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**UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION**
  Washington, D.C. 20549

FORM 20-F

ANNUAL REPORT

 ̈ REGISTRATION
  STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXHANGE ACT OF
  1934

x ANNUAL REPORT
  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. 
  For the Fiscal Year Ended December 31, 2003

 ̈ TRANSITION REPORT
  PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. 
  For transition period from ____ to ______

Commission File Number: 0-1222108

PMI VENTURES LTD.(Exact name of Registrant as specified in its charter)

Not Applicable(Translation of Registrants name into English)

Canada(Jurisdiction of Incorporation or Organization)

Suite 511  475 Howe Street, Vancouver, British
  Columbia V6C 2T8(Address of Principal executive office)

Securities registered or to be registered pursuant to Section
  12(b) of the Act: Not Applicable

Securities registered or to be registered pursuant to Section
  12(g) of the Act: Common Shares, Without Par Value

Securities for which there is a reporting obligation pursuant
  to Section 15(d) of the Act: None

Number of outstanding shares of each of the Companys
  classes of capital or common stock as of June 22, 2004: 23,475,396 Common
  Shares, Without Par Value

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

Indicate by check mark which financial statement item the Registrant
  has elected to follow: Item 17 x
  Item 18  ̈

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
  DURING THE PAST FIVE YEARS)

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Indicate by check mark whether the Registrant has filed all
  documents and reports required to be filed by Section 12, 14 or 15(d) of the
  Securities Exchange Act of 1934 subsequent tot he distribution of securities
  under a plan confirmed by court Yes:  ̈
  No:  ̈

INFORMATION TO BE INCLUDED IN THE REPORT

Convention

In this Annual Report all references to "Canada" are references
  to The Dominion of Canada. All references to the "Government" are references
  to the government of Canada. Unless otherwise noted all references to "shares"
  or "common stock" are references to the common shares of PMI Ventures Ltd.

In this document, all references to "SEC" refer to the United
  States Securities and Exchange Commission. The Companys reporting currency
  is the Canadian dollar. References to"$", "Cdn Dollars", or Cdn$
  are to the currency of Canada and all references to "US Dollars" or "US$" are
  to the currency of the United States of America. Solely for the convenience
  of the reader, this Annual Report contains translations of certain Cdn Dollar
  amounts into US Dollar amounts at specified rates.

Measurement Conversion Information

In this Annual Report, metric measures are used with respect
  to mineral properties described herein. For ease of reference, the following
  conversion factors are provided:

|Imperial Measure | Metric Unit      | Imperial Measure         | Metric Unit 
|---------------- | ---------------- | ------------------------ | ------------
|1 mile           | 1.609 kilometres | 2,204 pounds             | 1 tonne     
|1 yard           | 0.9144 metre     | 2,000 pounds/1 short ton | 0.907 tonnes
|1 acre           | 0.405 hectare    | 1 troy ounce             | 31.103 grams
|1 US gallon      | 3.785 litres     | 1 imperial gallon        | 4.546 litres

Forward Looking Statements

This Annual Report includes "forward-looking statements" A
  shareholder or prospective shareholder should bear this in mind when assessing
  the Company's business. All statements, other than statements of historical
  facts, included in this registration statement, including, without limitation,
  the statements under and located elsewhere herein regarding industry prospects
  and the Company's financial position are forward-looking statements. Although
  the Company believes that the expectations reflected in such forward looking
  statements are reasonable, it can give no assurance that such expectation will
  prove to have been correct. There is significant risk that actual results will
  vary, perhaps materially from results projected depending on such factors as
  changes in general economic conditions, financial markets, copper prices and
  other metals, technology and exploration hazards.

GEOLOGIC TIME

The geological history of the earth is divided into Periods and sub-divided into Eras, based on ages as outlined below:

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|               |               | Number of Years
|-------------- | ------------- | ---------------
|Name of Period | Name of Era   | before Present 
|               |               | (Millions)     
|Quaternary     | Holocene      | 0 to 0.4       
|               | Pleistocene   | 0.4 to 1.8     
|Tertiary       | Pliocene      | 1.8 to 5.0     
|               | Miocene       | 5.0 to 24      
|               | Oligocene     | 24 to 38       
|               | Eocene        | 38 to 56       
|               | Paleocene     | 56 to 66       
|Mesozoic       | Cretaceous    | 66 to 140      
|               | Jurassic      | 140 to 200     
|               | Triassic      | 200 to 250     
|Paleozoic      | Permian       | 250 to 290     
|               | Carboniferous | 290 to 365     
|               | Devonian      | 365 to 405     
|               | Silurian      | 405 to 425     
|               | Ordovician    | 425 to 500     
|               | Cambrian      | 500 to 570     
|Precambrian    | Precambrian   | > 570          

GLOSSARY OF MINING TERMS

The following are abbreviations and definitions of terms commonly used in
  the mining industry and this Annual Report:

|Disseminated or dissemination | is a descriptive term referring to mineral grains, which are scattered
      evenly throughout a rock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Geological Time                 | that is recorded in the succession of rocks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Indicated Mineral Resource      | is that part of a Mineral Resource for which quantity,
        grade or quality, densities, shape and physical characteristics, can be
        estimated with a level of confidence sufficient to allow the appropriate
        application of technical and economic parameters, to support mine planning
        and evaluation of the economic viability of the deposit. The estimate
        is based on detailed and reliable exploration and testing information
        gathered through appropriate techniques from locations such as outcrops,
        trenches, pits, workings and drill holes that are spaced closely enough
        for geological and grade continuity to be reasonably assumed
|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Inferred Mineral Resource       | is that part of a Mineral Resource for which quantity
        and grade or quality can be estimated on the basis of geological evidence
        and limited sampling and reasonably assumed, but not verified, geological
        and grade continuity. The estimate is based on limited information and
        sampling gathered through appropriate techniques from locations such as
        outcrops, trenches, pits, workings and drill holes                                                                                                                                                                                                                                                         

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|Measured Mineral Resource  | is that part of a Mineral Resource for which quantity,
        grade or quality, densities, shape, physical characteristics are so well
        established that they can be estimated with confidence sufficient to allow
        the appropriate application of technical and economic parameters, to support
        production planning and evaluation of the economic viability of the deposit.
        The estimate is based on detailed and reliable exploration, sampling and
        testing information gathered through appropriate techniques from locations
        such as outcrops, trenches, pits, workings and drill holes that are spaced
        closely enough to confirm both geological and grade continuity
|---------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Metallurgy                 | is the science and art of extraction of metals from their ores and preparing
      them for use                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Mineral Resource           | is a concentration or occurrence of natural, solid,
        inorganic or fossilized organic material in or on the Earth's crust in
        such form and quantity and of such a grade or quality that it has reasonable
        prospects for economic extraction. The location, quantity, grade, geological
        characteristics and continuity of a Mineral Resource are known, estimated
        or interpreted from specific geological evidence and knowledge                                                                                                                                                                                                                                                             
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Mineralization             | is the process by which minerals are introduced and
        concentrated within a host rock, and the product of this process                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|National Instrument 43-101 | is an instrument made under the Securities Actof British Columbia for standards of disclosure for mineral projects                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

GLOSSARY OF NON-MINING TERMS

In this Annual Report, unless there is something in the subject
  matter or context inconsistent therewith, the following capitalized words and
  terms have the following meanings:

|Act           | means the Securities Exchange Act of 1934                                                    
|--------------- | ---------------------------------------------------------------------------------------------
|                |                                                                                              
|affiliate     | has the meaning ascribed thereto in the Securities
        Act (British Columbia), as amended
|                |                                                                                              
|BC Act        | means the Business Corporations Act (British Columbia), as amended                           
|                |                                                                                              
|Common Shares | means the common shares in the capital of the Company as presently constituted               
|                |                                                                                              
|Exchange      | means the TSX Venture Exchange of Toronto, Ontario, Canada                                   

PART I

Item 1.     IDENTITY OF DIRECTORS SENIOR MANAGEMENT
  AND ADVISERS

Not Applicable

Item 2.     OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

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Item 3.     KEY INFORMATION

A.     Selected Financial Data

Currency Exchange Rate Information:

The rate of exchange means that noon buying rate in New York
  City for cable transfer in Canadian dollars as certified for customs proposed
  by the Federal Reserve Bank of New York. The average rate means the average
  of the exchange rates on the last date of each month during a year.

|                   | 2003    | 2002    | 2001    | 2000    | 1999   
|------------------ | ------- | ------- | ------- | ------- | -------
|High               | $1.5747 | $1.6003 | $1.6034 | $1.5583 | $1.5475
|Low                | $1.3484 | $1.5593 | $1.4935 | $1.4318 | $1.4420
|Average for Period | $1.4615 | $1.5597 | $1.5494 | $1.4854 | $1.4857
|End of Period      | $1.3484 | $1.5593 | $1.5928 | $1.4995 | $1.4433

The exchange rate on June 22, 2004 was $1.3616.

The high and low exchange rates for the most recent six months are as follows:

|     | Dec
      2003 | Jan
      2004 | Feb
      2004 | March
      2004 | April
      2004 | May
      2004
|---- | -------------- | -------------- | -------------- | ---------------- | ---------------- | --------------
|High | 1.3292         | 1.3380         | 1.3432         | 1.3476           | 1.3707           | 1.3968        
|Low  | 1.2924         | 1.2236         | 1.3102         | 1.3079           | 1.3093           | 1.3448        

Financial Information

The following table sets forth, for the periods indicated,
  selected financial and operating data for the Company which information was
  derived from the audited financial statements of the Company which are included
  elsewhere herein. The selected financial data provided below are not necessarily
  indicative of the future results of operations or financial performance of the
  Company. To the best of managements knowledge, the Company has not paid
  any dividends on the Common Shares and it does not expect to pay dividends in
  the foreseeable future.

The year end Financial Statements of the Company have been
  audited by Davidson & Company, independent chartered accountants. They are
  maintained in Canadian dollars, and have been prepared in accordance with accounting
  principles generally accepted in Canada. Comparison of Canadian GAAP and United
  States GAAP are set forth in the notes to the Financial Statements of the Company.

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|                            | Year Ending December
      31
|--------------------------- | -----------------------------
|                            | 2003                         
|Amounts in Accordance with  |                              
|Canadian GAAP (presented in |                              
|Canadian dollars):          | $17,637                      
|Income                      | $4,634,113                   
|Total Assets                | $2,220,161                   
|Net working capital         | 4,388,590                    
|Shareholders equity        | ($1,018,341                  
|Loss from operations        |                              
|Loss per share (basic and   |                              
|diluted)                    | ($0.07                       
|Weighted average number of  |                              
|common shares outstanding   |                              
|basic and diluted)          | 14,627,645                   
|Amounts in Accordance with  |                              
|U.S. GAAP (presented in     |                              
|Canadian dollars):          | $2,526,223                   
|Total assets                | $2,220,161                   
|Net working capital         | $2,280,700                   
|Shareholders equity        | ($3,126,231                  
|Net Loss                    |                              
|Loss per share (basic and   |                              
|diluted)                    | ($0.21                       
|Weighted average number of  |                              
|common shares outstanding   |                              
|(basic and diluted)         | 14,565,562                   

B.     Capitalization and Indebtedness

Not Applicable.

C.     Reasons for Offer

Not Applicable.

D.     Risk Factors

The following risks relate specifically to the Company's business
  and should be considered carefully. The Company's business, financial condition
  and results of operations could be materially and adversely affected by any
  of the following risks.

(1) The Company's limited operating history makes it difficult
  to evaluate the Companys current business and forecast future results

The Company has only a limited operating history on which
  to base an evaluation of the Company's current business and prospects, each
  of which should be considered in light of the risks, expenses and problems frequently
  encountered in the early stages of development of all companies. This limited
  operating history leads the Company to believe that period-to-period comparisons
  of its operating results

6

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may not be meaningful and that the results for any particular
  period should not be relied upon as an indication of future performance.

(2) The mineral properties of the Company are in the exploration
  stage only and consequently exploration of the Companys mineral properties
  may not result in any discoveries of commercial bodies of mineralization

The property interests owned by the Company or in which it
  has an option to earn an interest are in the exploration stages only, are without
  known bodies of commercial mineralization and have no ongoing mining operations.
  Mineral exploration involves a high degree of risk and few properties which
  are explored are ultimately developed into producing mines. Exploration of the
  Companys mineral exploration may not result in any discoveries of commercial
  bodies of mineralization. If the Companys efforts do not result in any
  discovery of commercial mineralization, the Company will be forced to look for
  other exploration projects or cease operations.

(3) In order to explore its mineral properties the Company
  will need additional financing, failing which the Company could go out of business

If the Company wishes to retain its mineral properties, or
  participate in additional mineral exploration programs, it would need to raise
  additional financing. There is no assurance that such financing will be available
  on terms acceptable to the Company or at all. Failure to generate additional
  funds could result in the Company going out of business.

(4) The Company has no significant source of operating
  cash flow and failure to generate revenues in the future could cause the Company
  to go out of business

As none of the Companys mineral properties currently
  have ore reserves the Company has no revenues from operations. The Company has
  limited financial resources. The Company expects that its existing capital requirements
  arising from the evaluation of its existing mineral properties and fulfilling
  its exploration commitments for the next 12 months will be met from the Companys
  working capital which as at June 8, 2004 was $453,145 and from additional financing
  efforts. The Companys ability to achieve and maintain profitability and
  positive cash flow is dependent upon the Companys:

- ability to locate a profitable mineral property;
- ability to generate revenues; and
- ability to reduce exploration costs.

Based upon current plans, the Company expects to incur operating
  losses in future periods. This will happen because there are continuing expenses
  associated with the holding and exploration of the Companys mineral properties.
  The Company may not be successful in generating revenues in the future. Failure
  to generate revenues could cause the Company to go out of business.

Additional funds raised by the Company through the issuance
  of equity or convertible debt securities will cause the Companys current
  stockholders to experience dilution. Such securities may grant rights, preferences
  or privileges senior to those of the Companys common stockholders.

The Company does not have any contractual restrictions on
  its ability to incur debt and, accordingly, the Company could incur significant
  amounts of indebtedness to finance its operations. Any such indebtedness could
  contain covenants, which would restrict the Companys operations. The Company
  does not plan on entering into any debt obligations in the next twelve months.

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(5) The possibility of any of the Companys mineral
  properties ever having ore reserves is extremely remote

The Company has no known ore reserves. The possibility of
  any of the Companys mineral properties ever having ore reserves is extremely
  remote and any funds spent on exploration will probably be lost. The Companys
  success depends upon finding and developing an ore reserve. If the Company does
  not find an ore reserve containing gold, precious or non-precious metals, either
  because it does not have the money to do so or because it is not economically
  feasible to do it, the Company will cease operations.

(6) The Companys mineral properties are in a foreign
  country and as such the Companys business may be exposed to various levels
  of political, economic and other risks and uncertainties

The Companys mineral properties are located in Ghana,
  West Africa. As the Companys business is carried on in a foreign country
  it is exposed to various levels of political, economic and other risks and uncertainties.
  These risks and uncertainties include, but not limited to, terrorism, hostage
  taking, military repression, expropriation, changing tax laws, extreme fluctuations
  in currency exchange rates, high rates of inflation and labour unrest. Ghanas
  status as a developing country may make it more difficult for the Company to
  obtain any required exploration financing for its project.

Changes, if any, in mining or investment policies or shifts
  in political attitude in Ghana may adversely affect the Companys operations.
  Operations may be effected in varying degrees by government regulations with
  respect to, but not limited to restrictions on expropriation of property, foreign
  investment, maintenance of claims, environmental legalisation, land use and
  land claims of local people.

Failure to comply strictly with applicable laws, regulations
  and local practices relating to mineral right applications and tenure could
  result in loss, reduction or expropriation of entitlements, or the imposition
  of additional local or foreign parties as joint venture partners with carried
  or other interests.

The occurrence of these various factors and uncertainties
  cannot be accurately predicted and could have an adverse effect on the Companys
  operations.

(7) As the Company is a Canadian company it may be difficult
  for U.S. shareholders of the Company to effect service on the Company or to
  realize on judgments obtained against the Company in the United States

The Company is a Canadian corporation. All of its directors
  and officers are residents of Canada and a significant part of its assets are,
  or will be, located outside of the United States. As a result, it may be difficult
  for shareholders resident in the United States to effect service within the
  United States upon the Company, directors, officers or experts who are not residents
  of the United States, or to realize in the United States judgments of courts
  of the United States predicated upon civil liability of any of the Company,
  directors or officers under the United States federal securities laws. If a
  judgment is obtained in the U.S. courts based on civil liability provisions
  of the U.S. federal securities laws against the Company or its directors or
  officers, it will be difficult to enforce the judgment in the Canadian courts
  against the Company and any of the Companys non-U.S. resident executive
  officers or directors. Accordingly, United States shareholders may be forced
  to bring actions against the Company and its respective directors and officers
  under Canadian law and in Canadian courts in order to enforce any claims that
  they may have against the Company or its directors and officers. Nevertheless,
  it may be difficult for United States shareholders to bring an original action
  in the Canadian courts to enforce liabilities based on the U.S. federal securities
  laws against the Company and any of the Companys non-U.S. resident executive
  officers or directors.

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(8) The mineral exploitation industry is intensely competitive
  in all its phases and the Company competes with many companies possessing greater
  financial resources and technical facilities than itself

The mineral exploitation industry is intensely competitive
  in all its phases. The Company competes with many companies possessing greater
  financial resources and technical facilities than itself for the acquisition
  of mineral concessions, claims, leases and other mineral interests as well as
  for the recruitment and retention of qualified employees. In addition, there
  is no assurance that even if commercial quantities of minerals are discovered,
  a ready market will exist for their sale. Factors beyond the control of the
  Company may affect the marketability of any minerals discovered. These factors
  include market fluctuations, the proximity and capacity of natural resource
  markets and processing equipment, international economic and political trends,
  expectations of inflation, currency exchange fluctuations (specifically, the
  U.S. dollar relative to other currencies), interest rates and global or regional
  consumption patterns, speculative activities, government regulations, including
  regulations relating to prices, taxes, royalties, land tenure, land use, importing
  and exporting of minerals and environmental protection. The exact effect of
  these factors cannot be accurately predicted, but the combination of these factors
  may result in the Company not receiving an adequate return on invested capital
  or losing its invested capital. As the Company is in the exploration stage,
  the above factors have had no material impact on current operations.

(9) Substantial expenditures are required to be made by
  the Company to establish ore reserves and the Company may not either discover
  minerals in sufficient quantities or grade or may not have the necessary funds
  required

Substantial expenditures are required to establish ore reserves
  through drilling. Although substantial benefits may be derived from the discovery
  of a major mineralized deposit, the Company may not discover minerals in sufficient
  quantities or grades to justify commercial operation or that the funds required
  for development may not be obtained on a timely basis. Estimates of reserves
  and mineral deposits can also be affected by such factors as environmental factors,
  unforeseen technical difficulties and unusual or unexpected geological formations.
  In addition, the grade of ore ultimately mined may differ from that indicated
  by drilling results. Material changes in ore reserves, grades, stripping ratios
  or recovery rates may affect the economic viability of any project.

(10) Currency fluctuations of the Canadian dollar may affect
  the Companys financial position

The Company presently maintains its accounts in Canadian dollars.
  The Companys future operations may make the Company subject to foreign
  currency fluctuations and such fluctuations may materially affect its financial
  position and results. While, at present, monetary inflation in Ghana is relatively
  low, in past years the exchange value of the Ghanaian cedis has been subject
  to significant inflation. The Company has not in the past engaged in hedging
  activities.

(11) The Company does not presently have insurance covering
  any of its mineral properties and as a consequence could incur considerable
  costs

Mineral exploration involves risks, which even a combination
  of experience, knowledge and careful evaluation may not be able to overcome.
  Operations in which the Company has a direct or indirect interest may be subject
  to all the hazards and risks normally incidental to exploration of precious
  and non-precious metals, any of which could result in work stoppages, damage
  to property, and possible environmental damage. The Company does not presently
  have insurance covering any of its mining properties and does not presently
  intend to obtain liability insurance. As a result of not having insurance,

9

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the Company could incur significant costs that could have
  a materially adverse effect upon its financial condition and even cause the
  Company to cease operations.

To date, the Company has not experienced any material losses
  due to hazards arising from its operations.

(12) The Companys mineral properties may be subject
  to prior unregistered agreements or transfers or native land claims and as such
  title to some of the Companys mineral properties may be affected

Although the Company has sought and received such representations
  as it has been able to achieve from vendors in connection with options to acquire
  an interest in its mining properties and has conducted its own investigation
  of legal title to each such property, the mining properties may be subject to
  undetected defects.

(15) The price of gold has fluctuated widely in recent
  years and may adversely affect the economic viability of the Companys
  mineral property

The Companys revenues, if any, are expected to be in
  large part derived from the mining and sale of gold and other precious and non-precious
  metals. The price of those commodities has fluctuated widely, particularly in
  recent years, and is affected by numerous factors beyond the Companys
  control including international economic and political trends, expectations
  of inflation, currency exchange fluctuations, interest rates, consumption patterns,
  speculative activities and increased production due to new mine developments
  and improved mining and production methods. The effect of these factors on the
  price of gold, base and precious metals and therefore the economic viability
  of the Companys mineral property cannot be accurately predicted.

(16) The Companys future performance is dependent
  on key personnel The loss of the services of any of the Companys executives
  or Board of Directors could have a material adverse effect on the Company business

The Companys performance is substantially dependent
  on the performance and continued efforts of the Companys executives and
  its Board of Directors. The loss of the services of any of the Companys
  executives or Board of Directors could have a material adverse effect on the
  Company business, results of operations and financial condition. The Company
  currently does not carry any key person insurance on any of the board of directors.

(17) No dividends declared or any likely to be declared
  in the future

The Company has not declared any dividends and has no present
  intention of paying any cash dividends on its common stock in the foreseeable
  future. The payment by the Company of dividends, if any, in the future, rests
  in the discretion of the Company's Board of Directors and will depend, among
  other things, upon the Company's earnings, its capital requirements and financial
  condition, as well as other relevant factors.

(18) The possible issuance of additional shares may impact
  the value of the Company stock

The Company is authorized to issue up to 100,000,000 shares
  of common stock without par value. It is the Company's intention to issue more
  shares. Sales of substantial amounts of common stock (including shares issuable
  upon the exercise of stock options, the conversion of notes and the exercise
  of warrants), or the perception that such sales could occur, could materially
  adversely affect prevailing market prices for the common stock and the ability
  of the Company to raise equity capital in the future.

10

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(19) Forward Looking Statements

This Annual Report includes "forward-looking statements" A
  shareholder or prospective shareholder should bear this in mind when assessing
  the Company's business. All statements, other than statements of historical
  facts, included in this registration statement, including, without limitation,
  the statements under and located elsewhere herein regarding industry prospects
  and the Company's financial position are forward-looking statements. Although
  the Company believes that the expectations reflected in such forward looking
  statements are reasonable, it can give no assurance that such expectation will
  prove to have been correct. There is significant risk that actual results will
  vary, perhaps materially from results projected depending on such factors as
  changes in general economic conditions, financial markets, gold prices and other
  metals, technology and exploration hazards.

(20) Conflicts of Interest of certain directors and officers of the Company

Certain of the Company's directors are also directors, officers
  or shareholders of other companies that are engaged in the business of acquiring,
  developing and exploiting natural resource properties. Such associations may
  give rise to conflicts of interest from time to time. Such a conflict poses
  the risk that the Company may enter into a transaction on terms which place
  the Company in a worse position than if no conflict existed.

(21) The value and transferability of the Company shares
  may be adversely impacted by the limited trading market for the Companys
  common stock, the penny stock rules and futures share issuance. There is a limited
  market for the Companys common stock in the United States

No assurance can be given that a market for the Companys
  common stock will be quoted on an exchange in the U.S. or on the NASD's Over
  the Counter Bulletin Board.

The sale or transfer of the Company common stock by shareholders
  in the United States may be subject to the so-called "penny stock rules."

Under Rule 15g-9 of the Exchange Act, a broker or dealer may
  not sell a "penny stock" (as defined in Rule 3a51-1) to or effect the purchase
  of a penny stock by any person unless:

| | (a) | such sale or purchase is exempt from Rule 15g-9;                                                                                                                                                                                                                                                                                         
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                          
| | (b) | prior to the transaction the broker
        or dealer has (1) approved the person's account for transaction in penny
        stocks in accordance with Rule15g-9, and (2) received from the person
        a written agreement to the transaction setting forth the identity and
        quantity of the penny stock to be purchased; and
| |     |                                                                                                                                                                                                                                                                                                                                          
| | (c) | the purchaser has been provided an appropriate disclosure
      statement as to penny stock investment.                                                                                                                                                                                                                                  

The SEC adopted regulations that generally define a penny
  stock to be any equity security other than a security excluded from such definition
  by Rule 3a51-1. Such exemptions include, but are not limited to (1) an equity
  security issued by an issuer that has (i) net tangible assets of at least $2,000,000,
  if such issuer has been in continuous operations for at least three years, (ii)
  net tangible assets of at least $5,000,000, if such issuer has been in continuous
  operation for less than three years, or (iii) average revenue of at least $6,000,000
  for the preceding three years; (2) except for purposes of Section 7(b) of

11

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the Exchange Act and Rule 419, any security that has a price
  of $5.00 or more; and (3) a security that is authorized or approved for authorization
  upon notice of issuance for quotation on the NASDAQ Stock Market, Inc.'s Automated
  Quotation System. It is likely that shares of the Companys common stock,
  assuming a market were to develop in the US therefore, will be subject to the
  regulations on penny stocks; consequently, the market liquidity for the common
  stock may be adversely affected by such regulations limiting the ability of
  broker/dealers to sell the Companys common stock and the ability of shareholders
  to sell their securities in the secondary market in the US.

Moreover, the Company shares may only be sold or transferred
  by the Company shareholders in those jurisdictions in the US in which an exemption
  for such "secondary trading" exists or in which the shares may have been registered.

ITEM 4.     INFORMATION ON THE COMPANY

A. History and Development of the Company

The Company was incorporated by registration of its Memorandum
  and Articles under theBC Act on June 31, 1978 under the name Denar
  Mines Ltd.. Effective August 31st, 1987, the Company changed
  its name from Denar Mines Ltd. to International Sinabarb Industries
  Ltd.. On October 15th 1990, the Company changed its name to
  Primero Industries Ltd.. On June 27th 2001, the Company
  consolidated its shares on a five old for one new basis and changed its name
  to PMI Ventures Ltd..

The head office of the Company is located at 511  475
  Howe Street, Vancouver, British Columbia, V6C 2B3 and consists of 1,132 sq.
  feet. The Company has entered into a lease agreement that expires on January
  1, 2006 at a cost of approximately $2,221 per month with a renewal option. The
  Companys telephone number is (604) 682-8089. The registered office of
  the Company is located at 1100  888 Dunsmuir St., Vancouver, British Columbia,
  V6C 3K4.

The Company is a reporting issuer in the United States and
  the Provinces of British Columbia, Alberta and Ontario, Canada. The Companys
  common stock has been listed for trading on the TSX Venture Exchange (the Exchange)
  for over 10 years under the symbol PMI. See Listing Details
  and Markets.

B. Business Overview

The Company is currently engaged in the acquisition and exploration
  of natural resource properties and currently has, pursuant to a letter agreement
  dated November 2002 (the Letter Agreement) with Goknet Mining Company
  Limited, a privately held Ghanaian corporation (Goknet), the right
  to acquire up to 85% of Goknets interest in eight exploration concessions/applications/options
  within the Asankrangwa Gold Belt of Southwest Ghana (the Goknet Properties).
  These prospects and properties lie within an area approximately 50 km by 10
  km and comprise approximately 400 sq. km.

The mineral properties of the Company are currently in the
  exploration stage without any known reserves. The Companys primary objective
  is to explore and develop its existing mineral properties. Its secondary objective
  is to locate, evaluate and acquire other mineral properties and to finance their
  exploration either through equity financing, by way of joint venture, option
  agreements or through a combination of both.

12

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Three Year History

In 1999 the Company filed an assignment in bankruptcy under
  the Bankruptcy Act (Canada) in order to resolve and quantify claims to various
  creditors. This action was undertaken as a first step in the reorganization
  of the Companys affairs.

Year 2000

The Company spent the year reorganizing its financial affairs.

In early 2000, the Company made a proposal to its creditors
  under the Bankruptcy Act (Canada) to settle all of the creditors claims
  against the Company in exchange for a dividend of $0.26 on the dollar. This
  proposal was accepted by the creditors and settlement was approved by the court
  on March 23, 2000. The funds were dispersed to the creditors on April 18, 2000.
  To facilitate this settlement, a director loaned the Company $50,000 on a non-interest
  bearing basis.

Year 2001

The Company spent most of the year finalizing its reorganization plans.

During June, April and May 2001, the Company entered into
  agreements with certain investors to borrow $605,200 to enable the reorganization
  of the Company. Shareholder approval to the reorganization was received on May
  25, 2001 at the Companys Annual General Meeting. On September 21, 2001,
  these loans were converted to convertible promissory notes in the principal
  amount of $605,200 with 6,052,000 detachable share purchase warrants. The Company
  issued units consisting of convertible notes in the aggregate principal amount
  of $605,200 together with 6,052,000 detachable share purchase warrants. The
  notes are non-interest bearing and mature on September 21, 2003. The holders
  of the convertible notes have the option to convert the notes into common shares
  of the Company at a conversion price of $0.10 per share until September 21,
  2002 and at $0.15 per share from September 22, 2002 until September 21, 2003.

As part of its reorganization, on March 27, 2001, the Company
  changed its name from Primero Industries Ltd. to PMI Ventures Ltd. and consolidated
  its share capital on a 5:1 basis. On February 1, 2001, the Company entered into
  a farm-out letter agreement with Omax Resources Ltd. of Vancouver, British Columbia,
  Canada whereby the Company was granted an option to acquire a 60% interest in
  an oil and gas lease in Little Bow, Alberta. Pursuant to this agreement, the
  Company agreed to pay 100% of the drilling and abandonment or the drilling,
  completion and tie-in costs for taking of production from the well.

Year 2002

For the majority of 2002, the Companys principal business
  activity continued to be the exploration and development of oil and gas properties.
  However, in the last quarter of the fiscal year the Company entered into negotiations
  and on November 22, 2002 executed the Letter Agreement with Goknet to enter
  into an option and joint venture agreement to further develop the Goknet Properties,
  located in Ghana, West Africa. The signing of this agreement signalled a change
  in direction for the Company, a move from oil and gas to mineral exploration.

On November 6, 2002, Mr. Arthur Fisher was appointed President
  of the Company and joined the Companys Board of Directors. Mr. Fisher
  replaced Mr. Laurie Sadler as President of the Company.

13

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Mr. Navtej S. Purewal resigned as a director of the Company on November 6, 2002.

Year 2003

On April 2, 2003, the Company completed a private placement
  of 1,699,845 Units to raise proceeds of $1,104,900. Each unit consisted of one
  common share of the Company and one share purchase warrant entitling the warrant
  holder to acquire one additional share of the Company for a period of one year
  at a price of $0.85 per share. The funds were raised to be used for exploration
  expenditures on the Goknet Properties and for general working capital purposes.

On May 23, 2003, the Company granted 1,205,000 common stock
  options to its directors and employees. The options will expire on May 23, 2008
  and have an exercise price of $0.70 per share.

On May 28, 2003, the Company granted 100,000 common stock
  options to its employees. The options will expire on August 28, 2008 and have
  an exercise price of $0.70 per share.

On October 27, 2003, the Company closed two private placements.
  The first placement, announced on August 22, 2003, consisted of 4,444,444 Units,
  raised gross proceeds of $2,000,000. A finders fee of $72,000 plus 300,000
  share purchase warrants exercisable at $0.70 per share in the first year and
  at $1.00 per share in the second year was paid in connection with this private
  placement. A second placement, announced August 28, 2003, consisted of 1,090,385
  Units and raised gross proceeds of $567,000. A finders fee of $40,000
  plus 144,231 share purchase warrants exercisable at $0.70 per share in the first
  year and at $1.00 per share in the second year was paid in connection with this
  second placement. For both placements, each Unit consists of one common share
  and one-half of one non-transferable share purchase warrant, each whole share
  purchase warrant entitling the holder to acquire one additional common share
  of the Company for a period of two years at a price of $0.70 per share in the
  first year and at $1.00 in the second year. The funds were raised to be used
  for exploration expenditures on the Goknet Properties and for general working
  capital purposes.

On October 28, 2003, the Company granted 360,000 common stock
  options to its employees. The options will expire on October 28, 2008 and have
  an exercise price of $0.70 per share.

On October 27, 2003, the Company commenced a 5,000 metre drilling program on the Goknet Properties.

On November 17, 2003, the Company received initial results from its 5,000 metre drilling program.

On December 2, 2003, the Company received additional assay results from its 5,000 metre drilling program.

2004 to date

On January 5, 2004, the Company received final results from its 5,000 metre drilling program.

On January 26, 2004, Laurie Sadler was appointed the interim President of the Company due to the untimely passing of Arthur Fisher.

On February 9, 2004, the Company commenced a next phase 2,000 metre drilling program and 80 line kilometres of deep sensing 3D IP geophysical surveys on the Goknet Properties.

On February 16, 2004, Mr. Marc Prefontaine was appointed to the Companys Board of Directors.

14

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On February 23, 2004, the Company granted 350,000 common stock
  options to its directors and consultants. The options will expire on February
  23, 2009 and have an exercise price of $0.56 per share. In addition the Company
  cancelled 318,000 stock options.

On April 7, 2004, the Company received assay results from
  its initial 742 metres of the 2,000 metre drilling program.

On April 8, 2004, the Company announced a best-efforts brokered
  private placement of 2,727,273 Units of the Company at a price of $0.55 per
  Unit to raise gross proceeds of $1,500,000. Each Unit will consist of one common
  share and one-half of one non-transferable share purchase warrant, each whole
  share purchase warrant entitling the holder to acquire one additional common
  share of the Company for a period of eighteen months at a price of $0.75 per
  share. The financing was cancelled due to unfavourable market conditions.

On May 6, 2004, the Company completed the buyout of the Fromenda
  Concession one of eight concessions that comprise the Goknet Properties. Final
  consideration paid was US$229,000.

On June 8, 2004, Douglas MacQuarrie, formerly the Vice President
  of Exploration for the Company, was appointed as a Director and President, replacing
  Mr. Laurie Sadler who resigned both positions.

On June 15, 2004, the Company completed the buyout of the
  Gemap Concession one of eight concessions that comprise the Goknet Properties.
  Final consideration paid was US$50,000.

On June 22, 2004, the Company announced a best-efforts brokered
  private placement of 3,571,429 Units of the Company at a price of $0.28 per
  Unit to raise gross proceeds of $1,000,000. Each Unit will consist of one common
  share and one-half of one non-transferable share purchase warrant, each whole
  share purchase warrant entitling the holder to acquire one additional common
  share of the Company for a period of eighteen months at a price of $0.35 per
  share. To date the financing has not closed.

C. Organizational Structure

The following diagram shows the Company and its subsidiaries,
  the laws under which they were incorporated and the dates on which they came
  into existence:



D. Property, Plant and Equipment

Pursuant to the Letter Agreement the Company has an option
  to acquire an 85% interest in the Goknet Properties. See Property Ownershipfor details of the Letter Agreement.

15

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Under the Letter Agreement the Company was granted an option
  to acquire an 85% interest in the Goknet Properties. In consideration of the
  grant of the option, the Company agreed to pay Goknet cash consideration of
  US$260,000 over three years and issue to Goknet a total of 3,000,000 of the
  Company's common shares in staged payments: (i) $90,000 and 500,000 common shares
  on the Exchange acceptance (the Approval); (ii) US$100,000 and 500,000
  common shares on or before the second anniversary of the Approval; (iii) US$100,000
  and 750,000 common shares on or before the second anniversary of the Approval;
  and 1,250,000 common shares on or before the third anniversary of the Approval.
  The Company will also be required to complete the following exploration expenditures
  on the Goknet Properties: (i) US$500,000 by the first anniversary of the Approval;
  (ii) US$1,000,000 by the second anniversary of the Approval; (iii) US$1,500,000
  by the third anniversary of the Approval.

Goknet is a Ghanaian limited liability corporation formed
  and incorporated on April 27, 2001 with an office at #1 Switchback Crescent,
  Cantonments, Accra, Ghana. The directors of Goknet are G.O. Kesse, Thomas Ennison,
  and Douglas MacQuarrie.

The Company received Exchange Approval of the transaction on January 17, 2003.

E. Property Description and Location

The information in this Annual Report with respect to the
  Goknet Properties is derived from a Technical Report entitled Technical
  Evaluation Report on the Asankrangwa Gold Belt of Ghana, West Africa written
  by E.D. Black, M.Sc., P.Eng., an independent Consulting Geologist and dated
  October 28, 2002.

The Goknet Properties include eight (8) concessions/applications/options
  in the south western portion of Ghana along the axis of the Asankrangwa Gold
  Belt. Local staging point is the town of Dunkwa, approximately 200 km by road
  northwest of Accra. A summary of the concessions and applications comprising
  the Goknet Properties is listed in the following table:

|Concession  | Area     | Ownership              | Current Status vv Goknet   |     
|----------- | -------- | ---------------------- | -------------------------- | ----
|            | (sq. km) |                        | (maximum interest
      %) |     
|            |          |                        |                            |     
|Gyagyatreso | 10.95    | Switchback Mining Co.  | Optioned                   | 90% 
|Nkronua     | 24.97    | Switchback Mining Co.  | Optioned                   | 90% 
|Fromenda    | 21.53    | Adansi Gold (Gh)       | 100% interest              | 100%
|Diaso       | 120.8    | Adansi Gold (Gh)       | Application                | 100%
|Amuabaka    | 28.86    | Switchback Mining Co.  | Optioned                   | 90% 
|Gemap       | 57.12    | Adansi Gold (Gh)       | 100% interest              | 100%
|EJT #1      | 37.96    | EJT Exploration Ltd.   | Optioned                   | 100%
|Goknet#1    | 81.04    | Goynet Mining Co. Ltd. | Optioned                   | 100%
|Total       | 383.23   |                        |                            |     

There can be no assurances that the Company will be successful
  in obtaining licenses for each of the areas for which it has made application.

16

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Accessibility & Local Resources

The Goknet Properties are situated in the southwest part of
  Ghana, West Africa. Accra, the seacoast capital of Ghana, is a city with a population
  of approximately one million people, serviced daily by air from major European
  centers, including London, Amsterdam, Frankfurt and Rome.

The Goknet Properties are mostly contiguous and lie along
  the 150-km long northeasterly-trending Asankrangwa Gold Belt, centered by the
  village of Diaso. Diaso is approximately 50 km northwest by partially paved
  highway from the local staging point, Dunkwa, which, in turn, is approximately
  200 km northwest of Accra.

The concessions are accessible by the all weather Dunkwa -
  Diaso motor road. Diaso, the largest town within the concession, has two trunk
  roads connecting to Bibiani and Sefwi Bekwai. A railway line running from Dunkwa
  to Awaso passes through the southern sector of the concession. The northern
  section is accessible via the main Dunkwa to Kumasi highway to the Bekwai junction,
  and then 37 km along the Obotan mine road, and finally along a 3rd
  class road 12 km. Other parts of the concessions can be easily reached by footpaths
  and farm tracks. In addition to Diaso, Manso, Juabo, Ntom, Agona, Moadaso and
  Afiefiso are large towns within the area.

Physiography

The concession area generally displays moderate relief, the
  highest elevation being 266m above mean sea level in the south-western area,
  with moderate to steep slopes. The major streams draining the area are the Ankobra
  river in the west and the Ofin river in the east, with numerous tributaries
  displaying a mature, dendritic drainage pattern.

The vegetation is mainly of the tropical rain forest type,
  which, with the exception of a small area of national Forest Reserves, has been
  actively farmed and form less densely wooded secondary forest. The concession
  area supports large cocoa farms and palm plantations as well as subsistence
  food crops such as plantain, maize and cassava.

The relative humidity is usually high. Two rainy seasons are
  experienced in the area - a major one from March to July followed by a minor
  one from September to October. The annual rainfall is in the range of 1500 -
  2000 mm and the minimum and maximum temperatures are about 220 C
  and 360 C, respectively, with an average annual temperature of about
  290 C.

Regional Geology

Ghana occupies the south eastern lobe of the Man Precambrian
  Shield and comprises a bedrock sequence of five north easterly trending, isoclinally
  folded, Proterozoic meta-sediment and meta-volcanic troughs of Upper Birimian
  age (2.17 Ba), with four intervening anticlinoria of meta-sediments and minor
  meta-volcanics, of Lower Birimian age (2.18 Ba). Locally, the former are, at
  times, overlain by Tarkwaian sandstones and conglomerates. This younger
  sequence lies unconformably upon a complex of intensely folded, faulted and
  granite intruded Archean basement.

Structurally, northeast oriented corrugated folding and thrust
  faulting predominates, crossed indiscriminately by north-south diabase dykes
  and east-west structural elements.

17

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Exploration History and Mineralization

The concession area has been mined by local artisanal miners
  over the centuries. Significant gold production has been recorded from the alluvial
  dredges which worked the Ofin river  just to the east of the concessions.
  More recently, gold production has come from Resolute Amansies Obotan
  Mine, a recently closed 5,000 ton per day open-cut milling operation. Obotan
  is located 25 km north east of Diaso, along the strike of the regional geology
  and the concession outline.

Gold mineralization in the Asankrangwa gold belt is associated
  with pyrite, arsenopyrite, graphite and quartz in close proximity with northeast
  trending structures. Ore grade gold deposits occur along fractured, brecciated
  and silica invaded parts of the shear zones, which tend to parallel the Birimian
  fold structures; or as disseminated stockwork type gold deposits
  in favourable greywackes in and adjacent to the shear zones.

Since 1992, many of the concessions currently held by Goknet
  were worked by other companies with total estimated expenditures of US$9 million.
  Previous work consisted of over 35,000 soil samples; 115 trenchs; ground and
  airborne geophysics; and 27,000 metres of drilling in 559 short drill holes.

Previous best drill intersections were: 24 metres @ 5.1 g/t
  gold; 23 metres @ 5.65 g/t gold; 4 metres @ 27.0 g/t gold; and 9 metres @ 12.0
  g/t gold. The most significant gold mineralization was noted on the Fromenda
  concession in the Grid B area, and an additional 10 target areas
  have been outlined elsewhere on the concessions based on the above work programs.

Legislative Overview

The legislative framework for mining in Ghana is laid down
  in the Minerals and Mining Law, 1986, PNDCL 153 (Law 153) as amended by the
  Minerals and Mining Amendment Act 1993, Act 475 (Act 475) and modified by the
  provisions of the Constitution of 1993 (the Constitution). Within
  this legal framework, the State is the owner of all minerals occurring in their
  natural state within Ghana's land and sea territory, including its exclusive
  economic zone. All minerals in Ghana are vested in the President on behalf of
  and in trust for the people of Ghana. Thus, regardless of who owns the land
  upon or under which minerals are situated, the exercise of any mineral right
  requires, by law, a licence to be granted by the Minister for Mines (the Sector
  Minister) who acts as an agent of the State for the exercise of powers
  relating to minerals. Mineral rights are legally defined to include the rights
  to reconnoitre, prospect for, and mine minerals. The sector Minister is also
  authorized to exercise, within defined limits, powers relating to the transfer,
  amendment, renewal, cancellation and surrender of mineral rights. The powers
  conferred upon the Minister must be exercised contingent upon the advice of
  the Minerals Commission (Mincom), which has the authority under
  the Constitution to regulate and manage the utilization of mineral resources
  and co-ordinate policies in relation to minerals. Law 153 specifies the forms
  of mineral rights that the sector Minister is empowered to grant, the duration
  of the grant, the size of the concessions, and eligibility criteria for the
  grantee, as well as the procedure for application for mineral rights. The law
  also spells out in broad terms the rights and obligations of a holder of a mineral
  right and the terms and conditions upon which each mineral right grant should
  be made. A mineral right granted is not transferable or tradable in any form
  except with the prior written consent of the sector Minister.

Mincom is the main promotional and regulatory agency in the
  minerals sector in Ghana. Under the Constitution of the republic of Ghana and
  Act 450 (1993), Mincom is responsible for the regulation and management of the
  mineral resources of Ghana and the co-ordination of policies in relation to
  minerals. Mincom was first established under the Minerals Commission Law (1986).
  Mincom functions through a Secretariat which is headed by a Chief Executive
  and assisted by professionals and technical personnel within the six departments
  of the Secretariat, namely:

18

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| | a. | Planning and Policy Analysis   
| | -- | -------------------------------
| | b. | Monitoring and Evaluation      
| | c. | Finance, Marketing and Research
| | d. | Personnel and Administration   
| | e. | Legal                          
| | f. | Small Scale Mining             

Under Law 153 mineral rights can be granted in the following areas:

a. Reconnaissance Licence

A Reconnaissance Licence confers on the holder the right to
  search for a specific mineral (or commodity) within the licence area by geochemical
  and photo-geological surveys or other remote sensing techniques. Except as otherwise
  provided in the licence, it does not permit drilling, excavation or other sub-surface
  techniques. The licence is normally granted for up to one year and may be renewed
  by the Minister from time to time for periods up to one year at a time upon
  application by the holder. The application for renewal must be made at least
  three months before the expiration of the licence. There is no legal limitation
  as to the size of the area over which a reconnaissance licence may be granted.

b. Prospecting Licence

A Prospecting Licence gives the holder the exclusive right
  to search for specific minerals (or commodities) by the conduct of geological,
  geochemical and geophysical investigations and to determine the extent and economic
  value of any deposit within the licence area. The initial grant of the licence
  is limited to three years and a maximum area of 150 km2. These limits may, at
  the direction of the President of the Republic, be exceeded in any particular
  grant whenever the President considers it to be in the national interest so
  to do. A prospecting licence may be renewed for a maximum of two terms or for
  further periods of up to two years each. At each renewal, half the licence area
  is required to be relinquished by the holder. If more than one prospecting licence
  is held, they may be treated as one area for purposes of relinquishment.

c. Mining Lease

The grant of a Mining Lease gives the holder the right to
  mine, win or extract specified minerals (or commodities) within the lease area.
  The lease may be granted to the holder of a prospecting licence or any person
  who establishes to the satisfaction of the Minister that a mineral to which
  the lease relates exists in commercial quantities within the proposed lease
  area and can be mined at a profit. The lease is issued for up to thirty years
  subject to renewal for a further thirty-year term. The size of the area in respect
  of which a lease may be granted is limited to 50 km2 for a single grant or 150
  km2 for aggregate grants. These limits may be exceeded in particular cases at
  the direction of the President if it is in the national interest.

Exploration completed by the Company in 2003

A work program commenced in mid-February 2003 in preparation
  for a follow-up drill program that was comprised of approximately 1,050 metres
  of diamond drilling in 8 to 10 holes planned for, and initiated, in the second
  quarter of fiscal 2003.

The preliminary work program was carried out on the Fromenda
  and Gemap concessions. The program consisted of cutting of 33 line km of survey
  lines; rehabilitation of 10 km of drill access roads; placement of survey control
  pillars and the completion of 22 line km of induced polarization (IP)
  surveys.

19

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The IP survey on the Fromenda property outlined two chargeability
  high areas which are on strike of an area previously tested by 21 reverse circulation
  drill holes that have also been the target of extensive recent artisan mining.
  Previous work in this area indicated that gold mineralization occurs over a
  length of 500 metres and consists of two parallel mineralized zones, each 3
  to 10 metres in width. Limited drilling of this area was completed in the early
  1990s. Best intersections included 7.1 g/t Au over 4 metres at a depth
  of 25 metres; 3.4 g/t Au over 4 metres at a depth of 55 metres and 5.42
  g/t Au over 2 metres at a depth of 24 metres.

Following are results of the diamond drill holes (1,050 metres
  in total) that comprise the first phase of the 2003 drill program. Drill hole
  03FBDDH-1 was drilled in the Fromenda Grid B area to a total length
  of 86 metres (282 feet) at -45° using HQ drill string. The hole intersected
  a mineralized section of 30.0 metres (approximately true width) as shown in
  Table I.

The mineralized intercept is located at a depth of about 20
  metres below surface. Mineralization is characterized by highly altered and
  oxidized greywacke crosscut by sheared quartz stringers.

|Table I               
|----------------------
|                      
|Fromenda Grid B Area
|                      
|Drill Hole &          
|                      
|-inclination          
|                      
|03FBDDH1              
|                      
|-45°                  
|                      
|including             
|                      
|03FBDDH2              
|                      
|-50°                  
|                      
|including             
|                      
|03FBDDH3              
|                      
|-60°                  
|                      
|including             

This initial drilling at the Fromenda Grid B area
  has demonstrated that the shear structure that hosts the gold mineralization
  is approximately 25 metres (83 feet) in true width with grades of up to 3.59
  g/t over a true width of 17.0 metres (56 feet).

In the Kukunapi area, four drill holes were completed. Results
  for the first two drill holes are shown below.

20

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|Table II     
|-------------
|             
|Kukunapi Area
|             
|Drill Hole & 
|             
|-inclination 
|             
|03JGDDH1     
|             
|-45°         
|             
|including    
|             
|including    
|             
|03JGDDH2     
|             
|-60°         
|             
|including    

The initial drilling at Kukunapi is regarded by the Company
  as successful since it has demonstrated the existence of the mineralized structures
  grading up to 4.67 g/t Au over a width of 5.97 metres (19.59 feet). During the
  last half of 2003, the Company commenced a second diamond drilling program on
  the Fromenda concession. The program, which consisted of nine holes totalling
  931 metres, was intended to extend the previously reported gold mineralization
  to the east and to depth. The Company was encouraged by the results from the
  second drill (see Table III below), since they continued to demonstrate that
  the shear structure that hosts the gold mineralization is laterally continuous
  and contains near surface mineralized sections with gold grades of between 1.13
  g/t gold and 4.97 g/t gold over widths ranging from 6.50 metres (21.32 feet)
  to 41.00 metres (134.50 feet). The deepest hole completed to date has tested
  the mineralized zone to a true depth of 72 metres (236 feet).

|Table III                   
|----------------------------
|                            
|Fromenda Grid B
      Area
|                            
|Drill Hole &                
|                            
|-inclination                
|                            
|03FBDDH5                    
|                            
|-50°                        
|                            
|including                   
|                            
|including                   

21

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|Table III             
|----------------------
|                      
|Fromenda Grid B Area
|                      
|Drill Hole &          
|                      
|-inclination          
|                      
|03FBDDH7              
|                      
|-90°                  
|                      
|including             
|                      
|including             
|                      
|03FBDDH09             
|                      
|-60°                  
|                      
|including             
|                      
|03FBDDH11             
|                      
|-50°                  
|                      
|including             
|                      
|including             
|                      
|03FBDDH12             
|                      
|-50°                  
|                      
|including             
|                      
|03FBDDH13             
|                      
|-50°                  
|                      
|including             
|                      
|                      

On October 27, 2003, the Company announced commencement of
  a 3,000 metre drilling program. The intent of this program was to focus on the
  Grid "B" area of the Fromenda concession. Four other targets were slated to
  be drill tested on a reconnaissance basis during this program. On December 2,
  2003, the Company announced that it had again intersected very significant high
  gold grades (27.0 g/t Au over 4.0 metres) in connection with this drill program.
  The results are deemed significant as they are well above the average grades
  found in Ghana.

22

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Item 5.     OPERATING AND FINANCIAL REVIEW AND
  PROSPECTS

A.     Operating Results

This discussion should be read in conjunction with the audited
  financial statements of the Company and related notes included therein.

All statements other than statements of historical facts included
  in this Annual Report, including, without limitation, the statements under Operating
  and Financial Review and Prospects, Information on the Company,
  and Property, Plant and Equipment and located elsewhere herein regarding
  industry prospects and the Companys financial positions are forward-looking
  statements. Although the Company believes that the expectations reflected in
  such forward-looking statements are reasonable, it cannot give any assurance
  that such expectations will prove to have been correct. Important factors that
  could cause actual results to differ materially from the Companys expectations
  (Cautionary Statements) are disclosed in this Annual Report, including,
  without limitation, in conjunction with the forward-looking statements included
  in this Annual Report under Risk Factors. All subsequent
  written and oral forward-looking statements attributed to the Company or persons
  acting on their behalf are expressly qualified in their entirety by the Cautionary
  Statement. There is significant risk that actual results will vary, perhaps
  materially from results projected depending on such factors as changes in general
  economic conditions, financial markets, gold prices and other metals, technology
  and exploration hazards.

United States Generally Accepted Accounting Principles

See note 17 to the Companys Financial Statements for
  a comparison of Canadian GAAP and United States GAAP as applicable to the Companys
  operations. Material variations in the accounting principles, practices and
  methods used in preparing these financial statements from principles, practices
  and methods accepted under United States GAAP are described and quantified below:

Mineral property interests and deferred exploration costs

Under Canadian GAAP, mineral property interests and deferred
  exploration costs, including acquisition and exploration costs, are carried
  at cost and written down if the properties are abandoned, sold or if management
  determines there to be an impairment in value. Under United States GAAP, mineral
  property interests and deferred exploration costs are expensed as incurred.
  Once a final feasibility study has been completed, additional costs incurred
  to bring the mine into production are capitalized as development costs. Costs
  incurred to access ore bodies identified in the current mining plan after production
  has commenced are considered production costs and are expensed as incurred.
  Costs incurred to extend production beyond those areas identified in the mining
  plan where additional reserves have been established are deferred as development
  costs until the incremental reserves are produced. Capitalized costs are amortized
  using the unit-of-production method over the estimated life of the ore body
  based on proven and probable reserves.

Escrow shares

Under Canadian GAAP, shares issued with escrow restrictions
  are recorded at their issue price, with no revaluation upon release from escrow.
  Under United States GAAP, escrow shares which are to be released upon the Company
  meeting certain performance criteria are considered to be contingently issuable.
  Accordingly, these shares are excluded from the weighted average number of shares
  outstanding under United States GAAP until they are releasable, and the difference
  between the fair value of those shares at the time they become releasable from
  escrow and their original issue price is accounted for as compensation expense.
  The weighted average number of shares outstanding under United States

23

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GAAP for the years ended December 31, 2003, 2002 and 2001
  were 14,565,562, 5,679,999, and 2,778,635, respectively.

Convertible notes

Under Canadian GAAP, upon issuance of the convertible notes,
  the net proceeds received are allocated between the liability and equity components
  of the notes. Upon conversion of the note, the fair value of the note and the
  related equity components are transferred to capital stock.

Under United States GAAP, the beneficial conversion feature
  represented by the excess of the fair value of the shares issuable on conversion
  of the notes, measured on the commitment date, over the amount of the proceeds
  to be allocated to the common shares upon conversion, would be allocated to
  additional paid in capital and offset against the convertible notes. This results
  in a discount on the note that is accreted as additional interest expense over
  the term of the note and any unamortized balance is expensed immediately upon
  conversion of the note. Accordingly, for United States GAAP purposes, for the
  years ended December 31, 2003, 2002 and 2001 additional interest expense (including
  accretion) of $Nil, $88,337 and $6,244, respectively, has been recorded. The
  balance sheet adjustment represents the difference between the portion of the
  convertible debt allocated to equity under Canadian GAAP, net of accretion to
  date, and the portion allocated to the beneficial conversion feature under United
  States GAAP, also net of accretion to date.

Stock based compensation

Under United States GAAP, Statement of Financial Accounting
  Standards No. 123, Accounting for Stock-based Compensation (SFAS
  123) requires companies to establish a fair market value based method
  of accounting for stock-based compensation plans. The Company has elected for
  the year ended December 31, 2003 to account for stock-based compensation using
  SFAS 123. Accordingly, compensation cost for stock options is measured at the
  fair value of options granted.

For the years ended December 31, 2002 and 2001, the company
  elected to account for stock-based compensation using Accounting Principles
  Board Opinion No. 25 Accounting for Stock Issued to Employees. Accordingly,
  compensation cost for stock options was measured as the excess, if any, of the
  quoted market price of the Companys stock at the date of grant over the
  option price.

Fiscal year ended December 31, 2003 compared to fiscal
  year ended December 31, 2002

As at December 31, 2003, the Company held cash, cash equivalents
  and short-term investments of $2,367,606 and had a working capital of $2,220,161
  as compared to cash, cash equivalents and short term investments of $174,375
  and working capital of $161,740 as at December 31, 2002. The increased level
  of cash and cash equivalents at the end of year ended December 31, 2003 was
  due the closing of three private placements in 2003.

There was a loss of $1,018,341 for the year ended December
  31, 2003. Comparatively, the loss for the year ended December 31, 2002 was $506,134.
  The Company recorded $8,869 in gas sales in the year ended December 31, 2003
  as compared to $9,206 for the year ended December 31, 2002. Other income for
  the year ended December 31, 2003 was $8,768 compared to $1,982 in the year ended
  December 31, 2002. The increase in other income is attributable to interest
  on cash balances invested throughout the year ended December 31, 2003.

The Companys costs rose dramatically in the year ended
  December 31, 2003, in line with the substantial increase in business activities.
  General & administrative expenses increased by $792,384 in the year

24

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ended December 31, 2003 to $997,474 from $205,090 in the year
  ended December 31, 2002. Bank charges and interest increased over the year ended
  December 31, 2002 by $2,637. Office and miscellaneous costs increased to $115,644
  in the year ended December 31 2003 from $4,170 the year ended December 31, 2002.
  Professional fees totalled $134,749 the year ended December 31, 2003 as compared
  to $21,109 in the year ended December 31, 2002.

A total of $189,535 was expended on investor relations activities
  in the year ended December 31, 2003 as compared to $3,504 in the year ended
  December 31, 2002. There was a concentrated effort made by the Company to expand
  awareness within the public sector, which resulted in shareholder communications
  expenses of $107,315 the year ended December 31, 2003 as compared to nil in
  the year ended December 31, 2002.

The Company incurred management fees of $81,200 during the
  year ended December 31, 2003 as compared to $55,600 for the year ended December
  31, 2002. Wages and benefits increased substantially over the prior year to
  $335,450 for the year ended December 31, 2003 as compared to $24,384 during
  the year ended December 31 2002. This increase was as a result of the hiring
  of three additional employees during the year and, largely, to the inclusion
  of $121,093 of stock based compensation, based on the Black Scholes option pricing
  model resulting from the grant of 1,665,000 options to employees/directors during
  the year ended December 31, 2003.

Comparison of Canadian GAAP and United States GAAP

Under United States GAAP the total assets of the Company for
  the year ended December 31, 2003 would have been $2,526,223 as compared to $4,634,113
  under Canadian GAAP as a result of the adjustment for mineral property interest
  and exploration costs. Total liabilities and stockholders equity under
  United States GAAP would be $2,526,223 as compared to $4,634,113 under Canadian
  GAAP as a result of the same adjustment.

Under United States GAAP the net loss for the year ended December
  31, 2003 would have been a loss of $3,126,231 as compared to a net loss of $1,018,341
  under Canadian GAAPas a result of an adjustment to mineral property
  interests and deferred exploration costs.

The weighted average number of shares outstanding under United
  States GAAP for the year ended December 31, 2003 was 14,565,562 as compared
  with 5,679,999 for the year ended December 31, 2002.

Fiscal year ended December 31, 2002 compared to fiscal
  year ended December 31, 2001

As at December 31, 2002, the Company held cash and short-term
  deposits of $174,375 and had a working capital of $161,740 as compared to cash
  and short term deposits of $59,231 and working capital of $55,116 as at December
  31, 2001. The increased level of cash and cash equivalent at the end of 2002
  fiscal year was due largely to the exercise of warrants related to convertible
  notes issued in 2001.

In the year ending December 31, 2002 the Company wrote down
  its interest in the Little Bow, Alberta oil and gas properties from $316,815
  to a nominal value of $1. During the 2002 fiscal year the Company acquired capital
  assets consisting of computer equipment and furniture valued at a total of $3,705
  ($3,621 net of amortization. In addition the Company entered into a lease agreement
  for office space with annual lease commitments under the agreement of $12,452
  for each of 2003, 2004 and 2005 fiscal years. In 2001, the Company had not purchased
  any capital assets nor leased any office premises.

In 2002 accounts payable and accrued liabilities increased
  by $17,216 over 2001 as a result of increased level of business activity by
  the Company during 2002.

25

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Comparison of Canadian GAAP and United States GAAP

Under United States GAAP the Capital Stock of the Company
  for the year ended December 31, 2002 would have been $4,825,986 as compared
  to $4,878,986 under Canadian GAAP. Additional paid-in capital under United States
  GAAP would be $219,343 as compared to $71,762 under Canadian GAAP and the Deficit
  would be $4,893,467 under United States CAAP as compared to $4,798,886 under
  Canadian GAAP.

Under United States GAAP the net income (loss) for the year
  ended December 31, 2002 would have been a loss of $594,471 as compared to a
  net loss of $506,134 under Canadian GAAPas a result of an adjustment
  for accreted interest on conversion of the convertible notes.Under United
  States GAAP the net income (loss) for the year ended December 31, 2001 would
  have been a loss of $114,012 as compared to a net loss of $107,768 under Canadian
  GAAPas a result of an adjustment for accreted interest on conversion
  of the convertible notes.

The weighted average number of shares outstanding under United
  States GAAP for the years ended December 31, 2002 and 2001 were 5,679,999 and
  2,778,635, respectively, resulting in no effect on basic and diluted earnings
  (loss) per share for the years ended December 31, 2002 and 2001.

Fiscal year ended December 31, 2001 compared to the fiscal year ended December 31, 2000

The Company's expenses for the year ended December 31, 2001
  were $113,111 as compared to $61,639 for the fiscal year ended December 31,
  2000 reflecting the Company's increased activity in the oil and gas industry.
  The increase in expenses is predominantly attributable to increased professional
  fees from $20,890 in 2000 to $38,327 in 2001 and bank interest costs and interest
  on convertible notes of $202 in 2001 to $25,684 in 2001 and regulatory fees
  from $8,420 in 2000 to $12,515 in 2001.

The Company incurred a net loss of $107,768 for the year ended
  December 31, 2001. During the fiscal year ended December 31, 2000, it incurred
  a net gain of $314,668 arising from a gain on settlement arising from a proposal
  the Company made to its creditors in early 2000.

The Company had interest income of $2,526 in the year ended
  December 31, 2001 and interest income of $15 in the year ended December 31,
  2000. The Company had miscellaneous income of $2,817 in 2001 and incurred a
  gain of $376,292 in 2000 arising from a proposal the Company made to its creditors
  in early 2000.

The Company incurred drilling costs of $312,476 and engineering
  costs of $4,339 in 2001 on its Little Bow oil play in Alberta Canada. The Company
  did not incur any mineral property acquisition or exploration costs during fiscal
  2000.

Comparison of Canadian GAAP and United States GAAP

Under United States GAAP the Capital Stock of the Company
  for the year ended December 31, 2001 would have been $4,118,069 as compared
  to $4,133,780 under Canadian GAAP. Additional paid-in capital under United States
  GAAP would be $147,581 as compared to $125,626 under Canadian GAAP and the Deficit
  would be $4,298,996 under United States GAAP as compared to $4,292,752 under
  Canadian GAAP.

Under United States GAAP the net income (loss) for the year
  ended December 31, 2001 would have been a net loss of $114,012 as compared to
  a net loss of $107,768 under Canadian GAAP as a result of an

26

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adjustment for accreted interest on conversion of the convertible
  notes.There was no effect on the net income (loss) of the Company for
  the year ended December 31, 2000.

The weighted average number of shares outstanding under United
  States GAAP for the years ended December 31, 2001 and 2000 were 2,778,635 and
  2,766,306, respectively, resulting in no effect on basic and diluted earnings
  (loss) per share for the years ended December 31, 2001 and 2000.

Liquidity and Capital Resources

In managements view, given the nature of the Companys
  operation, which consists of exploration and evaluation of mining properties,
  the most meaningful financial information relates primarily to current liquidity
  and solvency. The Companys financial success will be dependent upon the
  extent to which it can discover mineralization and the economic viability of
  developing the properties. Such development may take years to complete and the
  amount of resulting income, if any, is difficult to determine with any certainty.
  The sales value of any mineralization discovered by the Company is largely dependent
  upon factors beyond its control such as the market value of the metals produced.

The Companys historical capital needs have been met
  by equity subscriptions. The Company does not expect to receive income from
  any of its properties in the foreseeable future. The Company does not now and
  does not in the future expect to engage in currency hedging to offset any risk
  of currency fluctuations.

As at December 31, 2003, the Company had cash and cash equivalents
  of $867,606 and working capital of $2,220,161 as compared to $174,375 and $161,740
  respectively at December 31, 2002. Accounts payable and accrued liabilities
  were $227,238 at December 31, 2003 compared to $24,238 at December 31, 2002.

At December 31, 2003, the Company had 23,475,396 common shares
  outstanding compared to 10,130,389 common shares outstanding at December 31,
  2002.

As at December 31, 2003, the Company had current assets of
  $2,465,684 as compared to $185,978 at December 31, 2002. These assets exceeded
  the accounts payable and accrued liabilities due to third parties of $227,238
  at December 31, 2003 and $24,238 at December 31, 2002. At December 31, 2003
  the Company had working capital of $2,220,161 as compared to $161,740 as of
  December 31, 2002.

At December 31, 2003, the Company also had 4,731,491 share
  purchase warrants outstanding exercisable at varying prices between $0.70 and
  $1.00 per share and with varying expiry dates between April 4, 2004 and October
  16, 2005. In addition, a total of 2,381,667 stock options were outstanding at
  varying prices between $0.25 and $0.70 per share and with varying expiry dates
  between November 27, 2007 and October 14, 2008. The full exercise of all outstanding
  warrants and options at December 31, 2003 would generate a total of $1,344,667
  in cash.

As at June 22, 2004, the Company has the following securities
  issued and outstanding: (i) 23,475,396 common shares; (ii) 4,911,491 share purchase
  warrants; and (iii) 2,413,334 stock options.

The Company is in the exploration stage on its mineral properties
  and therefore has no regular cash flow. The Company expects that its existing
  capital requirements arising from the evaluation of its existing mineral properties
  and fulfilling its exploration commitments for the next 12 months will be met
  from the Company's working capital which as of June 22, 2003 is Cdn$453,145
  plus anticipated additional equity financings. The Company expects that these
  funds will be expended as follows:

27

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|Description                                         | Amount US($)
|--------------------------------------------------- | ------------
|Cash payments for the Properties for next 12 months | 200,000     
|Proposed exploration costs                          | 500,000     
|Management Fees for the next 12 months              | 80,000      
|Overhead Costs for the next 12 months               | 250,000     
|Total:                                              | $US1,080,000

This no assurance that the Company will be able to raise sufficient
  capital in the near term to meet its needs for the next 12 months. Failure to
  do so could result in the Company reducing its planned exploration programs
  and/or abandoning some or all of the Properties

In the long term, the Company's financial success will be
  dependent on the extent to which it can discover mineralization and establish
  the economic viability of developing its properties. Such development may take
  years to complete and future cash flows, if any, are difficult to determine
  with any certainty. The realization value of any mineralization discovered by
  the Company is largely dependent on factors beyond the Company's control such
  as the market value of the metals produced, mining regulations in Canada and
  foreign exchange rates.

The Company presently has no producing properties, and the
  Company's material properties contain no known mineral reserves.

Critical Accounting Policies

The preparation of financial statements in conformity with
  Canadian generally accepted accounting principles requires the Company to make
  estimates and assumptions that affect the reported amounts of assets and liabilities
  at the date of the financial statements and the reported amounts of revenues
  and expenses during the reporting periods. As described below, significant estimates
  and assumptions are used in determining the application of the going concern
  concept and the deferral of costs incurred for mineral properties, deferred
  explorations and assets held for sale. The Company evaluates its estimates on
  an ongoing basis and bases them on various assumptions that are believed to
  be reasonable under the circumstances. The Companys estimates form the
  basis for making judgments about the carrying value of assets and liabilities
  that are not readily apparent from other sources. Actual results may differ
  from these estimates under different assumptions or conditions.

The Company believes the policies for mineral properties and
  deferred exploration are critical accounting policies that affect judgments
  and estimates used in the preparation of the Companys financial statements.
  The Company has the option to capitalize its mineral acquisition and exploration
  costs under Canadian generally accepted accounting principles. The recoverability
  of mineral property and future deferred exploration expenditures is dependant
  upon the discovery of economically recoverable reserves and on the future profitable
  production or proceeds from disposition, of the Companys properties.

Changes in circumstances in the future, many of which are
  outside of managements control, will impact on the Companys estimates
  of future recoverability of net amounts to be realized from their assets. Such
  factors include, but are not limited to, the availability of financing, the
  identification of economically recoverable reserves, co-venture decisions and
  developments, market prices of minerals, the Companys plans and intentions
  with respect to is assets and other industry and competitor developments.

While the Company is currently exploring its mineral properties
  it has not yet determined whether the properties contain mineral reserves that
  are economically recoverable. Development of any property may

28

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take years to complete and the amount of resulting income,
  if any, is difficult to determine with any certainty. The sales value of any
  mineralization discovered by the Company is largely dependant upon factors beyond
  the Companys control, such as the market value of minerals recovered.

Recent accounting pronouncements

In July 2001, FASB issued Statement of Financial Accounting
  Standards No. 143, Accounting for Asset Retirement Obligations (SFAS
  143), that requires recording the fair value of the liability for closure
  and removal costs associated with the legal obligations upon retirement or removal
  of any tangible long-lived assets in the period the obligation is incurred and
  can be reasonably estimated. The initial recognition of the liability will be
  capitalized as part of the asset cost and depreciated over its estimated useful
  life. SFAS 143 is required to be adopted effective January 1, 2003.

In April 2003, FASB issued Statements of Financial Accounting
  Standards No. 149 Amendment of Statement 133 on Derivative Instruments
  and Hedging Activities (SFAS 149). SFAS 149 amends and clarifies
  financial accounting and reporting for derivative instruments, including certain
  derivative instruments embedded in other contracts and for hedging activities
  under FASB Statement No. 133 Accounting for Derivative Instruments and
  Hedging Activities. SFAS 149 is generally effective for contracts entered
  into or modified after June 30, 2003.

In May 2003, FASB issued Statements of Financial Accounting
  Standards No. 150 Accounting for Certain Financial Instruments with Characteristics
  of both Liabilities and Equity (SFAS 150). SFAS 150 establishes
  standards for how an issuer classifies and measures certain financial instruments
  with characteristics of both liabilities and equity. SFAS 150 is effective for
  financial instruments entered into or modified after May 31, 2003.

In November 2002, FASB issued Financial Interpretation No.
  45 "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
  Indirect Guarantees of Indebtedness of Others" ("FIN 45"), which requires elaborating
  on the disclosures that must be made by a guarantor in financial statements
  about its obligations under certain guarantees. It also requires that a guarantor
  recognize, at the inception of certain types of guarantees, a liability for
  the fair value of the obligation undertaken in issuing the guarantee. The disclosure
  requirements of FIN 45 are effective for financial statements issued after December
  15, 2002, while the recognition requirements of FIN 45 are applicable for guarantees
  issued or modified after December 31, 2002.

In January 2003, FASB issued Financial Interpretation No.
  46 Consolidation of Variable Interest Entities ("FIN 46") (revised
  in December 17, 2003). The objective of FIN 46 is to improve financial reporting
  by companies involved with variable interest entities. A variable interest entity
  is a corporation, partnership, trust, or any other legal structure used for
  business purposes that either (a) does not have equity investors with voting
  rights or (b) has equity investors that do not provide sufficient financial
  resources for the entity to support its activities. FIN 46 requires a variable
  interest entity to be consolidated by a company if that company is subject to
  a majority of the risk of loss from the variable interest entity's activities
  or entitled to receive a majority of the entity's residual returns or both.
  FIN 46 also requires disclosures about variable interest entities that the Company
  is not required to consolidate but in which it has a significant variable interest.
  The consolidation requirements of FIN 46 apply immediately to variable interest
  entities created after December 15, 2003. The consolidation requirements apply
  to older entities in the first fiscal year or interim period beginning after
  March 15, 2004.

The adoption of these new pronouncements is not expected to
  have a material effect on the Company's consolidated financial position or results
  of operations.

29

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C. Research and Development

Not applicable

D. Trend Information

Not applicable

E. Off-balance sheet arrangements

Not applicable

F. Tabular disclosure of Contractual Obligations

Not applicable

Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table sets forth certain information as of June
  8, 2004 about the Companys current directors and senior management:

|Name               | Age      | Position                                                                   | Other Reporting Companies in Canadaor the United States   
|------------------ | -------- | -------------------------------------------------------------------------- | ----------------------------------------------------------
|Company            | Position
|Douglas MacQuarrie | 51       | President, Director formerly Vice President of Exploration                 | N/A                                                       
|Len Dennis         | 49       | Director, formerly Secretary and Vice-President, Corporate
      Relations | PMI Ventures Ltd.
      CHC Helicopters International Ltd.
|Marc Prefontaine   | 42       | Director                                                                   | Grayd Resource Corporation                                
|Kim Evans          | 33       | Secretary                                                                  | Lysander Minerals Corporation                             

Douglas R. MacQuarrie  President, CEO and Director

Mr. MacQuarrie was appointed the President, CEO and a Director
  of the Company on June 8, 2004. He was the Vice President of the Company from
  May 6, 2003 to June 7, 2004. Mr. MacQuarrie has a combined honours B.Sc. degree
  in Geology and Geophysics from the University of British Columbia, Canada and
  has been active in the mineral exploration industry since 1970 and in gold exploration
  in West Africa since 1993.

30

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Len Dennis - Director

Mr. Dennis was the Secretary and Vice-President of the Company
  from November 3, 1994 to August 16, 1996 and has been a Director of the Company
  since April 10, 2000. Mr. Dennis has been a Director of Business Development/Commercial
  Manager of CHC Helicopters International since 1975.

Marc Prefontaine - Director

Mr. Prefontaine has been a Director of the Company since February
  16, 2004. Mr. Prefontaine graduated with a B.Sc. in Geology from the University
  of Alberta and a M.Sc. in Mineral Exploration from Queen's University. He is
  a Professional Geologist with over 16 years experience in all facets of mineral
  exploration including Exploration Manager, and has worked extensively throughout
  North and South America, South Africa and Central Asia.

Kim Evans  Secretary and CFO

Ms. Evans has been the Secretary of the Company since May
  2003. Ms. Evans is a Certified General Accountant and obtained a Bachelor of
  Arts from the University of British Columbia in 1992.

Neither the Company nor any of its officers, directors or
  controlling shareholders has (i) been the subject of any penalties or sanctions
  imposed by a court relating to Canadian securities legislation or by a Canadian
  securities regulatory authority, (ii) entered into a settlement agreement with
  a Canadian securities regulatory authority, or (iii) been subject to any other
  penalties or sanctions imposed by a court or regulatory authority that would
  likely be considered important to a reasonable investor making an investment
  decision.

B. Executive Compensation

There are presently two Executive Officers of the Company
  namely, Douglas R. MacQuarrie (President and CEO) and Kim Evans (Secretary and
  CFO). Executive Officer means the president, any vice-president
  in charge of a principal business unit such as sales, finance or production,
  any officer of the Company or a subsidiary who performs a policy-making function
  for the Company whether or not that person is also a director of the Company
  or the subsidiary, and the chairman and any vice-chairman of the board of directors
  of the Company if that person performs the functions of that office on a full-time
  basis.

Set out below is a summary of compensation paid during the
  Companys three most recently completed financial years to the Companys
  Executive Officers

31

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Summary Compensation Table

|Name andPrincipal Position                  | Year                                       | Annual Compensation             | Long Term Compensation   |                        
|------------------------------------------- | ------------------------------------------ | ------------------------------- | ------------------------ | -----------------------
|Salary($)                                   | Bonus($)                                   | Other AnnualCompensation($)     | Awards                   | Payouts                
|SecuritiesUnderOptions/SARsGranted(#)       | RestrictedShares orRestrictedShareUnits($) | LongTermIncentivePlanPayouts($) | AllOtherCompen-sation($)
|Arthur T. Fisher,
      Former President(2) | 2003
      2002
      2001                 | 61,700
      3,000(3)N/A        | Nil
      Nil
      N/A  | Nil
      Nil
      N/A
|Laurie W. Sadler,
      former President(5) | 2003
      2002
      2001                 | 19,500(6)31,000(6)30,000(6)     | Nil
      Nil
      Nil  | Nil
      Nil
      Nil

|(1) | As freestanding SARs have not been granted under
      the stock option plan, the number of shares relate solely to stock options.                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Arthur T. Fisher was appointed President of the Company
      on November 6, 2002 and served as such until his death on January 23, 2004.                                                                                                                  
|(3) | This amount was paid or accrued through a management company
      for services provided to the Company.                                                                                                                                                   
|(4) | A total of 190,000 options granted to Arthur T. Fisher
      in 2002 and 2003 will not vest and have been cancelled in 2004; the remaining
      445,000 options will expire on July 23, 2004.                                                             
|(5) | Laurie Sadler was appointed President of the Company on
      April 10, 2000 and resigned as President of the Company on November 6, 2002.
      Mr Sadler was reappointed as the interim President on January 26, 2004 and
      resigned on June 8, 2004.
|(6) | These amounts were paid or accrued through a management
      company for services provided to the Company.                                                                                                                                                

Options and Stock Appreciation Rights (SARs)

The Company has not issued any SARs

A total of 730,000 stock options were granted to the Executive
  Officers during the most recently completed financial year.

The Company has in place a Stock Option Plan whereby a total
  of 2,466,047 shares or 20% of the issued shares of the Company are reserved
  for issuance pursuant to the exercise of options. The purpose of the Stock Option
  Plan is to provide the Company with a share related mechanism to enable the
  Company and its subsidiaries to attract, retain and motivate qualified directors,
  officers, employees and other service providers, to reward directors, officers,
  employees and other service providers, for their contribution toward the long
  term goals of the Company and its subsidiaries and to enable and encourage such
  individuals to acquire shares of the Company as long term investments.

The following information is intended as a brief description
  of the Stock Option Plan:

1. The maximum number of shares that may be issued, from
      time to time, upon the exercise of stock options granted under the Stock
      Option Plan shall not exceed 2,466,047 or up to 20% of the Companys
      then issued shares, the exercise price of which, as determined by the board
      of directors in its sole discretion, shall not be less than the closing
      price of the Companys shares traded through the facilities of the
      Exchange on the date prior to the date of grant, less allowable discounts,
      in accordance with the policies of the Exchange or, if the shares are no
      longer listed for trading on the

32

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> Exchange, then such other exchange or quotation system on
>     which the shares are listed or quoted for trading.

The board of directors shall not grant options to any one person in any
      one year which will, when exercised, exceed 5% of the issued and outstanding
      shares of the Company or to consultants or to those persons employed by
      the Company who perform investor relations services which will, when exercised,
      exceed 2% of the issued and outstanding shares of the Company.
    Upon expiry of an option, or in the event an option is otherwise terminated
      for any reason, without having been exercised in full, the number of shares
      in respect of the expired or terminated option shall again be available
      for the purposes of the Plan. All options granted under the Stock Option
      Plan may not have an expiry date exceeding five years from the date on which
      the board of directors grant and announce the granting of the option.
    If the option holder ceases to be a director of the Company or ceases
      to be employed by the Company (other then by reason of death), as the case
      may be, then the option granted shall expire on no later than the 30th day
      following the date that the option holder ceases to be a director or ceases
      to be employed by the Company, subject to the terms and conditions set out
      in the Stock Option Plan.


During the year ended December 31, 2003, the Company granted
  a total of 1,665,000 options to directors, officers, employees and consultants
  exercisable at $0.70 per share and expiring at varying dates between May 23,
  2008 and October 14, 2008. An aggregate total of 368,333 of these stock options
  were cancelled in 2004. See Item 6(E) for details of the stock options held
  by all of the Companys Directors and members of its administrative, supervisory
  and management bodies.

The following table sets forth details of all exercises of
  stock options or SARs during the most recently completed fiscal year by each
  of the Executive Officers and the fiscal year end value of unexercised options
  or SARs on an aggregated basis:

Aggregated option/SAR exercises during the most recently
  completed financial year and financial year-end option/SAR values

|Name             | SecuritiesUnderOptions/SARsGranted(#)(1) | % of TotalOptions/SARsGranted toEmployees | %Exerciseor BasePrice($/Security) | Market Valueof SecuritiesUnderlyingOptions/SARson the Date ofGrant($/Security) | ExpirationDate                       
|---------------- | ---------------------------------------- | ----------------------------------------- | --------------------------------- | ------------------------------------------------------------------------------ | -------------------------------------
|Arthur T. Fisher | 300,000
      135,000                    | 18.02%
      8.11%                        | 0.70
      0.70                   | 0.68
      0.69                                                                | July 23, 2004(2)July 23, 2004(2)     
|Laurie Sadler    | 200,000
      95,000                     | 12.01%
      5.71%                        | 0.70
      0.70                   | 0.68
      0.69                                                                | May 23, 2008(3)
      Oct 14, 2008(3)

| | (1) | As freestanding SARs have not been granted under the stock
      option plan, the number of shares relate solely to stock options.                                                                
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | A total of 190,000 options granted to Arthur T. Fisher during
      2002 and 2003 will not vest and have been cancelled in 2004; the remaining
      245,000 options will expire on July 23, 2004.
| | (3) | As Laurie Sadler resigned as the President on June 8, 2004,
      these options will expire on July 8, 2004 unless exercised prior to that
      date.                                            

33

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Option and SAR Repricings

No options or SARs have been repriced downward during the
  most recently completed financial year of the Company.

Compensation of Directors

The Company has no arrangements, standard or otherwise, pursuant
  to which directors are compensated by the Company for their services in their
  capacity as directors, or for committee participation, involvement in special
  assignments or for services as consultant or expert during the most recently
  completed financial year.

None of the Companys directors have received any manner
  of compensation for services provided in their capacity as directors during
  the Companys most recently completed financial year. The stock options
  and warrants listed above were not issued to officers, directors or senior management
  of the Company as part of a compensation plan.

Long Term Incentive Plan (LTIP) Awards

The Company does not have LTIP awards pursuant to which cash
  or non-cash compensation is intended to serve as an incentive for performance
  whereby performance is measured by reference to financial performance or the
  price of the Companys securities, was paid or distributed.

Defined Benefit or Actuarial Plan Disclosure

The Company has no defined benefit or actuarial plans.

C. Board Practices

The Board of Directors of the Company is currently comprised
  of Marc Prefontaine, Douglas R. MacQuarrie, and Len Dennis. Each director of
  the Company is elected annually and holds office until the next Annual General
  Meeting of the Members unless that person ceases to be a Director before then.
  The Board of Directors currently has one committee; the Audit Committee. The
  Audit Committee is comprised of Messrs. Prefontaine, MacQuarrie and Dennis.
  This committee is responsible for reviewing the Companys financial reporting
  procedures, internal controls and the performance of the Companys external
  auditors. The committee is also responsible for reviewing quarterly financial
  statements and the annual financial statements.

Termination of Employment, Changes in Responsibility and
  Employment Contracts

The Company does not have any compensatory plan or arrangement
  which will result from the resignation, retirement or other termination of employment
  of any Directors and/or member of the Companys administrative, supervisory
  or management bodies or from a change of control of the Company or a change
  in any of such persons responsibilities following a change of control.

D. Employees

The Company currently has 3 employees. One of the Companys
  current officers is employed directly by the Company.

34

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E. Share Ownership

The following table lists as of June 8, 2004, the direct and
  indirect share ownership of all of the Companys Directors and members
  of its administrative, supervisory and management bodies. The Company has only
  one class of shares, common, with no par value and all of the common shares
  have the same voting rights.

|Name               | Numberof SharesHeld | Percentageof SharesHeld(1) | Numberof StockOptionsHeld                                 | Numberof SharePurchaseWarrantsHeld | ExercisePrice($)                                      | ExpirationDate                                                                          
|------------------ | ------------------- | -------------------------- | --------------------------------------------------------- | ---------------------------------- | ----------------------------------------------------- | ----------------------------------------------------------------------------------------
|Douglas MacQuarrie | 222,500             | 0.01%                      | 100,000
      200,000                                     | Nil                                | $0.25
      $0.70                                     | Nov. 27, 2007
      May 23, 2008                                                        
|Marc Prefontaine   | 7,500               | 0.00%                      | 200,000                                                   | Nil                                | $0.56                                                 | Feb 23, 2009                                                                            
|Len Dennis         | 107,384             | 0.01%                      | 10,000
      90,000
      25,000                          | Nil                                | $0.25
      $0.70
      $0.70                         | Nov 27, 2007
      May 23, 2008
      Oct 14, 2008                                      
|Kim Evans          | 14,278              | 0.00%                      | 46,667
      100,000
      35,000
      7,639
      7,639 | Nil                                | $0.25
      $0.70
      $0.70
      $0.70
      $1.00 | Nov 27, 2007
      May 23, 2008
      Oct 14, 2008
      Oct 16, 2004
      Oct 16, 2005

(1) The percentage ownership is based on 23,475,396 shares outstanding as
  of June 23, 2004.

Item 7.     MAJOR SHAREHOLDERS AND RELATED PARTY
  TRANSACTIONS

A. Major Shareholders

As of June 22, 2004 to the best of the Companys knowledge,
  the following parties have ownership of 5% or greater of the Companys
  common shares, all of which have the same voting rights attached thereto as
  all other common shares of the Company:

|Name          | Number of CommonShares Held | Percentage of CommonShares Held
|------------- | --------------------------- | -------------------------------
|CDS & Co. (1) | 21,469,414                  | 91.45%                         

(1) The beneficial owners of shares held by depositories are not known to
  the directors or officers of the Company.

Other than as disclosed above the Company is not aware of
  any other company, any foreign government or any other person, jointly or severally,
  that directly or indirectly controls the Company. The Company is not aware of
  any arrangements the operation of which may at a future date result in a change
  in control of the Company.

B. Related Party Transactions

During the current year, the Company paid or accrued management
  fees of $81,200 (2002 - $55,600; 2001 - $30,000) to directors and companies
  controlled by an officer and a director of the Company.

35

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During the current year, the Company paid or accrued $1,543,400
  (2002 - $Nil; 2001 - $Nil) with respect to the Companys Ghanaian operations
  and project management of mineral property exploration activities to a company
  related by virtue of its having a director who is also an officer of the Company.

Included in convertible notes and equity component of convertible
  notes at December 31, 2003 is $Nil (2002 - $Nil; 2001 - $205,000) advanced by
  directors of the Company.

Amounts due from and to related parties are unsecured, non-interest
  bearing with no specific terms of repayment and accordingly the fair value cannot
  be determined. These amounts have been advanced for the purposes of working
  capital between companies with a director in common.

C. Interests of Experts and Counsel

Not Applicable.

Item 8.     FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

See Item 17 for Financial Statements of the Company.

The Company knows of no pending legal or arbitration proceedings
  including those relating to bankruptcy, governmental receivership or similar
  proceeding and those involving any third party against it, nor is the Company
  involved as a plaintiff in any material pending litigation.

The Company knows of no pending proceedings to which any director,
  member of senior management, or affiliate is either a party adverse to the Company
  or its subsidiaries or has a material interest adverse to the Company or its
  subsidiaries.

To the best of the Managements knowledge, the Company
  has not since the date of its incorporation, declared or paid any dividends,
  nor does it intend to declare any dividend for the foreseeable future.

B. Significant Changes

No significant changes have occurred since December 31, 2003
  being the date of the annual financial statements of the Company.

Item 9.     THE LISTING

The Common Shares of the Company are listed on the Exchange
  under the symbol PMI. The following table sets out the market price
  range of the Common Shares on the Exchange for each full quarterly period within
  each of the calendar years indicated:

|Market Prices       | High($) | Low($) | Volume    
|------------------- | ------- | ------ | ----------
|Annual High and Low
|2003                | 1.08    | 0.42   | 23,076,501
|2002                | 0.77    | 0.03   | 2,786,209 
|2001                | 0.15    | 0.03   | 610,000   
|2000                | 0.05    | 0.01   | 613,000   
|1999                | 0.05    | 0.01   | 2,855,425 

36

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|Market Prices          | High($) | Low($) | Volume    
|---------------------- | ------- | ------ | ----------
|1998                   | 0.36    | 0.02   | 5,162,105 
|Quarterly High and Low
|1stQuarter  2003      | 0.86    | 0.55   | 2,033,701 
|2ndQuarter  2003      | 0.75    | 0.46   | 861,511   
|3rdQuarter  2003      | 0.77    | 0.42   | 6,147,825 
|4thQuarter  2003      | 1.08    | 0.61   | 14,033,464
|                       |         |        |           
|1stQuarter  2002      | 0.12    | 0.07   | 74,704    
|2ndQuarter  2002      | 0.09    | 0.04   | 44,960    
|3rdQuarter  2002      | 0.10    | 0.03   | 1,222,944 
|4thQuarter  2002      | 0.77    | 0.06   | 1,425,601 
|1stQuarter  2001      | n/a     | n/a    | n/a (1)   
|2ndQuarter  2001      | n/a     | n/a    | n/a (1)   
|3rdQuarter  2001      | 0.15    | 0.10   | 2,000     
|4thQuarter  2001      | 0.10    | 0.03   | 608,000   
|Most Recent Six Months
|December 2003          | 0.85    | 0.63   | 3,868,085 
|January 2004           | 0.76    | 0.63   | 2,065,922 
|February 2004          | 0.61    | 0.52   | 3,441,971 
|March 2004             | 0.71    | 0.55   | 2,677,406 
|April 2004             | 0.57    | 0.35   | 1,811,209 
|May 2004               | 0.38    | 0.205  | 1,455,522 

(1) Shares of the Company were suspended from trading from February 8, 2000
  to September 8, 2000 due to failure to file interim financial statements.

There is no active trading market for the Common Shares in the United States,
  although United States residents may purchase Common Shares in Canada.

As a foreign private issuer the Company will be subject to certain of the
  reporting obligations of the Exchange Act including:

|(1) | filing an annual report, on a Form 20-F, within 6
        months after the end of the Companys fiscal year end which form
        must include audited financial statements in compliance with US GAAP and
        US accounting standards; and                                                                                                                                                                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(2) | filing periodic reports on Form 6-K, any significant
        information with respect to the Company and its subsidiaries which
        the Company (i) is required to make public in its own country, (ii) has
        filed with a non-U.S. stock exchange on which the Companys securities
        are traded and which the exchange has make public, or (iii) has distributed
        to holders of its securities, either directly or through a press release.

As a foreign private issuer the Company will not be subject
  to the reporting obligations of the proxy rules of Section 14 of the Act nor
  the short-swing profit recovery provisions contained in Section 16 of the Act.

37

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C. Markets

The Companys Common Shares are listed and traded in Canadian dollars
  on the TSX Venture Exchange under the symbol PMI.

Item 10.     ADDITIONAL INFORMATION

A. Share Capital

Not Applicable

B. Memorandum and Articles of Incorporation

The Company was incorporated under the laws of the Province
  of British Columbia Canada.

(1) The Companys objects and purposes as set forth
  in the Companys Memorandum and Articles:

The Companys Memorandum and Articles are silent as to
  the Companys objects and purposes.

(2) Matters relating to Directors of the Company:

(a) Directors power to vote on a proposal, arrangement
  or contract in which the director is materially interested:

Part 16.1 of the Companys Articles provide that: A
  director who is, in any way, directly or indirectly, interested in a proposed
  contract or transaction with the Company shall be counted in the quorum at any
  meeting of the directors at which the proposed contract or transaction is approved.
  Where a director has a material interest in the business the Director will abstain
  from voting on said business.

Part 16.2 of the Companys Articles provide that: A
  director may hold any office or place of profit with the Company, other than
  the office of auditor of the Company, in conjunction with his office of director
  for such period and on such terms, as to remuneration or otherwise, as the directors
  may determine and no director or intended director shall be disqualified by
  his office from contracting with the Company either with regard to his tenure
  of any such other office or place of profit or as vendor, purchaser or otherwise,
  and, subject to compliance with the provisions of the (BC Act), no contract
  or transaction entered into by or on behalf of the Company in which a director
  is any way interested shall be liable to be voided by reason thereof.

Part 16.3 of the Companys Articles provide that: Subject
  to compliance with the provisions of the (BC Act), a director or his firm may
  act in a professional capacity for the Company and he or his form shall be entitled
  to remuneration for professional services as if he were not a director.

Part 16.4 of the Companys Articles provide that: A
  director may be or become a director or other officer or employee of, or otherwise
  interested in, any other corporation or firm, whether or not the Company is
  interested therein as a shareholder or otherwise, and, subject to compliance
  with the provisions of the (BC Act), such director shall not be accountable
  to the Company for any remuneration or other benefits received by him as a director,
  officer or employee of, or from his interest in, such other corporation or firm.

(b) Directors' power, in the absence of an independent quorum,
  to vote compensation to themselves or any members of their body:

38

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Part 13.2 of the Companys Articles provides that: "The
  remuneration of the directors as such may from time to time be determined by
  the directors or, if the directors shall so decide, by the members. Such remuneration
  may be in addition to any salary or other remuneration paid to any officer or
  employee of the Company as such who is also a director. The directors shall
  be repaid such reasonable traveling, hotel and other expenses as they incur
  in and about the business of the Company and if any director shall perform any
  professional or other services for the Company that in the opinion of the directors
  are outside the ordinary duties of a director or shall otherwise be specifically
  occupied in or about the Company's business, he may be paid a remuneration to
  be fixed by the Board, or, at the option of such director, by the Company in
  general meeting, and such remuneration may be either in addition to, or in substitution
  for any other remuneration that he may be entitled to receive. The directors
  on behalf of the Company, unless otherwise determined by ordinary resolution,
  may pay a gratuity, pension or allowance on retirement to any director who has
  held any salaried office or place of profit with the Company or to his spouse
  or dependents and may make contributions to any fund and pay premiums for the
  purchase or provision of any such gratuity, pension or allowance.

(c) Borrowing powers exercisable by the directors and how
  such borrowing powers can be varied:

Part 9.1 of the Companys Articles provides that: The
  directors may from time to time authorize the Company to: (a) borrow money in
  such manner and amount, on such security, from such sources and upon such terms
  and conditions as they in their absolute discretion think fit; (b) issue bonds,
  debentures, and other debt obligations either outright or as security for any
  liability or obligation of the Company or any other person; and (c) mortgage,
  charge, whether by way of specific or floating charge, or give other security
  on the undertaking, or on the whole or any part of the property and assets of
  the Company, both present and future.

(d) The Companys Articles are silent with regard to
  the retirement or non-retirement of directors under an age limit requirement:

(3) Rights, preferences and restrictions attaching to
  each class of shares:

(a) Dividend rights, including time limit after which dividend
  entitlement lapses:

Pursuant to Part 21 of the Companys Articles, the Companys
  shareholders, subject to the rights, privileges and restrictions attaching to
  a particular class of shares, have the right to receive dividends if, as and
  when declared by the Board of Directors. Neither the BC Act nor the Companys
  Articles provides for lapses in dividend entitlement.

(b) Voting rights; staggered re-election intervals; cumulative
  voting:

Each of the Companys Common Shares entitles the holder
  to one vote at any annual or special meeting of shareholders. Holders of the
  Companys Preferred Shares are not entitled to vote at such meeting (except
  where holders of a specified class or series of shares are entitled to vote
  separately as a class as provided in the BC Act). Directors of the Company may
  from time to time prior to issuance of Preferred Shares of a particular series,
  alter the Companys Memorandum to fix the number of Preferred Shares in
  and to determine the designation of the Preferred shares of, that series and
  alter the Articles to create, define and attach special rights and restrictions
  to the Preferred Shares, including, among other things, any voting rights or
  rights upon dissolution, liquidation or winding-up of the Company.

The Companys Articles provide for election of directors
  on a rotation basis.

39

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The Companys shareholders do not have cumulative voting.

(c) Rights to share in surplus in event of liquidation:

Subject to the special rights and restrictions that may be
  attached to a particular series of Preferred Shares by the directors of the
  Company, in the event of liquidation, dissolution or winding-up of the Company,
  whether voluntary or involuntary, the holders of Preferred Shares will be entitled
  to receive, before any distribution of any part of the assets of the Company
  among the holders of other shares, for each Preferred Share, an amount equal
  to the redemption price of such share and any dividends declared thereon and
  unpaid and no more.

(d) Other:

Subject to the special rights and restrictions attached to
  any class or series of shares, the Company may, by a resolution of the directors
  and in compliance with the BC Act, purchase any of its shares at the price and
  upon the terms specified in such resolution. If the Company proposes at its
  option to redeem some but not all of the shares of any class or series, the
  directors may by resolution, subject to the special rights and restrictions
  attached to such shares, decide the manner in which the shares to be redeemed
  shall be selected.

Holders of the Companys Common Shares do not have rights
  to share in the profits of the Company. There are no redemption or sinking fund
  provisions with respect to the Companys Common Shares. Common shareholders
  have no liability as to further capital calls by the Company. There are no provisions
  discriminating against any existing or prospective holder of the Companys
  Common Shares as a result of such shareholder owning a substantial number of
  the Companys Common Shares. Holders of the Companys Common Shares
  do not have pre-emptive rights.

(4) Actions necessary to change the rights of holders of
  the Company's stock:

In order to change the rights of holders of a class of the
  Company's stock, a vote of at least three-quarters of the issued and outstanding
  shares of that class is required.

(5) Conditions governing manner in which annual general
  meetings and extraordinary general meetings of shareholders are convoked, including
  conditions of admission:

Annual Meeting

Part 9 of the Companys Articles indicate that annual
  general meetings shall be held in accordance with the requirements of BC Act,
  being within 15 months from the date of incorporation and thereafter once in
  every calendar year at such time, not being more than 13 months after the holding
  of the last preceding annual general meeting, at a place as the directors shall
  appoint.

Special Meetings

Part 9.2 of the Companys Articles state that "The directors
  may, whenever they think fit, convene an extraordinary general meeting for whatever
  purpose or purposes the directors may determine. An extraordinary general
  meeting may also be convened if requisitioned in accordance with the BC Act,
  by the directors or, if not convened by the directors, by the requisitionists
  as provided in the BC Act.

Part 9.3 of the Companys Articles provides that "A notice
  convening a general meeting specifying the place, the day and the hour of the
  meeting, and, in case of special business as defined in article 10.1, the

40

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general nature of that business, shall be given as provided
  in the (BC Act), to members entitled to receive such notice from the Company.
  No notice need be given of business that is not special business. Accidental
  omission to give notice of a meeting to, or the non-receipt of notice of a meeting
  by, any member shall not invalidate the proceedings at that meeting.

(6) Limitations on rights to own securities of the Company:

The Investment Canada Act (the "ICA"), enacted on June 20,
  1985, requires prior notification to the Government of Canada on the "acquisition
  of control" of Canadian businesses by non-Canadians, as defined in the ICA.
  Certain acquisitions of control, discussed below, are reviewed by the Government
  of Canada. The term "acquisition of control" is defined as any one or more non-Canadian
  persons acquiring all or substantially all of the assets used in the Canadian
  business, or the acquisition of the voting shares of a Canadian corporation
  carrying on the Canadian business or the acquisition of the voting interests
  of an entity controlling or carrying on the Canadian business. The acquisition
  of the majority of the outstanding shares is deemed to be an "acquisition of
  control" of a corporation. The acquisition of less than a majority, but one-third
  or more, of the voting shares of a corporation is presumed to be an "acquisition
  of control" of a corporation unless it can be established that the purchaser
  will not control the corporation.

Investments requiring notification and review are all direct
  acquisitions of Canadian businesses with assets of Cdn$5,000,000 or more (subject
  to the comments below on WTO investors), and all indirect acquisitions of Canadian
  businesses (subject to the comments below on WTO investors) with assets of more
  than Cdn$50,000,000 or with assets of between Cdn$5,000,000 and Cdn$50,000,000
  which represent more than 50% of the value of the total international transaction.
  In addition, specific acquisitions or new business in designated types of business
  activities related to Canada's cultural heritage or national identity could
  be reviewed if the Government of Canada considers that it is in the public interest
  to do so.

The ICA was amended with the implementation of the Agreement
  establishing the World Trade Organization ("WTO") to provide for special review
  thresholds for "WTO investors", as defined in the ICA. "WTO investor" generally
  means:

|(a) | an individual, other than a Canadian,
        who is a national of a WTO member (such as, for example, the United States),
        or who has the right of permanent residence in relation to that WTO member;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | governments of WTO members; and                                                                                                                                                                               
|(c) | entities that are not Canadian controlled,
        but which are WTO investor controlled, as determined by rules specified
        in the ICA.                                                                

The special review thresholds for WTO investors do not apply,
  and the general rules described above do apply, to the acquisition of control
  of certain types of businesses specified in the ICA, including a business that
  is a "cultural business". If the WTO investor rules apply, an investment in
  the shares of the Company by or from a WTO investor will be reviewable only
  if it is an investment to acquire control of the Company and the value of the
  assets of the Company is equal to or greater than a specified amount (the "WTO
  Review Threshold"). The WTO Review Threshold is adjusted annually by a formula
  relating to increases in the nominal gross domestic product of Canada. The 1999
  WTO Review Threshold was $184,000,000.

If any non-Canadian, whether or not a WTO investor, acquires
  control of the Company by the acquisition of shares, but the transaction is
  not reviewable as described above, the non-Canadian is required to notify

41

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the Canadian government and to provide certain basic information
  relating to the investment. A non-Canadian, whether or not a WTO investor, is
  also required to provide a notice to the government on the establishment of
  a new Canadian business. If the business of the Company is then a prescribed
  type of business activity related to Canada's cultural heritage or national
  identity, and if the Canadian government considers it to be in the public interest
  to do so, then the Canadian government may give a notice in writing within 21
  days requiring the investment to be reviewed.

For non-Canadians (other than WTO investors), an indirect
  acquisition of control, by the acquisition of voting interests of an entity
  that directly or indirectly controls the Company, is reviewable if the value
  of the assets of the Company is then Cdn.$50,000,000 or more. If the WTO investor
  rules apply, then this requirement does not apply to a WTO investor, or to a
  person acquiring the entity from a WTO investor. Special rules specified in
  the ICA apply if the value of the assets of the Company is more than 50% of
  the value of the entity so acquired. By these special rules, if the non-Canadian
  (whether or not a WTO investor) is acquiring control of an entity that directly
  or indirectly controls the Company, and the value of the assets of the Company
  and all other entities carrying on business in Canada, calculated in the manner
  provided in the ICA and the regulations under the ICA, is more than 50% of the
  value, calculated in the manner provided in the ICA and the regulations under
  the ICA, of the assets of all entities, the control of which is acquired, directly
  or indirectly, in the transaction of which the acquisition of control of the
  Company forms a part, then the thresholds for a direct acquisition of control
  as discussed above will apply, that is, a WTO Review Threshold of Cdn.$184,000,000
  (in 1999) for a WTO investor or threshold of Cdn. $5,000,000 for a non-Canadian
  other than a WTO investor. If the value exceeds that level, then the transaction
  must be reviewed in the same manner as a direct acquisition of control by the
  purchase of shares of the Company.

If an investor is reviewable, an application for review in
  the form prescribed by the regulations is normally required to be filed with
  the Director appointed under the ICA (the "Director") prior to the investment
  taking place and the investment may not be consummated until the review has
  been completed. There are, however, certain exceptions. Applications concerning
  indirect acquisitions may be filed up to 30 days after the investment is consummated
  and applications concerning reviewable investments in culture-sensitive sectors
  are required upon receipt of a notice for review. In addition, the Minister
  (a person designated as such under the ICA) may permit an investment to be consummated
  prior to completion of the review, if he is satisfied that delay would cause
  undue hardship to the acquiror or jeopardize the operations of the Canadian
  business that is being acquired. The Director will submit the application to
  the Minister, together with any other information or written undertakings given
  by the acquiror and any representation submitted to the Director by a province
  that is likely to be significantly affected by the investment.

The Minister will then determine whether the investment is
  likely to be of net benefit to Canada, taking into account the information provided
  and having regard to certain factors of assessment where they are relevant.
  Some of the factors to be considered are:

|(a) | the effect of the investment on the
        level and nature of economic activity in Canada, including the effect
        on employment, on resource processing, and on the utilization of parts,
        components and services produced in Canada;
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | the effect of the investment on exports
        from Canada;                                                                                                                                                                                         
|(c) | the degree and significance of participation
        by Canadians in the Canadian business and in any industry in Canada of
        which it forms a part;                                                                                           

42

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|(d) | the effect of the investment on productivity,
        industrial efficiency, technological development, product innovation and
        product variety in Canada;                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(e) | the effect of the investment on competition
        within any industry or industries in Canada;                                                                                                                                                                                                                          
|(f) | the compatibility of the investment
        with national industrial, economical and cultural policies;                                                                                                                                                                                                                   
|(g) | the compatibility of the investment
        with national industrial, economic and cultural policies taking into consideration
        industrial, economic and cultural objectives enunciated by the government
        or legislature of any province likely to be significantly affected by
        the investment; and
|(h) | the contribution of the investment to
        Canada's ability to compete in world markets.                                                                                                                                                                                                                               

To ensure prompt review, the ICA sets certain time limits
  for the Director and the Minister. Within 45 days after a completed application
  has been received, the Minister must notify the acquiror that he is satisfied
  that the investment is likely to be of net benefit to Canada, or that he is
  unable to complete his review, in which case he shall have 30 additional days
  to complete his review (unless the acquiror agrees to a longer period), or he
  is not satisfied that the investment is likely to be of net benefit to Canada.

Where the Minister has advised the acquiror that he is not
  satisfied that the investment is likely to be of net benefit to Canada, the
  acquiror has the right to make representations and submit undertakings within
  30 days of the date of the notice (or any other further period that is agreed
  upon between the acquiror and the Minister). On the expiration of the 30-day
  period (or the agreed extension), the Minister must quickly notify the acquiror
  that he is now satisfied that the investment is likely to be of net benefit
  to Canada or that he is not satisfied that the investment is likely to be of
  net benefit to Canada. In the latter case, the acquiror may not proceed with
  the investment or, if the investment has already been consummated, must divest
  itself of control of the Canadian business.

The ICA provides civil remedies for non-compliance with any
  provision. There are also criminal penalties for breach of confidentiality or
  providing false information.

Except as provided in the ICA, there are no limitations under
  the laws of Canada, the Province of British Columbia or in any constituent documents
  of the Company on the right of non-Canadians to hold or vote the common shares
  of the Company.

(7) Provisions of Company's articles, charter or by-laws
  that have the effect of delaying, deferring or preventing a change in control
  of the Company and that would operate only with respect to a merger, acquisition,
  or corporate restructuring involving the Company:

There are no limitations in the Companys Memorandum
  or Articles.

(8) Provisions governing the ownership threshold above
  which shareholder ownership must be disclosed:

The British Columbia Securities Act provides that a
  person that has direct or indirect beneficial ownership of, control or direction
  over, or a combination of direct or indirect beneficial ownership of, and of
  control or direction over, securities of the issuer carrying more than 10% of
  the voting rights attached to all the issuer's outstanding voting securities
  must, within 10 days of becoming an "insider", file an insider report in the
  required form effective the date on which the person became an insider, disclosing
  any direct or indirect beneficial ownership of, or control or direction over,
  securities of the reporting issuer. The British Columbia Securities Act
  also provides for the filing of a report by an "insider" of a reporting issuer
  who

43

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acquires or transfers securities of the issuer. This insider
  report must be filed within 10 days of the date in which the change takes place.

The U.S. rules governing the ownership threshold above which
  shareholder ownership must be disclosed are more stringent than those under
  the British Columbia Securities Act. Section 13 of the Exchange Act imposes
  reporting requirements on persons who acquire beneficial ownership (as such
  term is defined in the Rule 13d-3 under the Exchange Act) of more than 5 per
  cent of a class of an equity security registered under Section 12 of the Exchange
  Act. In general, such persons must file, within 10 days after such acquisition,
  a report of beneficial ownership with the Securities and Exchange Commission
  containing the information prescribed by the regulations under Section 13 of
  the Exchange Act. This information is also required to be sent to the issuer
  of the securities and to each exchange where the securities are traded.

(9) Significant differences between law applicable to the
  Company and law of the United States.

See 8 above.

(10) Conditions imposed by the Companys Memorandum
  and Articles that are more stringent than required by law.

None

C. Material Contracts

Other than contracts described elsewhere in this Annual Report
  there are no contracts that may be regarded as presently material.

D. Exchange Controls

There is no law or governmental decree or regulation in Canada
  that restricts the export or import of capital, or affects the remittance of
  dividends, interest or other payments to a non-resident holder of Common Shares,
  other than withholding tax requirements. See Item 10(D)  Taxation.

There is no limitation imposed by Canadian law or by the constituent
  documents of the Company on the right of a non-resident to hold or vote Common
  Shares, other than are provided in the Investment Canada Act (Canada). The following
  summarizes the principal features of the Investment Canada Act (Canada).

The Investment Canada Act (Canada) requires certain non-Canadian
  individuals, governments, corporations or other entities who wish to acquire
  a Canadian business (as defined in the Investment Canada Act), or
  establish a new Canadian business (as defined in the Investment
  Canada Act) to file either a notification or an application for review with
  a governmental agency known as Investment Canada. The Investment
  Canada Act requires that certain acquisitions of control by a Canadian business
  by a non-Canadian must be reviewed and approved by the Minister
  responsible for the Investment Canada Act on the basis that the Minister is
  satisfied that the acquisition is likely to be of net benefit to Canada,
  having regard to criteria set forth in the Investment Canada Act. Only acquisitions
  of control rules for the determination of whether control has been acquired
  and, pursuant to those rules, the acquisition of one-third or more of the voting
  shares of a corporation may, in some circumstances, be considered to constitute
  an acquisition of control. Certain reviewable acquisitions of control may not
  be implemented before being approved by the Minister; if the Minister does not
  ultimately approve a reviewable acquisition which has been completed, the acquired
  Canadian business would be divested. Failure to comply with the review provisions
  of the Investment Canada Act could result in, among other things, an injunction
  or a court order directing disposition of assets or shares.

44

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E. Taxation

Material Canadian Federal Income Tax Consequences

Management of the Company considers that the following discussion
  describes the material Canadian federal income tax consequences applicable to
  a holder of Common Stock of the Company who is a resident of the United States
  and who is not a resident of Canada and who does not use or hold, and is not
  deemed to use or hold, his shares of Common Stock of the Company in connection
  with carrying on a business in Canada (a "non-resident shareholder").

This summary is based upon the current provisions of the Income
  Tax Act (Canada) (the "ITA"), the regulations thereunder (the "Regulations"),
  the current publicly announced administrative and assessing policies of Revenue
  Canada, Taxation and all specific proposals (the "Tax Proposals") to amend the
  ITA and Regulations announced by the Minister of Finance (Canada) prior to the
  date hereof. This description is not exhaustive of all possible Canadian federal
  income tax consequences and, except for the Tax Proposals, does not take into
  account or anticipate any changes in law, whether by legislative, governmental
  or judicial action.

Dividends

Dividends paid on the common stock of the Company to a non-resident
  will be subject to withholding tax. The Canada-U.S. Income Tax Convention (1980)
  provides that the normal 25% withholding tax rate is reduced to 15% on dividends
  paid on shares of a corporation resident in Canada (such as the Company) to
  residents of the United States, and also provides for a further reduction of
  this rate to 5% where the beneficial owner of the dividends is a corporation
  which is a resident of the United States which owns at least 10% of the voting
  shares of the corporation paying the dividend.

Capital Gains

In general, a non-resident of Canada is not subject to tax
  under the ITA with respect to a capital gain realized upon the disposition of
  a share of a corporation resident in Canada that is listed on a prescribed stock
  exchange. For purposes of the ITA, the Company is listed on a prescribed stock
  exchange. Nonresidents of Canada who dispose of shares of the Company will be
  subject to income tax in Canada with respect to capital gains if:

| | (a) | the non-resident holder;                                                                                     
| | --- | -------------------------------------------------------------------------------------------------------------
| | (b) | persons with whom the non-resident holder did
      not deal at arm's length; or                             
| | (c) | the non-resident holder and persons with whom
      the non-resident holder did not deal with at arms length,

owned not less than 25% of the issued shares of any class
  or series of the Company at any time during the five-year period preceding the
  disposition. In the case of a non-resident holder to whom shares of the Company
  represent taxable Canadian property and who is resident in the United States,
  no Canadian taxes will be payable on a capital gain realized on such shares
  by reason of the Canada-U.S. Income Tax Convention (1980) (the "Treaty") unless
  the value of such shares is derived principally from real property situated
  in Canada. However, in such a case, certain transitional relief under the Treaty
  may be available.

Material United States Federal Income Tax Considerations

The following discussion summarizes the material United States
  federal income tax consequences, under current law, applicable to a U.S. Holder
  (as defined below) of the Company's common stock. This

45

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discussion does not address consequences peculiar to persons
  subject to special provisions of federal income tax law, such as tax-exempt
  organizations, qualified retirement plans, financial institutions, insurance
  companies, real estate investment trusts, regulated investment companies, broker-dealers,
  non resident alien individuals or foreign corporations, or shareholders owning
  common stock representing 10% of the vote and value of the Company. In addition,
  this discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the
  Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
  published Internal Revenue Service ("IRS") rulings, published administrative
  positions of the IRS and court decisions that are currently applicable, any
  or all of which could be materially and adversely changed, possibly on a retroactive
  basis, at any time. In addition, this discussion does not consider the potential
  effects, both adverse and beneficial of recently proposed legislation which,
  if enacted, could be applied, possibly on a retroactive basis, at any time.
  Holders and prospective holders of the Company's Common Stock are advised to
  consult their own tax advisors about the federal, state, local and foreign tax
  consequences of purchasing, owning and disposing of shares of Common Stock of
  the Company.

U.S. Holders

As used herein, a "U.S. Holder" is defined as (i) citizens
  or residents of the U.S., or any state thereof, (ii) a corporation or other
  entity created or organized under the laws of the U.S., or any political subdivision
  thereof, (iii) an estate the income of which is subject to U.S. federal income
  tax regardless of source or that is otherwise subject to U.S. federal income
  tax on a net income basis in respect of the common stock, or (iv) a trust whose
  administration is subject to the primary supervision of a U.S. court and which
  has one or more U.S. fiduciaries who have the authority to control all substantial
  decisions of the trust, whose ownership of common stock is not effectively connected
  with the conduct of a trade or business in the United States and shareholders
  who acquired their stock through the exercise of employee stock options or otherwise
  as compensation.

Distributions on Shares of Common Stock

Subject to the passive foreign investment company rules discussed
  below, for cash dividends, the gross amount of any such distribution (other
  than in liquidation) that you receive with respect to our common shares generally
  will be taxed to you as dividend income to the extent such distribution does
  not exceed our current or accumulated earnings and profits (E&P),
  as calculated for U.S. federal income tax purposes. Such income will be includable
  in your gross income as ordinary income on the date of receipt, without reduction
  for any Canadian income tax withheld from such distributions. Such Canadian
  tax withheld may be credited, subject to certain limitations, against the U.S.
  Holder's United States federal income tax liability or, alternatively, may be
  deducted in computing the U.S. Holder's United States federal taxable income
  by those who itemize deductions. (See more detailed discussion at "Foreign Tax
  Credit" below.)

Under the tax law recently enacted in the United States, dividends
  received by individuals in their tax years beginning on January 1, 2003 from
  qualified foreign corporations are taxed at the rate of 5% (zero,
  in 2008) or 15%, depending upon the particular taxpayers U.S. federal
  income tax bracket. This law sunsets after December 31, 2008, at which time
  dividends will be taxed at the ordinary income tax rates of up to 35%. A foreign
  corporation is a qualified foreign corporation with respect to its
  stock that is traded on an established securities market in the United States,
  provided that the foreign corporation is not a foreign personal holding
  company, a foreign investment company or a passive foreign
  investment company, as defined under the U.S federal income tax law.

46

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To the extent any distribution exceeds our E&P, the distribution
  will first be treated as a tax-free return of capital to the extent of your
  adjusted tax basis in our common shares and will be applied against and reduce
  such basis on a dollar-for-dollar basis (thereby increasing the amount of gain
  and decreasing the amount of loss recognized on a subsequent disposition of
  such shares). To the extent that such distribution exceeds your adjusted tax
  basis, the distribution will be taxed as gain recognized on a sale or exchange
  of our common shares. Preferential tax rates for long-term capital gains are
  applicable to a U.S. Holder which is an individual, estate or trust. There are
  currently no preferential tax rates for long-term capital gains or a U.S. Holder
  which is a corporation.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions)
  Canadian income tax with respect to the ownership of the Company's common stock
  may be entitled, at the option of the U.S. Holder, to either a deduction or
  a tax credit for such foreign tax paid or withheld. Generally, it will be more
  advantageous to claim a credit because a credit reduces United States federal
  income taxes on a dollar-for-dollar basis, while a deduction merely reduces
  the taxpayer's income subject to tax. This election is made on a year-by-year
  basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder
  during that year.

Subject to certain limitations, Canadian taxes withheld will
  be eligible for credit against the U.S. Holder's United States federal income
  taxes. Under the Code, the limitation on foreign taxes eligible for credit is
  calculated separately with respect to specific classes of income. Dividends
  paid by the Company generally will be either "passive" income or "financial
  services" income, depending on the particular U.S. Holder's circumstances. Foreign
  tax credits allowable with respect to each class of income cannot exceed the
  U.S. federal income tax otherwise payable with respect to such class of income.
  The consequences of the separate limitations will depend on the nature and sources
  of each U.S. Holder's income and the deductions appropriately allocated or apportioned
  thereto. The availability of the foreign tax credit and the application of the
  limitations on the credit are fact specific and holders and prospective holders
  of common stock are advised to consult their own tax advisors regarding their
  individual circumstances.

Disposition of Shares of Common Stock

A U.S. Holder will recognize gain or loss upon the sale of
  shares of common stock equal to the difference, if any, between

|(a) | the amount of cash plus the fair market value of any property received;
      and
|--- | ---------------------------------------------------------------------------------
|(b) | the shareholder's tax basis in the common stock.                                 

This gain or loss will be capital gain or loss if the shares
  are a capital asset in the hands of the U.S. Holder, and such gain or loss will
  be long-term capital gain or loss if the U.S. Holder has held the common stock
  for more than one year. Gains and losses are netted and combined according to
  special rules in arriving at the overall capital gain or loss for a particular
  tax year. Deductions for net capital losses are subject to significant limitations.
  For U.S. Holders who are individuals, any unused portion of such net capital
  loss may be carried over to be used in later tax years until such net capital
  loss is thereby exhausted. For U.S. Holders which are corporations (other than
  corporations subject to Subchapter S of the Code), an unused net capital loss
  may be carried back three years from the loss year and carried forward five
  years from the loss year to be offset against capital gains until such net capital
  loss is thereby exhausted.

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Other Considerations

The Company has not determined whether it meets the definition
  of a "passive foreign investment company" (a "PFIC"). It is unlikely that the
  Company meets the definition of a "foreign personal holding company" (a "FPHC")
  or a "controlled foreign corporation" (a "CFC") under current U.S. law.

If more than 50% of the voting power or value of the Company
  were owned (actually or constructively) by U.S. Holders who each owned (actually
  or constructively) 10% or more of the voting power of the Company's common shares
  ("10% Shareholders"), then the Company would become a CFC and each 10% Shareholder
  would be required to include in its taxable income as a constructive dividend
  an amount equal to its share of certain undistributed income of the Company.
  If (1) more than 50% of the voting power or value of the Company's common shares
  were owned (actually or constructively) by five or fewer individuals who are
  citizens or residents of the United States and (2) 60% or more of the Company's
  income consisted of certain interest, dividend or other enumerated types of
  income, then the Company would be a FPHC. If the Company were a FPHC, then each
  U.S. Holder (regardless of the amount of the Company's Common Shares owned by
  such U.S. Holder) would be required to include in its taxable income as a constructive
  dividend its share of the Company's undistributed income of specific types.

If 75% or more of the Company's annual gross income has ever
  consisted of, or ever consists of, "passive" income or if 50% or more of the
  average value of the Company's assets in any year has ever consisted of, or
  ever consists of, assets that produce, or are held for the production of, such
  "passive" income, then the Company would be or would become a PFIC. The Company
  has not provided assurances that it has not been and does not expect to become
  a PFIC. Please note that the application of the PFIC provisions of the Code
  to mining companies is somewhat unclear.

If the Company were to be a PFIC, then a U.S. Holder would
  be required to pay an interest charge together with tax calculated at maximum
  tax rates on certain "excess distributions" (defined to include ain on the sale
  of stock) unless such U.S. Holder made an election either to (1) include in
  his or her taxable income certain undistributed amounts of the Company's income
  or (2) mark to market his or her Company common shares at the end of each taxable
  year as set forth in Section 1296 of the Code.

Information Reporting and Backup Withholding

U.S. information reporting requirements may apply with respect
  to the payment of dividends to U.S. Holders of the Company's shares. Under Treasury
  regulations currently in effect, non-corporate holders may be subject to backup
  withholding at a 31% rate with respect to dividends when such holder (1) fails
  to furnish or certify a correct taxpayer identification number to the payor
  in the required manner, (2) is notified by the IRS that it has failed to report
  payments of interest or dividends properly or (3) fails, under certain circumstances,
  to certify that it has been notified by the IRS that it is subject to backup
  withholding for failure to report interest and dividend payments.

F. Dividends and Paying Agents

Not Applicable

G. Statements by Experts

Not Applicable

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H. Documents on Display

The Company is a reporting company under the Act, as amended
  and is a "foreign private issuer" as defined in the Act. A foreign private issuer
  is exempt from the provisions of the Exchange Act which prescribe the furnishing
  and content of proxy statements to shareholders and relating to short swing
  profits reporting and liability. Readers may review a copy of the Company's
  filings with the SEC, including exhibits and schedules filed with it, at the
  SEC's public reference facilities in Room 1024, Judiciary Plaza, 450 Fifth Street,
  N.W., Washington, D.C. 20549. Readers may also obtain copies of such materials
  from the Public Reference Section of the SEC, Room 1024, Judiciary Plaza, 450
  Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Readers may
  call the SEC at 1-800-SEC-0330 for further information on the public reference
  rooms. The SEC maintains a Web site (http://www.sec.gov) that contains reports,
  submissions and other information regarding registrants that file electronically
  with the SEC. The Company has only recently become subject to the requirement
  to file electronically through the EDGAR system most of its securities documents,
  including registration statements under the Act, as amended and registration
  statements, reports and other documents under the Act, as amended.

The Company is required to file financial statements and other
  information with the Securities Commissions in the Provinces of Alberta, British
  Columbia and Ontario electronically through the Canadian System for Electronic
  Document Analysis and Retrieval (SEDAR) which can be viewed at www.sedar.com.

The Documents concerning the Company which are referred to
  in this Annual Report are either annexed hereto as exhibits (See Item 19)
  or may be inspected at the principal offices of the Company.

I. Subsidiary Information

Not Applicable

Item 11.     QUANTITATIVE AND
  QUALITATIVE DISCLOSURES ABOUT MARKETRISK

A. Quantitative Information about Market Risk

Not Applicable

B. Qualitative Information about Market Risk

Currency Exchange Rate Sensitivity

The results of the Companys operations are subject to
  currency transnational risk and currency transaction risk. Regarding currency
  transnational risk, the operating results and financial position of the Company
  and Companys subsidiaries are reported in Canadian dollars in the Companys
  consolidated financial statements. The fluctuation of the US dollar in relation
  to the Canadian dollar will therefore have an impact upon the profitability
  of the Company and may also affect the value of the Companys assets and
  the amount of shareholders equity.

In regards to transaction risk, the Companys functional
  currency is the Canadian dollar and its activities are predominantly executed
  using the Canadian dollar. The Company incurs a relatively small portion of
  its expenses in U.S. dollars. The Companys common shares are listed on
  the Exchange and are bought and sold in Canadian dollars. The Company has not
  entered into any agreements or purchased any instruments to hedge any possible
  currency risks at this time.

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Interest Rate Sensitivity

The Company currently has no short term or long term debt
  requiring interest payments. As a result, the Company has not entered into any
  agreement or purchased any instrument to hedge against possible interest rate
  risks at this time.

Commodity Price Sensitivity

The future revenue and profitability of the Company will be
  dependent, to a significant extent, upon prevailing spot market prices for gold.
  In the past gold prices have been volatile. Prices are subject to wide fluctuations
  in response to changes in supply of and demand for gold, market uncertainty
  and a variety of additional factors that are beyond the control of the Company.
  The Companys mineral properties are in the exploration phase and accordingly
  the Company is not generating any operating revenues and is therefore not subject
  to any short term volatility in the prices of gold. As the Company is in the
  exploration phase, the above factors have had no material impact on operations
  or income. No futures or forward contracts have been entered into by the Company.

PART II

Item 12.     DESCRIPTION OF SECURITIES OTHER THAN
  EQUITY SECURITIES

Not Applicable

Item 13.     DEFAULTS, DIVIDEND ARREARAGES AND
  DELINQUENCIES

None

Item 14.     MATERIAL MODIFICATION TO THE RIGHTS
  OF SECURITY HOLDERS

AND USE OF PROCEEDS

None

Item 15.     CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act the Company's
  President and Chief Financial Officer have carried out an evaluation of the
  effectiveness of the design and operation of the Company's disclosure controls
  and procedures as of the end of the period covered by the annual report being
  December 31, 2003. This evaluation was carried out under the supervision and
  with the participation of the Companys management, including the Companys
  President and Chief Financial Officer. Based upon that evaluation, the Companys
  President and Chief Financial Officer concluded that the Company's disclosure
  controls and procedures are effective. There have been no significant changes
  in the Companys internal controls or in other factors which could significantly
  affect internal controls subsequent to the date the Company carried out its
  evaluation.

Disclosure controls and procedures are controls and other
  procedures that are designed to ensure that information required to be disclosed
  in the Companys reports filed or submitted under the Exchange Act is recorded,
  processed, summarized and reported, within the time periods specified in the
  SECs rules and forms. Disclosure controls and procedures include, without
  limitation, controls and procedures designed to ensure that information required
  to be disclosed in the Companys reports filed under the Exchange Act

50

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is accumulated and communicated to management, including the
  Companys President and Chief Financial Officer as appropriate, to allow
  timely decisions regarding required disclosure.

Item 16.     RESERVED

Item 16A.  AUDIT COMMITEE FINANCIAL EXPERT

The Company currently does not have an audit committee
  financial expert sitting on its board of directors.

The Company believes that the members of its Board of Directors
  are collectively capable of analyzing and evaluating the Companys financial
  statements and understanding internal controls and procedures for financial
  reporting. In addition, the Company believes that retaining an independent director
  who would qualify as an "audit committee financial expert" would be overly costly
  and burdensome and is not warranted given the early stages of the Companys
  development and the fact that it has not generated significant revenues to date.

Item 16B.  CODE OF ETHICS

The Company recently adopted a code of ethics that applies
  to all the Companys officers, including the President and the Chief Financial
  Officer. A copy of the code of ethics is filed as an exhibit to this Annual
  Report.

Item 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Davidson & Company acted as the Companys independent
  auditor for the fiscal years ended December 31, 2003 and 2002. The chart below
  sets forth the total amount billed to the Company by Davidson & Company
  for services performed in the years 2003 and 2002 and breaks down these amounts
  by category of service in Cdn$:

|               | Year2003$ | Year2002$
|-------------- | --------- | ---------
|Audit:         | 57,700    | 10,700   
|Audit Related: | Nil       | Nil      
|Tax            | Nil       | 1,800    
|All Other Fees | Nil       | Nil      

Audit Fees are the aggregate fees billed by Davidson
  & Company for the audit of the Companys annual financial statements,
  reviews of interim financial statements, attestation services that are provided
  in connection with statutory and regulatory filings or engagements and assistance
  in responding to comment letters from securities regulatory bodies and consultations
  with the Companys management as to accounting or disclosure treatment
  of transactions or events and/or the actual or potential impact of final or
  proposed rules, standards or interpretation by the securities regulatory authorities,
  accounting standard vetting bodies or other regulatory or standard setting bodies.

Audit-Related Fees are fees charged by Davidson
  & Company assurance and related services that are reasonably related to
  the performance of the audit or review of the Companys financial statements
  and are not reported under Audit Fees. This category comprises fees
  billed for independent accountant

51

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review of the interim financial statements and Management
  Discussion and Analysis, as well as advisory services associated with the Companys
  financial reporting.

Tax Fees are fees for professional services rendered
  by Davidson & Company for tax compliance, tax advice on actual or contemplated
  transactions.

Audit Committees pre-approval policies and procedures

The Audit Committee nominates and engages the independent
  auditors to audit the financial statements, and approves all audit, audit-related
  services, tax services and other services provided by Davidson & Company.
  Any services provided by Davidson & Company that are not specifically included
  within the scope of the audit must be pre-approved by the audit committee prior
  to any engagement. The audit committee is permitted to approve certain fees
  for audit-related services, tax services and other services pursuant to a de
  minimusexception before the completion of the engagement.

Item 16D.  EXEMPTIONS FROM THE LISTING STANDARDS FOR
  AUDIT COMMITTEES.

Not Applicable

Item 16E.  PURCHASES OF EQUITY SECURITIES BY THE ISSUER
  AND AFFILIATEDPURCHASERS.

None

PART III

Item 17.     FINANCIAL STATEMENTS

The consolidated financial statements of the Company have
  been prepared on the basis of Canadian GAAP. A reconciliation to U.S. GAAP is
  included therein.

The auditors report, financial statements and notes
  thereto, schedules thereto as required under Item 17 are found immediately below.

Financial Statements of the Company:

Report of Independent Registered Public
  Accounting Firm dated March 22, 2004 including comments by Auditors for U.S.
  Readers on Canada - U.S. Reporting Difference

Audited Consolidated Balance Sheets as of December 31,
  2003 and 2002

Audited Consolidated Statements of Operations for the
  Fiscal Periods Ended December 31, 2003, 2002 and 2001

Audited Consolidated Statement of Changes in Shareholders
  Equity (Deficiency)

Audited Consolidated Statements of Cash
  Flows for the Fiscal Periods Ended December 31, 2003, 2002 and 2001

Notes to the Audited Consolidated Financial
  Statements

All other financial statement schedules are omitted because
  the information is not required, is not material or is otherwise included in
  the financial statements or related notes thereto.

52

---

PMI VENTURES LTD.
  (An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS 
  (Expressed in Canadian Dollars)

DECEMBER 31, 2003

F-1

---

|DAVIDSON
      & COMPANY | Chartered
      Accountants | A
      Partnership of Incorporated Professionals
|------------------------ | --------------------------- | -------------------------------------------------

REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM - FORM 20-F

To the Shareholders of
  PMI Ventures Ltd.

We have audited the balance sheets of PMI Ventures Ltd. as
  at December 31, 2003 and 2002 and the consolidated statements of operations,
  changes in stockholders’ equity (deficiency) and cash flows for the years
  ended December 31, 2003, 2002 and 2001. These financial statements are the responsibility
  of the Company's management. Our responsibility is to express an opinion on
  these financial statements based on our audits.

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

In our opinion, these consolidated financial statements present
  fairly, in all material respects, the financial position of the Company as at
  December 31, 2003 and 2002 and the results of its operations and its cash flows
  for the years ended December 31, 2003, 2002 and 2001 in accordance with Canadian
  generally accepted accounting principles.

"DAVIDSON & COMPANY"

|Vancouver, Canada | Chartered Accountants
|----------------- | ---------------------
|                  |                      
|March 22, 2004    |                      

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA –
  U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require
  the addition of an explanatory paragraph (following the opinion paragraph) when
  the financial statements are affected by conditions and events that cast substantial
  doubt on the Company's ability to continue as a going concern, such as those
  described in Note 1 to the financial statements. Our report to the shareholders
  dated March 22, 2004 is expressed in accordance with Canadian reporting standards
  which do not permit a reference to such events and conditions in the auditors'
  report when these are adequately disclosed in the financial statements.

"DAVIDSON & COMPANY"

|Vancouver, Canada | Chartered Accountants
|----------------- | ---------------------
|                  |                      
|March 22, 2004    |                      

A Member of SC INTERNATIONAL

1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre,
  Vancouver, BC, Canada, V7Y 1G6
  Telephone (604) 687-0947 Fax (604) 687-6172

F-2

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      CONSOLIDATED BALANCE SHEETS
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|--------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                        

|                                                                  |   | 2003      |  |   | 2002    | 
|----------------------------------------------------------------- | - | --------- |  | - | ------- | 
|                                                                  |   |           |  |   |         | 
|ASSETS                                                            |   |           |  |   |         | 
|                                                                  |   |           |  |   |         | 
|Current                                                           |   |           |  |   |         | 
|Cash and cash equivalents                                         | $ | 867,606   |  | $ | 174,375 | 
|Receivables                                                       |   | 56,475    |  |   | 7,452   | 
|Prepaid expenses                                                  |   | 41,603    |  |   | 4,151   | 
|Short term investment (Note
      4)                              |   | 1,500,000 |  |   | -       | 
|                                                                  |   |           |  |   |         | 
|Total current assets                                              |   | 2,465,684 |  |   | 185,978 | 
|                                                                  |   |           |  |   |         | 
|Due from related parties(Note 10)                                 |   | 43,824    |  |   | -       | 
|                                                                  |   |           |  |   |         | 
|Mineral property interests and deferred exploration costs(Note 5) |   | 2,107,890 |  |   | -       | 
|                                                                  |   |           |  |   |         | 
|Oil and gas properties(Note 6)                                    |   | 1         |  |   | 1       | 
|                                                                  |   |           |  |   |         | 
|Equipment(Note 7)                                                 |   | 16,714    |  |   | 3,621   | 
|                                                                  |   |           |  |   |         | 
|Total assets                                                      | $ | 4,634,113 |  | $ | 189,600 | 

- continued-

The accompanying notes are an integral part of these consolidated
  financial statements.

F-3

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      CONSOLIDATED BALANCE SHEETS
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|--------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                        

|                                                                 |   | 2003       |   |   | 2002       |  
|---------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                 |   |            |   |   |            |  
|Continued                                                        |   |            |   |   |            |  
|                                                                 |   |            |   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                             |   |            |   |   |            |  
|                                                                 |   |            |   |   |            |  
|Current                                                          |   |            |   |   |            |  
|Accounts payable and accrued
      liabilities                   | $ | 227,238    |   | $ | 24,238     |  
|Due to related parties (Note
      10)                           |   | 18,285     |   |   | -          |  
|                                                                 |   |            |   |   |            |  
|Total liabilities                                                |   | 245,523    |   |   | 24,238     |  
|                                                                 |   |            |   |   |            |  
|Commitment(Note 14)                                              |   |            |   |   |            |  
|                                                                 |   |            |   |   |            |  
|Stockholders' equity                                             |   |            |   |   |            |  
|Capital stock (Note 9)                                           |   |            |   |   |            |  
|Authorized                                                       |   |            |   |   |            |  
|100,000,000 common shares, without par value                     |   |            |   |   |            |  
|100,000,000 Class A voting preference shares, $10 par value each |   |            |   |   |            |  
|100,000,000 Class B voting preference shares, $50 par value each |   |            |   |   |            |  
|                                                                 |   |            |   |   |            |  
|Issued and outstanding                                           |   |            |   |   |            |  
|23,475,396 common shares (2002  10,130,389)                     |   | 9,507,438  |   |   | 4,878,986  |  
|Subscriptions received in
      advance                          |   | -          |   |   | 13,500     |  
|Contributed surplus                                              |   | 698,379    |   |   | 71,762     |  
|Deficit                                                          |   | (5,817,227 | ) |   | (4,798,886 | )
|                                                                 |   |            |   |   |            |  
|Total stockholders' equity                                       |   | 4,388,590  |   |   | 165,362    |  
|                                                                 |   |            |   |   |            |  
|Total liabilities and stockholders' equity                       | $ | 4,634,113  |   | $ | 189,600    |  
|                                                                 |   |            |   |   |            |  
|Nature and continuance of operations(Note 1)                     |   |            |   |   |            |  

|On behalf of the Board:      |          |  |                      |         
|---------------------------- | -------- |  | -------------------- | --------
|                             |          |  |                      |         
|/s/
      Douglas MacQuarrie | Director |  | /s/
      Len Dennis | Director
|                             |          |  |                      |         

The accompanying notes are an integral part of these consolidated
  financial statements.

F-4

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      CONSOLIDATED STATEMENTS OF OPERATIONS
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                  

|                                                    |   | 2003       |   |   | 2002      |   |   | 2001      |  
|--------------------------------------------------- | - | ---------- | - | - | --------- | - | - | --------- | -
|                                                    |   |            |   |   |           |   |   |           |  
|EXPENSES                                            |   |            |   |   |           |   |   |           |  
|Amortization and depletion                          | $ | 2,410      |   | $ | 4,666     |   | $ | -         |  
|Bank charges and interest                           |   | 2,899      |   |   | 262       |   |   | 9,981     |  
|Engineering consulting                              |   | -          |   |   | 32,074    |   |   | -         |  
|Interest on convertible
      notes                 |   | -          |   |   | 37,297    |   |   | 15,703    |  
|Investor relations                                  |   | 189,535    |   |   | 3,504     |   |   | -         |  
|Management fees (Note 10)                           |   | 81,200     |   |   | 55,600    |   |   | 30,000    |  
|Office and miscellaneous                            |   | 115,644    |   |   | 4,170     |   |   | 5,991     |  
|Professional fees                                   |   | 134,749    |   |   | 21,109    |   |   | 38,327    |  
|Transfer agent and regulatory
      fees            |   | 45,396     |   |   | 9,878     |   |   | 12,515    |  
|Travel and promotion                                |   | 90,191     |   |   | 12,146    |   |   | 594       |  
|Wages and benefits                                  |   | 335,450    |   |   | 24,384    |   |   | -         |  
|                                                    |   |            |   |   |           |   |   |           |  
|Total expenses                                      |   | (997,474   | ) |   | (205,090  | ) |   | (113,111  | )
|                                                    |   |            |   |   |           |   |   |           |  
|OTHER ITEMS                                         |   |            |   |   |           |   |   |           |  
|Gas sales, net of cost                              |   | 8,869      |   |   | 9,206     |   |   | 2,817     |  
|Other income                                        |   | 8,768      |   |   | 1,982     |   |   | 2,526     |  
|Impairment of goodwill                              |   | (35,000    | ) |   | -         |   |   | -         |  
|Write-down of oil and gas
      properties (Note 6) |   | -          |   |   | (312,232  | ) |   | -         |  
|Write-down of equipment                             |   | (3,504     | ) |   | -         |   |   | -         |  
|                                                    |   |            |   |   |           |   |   |           |  
|                                                    |   | (20,867    | ) |   | (301,044  | ) |   | 5,343     |  
|                                                    |   |            |   |   |           |   |   |           |  
|Loss for the year                                   |   | (1,018,341 | ) |   | (506,134  | ) |   | (107,768  | )
|                                                    |   |            |   |   |           |   |   |           |  
|Basic and diluted loss per common share             | $ | (0.07      | ) | $ | (0.09     | ) | $ | (0.04     | )
|                                                    |   |            |   |   |           |   |   |           |  
|Basic and diluted weighted average number of        |   |            |   |   |           |   |   |           |  
|common shares outstanding                           |   | 14,627,645 |   |   | 5,742,082 |   |   | 2,840,718 |  

The accompanying notes are an integral part of these consolidated
  financial statements.

F-5

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
      (Expressed in Canadian Dollars)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                          

|                                                  | Capital Stock |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|------------------------------------------------- | ------------- | - | - | --------- | - | - | ------------ | - | - | ------------- | - | - | ----------- | - | - | ---------- | -
|                                                  |               |   |   |           |   |   | Equity       |   |   | Subscriptions |   |   |             |   |   |            |  
|                                                  | Number        |   |   |           |   |   | Component of |   |   | Received      |   |   | Contributed |   |   |            |  
|                                                  | of Shares     |   |   | Amount    |   |   | Convertible  |   |   | In Advance    |   |   | Surplus     |   |   | Deficit    |  
|                                                  |               |   |   |           |   |   | Notes        |   |   |               |   |   |             |   |   |            |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Balance, December 31, 2000                        | 14,141,948    |   | $ | 4,043,780 |   | $ | -            |   | $ | -             |   | $ | -           |   | $ | (4,184,984 | )
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Share consolidation
      (5:1)                   | (11,313,559   | ) |   | -         |   |   | -            |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Issued for conversion of  convertible
      notes | 900,000       |   |   | 90,000    |   |   | -            |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Equity component of convertible
      notes       | -             |   |   | -         |   |   | 125,626      |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Loss for the year                                 | -             |   |   | -         |   |   | -            |   |   | -             |   |   | -           |   |   | (107,768   | )
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Balance, December 31, 2001                        | 3,728,389     |   |   | 4,133,780 |   |   | 125,626      |   |   | -             |   |   | -           |   |   | (4,292,752 | )
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Issued for conversion of  convertible
      notes | 5,152,000     |   |   | 568,200   |   |   | (125,626     | ) |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Exercise of warrants                              | 1,250,000     |   |   | 187,500   |   |   | -            |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Share issuance costs                              | -             |   |   | (10,494   | ) |   | -            |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Share subscriptions received                      | -             |   |   | -         |   |   | -            |   |   | 13,500        |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Stock-based compensation                          | -             |   |   | -         |   |   | -            |   |   | -             |   |   | 71,762      |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Loss for the year                                 | -             |   |   | -         |   |   | -            |   |   | -             |   |   | -           |   |   | (506,134   | )
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Balance, December 31, 2002                        | 10,130,389    |   |   | 4,878,986 |   |   | -            |   |   | 13,500        |   |   | 71,762      |   |   | (4,798,886 | )
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Exercise of warrants                              | 4,982,000     |   |   | 891,686   |   |   | -            |   |   | (13,500       | ) |   | (18,385     | ) |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Exercise of stock options                         | 78,333        |   |   | 26,654    |   |   | -            |   |   | -             |   |   | (7,071      | ) |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Private placement issues                          | 7,234,674     |   |   | 3,140,920 |   |   | -            |   |   | -             |   |   | 472,179     |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Share issuance costs                              | -             |   |   | (200,808  | ) |   | -            |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Agents' warrants issued                           | -             |   |   | -         |   |   | -            |   |   | -             |   |   | 58,801      |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Stock-based compensation                          | -             |   |   | -         |   |   | -            |   |   | -             |   |   | 121,093     |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Property acquisitions                             | 1,000,000     |   |   | 735,000   |   |   | -            |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Acquisition of subsidiary                         | 50,000        |   |   | 35,000    |   |   | -            |   |   | -             |   |   | -           |   |   | -          |  
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Loss for the year                                 | -             |   |   | -         |   |   | -            |   |   | -             |   |   | -           |   |   | (1,018,341 | )
|                                                  |               |   |   |           |   |   |              |   |   |               |   |   |             |   |   |            |  
|Balance, December 31, 2003                        | 23,475,396    |   | $ | 9,507,438 |   | $ | -            |   | $ | -             |   | $ | 698,379     |   | $ | (5,817,227 | )

The accompanying notes are an integral part of these consolidated
  financial statements.

F-6

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      CONSOLIDATED STATEMENTS OF CASH FLOWS
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                  

|                                                                |   | 2003       |   |   | 2002     |   |   | 2001     |  
|--------------------------------------------------------------- | - | ---------- | - | - | -------- | - | - | -------- | -
|                                                                |   |            |   |   |          |   |   |          |  
|CASH FLOWS FROM OPERATING ACTIVITIES                            |   |            |   |   |          |   |   |          |  
|Loss for the year                                               | $ | (1,018,341 | ) | $ | (506,134 | ) | $ | (107,768 | )
|Items not affecting cash:                                       |   |            |   |   |          |   |   |          |  
|Amortization and depletion                                      |   | 2,410      |   |   | 4,666    |   |   | -        |  
|Accretion of liability component of convertible notes           |   | -          |   |   | 37,297   |   |   | 15,703   |  
|Stock-based compensation                                        |   | 121,093    |   |   | 71,762   |   |   | -        |  
|Impairment of goodwill                                          |   | 35,000     |   |   | -        |   |   | -        |  
|Write-down of oil and gas properties                            |   | -          |   |   | 312,232  |   |   | -        |  
|Write down of equipment                                         |   | 3,504      |   |   | -        |   |   | -        |  
|                                                                |   |            |   |   |          |   |   |          |  
|Changes in non-cash working
      capital items:                |   |            |   |   |          |   |   |          |  
|(Increase) decrease in receivables                              |   | (49,023    | ) |   | (7,452   | ) |   | 5,899    |  
|Increase in prepaid expenses                                    |   | (37,452    | ) |   | (1,244   | ) |   | (2,907   | )
|Increase (decrease) in accounts payable and accrued liabilities |   | 51,061     |   |   | 17,216   |   |   | (18,923  | )
|                                                                |   |            |   |   |          |   |   |          |  
|Net cash used in operating
      activities                     |   | (891,748   | ) |   | (71,657  | ) |   | (107,996 | )
|                                                                |   |            |   |   |          |   |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                            |   |            |   |   |          |   |   |          |  
|Proceeds from private placement
      issues                    |   | 3,671,900  |   |   | 187,500  |   |   | -        |  
|Issuance costs                                                  |   | (200,808   | ) |   | (10,494  | ) |   | -        |  
|Subscriptions received in
      advance                         |   | -          |   |   | 13,500   |   |   | -        |  
|Proceeds from exercise of
      stock options                   |   | 19,583     |   |   | -        |   |   | -        |  
|Proceeds from exercise of
      warrants                        |   | 859,801    |   |   | -        |   |   | -        |  
|Proceeds from convertible
      notes                           |   | -          |   |   | -        |   |   | 605,200  |  
|Advances from related parties                                   |   | 18,285     |   |   | -        |   |   | -        |  
|Advances to related parties                                     |   | (43,824    | ) |   | -        |   |   | -        |  
|Repayment of amounts from
      related parties                 |   | -          |   |   | -        |   |   | (121,451 | )
|                                                                |   |            |   |   |          |   |   |          |  
|Net cash provided by financing
      activities                 |   | 4,324,937  |   |   | 190,506  |   |   | 483,749  |  
|                                                                |   |            |   |   |          |   |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                            |   |            |   |   |          |   |   |          |  
|Oil and gas properties                                          |   | -          |   |   | -        |   |   | (316,815 | )
|Mineral property interests
      and deferred exploration costs |   | (1,220,951 | ) |   | -        |   |   | -        |  
|Purchase of short term investment                               |   | (1,500,000 | ) |   | -        |   |   | -        |  
|Purchase of equipment                                           |   | (19,007    | ) |   | (3,705   | ) |   | -        |  
|                                                                |   |            |   |   |          |   |   |          |  
|Net cash used in investing
      activities                     |   | (2,739,958 | ) |   | (3,705   | ) |   | (316,815 | )
|                                                                |   |            |   |   |          |   |   |          |  
|Increase in cash and cash equivalents during the year           |   | 693,231    |   |   | 115,144  |   |   | 58,938   |  
|                                                                |   |            |   |   |          |   |   |          |  
|Cash and cash equivalents, beginning of year                    |   | 174,375    |   |   | 59,231   |   |   | 293      |  
|                                                                |   |            |   |   |          |   |   |          |  
|Cash and cash equivalents, end of year                          | $ | 867,606    |   | $ | 174,375  |   | $ | 59,231   |  
|                                                                |   |            |   |   |          |   |   |          |  
|Cash paid during the year for interest                          | $ | -          |   | $ | -        |   | $ | 9,712    |  
|                                                                |   |            |   |   |          |   |   |          |  
|Cash paid during the year for income taxes                      | $ | -          |   | $ | -        |   | $ | -        |  

Supplemental disclosure with respect to cash flows (Note 12).

The accompanying notes are an integral part of these consolidated
  financial statements.

F-7

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|1. | NATURE AND CONTINUANCE OF OPERATIONS
      The Company is incorporated under the laws of British
        Columbia and its principal business activity is the acquisition and exploration
        of mineral property interests. In addition, the Company has residual interests
        in an oil and gas property, as described in Note 6. However, the Company
        is not pursuing additional or new exploration in this area and it does
        not comprise the Company's principal business activity.
      On March 27, 2001 the Company changed its name from
        Primero Industries Ltd. to PMI Ventures Ltd. and consolidated its capital
        stock on a 5:1 basis. During the year ended December 31, 2003, the Company
        acquired all 725,000 outstanding shares of common stock of Columbia Hunter
        Capital Corp. (Note 3).
      The Company is in the process of exploring its mineral
        property interests and has not yet determined whether the mineral property
        interests contain ore reserves that are economically recoverable. The
        recoverability of the amounts shown for mineral property interests and
        related deferred exploration costs are dependent upon the existence of
        economically recoverable reserves, the ability of the Company to obtain
        necessary financing to complete the development of those reserves and
        upon future profitable production.
      These financial statements have been prepared in accordance
        with Canadian generally accepted accounting principles applicable to a
        going concern which assume that the Company will realize its assets and
        discharge its liabilities in the normal course of business rather than
        a process of forced liquidation. The continuing operations of the Company
        are dependent upon its ability to continue to raise adequate financing
        and to commence profitable operations in the future.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |            |   |   |            |  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2003       |   |   | 2002       |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |            |   |   |            |  
|   | Deficit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $ | (5,817,227 | ) | $ | (4,798,886 | )
|   | Working capital                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $ | 2,220,161  |   | $ | 161,740    |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |            |   |   |            |  
|2. | SIGNIFICANT ACCOUNTING
        POLICIES
      These consolidated financial statements have been prepared
        in accordance with Canadian generally accepted accounting principles.
        The significant accounting policies adopted by the company are as follows:
      Principles of consolidation
      These consolidated financial statements include the
        accounts of the Company and its wholly owned subsidiary, PMI Resources
        (Delaware) Corp., which is incorporated under the laws of the state of
        Delaware in the United States of America. All material inter-company transactions
        and balances have been eliminated upon consolidation.
      Use of estimates
      The preparation of financial statements in conformity
        with Canadian generally accepted accounting principles requires management
        to make estimates and assumptions that affect the reported amount of assets
        and liabilities and the disclosure of contingent assets and liabilities
        at the date of the financial statements and the reported amount of revenues
        and expenses during the year. Actual results could differ from these estimates.

F-8

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|2. | SIGNIFICANT ACCOUNTING POLICIES(cont'd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   | Cash and cash equivalents consist of cash on hand
        and funds held in trust with the lawyer. To limit its credit risk exposure
        for amounts in excess of federally insured limits, the Company places
        its deposits with financial institutions of high credit standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | Receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | Provisions are made for doubtful accounts on an
        individual basis as necessary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | Investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   | Long-term investments are carried at cost. If it
        is determined that the value of the investment is permanently impaired,
        it is written down to its estimated net realizable value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | Oil and gas properties and related depletion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | The Company has an interest in an oil and gas property
        (Note 6) and is holding this interest as an investment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | Estimated future removal and site restoration costs
        are provided for using the unit-of-production method. These costs are
        based on engineering estimates of the anticipated costs of site restoration
        in accordance with current legislation and industry practices. The annual
        charge is recorded as additional depletion and amortization. No charges
        were recorded during the years presented.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   | Crown royalties and production revenue from oil
        and gas properties are recognized when amounts are received, after title
        passes and collection of the amount is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Mineral property interests and deferred exploration
        costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | The Company records mineral property interests,
        which consist of the right to explore for mineral deposits, at cost. The
        Company records deferred exploration costs, which consist of costs attributable
        to the exploration of mineral property interests, at cost. All direct
        and indirect costs relating to the acquisition and exploration of these
        mineral property interests are capitalized on the basis of specific claim
        blocks until the mineral property interests to which they relate are placed
        into production, the mineral property interests are disposed of through
        sale or where management has determined there to be an impairment. If
        a mineral property interest is abandoned, the mineral property interests
        and deferred exploration costs will be written off to operations in the
        period of abandonment.
|  
|   | On an ongoing basis, the capitalized costs are reviewed
        on a property-by-property basis to consider if there is any impairment
        on the subject property. Management's determination for impairment is
        based on: i) whether the Company's exploration programs on the mineral
        property interests have significantly changed, such that previously identified
        resource targets are no longer being pursued; ii) whether exploration
        results to date are promising and whether additional exploration work
        is being planned in the foreseeable future or iii) whether remaining lease
        terms are insufficient to conduct necessary studies or exploration work.
        As at December 31, 2003 and 2002, management                                                                                                                                           

F-9

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|2. | SIGNIFICANT ACCOUNTING POLICIES(cont'd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Mineral property interests and deferred exploration
        costs(cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | believes that no impairment relating to the mineral
        property interests and deferred exploration costs was required.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | The recorded cost of mineral property interests
        and deferred exploration costs is based on cash paid and the assigned
        value of share consideration issued for mineral property interest acquisitions
        and exploration costs incurred. The recorded amount may not reflect recoverable
        value as this will be dependent on future development programs, the nature
        of the mineral deposit, commodity prices, adequate funding and the ability
        of the Company to bring its projects into production.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | Canadian GAAP Conflict in Accounting for Mineral
        Property Interests and Deferred Exploration                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   | In March 2000, the Accounting Standards Board of
        the Canadian Institute of Chartered Accountants ("CICA") issued Accounting
        Guideline No. 11 "Enterprises in the Development Stage" ("AcG 11"). AcG
        11 addresses three distinct issues: i) the capitalization of costs/expenditures;
        ii) impairment; and iii) disclosure. Prior to its issuance, development
        stage entities were exempt from following certain aspects of Canadian
        GAAP. AcG 11 requires that all companies account for transactions based
        on the underlying characteristics of the transaction rather than the maturity
        of the enterprise. In addition, AcG 11 requires specific disclosure of
        information by development stage companies and is effective no later than
        fiscal periods beginning on or after April 1, 2000, which in the case
        of the Company, is the year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                        
|  
|   | In March 2002, the Emerging Issues Committee ("EIC")
        of the CICA issued EIC-126 "Accounting by Mining Enterprises for Exploration
        Costs" ("EIC-126") which interprets how AcG 11 affects mining companies
        with respect to the deferral of exploration costs. EIC-126 refers to CICA
        Handbook Section 3061 "Property, Plant and Equipment" ("HB 3061"), paragraph
        .21, which states that for a mining property, the cost of the asset includes
        exploration costs if the enterprise considers that such costs have the
        characteristics of property, plant and equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  
|   | EIC-126 then states that a mining enterprise that
        has not established mineral reserves objectively, and therefore does not
        have a basis for preparing a projection of the estimated cash flow from
        the property, is not precluded from considering the exploration costs
        to have the characteristics of property, plant and equipment. EIC-126
        also sets forth the EIC's consensus that a mining enterprise in the development
        stage is not required to consider the conditions in AcG 11 regarding impairment
        in determining whether exploration costs may be initially capitalized.
        With respect to impairment of capitalized exploration costs, EIC-126 sets
        forth the EIC's consensus that a mining enterprise in the development
        stage that has not established mineral reserves objectively, and, therefore,
        does not have a basis for preparing a projection of the estimated cash
        flow from the property, is not obliged to conclude that capitalized costs
        have been impaired. However, such an enterprise should consider the conditions
        set forth in AcG 11 and HB 3061 in determining whether a subsequent write-down
        of capitalized exploration costs related to mining properties is required.
|  
|   | As disclosed above, the Company considers that its
        mineral property interests and deferred exploration costs have the characteristics
        of property, plant and equipment, and, accordingly, the Company has chosen
        to classify its mineral property interests and deferred exploration costs
        as tangible assets in accordance with its interpretation of Canadian GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-10

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|2. | SIGNIFICANT ACCOUNTING POLICIES(cont'd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Mineral property interests and deferred exploration
        costs(cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | Although the Company believes its accounting policy
        is appropriate and consistent with Canadian GAAP, there is an alternative
        interpretation of Canadian GAAP that would consider them to be intangible
        assets as a result of the issuance of CICA Handbook Section 1581 "Business
        Combinations" ("HB 1581") and CICA Handbook Section 3062 "Goodwill and
        Other Intangible Assets" ("HB 3062").                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | This alternative interpretation under HB 1581 and
        HB 3062 would provide for the capitalization of a contract based mining
        asset as an intangible asset at its fair value at the time it was acquired,
        either as an individual asset purchase or as part of a business combination.
        For exploration stage mineral property interests and deferred exploration
        costs such as those owned by the Company, the excess of the carrying value
        over the residual value of the intangible assets would be amortized on
        a straight-line basis over the period in which the Company expected to
        complete its exploration process or convert, develop or further explore
        the underlying properties. For the Company, a reasonable estimate of this
        amortization period would be 13 years.
|  
|   | If the Company had chosen to account for these costs
        as intangible assets under HB 1581 and HB 3062 effective January 1, 2003,
        the Company's balance sheet as at December 31, 2003 and statements of
        operations for the year then ended would change as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |                                  |   |            
| | -------------------------------- | - | -----------
| |                                  |   | 2003       
| |                                  |   |            
| |                                  |   | Balance,   
| |                                  |   | as reported
| |                                  |   |            
| | Current assets                   | $ | 2,465,684  
| | Due from related parties         |   | 43,824     
| | Mineral property interests and   |   |            
| | deferred exploration
      costs |   | 2,107,890  
| | Oil and gas properties           |   | 1          
| | Equipment                        |   | 16,714     
| |                                  |   |            
| |                                  | $ | 4,634,113  
| |                                  |   |            
| | Liabilities                      | $ | 245,523    
| |                                  |   |            
| | Stockholders' equity             |   | 4,388,590  
| |                                  |   |            
| |                                  | $ | 4,634,113  



F-11

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|2. | SIGNIFICANT ACCOUNTING POLICIES(cont'd...)                        
|-- | ------------------------------------------------------------------
|   |                                                                   
|   | Mineral property interests and deferred exploration costs(cont'd)

| |                                                               |   |            |  
| | ------------------------------------------------------------- | - | ---------- | -
| |                                                               |   | 2003       |  
| |                                                               |   |            |  
| | Loss for the year, as reported                                | $ | (1,018,341 | )
| | Adjustments:                                                  |   |            |  
| | Amortization of mineral property interests
      and deferred |   |            |  
| | exploration costs                                             |   | (162,415   | )
| |                                                               |   |            |  
| | Loss for the year, pro-forma                                  | $ | (1,180,756 | )
| |                                                               |   |            |  
| | Basic and diluted loss per share, as reported                 | $ | (0.07      | )
| |                                                               |   |            |  
| | Basic and diluted loss per share, pro-forma                   | $ | (0.08      | )

It is possible that the CICA may provide additional guidance
  in the future that may clarify this situation and such guidance, if promulgated,
  may confirm or change the Company's current method of accounting for mineral
  property interests. Unless such alternative guidance is provided, the Company
  expects to continue accounting for these assets as tangible assets.

Cost of maintaining mineral property interests and deferred
  exploration costs

The Company does not accrue the estimated future costs of
  maintaining its mineral property interests and deferred exploration costs in
  good standing.

Environmental protection and rehabilitation costs


Liabilities related to environmental protection and rehabilitation
  costs are accrued and charged against income when their likelihood of occurrence
  is established. This includes future removal and site restoration costs as required
  due to environmental law or contracts.

Equipment

Equipment is recorded at cost less accumulated amortization.
  Amortization is recorded on a declining balance basis at the following annual
  rates:

| | Computer equipment      | 30% | 
| | ----------------------- | --- | 
| | Furniture and equipment | 20% | 

F-12

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|2. | SIGNIFICANT ACCOUNTING POLICIES(cont'd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Foreign currency translation and transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   | Monetary items denominated in a foreign currency
        are translated into Canadian dollars at exchange rates in effect at the
        balance sheet date and non-monetary items are translated at rates of exchange
        in effect when the assets were acquired or obligations incurred. Revenues
        and expenses denominated in a foreign currency are translated at an average
        exchange rate for the period. Realized foreign exchange gains and losses
        are included in loss for the year.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | During the year ended December 31, 2003, the aggregate
        foreign currency transaction loss recognized in determining loss for the
        year was $35,377 (2002 and 2001 - $Nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Stock based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   | Effective January 1, 2002, the Company adopted CICA
        Handbook Section 3870 "Stock-Based Compensation and Other Stock-Based
        Payments" ("Section 3870") which recommends the fair value-based methodology
        for measuring compensation costs but permits the intrinsic value-based
        method. For the year ended December 31, 2002, the Company applied the
        intrinsic value-based method, which recognizes compensation cost for awards
        to employees only when the market price exceeds the exercise price at
        date of grant but requires pro-forma disclosure of earnings and earnings
        per share as if the fair value method had been adopted. For the year ended
        December 31, 2003, the Company has prospectively adopted the fair value
        method for measuring compensation. Any consideration paid by the option
        holders to purchase shares is credited to capital stock.
|  
|   | Future income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   | Future income taxes are recorded using the asset
        and liability method whereby future tax assets and liabilities are recognized
        for the future tax consequences attributable to differences between the
        financial statement carrying amounts of existing assets and liabilities
        and their respective tax bases. Future tax assets and liabilities are
        measured using the enacted or substantively enacted tax rates expected
        to apply when the asset is realized or the liability settled. The effect
        on future tax assets and liabilities of a change in tax rates is recognized
        in income in the period that substantive enactment or enactment occurs.
        To the extent that the Company does not consider it more likely than not
        that a future tax asset will be recovered, it provides a valuation allowance
        against the excess.                                
|  
|   | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | The Company uses the treasury stock method to compute
        the dilutive effect of options, warrants and similar instruments. Under
        this method, the dilutive effect on loss per share is recognized on the
        use of the proceeds that could be obtained upon exercise of options, warrants
        and similar instruments. It assumes that the proceeds would be used to
        purchase common shares at the average market price during the period.
        For the years presented, this calculation proved to be anti-dilutive.
        At December 31, 2003, 2002 and 2001, the total number of potentially dilutive
        shares excluded from diluted net loss per share was 5,849,825, 5,597,000,
        and 6,052,000, respectively.                                                                                                                                                                                       
|  
|   | Basic loss per share is calculated using the weighted-average
        number of common shares outstanding during the year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-13

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|3. | BUSINESS ACQUISITION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | During the year ended December 31, 2003, the Company
        acquired all 725,000 outstanding shares of common stock of Columbia Hunter
        Capital Corp. ("CHCC"), a Delaware corporation, from the shareholders
        thereof in exchange for 50,000 shares of common stock of the Company (the
        "Acquisition"). The Acquisition was effective on September 22, 2003. The
        fair value of the shares issued on that date was $35,000.                                                                                                                                                                                                                                                                                     
|  
|   | Immediately following the Acquisition, PMI Resources
        (Delaware) Corp., a newly incorporated, wholly owned subsidiary of the
        Company, merged with CHCC. The merger was effective on September 26, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|   | Subsequent to the Acquisition, the Company determined
        that the carrying value of the subsidiary company exceeded its fair value
        as CHCC had no net assets and no sources of revenues at the date of the
        Acquisition and was unlikely to generate such net assets or revenue in
        the future. Accordingly, the Company recorded an impairment in goodwill
        for the full $35,000 fair value at which the investment was initially
        recorded.                                                                                                                                                                                                                                                         
|  
|   | The Acquisition was approved by the unanimous consent
        of the Board of Directors of the Issuer and its shareholders on September
        19, 2003, and was effective on September 22, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|4. | SHORT TERM INVESTMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | The short term investment consists of a guaranteed
        investment certificate bearing a nominal rate of interest, maturing October
        14, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|5. | MINERAL PROPERTY INTERESTS AND DEFERRED EXPLORATION
        COSTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | Title to mining properties involves certain inherent
        risks due to the difficulties of determining the validity of certain claims
        as well as the potential for problems arising from the frequently ambiguous
        conveyancing history characteristic of many mining properties. The Company
        has investigated title to all of its mineral properties and, to the best
        of its knowledge, title to all of its properties is in good standing.
        The properties in which the Company has committed to earn an interest
        are located in Ghana, West Africa and the Company is therefore relying
        on title opinion by legal counsel who is basing such opinions on the laws
        of Ghana.

F-14

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|5. | MINERAL PROPERTY INTERESTS AND DEFERRED EXPLORATION COSTS (cont'd)
|-- | -------------------------------------------------------------------

| |                                                        |   |           |  |   |      | 
| | ------------------------------------------------------ | - | --------- |  | - | ---- | 
| |                                                        |   | 2003      |  |   | 2002 | 
| |                                                        |   |           |  |   |      | 
| | Acquisition costs                                      |   |           |  |   |      | 
| | Balance, beginning
      of year                       | $ | -         |  | $ | -    | 
| |                                                        |   |           |  |   |      | 
| | Additions during the year                              |   | 825,000   |  |   | -    | 
| | Balance,
      end of year                             |   | 825,000   |  |   | -    | 
| |                                                        |   |           |  |   |      | 
| | Exploration costs                                      |   |           |  |   |      | 
| | Balance, beginning of the year                         |   | -         |  |   | -    | 
| |                                                        |   |           |  |   |      | 
| | Additions during the year:                             |   |           |  |   |      | 
| | Assaying,
      testing and analysis                   |   | 1,125     |  |   | -    | 
| | Diamond drilling                                       |   | 495,709   |  |   | -    | 
| | Project
      management and related exploration costs |   | 758,421   |  |   | -    | 
| | Transportation and
      travel                        |   | 27,635    |  |   | -    | 
| |                                                        |   |           |  |   |      | 
| | Additions during the year                              |   | 1,282,890 |  |   | -    | 
| |                                                        |   |           |  |   |      | 
| | Balance, end of the year                               |   | 1,282,890 |  |   | -    | 
| |                                                        |   |           |  |   |      | 
| | Total                                                  | $ | 2,107,890 |  | $ | -    | 

Asankrangwa Gold Belt


The Company entered into a letter agreement dated November
  22, 2002 with Goknet Mining Company Limited ("Goknet") whereby the Company has
  an option to acquire up to an 85% undivided interest in Goknet's Ashanti II
  Project which is located in the Asankrangwa Gold Belt in South Western Ghana,
  West Africa. The consideration to this option and joint venture agreement is
  as follows:

|a) | On the effective date of the agreement pay CAD$90,000
        and issue 500,000 common shares of the Company (paid and issued during
        2003).                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|b) | On the first anniversary date pay US$100,000 (paid
        subsequent to December 31, 2003), issue 500,000 common shares (issued
        during the year ended December 31, 2003) of the Company and have incurred
        expenditures of US$500,000 (incurred during the year ended December 31,
        2003) on the project;
|  
|c) | On the second anniversary date, pay US$100,000,
        issue 750,000 common shares of the Company and have incurred cumulative
        expenditures of US$1,500,000 on the project; and                                                                                                                                        
|  
|d) | On the third anniversary date, issue 1,250,000 common
        shares of the Company and have incurred cumulative expenditures of US$3,000,000
        on the project.                                                                                                                                                           

F-15

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|5. | MINERAL PROPERTY INTERESTS AND DEFERRED EXPLORATION
        COSTS(cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | The Company will be deemed to have acquired an undivided
        interest in the project, equivalent to a formula set out in the agreement,
        commencing with a minimum contribution of 42.5% undivided interest to
        a maximum of 85% undivided interest in the project.                                                                                                                                                                                                                                                                                                                                          
|  
|   | Within 30 days of the date the Company completes
        the exercise of the option, Goknet may elect to retain an undivided 15%
        interest in the project or to convert such interest to a 4% net smelter
        returns ("NSR") royalty interest. The Company will pay to Goknet advance
        NSR payments of US$100,000 per year commencing on the date the election
        to convert to an NSR interest is made, deductible against future NSR payments.
        The Company may also elect to purchase 50% of Goknet's 4% NSR interest
        by paying to Goknet US$1,000,000 for 1% or US$2,000,000 for 2%.
|  
|   | The parties have agreed to form a joint venture
        if Goknet elects to retain an undivided 15% interest or the Company acquired
        less than an undivided 85% interest.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   | The TSX-V has accepted the consideration up to the
        second anniversary of the effective date of the agreement. The share consideration
        in the third year will be subject to further TSX-V review and approval.                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|6. | OIL AND GAS PROPERTIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |                            |   |      |  |   |          |  
| | -------------------------- | - | ---- |  | - | -------- | -
| |                            |   | 2003 |  |   | 2002     |  
| | Balance, beginning of year | $ | 1    |  | $ | 316,815  |  
| | Drilling                   |   | -    |  |   | -        |  
| | Engineering                |   | -    |  |   | -        |  
| |                            |   |      |  |   |          |  
| |                            |   | -    |  |   | 316,815  |  
| | Depletion for the year     |   | -    |  |   | (4,582   | )
| |                            |   |      |  |   |          |  
| | Write-down during the year |   | -    |  |   | (312,232 | )
| |                            |   |      |  |   |          |  
| | Balance, end of year       | $ | 1    |  | $ | 1        |  

Little Bow, Alberta


The Company entered into a farm-out
  letter agreement dated February 1, 2001 with Omax Resources Ltd. whereby the
  Company was granted an option to acquire a 60% interest in an oil and gas lease.
  Pursuant to the agreement, the Company agreed to pay 100% of the drilling and
  abandonment or the drilling, completion and tie-in costs to bring the well to
  production. During the year ended December 31, 2002, management determined the
  property to be uneconomical and decided to write down its interest in the oil
  and gas properties to a nominal value.

F-16

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|7. | EQUIPMENT
|-- | ---------

| |                         |   |        |  |   |              |  |   |            |  |   |       |  |   |              |  |   |            | 
| | ----------------------- | - | ------ |  | - | ------------ |  | - | ---------- |  | - | ----- |  | - | ------------ |  | - | ---------- | 
| |                         |   | 2003   |  |   | 2002         | 
| |                         |   |        |  |   | Accumulated  |  |   | Net        |  |   |       |  |   | Accumulated  |  |   | Net        | 
| |                         |   | Cost   |  |   | Amortization |  |   | Book Value |  |   | Cost  |  |   | Amortization |  |   | Book Value | 
| | Computer equipment      | $ | 10,131 |  | $ | 986          |  | $ | 9,145      |  | $ | 2,682 |  | $ | 67           |  | $ | 2,615      | 
| | Furniture and equipment |   | 8,539  |  |   | 970          |  |   | 7,569      |  |   | 1,023 |  |   | 17           |  |   | 1,006      | 
| |                         | $ | 18,670 |  | $ | 1,956        |  | $ | 16,714     |  | $ | 3,705 |  | $ | 84           |  | $ | 3,621      | 

|8. | CONVERTIBLE NOTES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | On September 21, 2001, the Company issued
        units consisting of convertible notes in the aggregate principal amount
        of $605,200 together with 6,052,000 detachable share purchase warrants.
        The notes were non-interest bearing and were to mature on September 21,
        2003. The holders of the convertible notes had the option to convert the
        notes into common shares of the Company at a conversion price of $0.10
        until September 21, 2002 and $0.15 until September 21, 2003.
|  
|   | Each share purchase warrant entitled the
        holder to purchase one common share of the Company at a price of $0.10
        per share on or before September 21, 2002 and at a price of $0.15 per
        share until September 21, 2003.                                                                                                                                                                                                                                                                                 
|  
|   | Using pricing models, the convertible
        notes were segregated into the respective fair value of their debt and
        equity components on the date the convertible notes were originally issued.
        The convertible notes and detachable warrants issued during the year ended
        December 31, 2001 were segregated into a debt component of $457,619 and
        an equity component of $147,581.                                                                                                          
|  
|   | As of December 31, 2002, all of the notes
        had been converted to equity.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|9. | CAPITAL STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   | Capital stock transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   | During the year ended December 31, 2001,
        the following stock transactions occurred:                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-17

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|9. | CAPITAL STOCK(cont'd)                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | During the year ended December 31, 2002,
        the following stock transactions occurred:                                                                                                                                                                                                                                         
|  
|   | a)                                                                                                                                                                                                                                                                                                                                  
|  
|   | b)                                                                                                                                                                                                                                                                                                                                  
|  
|   | c)                                                                                                                                                                                                                                                                                                                                  
|  
|   | During the year ended December 31, 2003,
        the following stock transactions occurred:                                                                                                                                                                                                                                         
|  
|   | a)                                                                                                                                                                                                                                                                                                                                  
|  
|   | b)                                                                                                                                                                                                                                                                                                                                  
|  
|   | c)                                                                                                                                                                                                                                                                                                                                  
|  
|   | d)                                                                                                                                                                                                                                                                                                                                  
|  
|   | e)                                                                                                                                                                                                                                                                                                                                  
|  
|   | Escrow shares                                                                                                                                                                                                                                                                                                                       
|  
|   | Included in issued and outstanding shares
        at December 31, 2003 are 62,083 (2002  62,083) common shares that
        are escrowed shares and may not be transferred, assigned or otherwise
        dealt with without the consent of the regulatory authorities.                                                            
|  
|   | Stock options                                                                                                                                                                                                                                                                                                                       
|  
|   | The Company, in accordance with the policies
        of the TSX-V, is authorized to grant options to its directors, officers
        and employees to acquire up to 20% of issued and outstanding common stock.
        The options are for a maximum term of 5 years and vest in three tranches
        over a period of 1.5 years.

F-18

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|9. | CAPITAL STOCK(cont'd)                                                                                
|-- | ------------------------------------------------------------------------------------------------------
|  
|   | Stock options(cont'd)                                                                                
|  
|   | As at December 31, 2003, the following incentive stock options were outstanding
      and exercisable:

| |           |  |          |  |             |  |          |  |                   |  |                  
| | --------- |  | -------- |  | ----------- |  | -------- |  | ----------------- |  | -----------------
| |           |  |          |  |             |  | Weighted |  |                   |  |                  
| |           |  |          |  | Number of   |  | Average  |  |                   |  | Average Remaining
| | Number    |  | Exercise |  | Options     |  | Exercise |  |                   |  | Contractual Life 
| | of Shares |  | Price    |  | Exercisable |  | Price    |  | Expiry Date       |  |                  
| |           |  |          |  |             |  |          |  |                   |  |                  
| | 716,667   |  | $   0.25 |  | 716,667     |  | $   0.25 |  | November 27, 2007 |  | 3.91 years       
| | 1,205,000 |  | $   0.70 |  | 401,667     |  | $   0.70 |  | May 23, 2008      |  | 4.40 years       
| | 100,000   |  | $   0.70 |  | -           |  | -        |  | August 28, 2008   |  | 4.66 years       
| | 360,000   |  | $   0.70 |  | -           |  | -        |  | October 14, 2008  |  | 4.79 years       
| | 2,381,667 |  |          |  | 1,118,334   |  |          |  |                   |  |                  

| | Stock option transactions and the number of stock
      options outstanding are summarized as follows:
| | ------------------------------------------------------------------------------------------------------
| |                                                                                                       
| |                                                                                                       
| |                                                                                                       
| |                                                                                                       
| |                                                                                                       
| |                                                                                                       
| |                                                                                                       
| |                                                                                                       
| | Options, beginning                                                                                    
| | of year                                                                                               
| | Granted                                                                                               
| | Exercised                                                                                             
| | Expired/
      forfeited                                                                              
| |                                                                                                       
| | Options, end of year                                                                                  
| |                                                                                                       
| | Weighted average fair                                                                                 
| | value of options granted                                                                              

Stock-based compensation


During the year ended December 31,
  2003, the Company elected to adopt the fair value method to value stock based
  compensation. Under the transitional provisions of Section 3870, the method
  has been applied prospectively.

F-19

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|9. | CAPITAL STOCK(cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   | Stock-based compensation(cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   | During the year ended December 31, 2002, the Company
        measured compensation costs using the intrinsic value- based method for
        employee stock options. Had the compensation costs for the year ended
        December 31, 2002 been determined based on the fair value of the options
        at the grant date using the Black-Scholes option pricing model, additional
        compensation expense would have been recorded in the statement of operations
        of the period, with pro forma results as presented below. Under the transitional
        provisions of Section 3870, comparative figures for the year ended December
        31, 2001 are not required.

| |                                                   |   |          |  
| | ------------------------------------------------- | - | -------- | -
| |                                                   |   | 2002     |  
| |                                                   |   |          |  
| | Loss for the year as reported                     | $ | (506,134 | )
| | Compensation expense                              |   | (167,228 | )
| |                                                   |   |          |  
| | Pro forma net loss for the year                   | $ | (673,362 | )
| |                                                   |   |          |  
| | Pro forma basic and diluted loss per common share | $ | (0.12    | )

The Company granted 1,665,000 stock
  options to employees during the year ended December 31, 2003. Accordingly, the
  stock based compensation recognized, based on the Black-Scholes options pricing
  model, was $121,093 and was recorded as wages and benefits expense.

The Company granted 100,000 stock
  options during the year ended December 31, 2002 to third party consultants.
  Accordingly, the stock-based compensation recognized, based on the Black-Scholes
  option pricing model, was $30,062 (2001 - $Nil) and was recorded as an engineering
  consulting expense.

The Company also granted 695,000 stock
  options during the year ended December 31, 2002 to employees at an exercise
  price below the share price at the date of granting. Accordingly, the stock-based
  compensation recognized, based on the intrinsic value was $21,600 (2001 - $Nil)
  and $20,100 (2001 - $Nil) and was recorded as management fees and wages and
  benefits, respectively.



| |                          |  |                  |  |         | 
| | ------------------------ |  | ---------------- |  | ------- | 
| |                          |  | 2003             |  | 2002    | 
| |                          |  |                  |  |         | 
| | Risk-free interest rate  |  | 3.09% - 3.20%    |  | 4.39%   | 
| | Expected life of options |  | 0.5 to 1.5 years |  | 5 years | 
| | Stock price volatility   |  | 50% - 58%        |  | 185.85% | 
| | Dividend rate            |  | 0.00%            |  | 0.00%   | 

F-20

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|9. | CAPITAL STOCK(cont'd)                                                            
|-- | ----------------------------------------------------------------------------------
|  
|   | Warrants                                                                          
|  
|   | The following share purchase warrants were outstanding at December 31,
      2003:

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                 |  |                          |  |                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- |  | ------------------------ |  | ----------------
|    | Number                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | Weighted        |  |                          |  |                 
|    | of Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Average Grant   |  | Exercise Price           |  | Expiry Date     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | Date Fair Value |  |                          |  |                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                 |  |                          |  |                 
|    | 1,519,845                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $0.12           |  | $0.85                    |  | April 4, 2004   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                 |  |                          |  |                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                 |  | $.70 during year one and |  | October 16, 2005
|    | 3,211,646                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $0.13           |  | $1.00 during year two    |  |                 
|    | 4,731,491                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | $0.13           |  |                          |  |                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|10. | RELATED PARTY TRANSACTIONSDuring the current year, the Company paid or accrued management fees of
        $81,200 (2002 - $55,600; 2001 -$30,000) to directors and companies controlled
        by an officer and a director of the Company.
      During the current year, the Company paid or accrued
        $1,543,400 (2002 - $Nil; 2001 - $Nil) with respect to the Company's Ghanaian
        operations and project management of mineral property exploration activities
        to a company related by virtue of its having a director who is also an
        officer of the Company.
      Included in convertible notes and equity component of
        convertible notes at December 31, 2003 is $Nil (2002 - $Nil; 2001 - $205,000)
        advanced by directors of the Company.
      Amounts due from and to related parties are unsecured,
        non-interest bearing with no specific terms of repayment and accordingly
        the fair value cannot be determined. These amounts have been advanced
        for the purposes of working capital between companies with a director
        in common.
      These transactions are in the normal course of operations
        and are measured at the exchange amount, which is the amount of consideration
        established and agreed to by the related parties.

F-21

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|11. | INCOME TAXES                                                                                           
|--- | -------------------------------------------------------------------------------------------------------
|   
|    | A reconciliation of income taxes at statutory rates with the reported
      income taxes is as follows:

| |                                                                                              |   |            |   |   |          |   |   |          |  
| | -------------------------------------------------------------------------------------------- | - | ---------- | - | - | -------- | - | - | -------- | -
| |                                                                                              |   | 2003       |   |   | 2002     |   |   | 2001     |  
| |                                                                                              |   |            |   |   |          |   |   |          |  
| | Loss for the year                                                                            | $ | (1,018,341 | ) | $ | (506,134 | ) | $ | (107,768 | )
| |                                                                                              |   |            |   |   |          |   |   |          |  
| | Expected income tax expense (recovery)                                                       | $ | (382,896   | ) | $ | (200,429 | ) | $ | (47,418  | )
| | Non-deductible expenses                                                                      |   | 22,436     |   |   | 1,017    |   |   | -        |  
| | Write-down of oil and gas properties                                                         |   | -          |   |   | 123,644  |   |   | -        |  
| | Unrecognized benefit of non-capital losses                                                   |   | 360,460    |   |   | 75,768   |   |   | 47,418   |  
| |                                                                                              |   |            |   |   |          |   |   |          |  
| | Total income taxes                                                                           | $ | -          |   | $ | -        |   | $ | -        |  
| |                                                                                             
| | The significant components of the Company's future income
      taxes assets are as follows:

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |            |   |   |          |   |   |          |  
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | -------- | - | - | -------- | -
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 2003       |   |   | 2002     |   |   | 2001     |  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |            |   |   |          |   |   |          |  
|    | Future income tax assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |          |   |   |          |  
|    | Non-capital loss carryforwards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | $ | 355,000    |   | $ | 260,000  |   | $ | 244,000  |  
|    | Cumulative
      exploration and development expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 617,000    |   |   | 652,000  |   |   | 722,000  |  
|    | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 59,000     |   |   | 3,000    |   |   | -        |  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |            |   |   |          |   |   |          |  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 1,031,000  |   |   | 915,000  |   |   | 966,000  |  
|    | Valuation allowance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | (1,031,000 | ) |   | (915,000 | ) |   | (966,000 | )
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |            |   |   |          |   |   |          |  
|    | Net future income tax assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $ | -          |   | $ | -        |   | $ | -        |  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | The Company has non-capital
        losses of approximately $997,000 available for deduction against future
        taxable income. These losses, if not utilized, will expire through 2010.
        Subject to certain restrictions, the Company also has resource expenditures
        of approximately $3,842,000 available to reduce taxable income in future
        years. Future tax benefits which may arise as a result of these non-capital
        losses and resource deductions have not been recognized in these financial
        statements and have been offset by a valuation allowance.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|12. | SUPPLEMENTAL DISCLOSURE
        WITH RESPECT TO CASH FLOWS
      The significant non-cash transactions of the Company
        for the year ended December 31, 2003 consisted of the following:                                                                                                                                                                                                                                                                                                                                                                                                            

| |  | a) | Purchase of subsidiary company for capital
      stock valued at | $ | 35,000 
| |  | -- | ---------------------------------------------------------------- | - | -------
| |  | b) | Deferred exploration costs for accounts payable of               | $ | 151,939
| |  | c) | Acquisition of mineral property for common
      stock valued at | $ | 735,000

F-22

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|12. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH
        FLOWS(cont'd.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The significant non-cash transaction of the Company
        for the year ended December 31, 2002 consisted of the issuing of 5,152,000
        common shares at a value of $515,200 upon conversion of convertible notes
        resulting in an increase to capital stock of $568,200 and a decrease of
        $442,574 and $125,626 to convertible notes and equity component of convertible
        notes, respectively.                                                                                                                                                                                                                                                                                                                                           
|   
|    | The significant non-cash transaction for the year
        ended December 31, 2001 consisted of the Company issuing 900,000 common
        shares at a value of $90,000 upon conversion of convertible notes resulting
        in an increase to capital stock of $90,000 and a decrease of $68,045 and
        $21,955 to convertible notes and equity component of convertible notes,
        respectively.                                                                                                                                                                                                                                                                                                                                                           
|   
|13. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|    | The Company's financial instruments consist of cash
        and cash equivalents, receivables, due from related parties, short term
        investment, accounts payable and accrued liabilities and due to related
        parties. Unless otherwise noted, it is management's opinion that the Company
        is not exposed to significant interest or credit risks arising from the
        financial instruments. The fair market values of these financial instruments
        approximate their carrying values, unless otherwise noted.                                                                                                                                                                                                                       
|   
|    | The Company is exposed to financial risk arising
        from fluctuations in foreign exchange rates and the degree of volatility
        of these rates. The Company does not use derivative instruments to reduce
        its exposure to foreign currency risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|    | As substantially all of the Company's mining operations
        are conducted in Ghana, the Company is subject to different considerations
        and other risks not typically associated with companies operating in North
        America and Western Europe. These include risks associated with, among
        others, political, economic and legal environments and foreign currency
        exchange. The Company's results may be adversely affected by changes in
        the political and social conditions in Ghana and by changes in governmental
        policies with respect to laws and regulations, anti-inflationary measures,
        currency conversion and remittance abroad, and rates and methods of taxation,
        amongst other things.
|   
|14. | COMMITMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|    | The Company has entered into an operating lease
        agreement for office premises. The annual lease commitments under this
        lease are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |  | 2004 |  | $ | 12,452 | 
| |  | ---- |  | - | ------ | 
| |  | 2005 |  |   | 12,452 | 
| |  |      |  |   |        | 
| |  |      |  | $ | 24,904 | 

F-23

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|15. | SEGMENT INFORMATION                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | The Company primarily operates in one reportable
        operating segment, being the acquisition and resource properties in Canada
        and Africa. Prior to the year ended December 31, 2003, the Company's operations
        were limited to Canada. For the year ended December 31, 2003, the Company's
        breakdown geographically was as follows:

| |  |                   |   | Geographic Information | 
| |  | ----------------- | - | ---------------------- | 
| |  |                   |   |                        | 
| |  |                   |   | Canada                 | 
| |  | Revenues          | $ | -                      | 
| |  | Long lived assets |   | 16,714                 | 



|16. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | Subsequent to year end, the Company:                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | c)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|    | d)                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|17. | DIFFERENCES BETWEEN CANADIAN AND UNITED
        STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES                                                                                                                                                                                                                                                                                                                                                 
|   
|    | These consolidated financial statements
        have been prepared in accordance with generally accepted accounting principles
        in Canada ("Canadian GAAP"). Material variations in the accounting principles,
        practices and methods used in preparing these financial statements from
        principles, practices and methods accepted in the United States ("United
        States GAAP") are described and quantified below:

F-24

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|17. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(cont'd)
|--- | --------------------------------------------------------------------------------------------------------

| |                                     |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| | ----------------------------------- | - | ---------- | - | - | ---------- | - | - | ------------- | - | - | ---------- | - | - | ---------- | - | - | ------------- | -
| |                                     |   | 2003       |   |   | 2002       |  
| |                                     |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| |                                     |   | Balances,  |   |   |            |   |   | Balances,     |   |   | Balances,  |   |   |            |   |   | Balances,     |  
| |                                     |   | Canadian   |   |   |            |   |   | United States |   |   | Canadian   |   |   |            |   |   | United States |  
| |                                     |   | GAAP       |   |   | Adjustment |   |   | GAAP          |   |   | GAAP       |   |   | Adjustment |   |   | GAAP          |  
| |                                     |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| | Consolidated balance sheets         |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| |                                     |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| | Current assets                      | $ | 2,465,684  |   | $ | -          |   | $ | 2,465,684     |   | $ | 185,978    |   | $ | -          |   | $ | 185,978       |  
| | Due from related parties            |   | 43,824     |   |   |            |   |   | 43,824        |   |   | -          |   |   | -          |   |   | -             |  
| | Mineral property interests and      |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   | -             |  
| | deferred exploration costs          |   | 2,107,890  |   |   | (2,107,890 | ) |   | -             |   |   | -          |   |   | -          |   |   |               |  
| | Oil and gas properties              |   | 1          |   |   |            |   |   | 1             |   |   | 1          |   |   |            |   |   | 1             |  
| | Equipment                           |   | 16,714     |   |   | -          |   |   | 16,714        |   |   | 3,621      |   |   | -          |   |   | 3,621         |  
| |                                     |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| | Total assets                        | $ | 4,634,113  |   | $ | (2,107,890 | ) | $ | 2,526,223     |   | $ | 189,600    |   | $ | -          |   | $ | 189,600       |  
| |                                     |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| | Total liabilities                   | $ | 245,523    |   | $ | -          |   | $ | 245,523       |   | $ | 24,238     |   | $ | -          |   | $ | 24,238        |  
| | Capital stock                       |   | 9,507,438  |   |   | -          |   |   | 9,507,438     |   |   | 4,878,986  |   |   | (53,000    | ) |   | 4,825,986     |  
| | Subscriptions received in advance   |   | -          |   |   | -          |   |   | -             |   |   | 13,500     |   |   | -          |   |   | 13,500        |  
| | Contributed surplus                 |   | 698,379    |   |   | -          |   |   | 698,379       |   |   | 71,762     |   |   | 147,581    |   |   | 219,343       |  
| | Deficit                             |   | (5,817,227 | ) |   | (2,107,890 | ) |   | (7,925,117    | ) |   | (4,798,886 | ) |   | (94,581    | ) |   | (4,893,467    | )
| |                                     |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| | Total liabilities and stockholders' |   |            |   |   |            |   |   |               |   |   |            |   |   |            |   |   |               |  
| | equity                              | $ | 4,634,113  |   | $ | (2,107,890 | ) | $ | 2,526,223     |   | $ | 189,600    |   | $ | -          |   | $ | 189,600       |  

| |                                                      |   | 2003       |   |   | 2002      |   |   | 2001      |  
| | ---------------------------------------------------- | - | ---------- | - | - | --------- | - | - | --------- | -
| | Consolidated statements of operations                |   |            |   |   |           |   |   |           |  
| |                                                      |   |            |   |   |           |   |   |           |  
| | Net loss, Canadian GAAP                              | $ | (1,018,341 | ) | $ | (506,134  | ) | $ | (107,768  | )
| | Adjustment to mineral property interests and         |   |            |   |   |           |   |   |           |  
| | deferred exploration costs                           |   | (2,107,890 | ) |   | -         |   |   | -         |  
| | Accreted interest on conversion of convertible notes |   | -          |   |   | (88,337   | ) |   | (6,244    | )
| |                                                      |   |            |   |   |           |   |   |           |  
| | Net loss, United States GAAP                         | $ | (3,126,231 | ) | $ | (594,471  | ) | $ | (114,012  | )
| |                                                      |   |            |   |   |           |   |   |           |  
| | Basic and diluted loss per share, United States GAAP | $ | (0.21      | ) | $ | (0.10     | ) | $ | (0.04     | )
| |                                                      |   |            |   |   |           |   |   |           |  
| | Basic and diluted weighted average number of         |   |            |   |   |           |   |   |           |  
| | common shares outstanding,
      United States GAAP  |   | 14,565,562 |   |   | 5,679,999 |   |   | 2,778,635 |  

F-25

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|17. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(cont'd)
|--- | --------------------------------------------------------------------------------------------------------

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ------- | - | - | -------- | -
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | 2003       |   |   | 2002    |   |   | 2001     |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Consolidated statements of cash flows                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |            |   |   |         |   |   |          |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Cash flows used in operating activities,
      Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | $ | (891,748   | ) | $ | (71,657 | ) | $ | (107,996 | )
|   | Adjustments to mineral properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | (1,220,951 | ) |   | -       |   |   | -        |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Cash flows used in operating activities,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |            |   |   |         |   |   |          |  
|   | United States GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | (2,112,699 | ) |   | (71,657 | ) |   | (107,996 | )
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Cash flows provided by financing activities,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |            |   |   |         |   |   |          |  
|   | Canadian GAAP and United States GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | 4,324,937  |   |   | 190,506 |   |   | 483,749  |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Cash flows used in investing activities, Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   | (2,739,958 | ) |   | (3,705  | ) |   | (316,815 | )
|   | Adjustments to mineral
      properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | 1,220,951  |   |   | -       |   |   | -        |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Cash flows used in investing activities,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |            |   |   |         |   |   |          |  
|   | United States GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | (1,519,007 | ) |   | (3,705  | ) |   | (316,815 | )
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Increase in cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | 693,231    |   |   | 115,144 |   |   | 58,938   |  
|   | Cash and cash equivalents, beginning of
      year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | 174,375    |   |   | 59,231  |   |   | 293      |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |            |   |   |         |   |   |          |  
|   | Cash and cash equivalents, end of year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | $ | 867,606    |   | $ | 174,375 |   | $ | 59,231   |  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|a) | Mineral property interests and deferred
        exploration costs
      Under Canadian GAAP, mineral property interests and
        deferred exploration costs, including acquisition and exploration costs,
        are carried at cost and written down if the properties are abandoned,
        sold or if management determines there to be an impairment in value. Under
        United States GAAP, mineral property interests and deferred exploration
        costs are expensed as incurred. Once a final feasibility study has been
        completed, additional costs incurred to bring the mine into production
        are capitalized as development costs. Costs incurred to access ore bodies
        identified in the current mining plan after production has commenced are
        considered production costs and are expensed as incurred. Costs incurred
        to extend production beyond those areas identified in the mining plan
        where additional reserves have been established are deferred as development
        costs until the incremental reserves are produced. Capitalized costs are
        amortized using the unit-of-production method over the estimated life
        of the ore body based on proven and probable reserves.

F-26

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|17. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
      ACCEPTED ACCOUNTING PRINCIPLES(cont'd)
|--- | ------------------------------------------------------------------------------------------------------
|   
|    | b)                                                                                                    
|   
|    |                                                                                                       
|   
|    | c)                                                                                                    
|   
|    |                                                                                                       
|   
|    |                                                                                                       
|   
|    | d)                                                                                                    
|   
|    |                                                                                                       
|   
|    |                                                                                                       

F-27

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|17. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY
      ACCEPTED ACCOUNTING PRINCIPLES(cont'd)
|--- | ------------------------------------------------------------------------------------------------------
|   
|    | e)                                                                                                    
|   
|    |                                                                                                       
|   
|    |                                                                                                       
|   
|    | f)                                                                                                    
|   
|    |                                                                                                       
|   
|    |                                                                                                       
|   
|    |                                                                                                       
|   
|    |                                                                                                       
|   
|    |                                                                                                       

F-28

---

|PMI VENTURES LTD.
      (An Exploration Stage Company) 
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 
      (Expressed in Canadian Dollars) 
      AS AT DECEMBER 31
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|17. | DIFFERENCES BETWEEN CANADIAN AND UNITED STATES
        GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(cont'd)
|--- | --------------------------------------------------------------------------------------------------------

| | f) | New accounting pronouncements(cont'd)                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    | returns or both. FIN 46 also requires disclosures
        about variable interest entities that the Company is not required to consolidate
        but in which it has a significant variable interest. The consolidation
        requirements of FIN 46 apply immediately to variable interest entities
        created after December 15, 2003. The consolidation requirements apply
        to older entities in the first fiscal year or interim period beginning
        after March 15, 2004.
|
| |    | The adoption of these new pronouncements is not
        expected to have a material effect on the Company's consolidated financial
        position or results of operations.                                                                                                                                                                                                                                                                                                                      

F-29

---

Item 18.     FINANCIAL STATEMENTS

The Company has elected to report under Item 17.

Item 19.     EXHIBITS

|3.1  | Memorandum and Articles of Incorporation (1)                                                                                                      
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                   
|10.1 | Altered Memorandum re Change of Name (1)                                                                                                          
|     |                                                                                                                                                   
|10.2 | Merger Agreement between the Company and Columbia Hunter Capital Corp.
      (1)                                                                  
|     |                                                                                                                                                   
|10.4 | Stock Option Plan (1)                                                                                                                             
|     |                                                                                                                                                   
|23.1 | Consent of auditors (1)                                                                                                                           
|     |                                                                                                                                                   
|23.2 | Consent of E.D. Black regarding the using of excerpts of the Technical
      Report on the Goknet Properties (1)                                  
|     |                                                                                                                                                   
|11.1 | Code of Ethics                                                                                                                                    
|     |                                                                                                                                                   
|12.1 | Certification of President required by Rule
      13a-14(a) or Rule 15d-14(a)                                                                     
|     |                                                                                                                                                   
|12.2 | Certification of CFO required by Rule 13a-14(a)
      or Rule 15d-14(a)                                                                           
|     |                                                                                                                                                   
|13.1 | Certification of the President pursuant to 18
      U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002
|     |                                                                                                                                                   
|13.2 | Certification of CFO pursuant to 18 U.S.C. Section
      1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                

(1)These exhibits were previously filed with the Companys
  Form 8K dated October 16, 2003.

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for
  filing on Annual Report and that it has duly caused and authorized the undersigned
  to sign this registration report on its behalf.

|Dated: June 23, 2004 | PMI VENTURES LTD.                 
|-------------------- | ----------------------------------
|                     |                                   
|                     | By: /s/ Douglas MacQuarrie /s/    
|                     | Douglas MacQuarrie
      President

53

---