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, 2001
                                       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 $6,753 in interest
income. The aggregate market value of the voting stock held by non-affiliates at
March 27, 2002 was $13,497,665. The number of shares of common stock outstanding
at such date was 49,991,352.

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

                                       1
<PAGE>

                          GOLDEN QUEEN MINING CO. LTD.
                    ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR
                             ENDED DECEMBER 31, 2001

<TABLE>
                                TABLE OF CONTENTS


SAFE HARBOR STATEMENT

GLOSSARY

<CAPTION>
                                                                                                 Page
<S>        <C>                                                                                   <C>

PART I

           Item 1:   Description of Business........................................................6
           Item 2:   Description of Property.......................................................15
           Item 3:   Legal Proceedings.............................................................18
           Item 4:   Submission of Matters to a Vote of Security Holders...........................18


PART II

           Item 5:   Market for Common Equity and Related Stockholder Matters......................19
           Item 6:   Management's Discussion and Analysis and Plan of Operation....................20
           Item 7:   Financial Statements..........................................................23
           Item 8:   Changes in and Disagreements with Accountants and Financial Disclosure........23


PART III

           Item 9:   Directors and Executive Officers, Promoters and Control Persons;
                       Compliance with Section 16(a) of the Exchange Act...........................24
           Item 10:  Executive Compensation........................................................25
           Item 11:  Security Ownership of Certain Beneficial Owners and Management................27
           Item 12:  Certain Relationships and Related Transactions................................28
           Item 13:  Exhibits and Reports on Form 8-K..............................................29


SIGNATURES
</TABLE>


                                       2
<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, 2001 of approximately $33,475,000. This trend is expected to continue for at
least the next two years and is expected to reverse only if, and when gold is
produced from the Soledad Mountain Project. At December 31, 2001, the Company
held $90,000 in cash and cash equivalents, and is currently in care and
maintenance with a "burn" rate of approximately $22,000 per month. While
management anticipates raising $200,000 in April, 2002 through the conversion of
warrants, and $60,000 from sales of rip-rap aggregate over the next three
quarters of 2002, the Company has not received additional funding and therefore
cannot guarantee financing for Company activities in 2002.

The Company ceased making payments to landowners in October of 2000, and has
since been in the process of negotiating 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. Signed agreements will
cost the Company $58,000 in 2002 while pending agreements could cost an
additional $46,000.

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. The Company's ability to continue is also dependent upon its
landowners interpretation of vested interest in the project without the prospect
of royalty or land payments. 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. In addition to the above, the
Company anticipates that it will need approximately $86,300,000 in additional
financing to put the Soledad Mountain Project into production; an anticipated
$81,500,000 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 update which is more
fully discussed in Part I, Item 1 of this report. 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, 2001, world gold prices were approximately $277 per ounce, an
increase of approximately 1.5% from prices at December 31, 2000 and a decrease
of approximately 5% from prices at December 31, 1999. 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. In
addition to the risks noted above, 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.

                                       3
<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.

                                       4
<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.

                                       5
<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 resource/1/ 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,
construction and 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.

                                       6
<PAGE>

In response to the continued downturn in world gold prices, the Company's Board
of Directors voted in December 2000 to move the Company into care and
maintenance status. The number of employees was reduced to its lowest possible
level, and costs were reduced to the minimum amount necessary to hold the
Company together through this period of economic uncertainty . 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 remained on care and maintenance in 2001. The major land owners
agreed to a 3 year moratorium on payments or until the price of gold improves.
Most of the information provided in this report is unchanged from previous
filings.

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, and currently inactive, 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.


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

                                       7
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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 113,593 meters
(372,649 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.

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

                                       8
<PAGE>

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. 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.


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                                       9
<PAGE>

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

<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
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.

                                       10
<PAGE>

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.

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.


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                                       11
<PAGE>

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
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.


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                                       12
<PAGE>

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. Annual inspections of
the site are conducted by the appropriate authority for verification of the
Company's regulation compliance. For the year ended December 31, 2001, Golden
Queen remained in compliance with regulations and received favorable reviews
from each of the reviewing agencies. 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
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.

                                       13
<PAGE>

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.

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 the relative permits are
initiated by 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.

                                       14
<PAGE>

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 site - 11847 Gempen Street in Mojave, California. The
Company employs a half-time accountant at this Mojave office.

Miscellaneous. All of the Company's directors, Edward G. Thompson, Chester
Shynkaryk, Gordon C. Gutrath, and H. Lutz Klingmann 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 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 situated 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.


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                                       15
<PAGE>

The Company ceased making payments to landowners, according to the terms of the
various agreements, in October of 2000, and has since been in the process of
negotiating 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 negotiated moratorium
agreements with these landowners in the past, and has reached new agreements
with many of the landowners, there can be no assurance that the remaining
agreements will be successfully negotiated under current conditions.

The basis of the moratorium agreements is a suspension of advance minimum
royalty payments and all other payments for a period of three years, or until
the Company secures production financing, whichever is sooner. As of December
31, 2001, 42% of the agreements, constituting approximately 86% of the mineral
rights of the project, were successfully re-negotiated. Based on personal
contacts with each landowner from October 2000 through February 2001, management
believes that a variety of factors, other than non-approval of the moratorium
request, are the cause for a lack of response from the remaining landowners.
Follow-up contacts with these landowners will be conducted in 2002.

The costs to the Company for all land agreements for the years ending December
31, 1999, 2000, and 2001 were $541,000, $344,000, and $69,000 respectively. The
negotiated agreements will cost the Company $58,000 in 2002, while the remaining
agreements could cost the Company as much as $46,000. If the Company fails to
negotiate the outstanding agreements, additional financing may be required to
keep the land package together.

Maintaining control of Golden Queen's land package is critical to the future of
the Company. Without land and mineral rights the Company has no basis for
continuing. While each piece of property on Soledad Mountain has its own value,
and unique purpose in the overall mine plan, the feasibility of the project
depends on the Company's ability to maintain control of the land package as a
whole.

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, 2001, $772,000
remained to be paid by the Company under these various property purchase
agreements; $22,000 of this amount is due within the ensuing twelve months.
Certain of these agreements have been successfully re-negotiated to a three year
moratorium of payments. Without moratorium agreements, the Company would have
been unable to fulfill the payment obligations of the original contracts.

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.


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                                       16
<PAGE>

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 non-contracted 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 anticipated it's inability to make the extension payment scheduled for
July 1, 2001 and on August 10, 2001, a second amendment to the original stock
purchase agreement was signed. This amendment suspends all terms and obligations
of the Company as set forth in the original agreement and the first amendment.
Further, the second amendment requires the Company to recognize a liability of
$35,000, on or before July 1, 2001, and on each successive anniversary date for
up to five years. In order to extend the termination date of the agreement,
$10,000 of the liability is to be paid in cash, and the balance of $25,000 is to
be accrued, without interest, payment of which is deferred until the final stock
purchase payment is made. On July 11, 2001, the Company made the required
payment of $10,000, accrued a liability of $25,000, and extended the termination
date of the agreement to July 1, 2002. 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.

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.


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                                       17
<PAGE>

Geology.

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

Site Geology. Soledad Mountain is a moderately-eroded silicic volcanic center of
Middle-to-Late Miocene epoch (approximately 21.5 million to 16.9 million years
ago) and is interpreted as part of a large caldera. Volcanics consist of felsic
flows, tuffs and breccias with rock types ranging from quartz latite to
rhyolite. Faults have disrupted all major rock types with the major faults
trending 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 inactive 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 inactive 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.

As a result of the discussion above, the Company believes the geology of the
Soledad Mountain Project area is conducive to its intended operations.

Item 3.  Legal Proceedings.

The Company is not aware of, involved in, or subject to any legal proceedings as
of this report date.

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 2001.

                                       18
<PAGE>

                                     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, 2000                     High            Low

     First Quarter                     C$              .49            .21
     Second Quarter                                    .40            .28
     Third Quarter                                     .45            .22
     Fourth Quarter                                    .35            .17

     Year Ended December 31, 2001                     High            Low

     First Quarter                     C$              .30            .16
     Second Quarter                                    .30            .16
     Third Quarter                                     .23            .15
     Fourth Quarter                                    .25            .13

As of December 31, 2001 there were 275 holders of record of the Company's common
stock.

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.

Sales of Unregistered Securities. In December 2000, the Company received $65,000
from two shareholders of the Company pursuant to terms of an unsecured
promissory note. In January 2001, the note was converted into 406,250 common
shares at a per share rate of $0.16 (USD$).

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 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 were reserved
for issuance as warrants with a fixed price of US$0.16 per share. These warrants
were outstanding as of December 31, 2001 and have an expiration date of January
20, 2003. Until the share issuance was approved by the Toronto Stock Exchange,
the entire balance was reflected as a stock subscription.


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                                       19
<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 under care and maintenance in the exploration and development
stage of its business and therefore has earned no revenue from 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 2000 and 2001 care and maintenance expenses and cumulative
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 December      Year Ended     Cumulative Since
                           31, 2001        December 31, 2000      Inception
                      ------------------- ------------------ ------------------
Asset Impairment      $               -   $      28,547,592  $      28,547,592
General and
  administrative
  expense             $         363,809   $         367,451  $       5,619,528
Interest expense      $          67,516   $               -  $         391,001
Interest income       $           6,753   $          32,062  $       1,081,419
Net loss              $        (262,059)  $     (28,708,276) $     (33,475,495)

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 $363,809 for the year ended December 31, 2001, as compared to $367,451 for
the year ended December 31, 2000. Interest expense for the year ended December
31, 2001 of $67,516 increased from zero for the year ended December 31, 2000 as
a result of interest only payments related to extended land agreements.
Previously, interest on these borrowings was capitalized. Interest income for
the year ended December 31, 2001 was $6,753, as compared to $32,062 for the year
ended December 31, 2000. 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 $262,059 for the year ended December 31, 2001, as
compared to a net loss of $28,708,276 for the year ended December 31, 2000.


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, has
completed the exploration or development stage, and is now in a care and
maintenance position. During the period from inception through December 31,
2001, the Company has used $4,265,000 in operating activities, primarily as a
result of cumulative losses of $33,475,000. During the same period, the Company
has used $29,948,000 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 activities were financed by net
borrowings of $2,584,000 under various long-term debt arrangements and from the
sale of $31,719,000 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.

                                       20
<PAGE>

At December 31, 2001, the Company held $90,000 in cash and cash equivalents.
With a projected "burn" rate of $22,000 per month, the Company will need to
secure additional financing for 2002. In April 2002, management anticipates
raising $200,000 through the conversion of 1,250,000 warrants which were
reserved in January 2001 at US$0.16 per share. In addition, the Company is
expected to net $60,000 from the sale of approximately 70,000 tons of rip-rap
aggregate. As of the report date, the Company has not received funds from either
of these sources, therefore management cannot guarantee the completion of these
arrangements, or sufficient financing for Company activities in 2002.

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, 2001, world gold
prices were approximately $277 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.

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

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 were reserved for issuance
as warrants with a fixed price of US$0.16 per share. These warrants were
outstanding as of December 31, 2001 and have an expiration date of January 20,
2003. Until the share issuance was approved by the Toronto Stock Exchange, the
entire balance was reflected as a stock subscription.

Year Ended December 31, 2001. During the year ended December 31, 2001, the
Company used $295,000 in operating activities, primarily as a result of a
$262,000 net loss during the year. Proceeds from the sale of fixed assets netted
$21,000. In addition, $7,000 was expended for financing expenses related to
interest and share issuance costs. As a result of the foregoing, the Company's
cash balance decreased by $281,000, to $90,000, at December 31, 2001.

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.

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.

                                       21
<PAGE>

The initial capital costs of bringing the project into production are estimated
to be $86,300,000; 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, 2001, the Company had a deferred tax asset of $11,700,000, 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
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 was effective concurrent to the adoption date of
SFAS No. 133. There was no effect of adopting SFAS No. 133 on the consolidated
financial statements.

In September 2000 the FASB issued SFAS No. 140 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities", which replaces
SFAS No. 125 and revises the standards for accounting for securitizations and
other transfers of financial assets and collateral and requires certain
disclosures. This statement continues to use a "financial-components approach"
that focuses on control to determine if assets are sold or liabilities
extinguished. The statement is generally applied prospectively. The statement is
effective for transactions occurring after March 31, 2001. Adoption of this
standard had no material effect on the Company.

                                       22
<PAGE>

In June 2001, the Financial Accounting Standards Board approved for issuance,
Statement of Financial Accounting Standards No. 141 ("SFAS no. 141), "Business
Combinations." This standard eliminates the pooling method of accounting for
business combinations initiated after June 30, 2001. In addition, SFAS No. 141
addresses the accounting for intangible assets and goodwill acquired in a
business combination. The Company does not expect the adoption of SFAS No.141 to
have a material effect on the Company.

In June 2001, the Financial Accounting Standards Board approved for issuance,
Statement of Financial Accounting Standards No. 143 ("SFAS No. 143), "Accounting
for Asset Retirement Obligations", which addresses the accounting for legal
obligations associated with the retirement of tangible long lived assets. Under
SFAS No. 143, the fair value of a liability for an asset retirement obligation
shall be recognized in the period in which the obligation is incurred. SFAS No.
143 is effective for fiscal years beginning after June 15, 2002, with early
adoption permitted. The Company does not expect adoption of SFAS No. 143 on
January 1, 2003 to have a material effect on its financial position or results
of operations.

In August 2001, the Financial Accounting Standards Board approved for issuance,
Statement of Financial Accounting Standards No. 144 ("SFAS No. 144), "Accounting
for the Impairment and Disposal of Long-lived Assets." SFAS No. 144 was issued
to resolve implementation issues that have been created under Statement of
Financial Accounting Standards No. 121. Under SFAS No. 144 one accounting model
is required to be used for long-lived assets to be disposed of by sale, whether
previously held and used or newly acquired, and certain additional disclosures
are required. SFAS No. 144 is effective for financial statements issued for
fiscal years beginning after December 31, 2001. The Company does not expect
adoption of SFAS No. 144 on January 1, 2002 to have a material effect on the
financial position or results of operations.

Item 7.  Financial Statements.

See the Consolidated Financial Statements of the Company and the notes thereto
at pages 30 through 49 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]

                                       23
<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,
2002 are as follows. The Company's board of directors consists of four
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            President of E.G. Thompson Mining
Age:  65                                 Officer, Chairman, and Director       Consultants, Inc.

Gordon C. Gutrath (1)                    Director                              President of Atled Exploration
Age:  64                                                                       Management Ltd.

Chester Shynkaryk (2)                    Secretary and Director                President of Nu-Vision Resources (a
Age: 57                                                                        mineral exploration company)
H. Lutz Klingmann(3)                     Director                              President of Minto Explorations Ltd.
Age: 62

<FN>
(1)  Audit committee member - board of directors.
(2)  Compensation committee member - board of directors.
(3)  Appointed as a director March 1, 2001.
</FN>
</TABLE>

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 on 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), Gold Summit Mines Limited, Zaruma
Resources, Inc., Sparton Resources, Inc., Western Troy Capital Resources, Inc.,
Nu-Vision Resources, 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 Nu-Vision Resources (formerly 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 Nu-Vision Resources.

H. Lutz Klingmann was appointed as a director effective March 1, 2001. He has
been the President of Minto Explorations, Ltd. since inception in 1993. Mr.
Klingmann is also a director of Nu-Vision Resources.


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

                                       24
<PAGE>

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 for the years ended December 31, 2001, 2000, and
1999.

<TABLE>
<CAPTION>
        Annual Compensation                             Long-Term Compensation

                                                                   Other       Securities
                                                                   Annual      Underlying
             Executive                                            Compen-       Options/
              Officer                 Year          Salary         sation         SARS
------------------------------------- --------- --------------- ------------ --------------
<S>                                   <C>         <C>             <C>          <C>
Edward G. Thompson (1)                2001        $   10,653      $      -     $      -
President &Chief Executive Officer    2000        $   15,147             -            -
                                      1999                 -             -            -

<FN>
(1)  Mr. Thompson is chairman of the board of directors, and a member of the
     audit committee and compensation committee.
</FN>
</TABLE>

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.

For the year ended December 31, 2001, $10,653 was paid to Mr. Thompson for his
services as President of the Company, and $3,874 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.

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.

On March 1, 2001, options to purchase 115,000 shares of common stock at a per
share price of $0.25 were granted to a director of the Company.

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.

                                       25
<PAGE>

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 Shynkaryk and Thompson. As at December 31,
2001, options to acquire an aggregate of 1,045,000 shares of common stock were
outstanding under the Company's stock option plan, as follows:

Option Grants. The following table sets forth certain information concerning
individual grants of stock options under the stock option plan to the named
executive officer during the year ended December 31, 2001.

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------ ----------------------------------
                                                                                                 Potential Realizable
                                                                                                       Value at
                                    Individual Grants                                            Assumed Annual Rates
                                                                                                    of Stock Price
                                                                                                     Appreciation
                                                                                                  for Option Term (1)
                                                                                                          C$
------------------------------------------------------------------------------------------ ----------------------------------

                                           % of Total
                                             Options        Exercise
                               Options     Granted to        Price          Expiration
           Name                Granted      Employees          C$              Date               5%               10%
---------------------------- ------------ -------------- --------------- ----------------- ----------------- ----------------
<S>                          <C>          <C>            <C>             <C>               <C>               <C>

Edward G. Thompson             50,000          50%           $0.20        June 26, 2006        $12,763           $16,105

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

<FN>
(1)  The potential realizable value is based on the assumption that the stock
     price appreciates at the annual rate shown (compounded annually) from the
     date of grant until the end of the five-year option term. These numbers are
     calculated based on the requirements of the SEC and do not reflect the
     Company's estimate of future stock price performance.
</FN>
</TABLE>

Option Exercises. The following table sets forth certain information concerning
exercises of stock options under the stock option plan by the named executive
officer during the year ended December 31, 2001, and stock options held at
year-end.

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                           AND YEAR END OPTION VALUES

<TABLE>
<CAPTION>
---------------------------- ------------ ------------ ---------------------------------- ----------------------------------
                               Shares                                                                 Value of
                              Acquired       Value                 Number of                  Unexercised In-the-Money
                                 on        Realized               Unexercised                        Options at
           Name               Exercise        C$              Options at Year End                  Year End C$ (1)
---------------------------- ------------ ------------ ----------------- ---------------- ----------------- -----------------
                                                         Exercisable     Un-exercisable     Exercisable     Un-exercisable
---------------------------- ------------ ------------ ----------------- ---------------- ----------------- -----------------
<S>                          <C>          <C>          <C>               <C>              <C>               <C>

    Edward G. Thompson            0          $0.00         385,000              0                0                 0
---------------------------- ------------ ------------ ----------------- ---------------- ----------------- -----------------

<FN>
(1)  On December 31, 2001, the closing price of the Company's stock was C$0.13
     (US$0.08 based on an exchange rate of $0.63). For purposes of the foregoing
     table, stock options with an exercise price less than that amount are
     considered to be "in-the-money" and are considered to have a value equal to
     the difference between this amount and the exercise price of the stock
     option multiplied by the number of shares covered by the stock option.
</FN>
</TABLE>

                                       26
<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 52,659,269 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                                 0.78%

Chester Shynkaryk (1), (3)
  900 W Hastings Street, Suite 700
  Vancouver, B.C. V6C 1E5                              414,508                                 0.79%

Gordon C. Gutrath (1), (4)
  1111 Melville Street, Suite 250
  Vancouver, B.C. V6E 3V6                              220,000                                 0.42%

H. Lutz Klingmann (1), (4)
  6411 Imperial Ave.
  West Vancouver, B.C. V7W 2J5                         115,000                                 0.22%

All directors and executive officers
  as a group (4 persons) (5)                         1,162,808                                 2.21%

Harris Clay (6)                                      7,398,848                                14.05%

Landon T. Clay (7)                                   8,554,771                                16.25%

Goodman and Company (8)                              5,621,800                                10.68%

Continental Casualty Company                         3,750,000                                 7.12%

BGR Precious Metals Fund, Inc.                       2,800,000                                 5.32%

<FN>
(1)  A director of the Company.
(2)  Includes presently exercisable options for the purchase of 385,000 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: 6,591,598 shares held directly by Mr. Clay; and 807,250 shares
     held by Arctic Coast Petroleum Ltd., with which Mr. Clay is affiliated.
     Harris Clay and Landon T. Clay are brothers.
(7)  Consists of: 7,716,678 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.
</FN>
</TABLE>

                                       27
<PAGE>

Item 12.  Certain Relationships and Related Transactions.

In December 2000, the Company received $65,000 from two shareholders of the
Company pursuant to terms of an unsecured promissory note. The note was
convertible into shares of the Company's common 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 which was 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 were reserved
for issuance as warrants with a fixed price of US$0.16 per share. The warrants
remained outstanding at December 31, 2001 and have an expiration date of January
20, 2003. Until the share issuance was approved by the Toronto Stock Exchange,
the entire balance was reflected as a stock subscription.

Transactions with Lawson Lundell Lawson & McIntosh. 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, 2001, and December 31, 2000, the Company paid Lawson Lundell Lawson
& McIntosh $42,798 and $52,041, 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, 2001.


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

                                       28
<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.

       10.5       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.

       10.8       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.

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

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

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

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

       10.15      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.

       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.

       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 2001.

                                       29
<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, 2001 and 2000, 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, 2001, 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, 2001 and 2000, 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, 2001, 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.



"BDO Dunwoody, LLP"


Chartered Accountants
March 15, 2002
Vancouver, British Columbia

                                       30
<PAGE>

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

<TABLE>
<CAPTION>
                                                          December 31,     December 31,
                                                              2001             2000
                                                          ------------     ------------
<S>                                                       <C>              <C>
Assets  (Note 1)

  Current assets:
   Cash and cash equivalents                              $     89,653     $    371,123
   Receivables                                                   4,729            1,859
   Prepaid expenses and other current assets                    24,540           33,485
                                                          ------------     ------------

   Total current assets                                        118,922          406,467

   Property and equipment, net (Note 2)                        291,011          317,313
   Mineral properties (Notes 3, 4, 6 and 10)                   682,687          682,687
                                                          ------------     ------------

                                                          $  1,092,620     $  1,406,467
                                                          ============     ============

Liabilities and Shareholders' Equity  (Note 1)

  Current liabilities:
   Accounts payable                                       $     25,180     $     46,514
   Royalty and mining rights payable                            97,484          103,250
   Accrued liabilities                                          12,037           28,808
   Current maturities of long-term debt (Note 6)                 5,010          750,130
   Convertible debt (Note 7)                                         -           65,000
                                                          ------------     ------------
  Total current liabilities                                    139,711          993,702

  Long-term debt, less current maturities (Note 6)             767,081           26,541
                                                          ------------     ------------

  Total liabilities                                            906,792        1,020,243
                                                          ------------     ------------

  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; 49,991,352 and 48,046,641 shares issued
   and outstanding (Notes 7 and 8)                          34,243,345       33,978,345
  Stock subscription (Note 8)                                       --          200,000
  Deficit accumulated during the development stage         (34,057,517)     (33,792,121)
                                                          ------------     ------------

  Total shareholders' equity                                   185,828          386,224
                                                          ------------     ------------

                                                          $  1,092,620     $  1,406,467
                                                          ============     ============
</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 Loss
                                 (U.S. dollars)

<TABLE>
<CAPTION>
                                                                                        Cumulative Amounts
                                                                                              From Date of
                                                                                       Inception (November
                                                 Year Ended            Year Ended        21, 1985) through
                                             December 31, 2001     December 31, 2000     December 31, 2001
                                             -----------------     -----------------     -----------------
<S>                                          <C>                   <C>                   <C>
General and administrative expense           $         363,809     $         367,451     $       5,619,528
Interest expense                                        67,516                     -               391,001
Interest income                                         (6,753)              (32,062)           (1,081,419)
Other expense, net                                     (25,886)                2,939                35,813
Asset impairment loss                                        -            28,547,592            28,547,592
Abandoned mineral interests                                  -                     -               277,251
                                             -----------------     -----------------     -----------------

Net loss before cumulative effect of
change in accounting principle and
extraordinary item                                     398,686            28,885,920            33,789,766
Cumulative effect of change in accounting
for stock options (Note 9)                                   -              (177,644)             (177,644)
                                             -----------------     -----------------     -----------------
Net loss before extraordinary items                    398,686            28,708,276            33,612,122

Extraordinary Items: (Note 11)
Gain on troubled debt restructuring                   (136,627)                    -              (136,627)

                                             -----------------     -----------------     -----------------
Net loss                                     $         262,059     $      28,708,276     $      33,475,495
                                             =================     =================     =================


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

Cumulative effect of change in accounting
principle                                                    -                     -
                                             -----------------     -----------------

Net loss per share before extraordinary
items                                                     0.01                  0.60

Extraordinary items                                          -                     -
                                             -----------------     -----------------

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

Weighted average shares outstanding                 49,890,120            48,046,641
                                             -----------------     -----------------
</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 of                                                       Deficit
        Inception                                                         Accumulated
   (November 21, 1985)                                                    During the          Total
         through               Common                       Stock         Development     Shareholders'
    December 31, 2001          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.

                                       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 of                                                       Deficit
        Inception                                                         Accumulated
   (November 21, 1985)                                                    During the          Total
         through               Common                       Stock         Development     Shareholders'
    December 31, 2001          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.

                                       34
<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 of                                                       Deficit
        Inception                                                         Accumulated
   (November 21, 1985)                                                    During the          Total
         through               Common                       Stock         Development     Shareholders'
    December 31, 2001          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.

                                       35
<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 of                                                          Deficit
          Inception                                                           Accumulated
     (November 21, 1985)                                                      During the          Total
           through                Common                        Stock         Development     Shareholders'
      December 31, 2001           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

Issuance of common
  shares through
  conversion of debt                406,250        65,000                -                -           65,000
Issuance of common
  shares for conversion of
  stock subscription              1,538,462       200,000         (200,000)               -                -
Share issuance cost                       -             -                -           (3,337)          (3,337)
Net loss for the year                     -             -                -         (262,059)        (262,059)
------------------------------ ------------- ------------- ---------------- ---------------- ----------------
Balance, December 31, 2001
                                 49,991,353   $34,243,345   $            -   $  (34,057,517)  $      185,828
============================== ============= ============= ================ ================ ================
</TABLE>

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

                                       36
<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
                                           Year Ended            Year Ended      Inception (November
                                          December 31,          December 31,       21, 1985) through
                                              2001                  2000           December 31, 2001
                                       -----------------     -----------------     -----------------
<S>                                    <C>                   <C>                   <C>
Operating activities
 Net loss                              $        (398,686)    $     (28,708,276)    $     (33,612,122)
 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                 16,488                81,574               376,706
    Loss (Gain) on disposition of
    property and equipment                       (11,186)                1,316               (10,032)
 Options to directors (Note 9)                         -                     -               177,644
 Cumulative effect of change in
 accounting principle (Note 9)                         -              (177,644)             (177,644)
 Gain on debt restructuring
 (Note 11)                                       136,627                     -               136,627
 Changes in assets and liabilities:
    Receivables                                   (2,870)                4,805                (4,729)
    Prepaid expenses and other
     assets                                        8,945               (61,636)             (111,450)
    Accounts payable and accrued
     liabilities                                 (43,871)               62,193               134,701
                                       -----------------     -----------------     -----------------

Cash used in operating activities               (294,553)             (250,076)           (4,265,456)
                                       -----------------     -----------------     -----------------

Investment activities:
 Deferred exploration and
  development expenditures                             -              (903,320)          (22,395,449)
 Purchase of mineral properties                        -              (184,707)           (5,268,409)
 Deposits on mineral properties                        -                     -            (1,017,551)
 Purchase of property and
  equipment                                            -                (1,200)           (1,313,838)
 Proceeds from sale of property
  and equipment                                   21,000                 5,335                47,153
                                       -----------------     -----------------     -----------------

Cash used in investment
  activities                                      21,000            (1,083,892)          (29,948,094)
                                       -----------------     -----------------     -----------------

 Financing activities:
 Borrowing under long-term debt                        -                     -             3,766,502
 Payment of long-term debt                        (4,580)              (29,764)           (1,182,129)
 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.

                                       37
<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
                                             Year Ended            Year Ended      Inception (November
                                            December 31,          December 31,       21, 1985) through
                                                2001                  2000           December 31, 2001
                                         -----------------     -----------------     -----------------
<S>                                      <C>                   <C>                   <C>
  Issuance of common shares for cash                     -                     -            13,086,902
  Share issuance costs                              (3,337)                    -              (582,022)
  Issuance of special warrants                           -                     -            18,091,667
  Issuance of common shares upon
   exercise of warrants                                  -                     -               857,283
                                         -----------------     -----------------     -----------------
Cash provided by financing activities               (7,917)              235,236            34,303,203
                                         -----------------     -----------------     -----------------

Net change in cash and cash
  equivalents                                     (281,470)           (1,098,732)               89,653

Cash and cash equivalents,
  beginning balance                                371,123             1,469,855                     -
                                         -----------------     -----------------     -----------------

Cash and cash equivalents,
  ending balance                         $          89,653     $         371,123     $          89,653
                                         =================     =================     =================

Supplemental disclosures of cash
  flow information:

Cash paid during period for:
  Interest                               $           2,615     $          82,924     $         845,674
  Income taxes                           $               -     $               -     $               -

Non-cash financing and
  investing activities:
  Exchange of notes for common
   shares                                $          65,000     $               -     $       1,727,282
  Exchange of stock subscription for
  common shares                          $         200,000     $               -     $         200,000
  Exchange of note for future
   royalty payments                      $               -     $               -     $         150,000
  Common shares issued 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.

                                       38
<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, 2001 and December 31, 2000 were $1.59 and $1.50, respectively
stated in Canadian dollars per one U.S. dollar. The average rates of exchange
during both years ended December 31, 2001 and December 31, 2000 were $1.55 and
$1.49 respectively.

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

                                       39
<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 1,011,667 and 1,551,250 common shares were
issuable pursuant to such convertible debt and stock options at December 31,
2001 and 2000 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, receivables, accounts payable and accrued
expenses approximate fair value because of the immediate or short-term maturity
of these financial instruments. The fair value of long-term debt approximates
its carrying value because the stated rates of the debt reflect recent market
conditions or because the rates are variable in nature.

Hedging Activities. 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 was effective concurrent to the adoption date of SFAS No.
133. There was no effect of adopting SFAS No. 133 on the consolidated financial
statements.

New Accounting Pronouncements. In September 2000 the FASB issued SFAS No. 140
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities", which replaces SFAS No. 125 and revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures. This statement continues to use a
"financial-components approach" that focuses on control to determine if assets
are sold or liabilities extinguished. The statement is generally applied
prospectively. The statement is effective for transactions occurring after March
31, 2001. Adoption of this standard had no material effect on the Company.

In June 2001, the Financial Accounting Standards Board approved for issuance,
Statement of Financial Accounting Standards No. 141 ("SFAS no. 141), "Business
Combinations." This standard eliminates the pooling method of accounting for
business combinations initiated after June 30, 2001. In addition, SFAS No. 141
addresses the accounting for intangible assets and goodwill acquired in a
business combination. There was no effect of adopting SFAS No. 141on the
consolidated financial statements.

                                       40
<PAGE>

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

In June 2001, the Financial Accounting Standards Board approved for issuance,
Statement of Financial Accounting Standards No. 143 ("SFAS No. 143), "Accounting
for Asset Retirement Obligations", which addresses the accounting for legal
obligations associated with the retirement of tangible long lived assets. Under
SFAS No. 143, the fair value of a liability for an asset retirement obligation
shall be recognized in the period in which the obligation is incurred. SFAS No.
143 is effective for fiscal years beginning after June 15, 2002, with early
adoption permitted. The Company does not expect adoption of SFAS No. 143 on
January 1, 2003 to have a material effect on its financial position or results
of operations.

In August 2001, the Financial Accounting Standards Board approved for issuance,
Statement of Financial Accounting Standards No. 144 ("SFAS No. 144), "Accounting
for the Impairment and Disposal of Long-lived Assets." SFAS No. 144 was issued
to resolve implementation issues that have been created under Statement of
Financial Accounting Standards No. 121. Under SFAS No. 144 one accounting model
is required to be used for long-lived assets to be disposed of by sale, whether
previously held and used or newly acquired, and certain additional disclosures
are required. SFAS No. 144 is effective for financial statements issued for
fiscal years beginning after December 31, 2001. The Company does not expect
adoption of SFAS No. 144 on January 1, 2002 to have a material effect on the
financial position or results of operations.



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

                                       41
<PAGE>

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


1.  Financial Condition and Ability to Continue as a Going Concern.

The Company has had no revenues from operations since inception, has a deficit
accumulated during the development stage of $34,057,517, and has been unable to
obtain the necessary financing to complete current development activities or
exit the development stage. Also, due to sustained depressed gold and silver
prices, the Company recorded an asset impairment loss of $28,547,592 during
December 2000. These conditions continue to 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 sustain care and maintenance 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 dependent 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. These financial statements do
not reflect the outcome of these uncertainties.


2.  Property and Equipment.

Property and equipment consists of:
                                        December 31, 2001     December 31, 2000
                                        -----------------     -----------------

Building                                      $    26,360           $    26,360

Furniture and fixtures                             56,090                56,090

Equipment                                         170,027               170,027

Automobiles                                        21,401                83,490

Rental properties                                 313,635               313,635
                                              -----------           -----------

Property and equipment, gross                     587,513               649,602

Less accumulated depreciation                     296,502               332,289
                                              -----------           -----------

Property and equipment, net                   $   291,011           $   317,313
                                              ===========           ===========


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.


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                                       42
<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 consisted of the
following:

<TABLE>
<CAPTION>
                                                               December 31, 2001         December 31, 2000
                                                               -----------------         -----------------
<S>                                                            <C>                       <C>
Deferred exploration and development expenditures,
   beginning of year                                           $      21,015,506         $      20,312,184

Costs capitalized during the year:
   Engineering                                                                 -                         -

   Geology/drilling                                                            -                    53,122

   Permitting/environmental                                                    -                    77,136

   Metallurgical testing                                                       -                     2,850

Other direct costs                                                             -                   570,214
                                                               -----------------         -----------------
Deferred exploration and development expenditures,
   end of year                                                        21,015,506                21,015,506

Properties                                                             4,113,738                 4,113,738

Advance minimum royalty                                                2,387,574                 2,387,574

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

Total                                                          $         682,687         $         682,687
                                                               =================         =================
</TABLE>

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. The Company has not capitalized any additional costs
associated with its' mineral properties since the asset impairment was recorded
in 2000. Until gold and silver prices rise to economically sustainable levels,
the Company will continue to expense its mineral property costs as incurred.


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                                       43
<PAGE>

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


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
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 anticipated it's inability to make the extension payment scheduled
for July 1, 2001, and on August 10, 2001, signed a second amendment to the
original stock purchase agreement. This amendment suspends all terms and
obligations of the Company as set forth in the original agreement and the first
amendment. Further, the amendment requires the Company to recognize a liability
of $35,000, on or before July 1, 2001, and on each successive anniversary date
for up to five years. To extend the termination date of the agreement, $10,000
of the liability is to be paid in cash, and the balance of $25,000 is to be
accrued, without interest, payment of which is deferred until the final stock
purchase payment is made. On July 11, 2001, the Company made the required
transfer of $10,000, accrued a liability of $25,000, and extended the
termination date of the agreement to July 1, 2002.

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 was uncertain it would be able to complete the necessary steps to
finalize the agreement and the entire $1,104,461 of carrying value was
determined to be impaired at December 31, 2000.


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                                       44
<PAGE>

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


5.  Income Taxes.

At December 31, 2001 and December 31, 2000, the Company had deferred tax assets
of approximately $11,700,000 and $11,595,000, 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, 2001 and December 31, 2000.


As at December 31, 2001, 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          $20,000,000               2003 - 2021

     United States - AMT              $14,600,000               2003 - 2021

     Canada                           $ 1,723,000               2002 - 2008


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


Major items causing the Corporation's affective tax rate to differ from the
statutory rate are as follows:

<TABLE>
<CAPTION>
                                      December 31, 2001                  December 31, 2000
                                   ------------------------          ---------------------------
<S>                                <C>              <C>              <C>                <C>
Income benefit at statutory rate   $   (104,825)        (40)%        $   (11,483,310)       (40)%

Change in valuation allowance           104,825          40               11,483,310         40

                                   ------------     -------          ---------------    --------
Total                              $          -           - %        $             -           -
                                   ============     =======          ===============    ========
</TABLE>

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                                       45
<PAGE>

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


6.  Long-Term Debt.

Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                             December 31, 2001      December 31, 2000
                                                             ------------------     -----------------
<S>                                                          <C>                    <C>
Note due to a corporation, payable in monthly
  installments of $9,275, including interest at
prime
  plus 2% (6.84% at December 31, 2001),
  estimated to mature in July 2013 and                       $         745,548      $         745,548
  collateralized by mineral property.

Note due an individual, payable in monthly
  installments of $600 including interest at 9%,
 maturing June 2006, collateralized by mineral
 property.                                                              26,543                 31,123
                                                             ------------------     -----------------

Total long-term debt                                                   772,091                776,671
Current maturities                                                       5,010                750,130
                                                             ------------------     -----------------

Long-term debt, less current maturities                      $         767,081      $          26,541
                                                             ==================     =================
</TABLE>

In June of 2001, an agreement effective September 30, 2000 was signed by the
note holder which allowed for the deferment of principal and interest payments
on the note in exchange for monthly payments of $4,000 over a period of three
years or until the Company obtains production financing, whichever is sooner.
These payments are reflected under interest expense in the financial statements
and discussed in Note 11 below. The following schedule shows the maturity of the
debts under the new agreement:


    Year ending December 31,                                        Amount
                                                                    ------

                          2002                           $           5,010
                          2003                                       5,480
                          2004                                      32,947
                          2005                                      36,778
                          2006                                      37,392
                          Thereafter                               654,484
                                                         -----------------
                                                         $         772,091
                                                         =================

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. In January 2001, the
note was converted into 406,250 common shares, at a per share rate of $0.16
(USD$).


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                                       46
<PAGE>

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


8.  Share Capital.

In December 2000, two shareholders advanced the Company $200,000 pursuant to a
private placement to be completed in January 2001. In January 2001 the private
placement was completed with 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 were
reserved for issuance as warrants with a fixed price of US$0.16 per share. These
warrants were outstanding as of December 31, 2001 and have an expiration date of
January 20, 2003. 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.

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 had a strike price of (C$0.60) and expired 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, 2001
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 December 4, 2001, stock options to purchase up to a total of 180,000 shares
were granted to two directors of the Subsidiary. The options are exercisable at
the price of C$0.13 per share and expire on December 4, 2006.

On June 26, 2001, stock options to purchase up to a total of 50,000 shares were
granted to a director. The options are exercisable at the price of C$0.20 per
share and expire on June 26, 2006. On the same date stock options to purchase up
to a total of 50,000 shares were granted to an employee. The options are
exercisable at the price of C$0.20 per share and expire on September 26, 2004.

On March 1, 2001 stock options to purchase up to 115,000 shares were granted to
a director. The options are exercisable at C$0.25 per share and expire March 1,
2006

On February 4, 2000, stock options to purchase up to a total of 210,000 shares
were granted to two directors. The options are exercisable at the price of
C$0.23 per share and expire on February 4, 2005.

The fair value of options issued during 2000 and 2001 was $58,500 and $54,388
respectively.

The following is a summary of all stock option activity:

<TABLE>
<CAPTION>
                                                       Year Ended                    Year Ended
                                                    December 31, 2001             December 31, 2000
                                                 Shares       Price Range      Shares       Price Range
                                             -------------- -------------- -------------- --------------
<S>                                          <C>            <C>            <C>            <C>
Options outstanding, beginning of period         1,145,000    C$0.23-1.00      2,185,000    C$0.28-1.00
Options granted                                    395,000    C$0.13-0.25        325,000    C$0.23
Options exercised                                        -              -              -              -
Options expired / cancelled                       (495,000)   C$0.28-1.00     (1,365,000)   C$0.23-1.00
                                             -------------- -------------- -------------- --------------
Options outstanding, end of period               1,045,000    C$0.13-1.00      1,145,000    C$0.23-1.00
                                             ============== ============== ============== ==============

Options exercisable                              1,011,667    C$0.13-1.00      1,098,333    C$0.23-1.00
                                             ============== ============== ============== ==============
</TABLE>

                                       47
<PAGE>

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


The following table summarizes information about fixed-price stock options
outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                                                Options Exercisable                    Options Outstanding
                                                -------------------                    -------------------
                          Number         Weighted-Average   Weighted-Average                       Weighted-Average
  Range of Prices       Outstanding      Contractual Life    Exercise Price    Number Exercisable   Exercise Price
-------------------- ------------------ ------------------- ------------------ ------------------- ------------------
<S>                  <C>                <C>                 <C>                <C>                 <C>
C$1.00                         115,000         5.0               C$1.00                   115,000       C$1.00
C$0.60                         250,000         5.0               C$0.60                   250,000       C$0.60
C$0.50                          75,000         5.0               C$0.50                    75,000       C$0.50
C$0.25                         115,000         5.0               C$0.25                   115,000       C$0.25
C$0.23                         210,000         5.0               C$0.23                   210,000       C$0.23
C$0.20                         100,000         4.0               C$0.20                    66,667       C$0.20
C$0.13                         180,000         5.0               C$0.13                   180,000       C$0.13
-------------------- ------------------ ------------------- ------------------ ------------------- ------------------
C$0.13 - $1.00               1,045,000         4.90              C$0.41                 1,011,667       C$0.41
==================== ================== =================== ================== =================== ==================
</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 2001 and 2000 was C$0.18 and
C$0.23 per option respectively.

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 2001 and 2000, respectively: no
dividend yield for each year; expected volatility of 100% and 103%; and
risk-free interest rates of 6.0% and 5.0 %.

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 principle for U.S. GAAP purposes.

Under the accounting provisions of FASB No. 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, 2001       December 31, 2000
     Net loss:
       As reported                      $(262,059)            $(28,708,276)
       Pro forma                        $(316,938)            $(28,766,776)

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


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                                       48
<PAGE>

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

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,
formerly 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. In 2001, the lease
agreement was successfully renegotiated to a three year moratorium of payments.

All are subject to a sliding scale royalty on net smelter returns beginning at
3%.

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. In 2001, This lease was successfully renegotiated to a
three year moratorium of payments.

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.

11.  Extraordinary Items.

In the third quarter of 2001, the Company recorded a gain of $136,627 on the
recovery of royalties previously expensed. The gain includes $67,516 of interest
only payments made to extend land agreements. During 2001, the Company accrued
liabilities for royalty payments and land payments payable to landowners
involved in the moratorium negotiation process. As agreements were secured,
related expenses and liabilities were adjusted to reflect the actual expenses,
and liabilities of amended agreements, in accordance with the troubled debt
restructuring provisions of SFAS No. 15, "Accounting by Debtors and Creditors
for Troubled Debt Restructuring". The balances due payable to landowners still
involved in the negotiation process will continue to be accrued until such time
as an agreement is reached.

12.  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 year ended December 31, 2001 and 2000, the Company paid
Lawson Lundell Lawson & McIntosh $42,798 and $52,041 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, 2001.

For the year ended December 31, 2001, $10,653 was paid to Mr. Thompson for his
services as President of the Company, and $3,874 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.

The above noted transactions were in the normal course of operations, and were
measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties.

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                                       49
<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, 2002


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, 2002

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

     Date:     March 15th, 2002

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

     Date:     March 15th, 2002

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

     Date:     March 15th, 2002

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

     Date:     March 15th, 2002

                                       50