable in monthly
  installments of $9,275, including interest
  at prime plus 2% (11.5% at December 31,
  2000), estimated to mature in July 2013
  and collateralized by mineral property       $          745,548   $         771,125

Note due an individual, payable in monthly
  installments of $600 including interest at
  9%, maturing June 2006, collateralized
  by mineral property                                      31,123              35,310
                                               ------------------   -----------------

Total long-term debt                                      776,671             806,435
Current maturities                                        750,130              39,986
                                               ------------------   -----------------

Long-term debt, less current maturities        $           26,541   $         766,449
                                               ==================   =================
</TABLE>

                                       41
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


At December 31, 2000, the Company was in default on the note payable of
$745,548, therefore the entire balance has been reflected as a current
liability. The following schedule shows the maturity of the debts if the Company
had not defaulted on the note payable:

     Year ending December 31,                                  Amount
                                                           -------------
     2001                                                  $     750,130
     2002                                                          5,013
     2003                                                          5,483
     2004                                                          5,998
       2005                                                        6,560
     Thereafter                                                    3,487
                                                           -------------
                                                           $     776,671
                                                           =============

7.       Convertible Debt.

In December 2000, the Company received $65,000 from two shareholders of the
Company pursuant to terms of an unsecured promissory note. The note is
convertible into shares of the Company's common stock at a per share rate of
$0.16 (USD$), at the option of the noteholder. The note was converted into
406,250 common shares in January 2001.

8.       Share Capital.

In December 2000, two shareholders advanced the Company $200,000 pursuant to a
private placement to be completed in January 2001. The terms of the private
placement call for the issuance of an aggregate of 1,538,462 shares at US$0.13
per share. In addition, an aggregate of 1,656,250 Common Shares will be reserved
for issuance as warrants with a fixed price of US$0.16 per share. At December
31, 2000, the share issuance was awaiting approval by the Toronto Stock
Exchange, and the entire balance was reflected as a stock subscription.
Subsequent to the balance sheet date, all 1,538,462 shares were issued.

On July 20, 1999, 13,250,000 of unregistered common shares of the Company were
issued upon the exercise of special warrants, which were issued on March 15,
1999, at a price of $0.26 (C$0.40) per share for gross proceeds of $3,472,450,
(C$5,300,000), less agent fees of $121,535. In addition, the Company paid
$166,620 in costs related to the private placement and issued 463,750 broker
warrants which have a strike price of (C$0.60) and expire March 15, 2001.

9.       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 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, 2000
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.

On February 4, 2000, stock options to purchase up to a total of 325,000 shares
were granted to three directors. The options are exercisable at the price of
C$0.23 per share and expire on February 4, 2005.

                                       42
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


On January 19, 1999, stock options to purchase up to 75,000 shares were granted
to a director. The options are exercisable at the price of C$0.50 per share and
expire on January 19, 2004.

On August 4, 1999 stock options to purchase up to 45,000 shares were granted to
employees. The options are exercisable at the price of C$0.28 per share and
expire on August 4, 2004.

On October 14, 1999, additional stock options to purchase up to 250,000 shares,
in total, were granted to three directors of the Company. In addition, stock
options to purchase up to a total of 75,000 common shares were granted to three
employees of the Company. All of the options are exercisable at the price of
C$0.60 per share and expire on October 14, 2004.

The fair value of options issued during 1999 and 2000 was $123,683 and $58,500
respectively.

The following is a summary of all stock option activity:

<TABLE>
<CAPTION>

                                                    Year Ended                     Year Ended
                                                 December 31, 2000              December 31, 1999
                                             --------------------------     --------------------------
                                               Shares      Price Range        Shares      Price Range
                                             -----------   ------------     -----------   ------------
<S>                                            <C>          <C>               <C>          <C>
Options outstanding, beginning of period       2,185,000    C$0.28-1.00       2,195,000    C$0.55-1.00
Options granted                                  325,000    C$0.23              445,000    C$0.28-0.60
Options exercised                                     --             --              --             --
Options expired / cancelled                   (1,365,000)   C$0.23-1.00        (455,000)   C$0.55-1.00
                                             -----------   ------------     -----------   ------------
Options outstanding, end of period             1,145,000    C$0.23-1.00       2,185,000    C$0.28-1.00
                                             ===========   ============     ===========   ============

Options exercisable                            1,098,333    C$0.23-1.00       2,104,999    C$0.28-1.00
                                             ===========   ============     ===========   ============
</TABLE>


The following table summarizes information about fixed-price stock options
outstanding at December 31, 2000:
<TABLE>
<CAPTION>

                                                OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                                       -------------------------------------    ----------------------------------
                            Number      Weighted-Average   Weighted-Average        Number        Weighted-Average
  Range of Prices        Outstanding    Contractual Life    Exercise Price       Exercisable      Exercise Price
-------------------     -------------  ------------------ ------------------    -------------   ------------------
<S>                       <C>                 <C>               <C>              <C>                  <C>
C$1.00                      540,000           5.0               C$1.00             540,000            C$1.00
C$0.60                      275,000           4.0               C$0.60             258,333            C$0.60
C$0.50                       75,000           5.0               C$0.50              75,000            C$0.50
C$0.28                       45,000           2.0               C$0.28              15,000            C$0.28
C$0.23                      210,000           5.0               C$0.23             210,000            C$0.23
-------------------     -------------  ------------------ ------------------    -------------   ------------------
C$0.28 - $1.00            1,145,000           4.44              C$0.70           1,098,333            C$0.71
</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 market at
date of grant for options granted to employees in 2000 and 1999 was C$0.23 and
C$0.55 per option respectively.

                                       43
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


SFAS Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 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
SFAS 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 2000 and 1999, respectively: no
dividend yield for each year; expected volatility of 103% and 51%; and risk-free
interest rates of 5.0 percent.

Until January 1, 2000, options issued to non-employee directors were treated
under the fair value method prescribed by Financial Accounting Standards Board
("FASB") Statement No. 123 "Accounting for Stock Based Compensation". On March
31, 2000 the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation, an interpretation of APB No. 23"
("the Interpretation"). Among other issues, the interpretation allows stock
options issued to members of the Company's board of directors to be treated
under the intrinsic value method for U.S. GAAP purposes. The interpretation was
effective July 1, 2000. As a result, on July 1, 2000 the Company recorded a one
time adjustment of $177,644, recorded as a cumulative effect of change in
accounting principles for U.S. GAAP purposes.

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

                                     Year Ended                Year Ended
                              December 31, 2000         December 31, 1999
     Net loss:                -----------------         -----------------
       As reported              $(28,708,276)                $(564,657)
       Pro forma                $(28,766,776)                $(688,340)

     Loss per share:
       As reported              $      (0.60)                $   (0.01)
       Pro forma                $      (0.60)                $   (0.02)


10.      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 are in
the process of renegotiation with a three year moratorium of payments requested.
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

                                       44
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


an aggregate amount of $862,000. With the departure of two executive officers in
1999, and the third in February 2000, the Company is no longer committed to
these contingencies. There were no actual costs to the Company for these
commitments for the year ended December 31, 2000. The costs for the year ended
December 31, 1999 was $142,000.

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 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 a production royalty was 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.

The Company has been named in a complaint filed in 1997 in the State of
California Superior Court by an individual seeking unspecified compensatory and
punitive damages associated with environmental contamination at a site unrelated
to the Company or the Soledad Mountain project. Management and the Company's
legal counsel believe the complaint is without merit, not applicable to the
Company, and intends to vigorously defend its position.


11.      Related Party Transactions.

Jerrold W. Schramm, a director of Golden Queen until January 22, 2001, is a
partner of the law firm of Lawson Lundell Lawson & McIntosh, counsel to the
Company. During the years ended December 31, 2000 and 1999, the Company paid
Lawson Lundell Lawson & McIntosh $52,041 and $35,820 respectively for services
rendered. 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, 2000.


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


                                       45
<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/ EDWARD G. THOMPSON
     ---------------------------------
     Edward G. Thompson, its President
     and Chief Executive Officer

     Date:     March 15th, 2001


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons, representing all of the members
of the Board of Directors and the principal accounting officer, on behalf of the
registrant and in the capacities and on the dates indicated.


By: /s/ GORDON C. GUTRATH
    ---------------------------------
    Gordon C. Gutrath, a Director

    Date:     March 15th, 2001


By: /s/ H. LUTZ KLINGMANN
    ---------------------------------
    H. Lutz Klingmann, a Director

    Date:     March 15th, 2001


By: /s/ EDWARD G. THOMPSON
    ---------------------------------
    Edward G. Thompson, a Director
    and Chief Executive Officer

    Date:     March 15th, 2001


By: /s/ CHESTER SHYNKARYK
    ---------------------------------
    Chester Shynkaryk, a Director

    Date:     March 15th, 2000


By: /s/ KEITH GAINEY
    ---------------------------------
    Keith Gainey, Chief Accountant

    Date:     March 15th, 2000


                                       46