<PAGE>   1
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                                   FORM 10-K
 
<TABLE>
<CAPTION>
(Mark One)
<S>          <C>
    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934

                     For the fiscal year ended December 31, 1998

                                          OR

    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934
</TABLE>
 
Commission file Number 0-16484
 
                           GETCHELL GOLD CORPORATION
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                               <C>
                 DELAWARE                                      64-0748908
     (State or other jurisdiction of              (I.R.S. Employer Identification No.)
      incorporation or organization)

         5460 SOUTH QUEBEC STREET                                80111
                SUITE 240                                      (Zip Code)
           ENGLEWOOD, COLORADO
(Address of principal executive offices)
</TABLE>
 
       Registrant's telephone number, including area code: (303) 771-9000
 
          Securities registered pursuant to Section 12(b) of the Act:
 
<TABLE>
<CAPTION>
             Title of Each Class                   Name of Exchanges on Which Registered
             -------------------                   -------------------------------------
<S>                                                <C>
       Common Stock, par value $0.0001                    American Stock Exchange
</TABLE>
 
     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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
 
     Aggregate market value of the voting stock held by non-affiliates of the
registrant, based on the February 23, 1999 closing price of $27 5/16 on the
American Stock Exchange, was approximately $823,800,000. Common Stock
outstanding on February 23, 1999 was 30,807,536 shares.
 
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<PAGE>   2
                                     PART I

ITEMS 1 AND 2.  BUSINESS AND PROPERTIES

INTRODUCTION

         Getchell Gold Corporation was incorporated in 1987 by ChemFirst Inc.
(formerly First Mississippi Corporation). After our initial public offering in
1988, ChemFirst held approximately 81% of our common stock. In October 1995,
ChemFirst distributed its shares of our common stock to its shareholders in a
tax free distribution.

         We are a Delaware corporation and are engaged in exploration and
production of gold from our 33,000-acre "Getchell Property" located in north
central Nevada (see map below). All of our consolidated sales and operating
losses and profits have been related to our gold mining activities in the United
States.

         Our executive offices are located at 5460 South Quebec Street, Suite
240, Englewood, Colorado 80111. Our telephone number is (303) 771-9000.

         On December 11, 1998, we entered into an Agreement and Plan of merger
with Placer Dome Inc., a Canada-based, international gold mining company, and
Bullion Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Placer Dome, pursuant to which Bullion Acquisition will be merged with and
into us, with us surviving the merger and becoming a wholly owned subsidiary of
Placer Dome. Under the terms of the merger agreement, each issued and
outstanding share of our common stock, other than shares owned by Placer Dome or
us, will be converted into 2.45 shares of Placer Dome's common stock. The merger
is subject to various regulatory approvals and other conditions. We currently
expect the merger to be consummated in April 1999.

                                      [MAP]

         Map which displays the outline of the Getchell Property, its general
locations within the state of Nevada and labels of the various mines, faults and
processing facilities.

THE GETCHELL PROPERTY

         General. The Getchell Property is located in the Potosi Mining District
on the eastern side of the Osgood Mountain Range, 43 miles northeast of
Winnemucca, Nevada. Access to the property is off Interstate 80 on a paved and
all-weather gravel road maintained and used jointly by us and various
competitors.

         Gold mining commenced at the Getchell Property in the late 1930's and
has continued intermittently since that time under several different owners.
ChemFirst purchased the inactive property from Conoco Inc. in 1983, at which
time ChemFirst began a development program. As of December 31, 1998, we had
produced over 1.9 million ounces of gold from the Getchell Property.



                                       1
<PAGE>   3
         Current operations on the Getchell Property include a pressure
oxidation ("autoclave") mill facility and two underground mines, the "Turquoise
Ridge" mine and the "Getchell Underground" mine. Production of development ore
at the Turquoise Ridge mine began in the first quarter of 1998. We began
commercial production at the Getchell Underground mine in May 1995. Prior to
July 1995, and for nine months during 1996, operations on the property also
included open pit mining of oxide and sulfide ores. During the year ended
December 31, 1998, Getchell sold 175,302 ounces of gold including 15,756
development ounces from the Turquoise Ridge mine, as compared to 179,676 ounces
of gold in 1997.

         In the years ended December 31, 1998 and 1997, we derived ore for mill
feed primarily from the Getchell Underground mine and from low-grade surface
stockpile ore, which was built up from the prior open pit mining operations.
Approximately 20% of the mill feed for 1998 consisted of this low-grade
stockpile ore.

         Property Interest. The Getchell Property consists of approximately
16,000 acres of land covered by unpatented lode and mill site mining claims and
14,100 acres of fee land owned by us. Greater than 61% of our current proven
and probable reserves are on fee land. Approximately 58% of the Getchell
Property, including all current proven and probable reserves, is subject to a
royalty payable to a third party equal to 2% of the sales revenues, net of
shipping and refining costs.

         Geology. Gold mineralization on the Getchell Property occurs in a
series of discrete zones associated with the north/south-trending Getchell Fault
and with the northeast-trending Turquoise Ridge Fault (see maps on pages 1 and
3). Both systems cut through a thick sequence of interbedded Paleozoic
sedimentary and volcanic units that dip at various angles. Intensity of gold
mineralization is related to structural complexity and the location of rocks
chemically receptive to mineralization. "Mineralization" is a naturally
occurring concentration of minerals which may or may not be economically
minable.

         Refractory sulfide gold deposits are found at depth along the Getchell
Fault and in sedimentary units near the Getchell Fault. Drilling has identified
similar gold deposits in folded Paleozoic sedimentary units in contact north and
south of the Turquoise Ridge Fault 2,000 feet northeast of the Getchell Fault.
Oxidized gold deposits are also associated with the Getchell and Turquoise Ridge
Fault zones and with other locations on the Getchell Property, typically
occurring as discrete zones at depths shallower than the sulfide mineralization.
Additional oxide and sulfide gold mineralization is found in an area known as
Section 13 which is located approximately three miles northeast of the mill site
(see map on page 1).

EXPLORATION AND DEVELOPMENT

         We focus our exploration activities solely on the Getchell Property.
The methods that we employ include drilling, geological mapping, and geophysical
and geochemical surveys. Our exploration staff includes five full-time
geologists and thirteen underground geologists and geotechs for both mines. The
full-time staff is augmented by consultants and other contract employees as
needed. Exploration efforts have been successful in recent years in identifying



                                       2

<PAGE>   4

new gold reserves at the Getchell Underground and Turquoise Ridge mines.
Exploration on the remainder of the Getchell Property has indicated deep sulfide
mineralization at Hansen Creek, located along the Getchell Fault, and mixed
oxide/sulfide mineralization at Section 13. Numerous other exploration targets
have been identified at the Getchell Property and await exploration drilling.

         Getchell Underground. Development drilling at the Getchell Underground
mine indicates that the ore body remains open at depth and along strike to the
north and to the south. Underground drilling in 1996 through 1998 defined new
ore bodies now known as the "Northwest Ore Zones" which are located to the north
and west of the current Getchell Underground workings. Development of these
zones was a high priority in 1998 and will continue to be a high priority in
1999 because of potentially higher grades than the average grade of the Getchell
Underground mine. Drilling in 1998 expanded the known reserves in the second
Northwest Ore Zone by 0.2 million contained ounces to 0.6 million contained
ounces. Additional drilling is planned in 1999 to determine the ultimate extent
of the mineralization. However, such drilling may also determine that there are
no additional reserves in such zones.

         Turquoise Ridge. Development drilling at Turquoise Ridge during 1997
and 1998 expanded reserves north and northwest of the original Turquoise Ridge
mineralized zone in an area known as the "N" zone. We announced a total of 1.6
million contained ounces of reserves in this area in February 1998. In February
1999 we announced a new reserve calculation for the "N" zone, bringing the
reserves in this ore body to 2.2 million contained ounces. The "N" zone is
contiguous with the original Turquoise Ridge reserves announced at the end of
1995. Additional drilling in 1997 and 1998 from the surface and underground has
further defined and increased the size of the Turquoise Ridge ore body.

                                     [MAP]

         Map which displays details of the active mining areas of the Getchell
Property including location of proven and probable reserves, shafts, mill
facilities, heap leach facilities and other sites.

PROVEN AND PROBABLE ORE RESERVES

         Our estimated proven and probable ore reserves were approximately 6.6
million contained ounces at December 31, 1998. At December 31, 1997, estimated
reserves totaled 6.2 million contained ounces. During 1998, 0.2 million
contained ounces were mined, 0.5 million contained ounces were removed from
reserves due to changes in assumptions, primarily a reduction in the gold price
used in the reserve calculations, and 1.1 million contained ounces were added
through development drilling and exploration. Such reserves were determined by
the use of mapping, drilling, sampling, assaying and evaluation methods
generally applied in the mining industry. Calculations with respect to the



                                       3

<PAGE>   5

estimates of proven and probable gold reserves as of December 31, 1998, are
based on a long term gold price of $325 per ounce. If such estimates had been
based on a gold price of $300 per ounce, we believe such estimated proven and
probable gold reserves would decrease less than five percent. Calculations with
respect to the estimates of proven and probable reserves as of December 31,
1997, were based on a gold price of $350 per ounce.

         Our proven and probable ore reserves have been prepared by us and
verified by an independent mining consulting firms, Mine Development Associates
("MDA"). For information regarding risks associated with our estimates of our
proven and probable reserves, see "Risk Factors--Gold Price Volatility" and
"--Ore Reserve Estimates May Not Be Realized" in Item 7--"Management's
Discussion and Analysis of Results of Operations and Financial Condition."

                  PROVEN AND PROBABLE MINABLE RESERVES (1) (2)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                          DECEMBER 31, 1998                           DECEMBER 31, 1997
                                ---------------------------------------    ----------------------------------------
                                               AVERAGE                                     AVERAGE
                                                GRADE       CONTAINED                        GRADE       CONTAINED
AREA                            ORE TONS       (OZ/TON)     OUNCES (3)      ORE TONS       (OZ/TON)      OUNCES (3)
----                            -----------    ---------    -----------    ------------   ----------    -----------
<S>                             <C>             <C>         <C>            <C>             <C>           <C>

UNDERGROUND RESERVES
     Turquoise Ridge.......      7,155,800        0.365      2,608,600       7,468,144         0.368      2,747,128
     "N" Zone..............      5,279,800        0.425      2,242,360       3,596,470         0.449      1,615,128
     Getchell Underground..      4,700,900        0.358      1,682,330       5,054,775         0.345      1,743,731
                                ----------                   ---------      ----------                    ---------


Total Underground Reserves.     17,136,500        0.381      6,533,290      16,119,389         0.379      6,105,987
                                ==========                   ---------      ==========                    ---------

SURFACE RESERVES
   Hansen Creek (Sulfide)..         85,500        0.138         11,800          85,500         0.138         11,800
   Section 13..............      1,139,700        0.044         50,240       1,139,700         0.044         50,240
   Stockpile...............        138,500        0.085         11,770         101,256         0.100         10,126
                                ----------                   ---------      ----------                    ---------
Total Surface Reserves           1,363,700        0.054         73,810       1,326,456         0.054         72,166
                                ==========                   ---------      ==========                    ---------


TOTAL PROVEN AND PROBABLE..                                  6,607,100                                    6,178,153
                                                             =========                                    =========
</TABLE>


(1)      The term "reserve" means that part of a mineral deposit which can be
         economically and legally extracted or produced at the time of the
         reserve determination.

         The term "proven reserves" means reserves for which (a) quantity is
         computed from dimensions revealed in outcrops, trenches, workings or
         drill holes; (b) grade and/or quality are computed from the results of
         detailed sampling and (c) the sites for inspection, sampling and
         measurement are spaced so closely and the geologic character is so well
         defined that size, shape, depth and mineral content of reserves are
         well-established.

         The term "probable reserves" means reserves for which quantity and
         grade and/or quality are computed from information similar to that used
         for proven reserves, but the sites for inspection, sampling and
         measurement are farther apart or are otherwise less adequately spaced.
         The degree of assurance, although lower than that for proven reserves,
         is high enough to assume continuity between points of observation.

(2)      Calculated using cut-off grades as follows: sulfide material for 1998
         not less than 0.200 per ton for underground reserves and only ore zones
         that were profitable at $325 gold; sulfide material for 1997 not less
         than 0.200 ounce per ton for underground reserves except for the
         Turquoise Ridge "A" zone which is not less than 0.250 ounce per ton;
         sulfide stockpile material not less than 0.075 ounce per ton; and oxide
         material not less than 0.010 ounce per ton cyanide soluble.

         The term "cut-off grade" means the lowest grade of mineralized rock
         that can be included in the reserve in a given area. Cut-off grades
         vary depending upon prevailing economic conditions, minability of the
         area, amenability of the ore to gold extraction, and milling or
         leaching facilities available.

         Calculations were based on a 15% average mining dilution and an average
         mine recovery of 95%.

(3)      The proven and probable mining ore reserve ounces are "contained"
         ounces with mining dilution taken into account. Actual ounces expected
         to be recovered during milling and heap leach processing will be less.



                                       4
<PAGE>   6


MINES

         Turquoise Ridge Mine. There are two shafts at the Turquoise Ridge mine
which provide access to the Turquoise Ridge reserves. One shaft serves as a
production/service shaft and the other shaft is a ventilation shaft and
emergency escape-way. At December 31, 1998, sinking of the production/service
shaft was complete to a depth of 1,850 feet and sinking of the ventilation shaft
was complete to a depth of 1,710 feet. Both shafts are temporarily bottomed and
being used as intended, although we may further sink these shafts in the future.
The unrestricted hoisting capacity of the production shaft is approximately
8,000 tons per day (tpd), and the unrestricted hoisting capacity of the
ventilation shaft is approximately 2,500 tpd.

         During 1998 four production and access levels were developed in the
mine. The four levels are located on the 900, 1250, 1550 and 1715 foot levels
below the surface. Approximately 20,000 feet of excavated development was
completed in 1998 which brings the total level and ramp development footage in
the mine to approximately 30,000 feet. The primary focus for the majority of the
development during 1998 were the 1250 and 1550 levels as well as a ramp system
to connect these levels, all of which was done to provide multiple access to the
ore body. During 1998 approximately 60,500 tons of development ore and 335,000
tons of waste were hoisted out of the mine.

         We currently estimate that the expected total capital cost for
construction required to bring the Turquoise Ridge underground mine into
commercial production at its designed capacity of 2,000 tons of ore per day is
$120 million. At December 31, 1998, we had spent approximately $114 million. In
addition, $8.0 million of mobile equipment had been leased as of December 31,
1998. However, we cannot assure you that the anticipated costs will not exceed
$120 million. See "Risk Factors--Certain Turquoise Ridge Mine Risks" in Item 7
below.

         Getchell Underground Mine. The Getchell Underground mine is located
immediately west of the Turquoise Ridge mine. Access to the upper ore zone and
current work area of this ore body is achieved through two portals located in
the west wall of the inactive Main Pit which connect to a series of declines to
lower levels. Ore and waste is moved to the surface by truck.

         We principally employ the "drift and fill" mining method in the
Getchell Underground mine, which we have determined is appropriate for the
ground conditions currently being encountered. This mining method involves
mining a section of ore, which is then backfilled with cemented aggregate prior
to the mining of the next contiguous section of the ore body. Higher
productivity mining methods are currently being used in the Northwest Ore Zones
due to better ground conditions there. Two of the higher productivity mining
methods currently being used in the Northwest Ore Zones are drift and bench
mining and longhole stoping. In 1998 we estimate that we produced 75% of
Getchell ore using the drift and fill method, and 25% using higher productivity
methods.


                                       5
<PAGE>   7

PROCESSING FACILITIES AND OPERATIONS

         Mill. We began operating our mill in February 1989. We obtain economic
gold recoveries from the sulfide ores on the Getchell Property by a pressure
oxidation process known as autoclaving, prior to treatment by conventional
carbon-in-leach ("CIL") processes. The mill uses high temperature, high pressure
autoclaves to oxidize sulfides in the ore. We believe that autoclaves are
presently the most effective available method for milling the Getchell Property
sulfide ores.

         Ore is processed through various grinding circuits, with a fine
grinding circuit having been added in the fourth quarter of 1997 to improve mill
recoveries. After crushing and grinding, the ore is thickened to form an ore
slurry, treated with sulfuric acid to remove carbonate minerals and then
preheated. The preheated ore slurry then enters the autoclaves where temperature
and pressure are increased and oxygen is added to oxidize the sulfide minerals.
After the ore slurry leaves the autoclaves, limestone and lime are added to
adjust the pH level and sodium cyanide is added in small amounts to leach the
gold from the ore slurry. The ore slurry is then transferred to a conventional
CIL circuit where the dissolved gold is absorbed onto carbon granules. Loaded
carbon granules are periodically removed from the CIL circuit and processed to
strip the gold. The stripping process culminates in a gold precipitate which is
collected in filter presses and smelted into dore bars. The dore bars are
shipped from the Getchell Property for further processing by an independent
refinery.

         The mill facility has three separate autoclaves. In December 1997, due
to the decline in gold prices, we suspended the milling of low grade stockpile
ore and shut down two autoclaves. As additional high grade material from the
Getchell and the Turquoise Ridge mines became available during 1998 we added a
second autoclave in May 1998, and the third autoclave was started in December
1998. Mill feed for the first quarter of 1999 is estimated to be a combination
of 1,500 tons per day from the Getchell Underground mine, 1,000 tons per day
from the Turquoise Ridge mine and 700 tons per day from the low grade
stockpiles, for a total of 3,200 tons per day. As ramping up of production at
the Turquoise Ridge mine increases the ore tonnage during the second quarter of
1999, it will be used to offset the use of the low grade stockpile ore. We are
engaged in various mill optimization studies, which investigate the possibility
of increasing the mill throughput in the future.

         Heap Leach. Heap leaching is a process used to recover gold from
naturally oxidized, permeable ores. The process involves heaping the ore on an
impermeable pad and applying a weak cyanide solution to the top of the heap. As
the solution percolates through the heap, gold is leached from the ore. The gold
bearing solution is recovered as it seeps from the bottom of the pile and the
solution is treated to recover the gold. Since gold recovery rates from heap
leaching are lower than from conventional CIL milling, this process is not
usually applied to high-grade ore. In such higher-grade ore, the value of the
incremental gold recovered through the milling process typically more than
offsets the higher cost of the milling process.

         We mined and leached oxide ores from several pits on the Getchell
Property from 1985 until December 1997. During 1998 approximately 1,000 ounces
of gold were recovered through the heap leaching process. We expect to close the



                                       6
<PAGE>   8

heap leach facility in 1999 and continue environmental reclamation of the
facility. Costs for such closure have been included in the estimate for
reclamation, for which accruals have been made. Various small oxide deposits are
still known to exist on the Getchell Property, but any possible future heap
leaching would be done in a newly constructed facility which is not currently
planned or permitted.

         Ancillary Facilities And Raw Materials. Oxygen used in the autoclave
process is supplied under a long-term agreement by an independent contractor
which owns and operates a plant at our mill site. The agreement has a remaining
term of approximately six years. Payments for the oxygen totaled $1.6 million in
1998. We purchased supplemental liquid oxygen that was delivered via truck
during periods of down time at the oxygen plant and during times of higher mill
throughput resulting in oxygen needs exceeding the oxygen plant capacity. Our
liquid oxygen purchases were immaterial during 1998.

         An independent utility company provides electricity to us under an
electric services agreement. The mill uses reclaimed water pumped from the
tailings pond and from the dewatering of the pits and underground mines. Makeup
water for the milling process comes from two wells located on the Getchell
Property approximately four miles from the mill. A limestone deposit located on
the Getchell Property is mined and stockpiled for use in the milling process.

         Other materials necessary in the milling process, such as sodium
hydroxide, sulfuric acid, lime, carbon, propane and sodium cyanide are available
for purchase from more than one supplier and are hauled by rail and truck to the
Getchell Property. These materials may be subject to shortages from time to
time, resulting in higher costs. Where practicable, we seek to enter into long
term contracts to assure continuing supplies and to minimize costs of such
materials.

         We have constructed a tailings dam and pond on 316 acres of land on the
Getchell Property. In 1997 we completed an additional lift, thereby increasing
the capacity at the tailings pond. Additional lifts to increase capacity will be
constructed as needed. The pond is lined with a plastic liner and is designed to
accommodate water run-off from a "100-year flood" event and reasonably expected
seismic activity for the site.



                                       7
<PAGE>   9

PRODUCTION

         The following table sets forth selected information about our
production data:

<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                   --------------------------------------------------
                                                                           1998                         1997
                                                                   ---------------------         --------------------
<S>                                                                        <C>                          <C>    
Ounces of gold sold (1)........................................            159,546                      179,676
Average realized price per ounce...............................               $335                         $361
Cash cost per ounce produced...................................               $321                         $418
Getchell Underground mine:
   Ore mined (dry tons)........................................            419,195                      500,459
   Ore mined per operating day (dry tons)......................              1,184                        1,410
   Average grade of ore mined (ounces per ton).................              0.404                        0.313
Milling:
   Production (ounces).........................................            174,315                      176,967
   Ore milled (dry tons).......................................            591,993                    1,085,099
   Average grade of ore milled (ounces per ton)................              0.328                        0.187
   Ore milled per calendar day (dry tons)......................              1,622                        2,973
   Gold recovery...............................................               90.5%                        87.9%
Leaching:
   Production (ounces) (2).....................................                987                        2,709   
   </TABLE>
--------------------------

(1) In 1998, ounces sold does not include 15,756 ounces of gold sold from the
development of Turquoise Ridge for which revenues were offset against the
deferred development costs of the project.

(2) Although there was production in 1998 and 1997, no new ore was placed on the
heap leach pads in these periods.

The following table sets forth the source and grade of mill feed for the years
ended December 31, 1998 and 1997:

<TABLE>
<CAPTION>
                                                              FOR THE YEAR ENDED DECEMBER 31,
                                        -----------------------------------------------------------------------------
                                                       1998                                    1997
                                        -----------------------------------    --------------------------------------
                                                               AVERAGE                                  AVERAGE
                                          DRY TONS              GRADE              DRY TONS              GRADE
                                          PROCESSED         (OZS PER TON)         PROCESSED          (OZS PER TON)
                                        ---------------     ---------------    -----------------    -----------------
<S>                                         <C>                <C>                   <C>                 <C>  
Getchell Underground ore............        413,659            0.401                 500,285             0.313
Turquoise Ridge ore ................         59,884            0.319                      --                --
Stockpile ore and other.............        118,450            0.082                 584,814             0.082
                                            -------            -----               ---------             -----

  Total Sulfide Ore.................        591,993            0.328               1,085,099             0.187
                                            =======            =====               =========             =====
</TABLE>



                                       8
<PAGE>   10

SALES AND MARKETING

         During the year ended December 31, 1998, our dore was refined under
contract with Metalor USA Refining Corporation ("Metalor") of North
Attleborough, Massachusetts, a wholly owned subsidiary of UBS AG. The refined
gold was sold to Metalor. We believe that there are a number of potential
refiners and purchasers in addition to the one currently being used.

HEDGING ACTIVITIES AND OTHER PRECIOUS METAL CONTRACT COMMITMENTS

         Precious metal contracts consist of spot deferred, forward sales, call
option and lease rate swap contracts. We currently use spot deferred and forward
sales contracts to mitigate the impact on earnings and cash flows of decreases
in gold prices. These transactions have been designated as hedges of the price
of future production and are accounted for as such, with the recognition of any
gains or losses in sales when the related gold production is delivered. Risk of
loss on the spot deferred and forward sales contracts arises from the possible
inability of a counterparty to fulfill its obligations under the contracts and
from our potential inability to deliver gold, although non-performance by the
counterparty to the contracts is not anticipated.

         Spot deferred and forward sales contracts are agreements between a
seller and a counterparty whereby the seller commits to deliver a set quantity
of gold on an established future date and at an agreed upon price. The
established forward price is equal to the spot gold price on the day the
agreement is entered into plus "contango." Contango is equal to the difference
between the prevailing market interest rate for cash deposits less the gold
lease rate, for comparable periods. The contango rate ranged from 3.68% to 3.27%
per annum for one-month to twelve-month periods at December 31, 1998.

         On the scheduled future delivery date, the seller may deliver physical
gold and thereby fulfill the contract, liquidate the contract through the
financial market by purchasing an equivalent amount of gold, or with respect to
a spot deferred contract, defer delivery to a future date. If the spot price on
the delivery date is greater than the contract price, delivery on the contract
may be deferred to a new future date and the gold is sold at the higher spot
price. If the spot price is lower than the contract price, the delivery may be
made against the contract and the higher contract price is realized. In
practice, this generally allows the seller to maximize the price received. Each
time a seller defers delivery, the forward sales price is increased by the then
prevailing contango (assuming it is positive) for the next period to the newly
established future delivery date. Generally, the counterparty will allow the
seller to continue to defer contract deliveries providing that there is
sufficient scheduled production from proven and probable reserves to fulfill the
commitment and the counterparty can borrow the gold.

         At December 31, 1998, our outstanding spot deferred contracts were for
380,000 ounces at a projected average price of $318 per ounce. Of these
contracts, 155,000 ounces are to be delivered in 1999 at a projected weighted
average price of $311 per ounce, 120,000 ounces are to be delivered in 2000 at
a projected weighted average price of $321 per ounce and 105,000 ounces are to
be delivered in 2001 at a projected weighted average price of $323 per ounce.

         On February 19, 1999 we closed out spot deferred contracts covering
250,000 ounces for cash consideration of approximately $4.7 million. The
proceeds will be recorded as deferred revenue and recognized in net sales when
the originally designated hedged future gold production is sold.


                                       9
<PAGE>   11

         Additionally, in November 1997, we entered into a forward sales
contract covering the sale of 250,000 ounces of gold along with an option by the
counterparty to purchase up to an additional 225,000 ounces of gold, if the gold
price equals or exceeds certain price increments. The agreement calls for us to
deliver 50,000 ounces of gold on December 31 in each of the years 1998 through
2002 and up to an additional 75,000 ounces of gold in each of the years 2000 to
2002. Delivery in 1998 was at $356 per ounce while delivery in 1999 will be at
approximately $355 per ounce and deliveries in 2000 through 2002 will be at
approximately $343 per ounce. These projected forward selling prices assume a
constant future gold lease rate of 2%. The actual forward prices under the
contract are adjusted up or down based on the actual future gold lease rate.

         The option feature of the contract is similar to a written call option
in that if the gold spot price equals or exceed certain price increments, we
would be required to sell additional ounces of gold at the specified price. If
at any time on or between December 27, 1997 and December 27, 2000, the gold
spot market price equals or exceeds a price increment, for each price increment
equaled or exceeded, we would be required to deliver 15,000 additional ounces
of gold at $343 per ounce on December 31 in each of the years 2000, 2001 and
2002. The price increments are $380, $387, $394, $401 and $408. In total, if
all five price increments are equaled or exceeded prior to December 27, 2000,
we would be required to deliver 75,000 additional ounces at $343 per ounce on
December 31 in each of the years 2000, 2001 and 2002. As of February 16, 1999,
none of the specified price levels had been reached.

         If any price increment has not been equaled or exceeded prior to or on
December 27, 2000 but is equaled or exceeded during the period on or between
December 28, 2000 and December 27, 2001, we would be required to deliver, for
each increment equaled or exceed, 15,000 ounces of gold at $343 per ounce on
December 31, 2001 and 2002. Similarly, if any price increment has not been
equaled or exceeded prior to or on December 27, 2001, but is equaled or exceeded
during the period on or between December 28, 2001 and December 27, 2002, we
would be required to deliver, for each increment equaled or exceed, 15,000
ounces of gold at $343 per ounce on December 31, 2002.

         The premium related to the option feature is included in the forward
sales price of the 250,000 ounces of gold. For accounting purposes, the
contract sales price of the 250,000 ounces of gold has been allocated between
the forward sales component of the contract and the premium for the embedded
option. We will recognize the revenue associated with the forward sales
component of the contract when the gold is delivered. The option premium
portion of the forward sales is deferred, adjusted for changes in the market
value of the option, and recognized in earnings when the option expires or is
exercised.

         On February 19, 1999 we closed the forward sales contract covering the
remaining 200,000 ounces of gold and cancelled the related option to purchase up
to an additional 225,000 ounces of gold in exchange for cash consideration of
approximately $3.3 million. The amount received, adjusted for the value of the
option cancelled and the deferred cost associated with the forward sales
contract will be recorded as deferred revenue. The resulting deferred revenue of
approximately $2.6 million will be recognized in net sales when the originally
designated hedged future gold production is sold.

         At December 31, 1998, we had outstanding European call option contracts
for 40,000 ounces of gold at a price of $309 per ounce which expire in 1999.
European call option contracts are agreements between a seller and a
counterparty whereby the counterparty has the right, but not the obligation, to
buy gold from the seller at a predetermined date. The counterparty pays a
premium for this right. The fair market value of premiums received are deferred
until the option expires or the related transaction occurs at which time the
deferred amounts are recognized as income. Risk of loss on European call option



                                       10

<PAGE>   12
contracts exists if we are unable to deliver the required quantity of gold and
the market price were to exceed the exercise price of the option on the date
designated in the contract.

         Our accounting treatment for hedging and other precious metal contract
commitments is outlined in Notes 2 and 3 to our consolidated financial
statements included in Item 8-- "Financial Statements and Supplementary Data."

GOVERNMENT REGULATION

         Safety. Our mining operations are subject to inspection and regulation
by the Mine Safety and Health Administration of the United States Department of
Labor ("MSHA") under the provisions of the Mine Safety and Health Act of 1977.
The Occupational Safety and Health Administration ("OSHA") also has jurisdiction
over safety and health standards not covered by MSHA. It is our policy to comply
with applicable directives and regulations of MSHA and OSHA.

         On February 15, 1999, a mine site accident involving the Turquoise
Ridge mine's underground compressed air system resulted in the death of one of
our employees. We have notified the appropriate state and federal safety
authorities and we expect, as required by federal law, the accident will be
investigated by MSHA. At this time, the results of this investigation are
unknown.

          Current Environmental Laws And Regulations. We must comply with
environmental standards, laws and regulations which may entail greater or lesser
costs and delays depending on the nature of the regulated activity and how
stringently the regulations are implemented by the regulatory authority. The
costs and delays associated with compliance with such laws and regulations could
stop us from proceeding with the development of a project or the operation or
further development of a mine. Laws and regulations involving the protection and
remediation of the environment and the governmental policies for implementation
of such laws and regulations are constantly changing and are generally becoming
more restrictive. We have made, and expect to make in the future, significant
expenditures to comply with such laws and regulations. These requirements
include regulations under:

         o    the Comprehensive Environmental Response, Compensation and
              Liability Act of 1980 ("CERCLA" or "Superfund") which regulates
              and establishes liability for the release of hazardous substances;

         o    the Endangered Species Act ("ESA") which identifies endangered
              species of plants and animals and regulates activities to protect
              these species and their habitats;

         o    the Clean Water Act;

         o    the Clean Air Act;



                                       11
<PAGE>   13


         o    the Resource Conservation and Recovery Act for disposal of 
              hazardous waste ("RCRA");

         o    the Migratory Bird Treaty Act;

         o    the Safe Drinking Water Act;

         o    the Emergency Planning and Community Right-to-Know Act;

         o    the Federal Land Policy and Management Act;

         o    the National Environmental Policy Act;

         o    the National Historic Preservation Act; and

         o    many other state and federal laws and regulations.

         The United States Environmental Protection Agency ("EPA") continues the
development of a solid waste regulatory program specific to mining operations
such as ours, whose mineral extraction and beneficiation wastes are not
regulated as hazardous wastes under RCRA.

         Environmental laws and regulations may also have an indirect impact on
us, such as increased cost for electricity due to acid rain provisions of the
Clean Air Act Amendments of 1990. Charges by refiners to which we sell our
metallic concentrates and products have substantially increased over the past
several years because of requirements that refiners meet revised environmental
quality standards. We have no control over the refiners' operations or their
compliance with environmental laws and regulations.

         Potential Legislation. Several recent legislative developments have
affected or may in the future affect the cost of and the ability of mining
claimants to use the Mining Law of 1872, as amended (the "General Mining Law"),
to acquire and use federal lands for mining operations. Since October 1994, a
moratorium has been imposed on processing new patent applications for mining
claims. This moratorium should not affect the status of the patent applications
we made under the General Mining Law before the moratorium was imposed. Also,
since 1993, a rental or maintenance annual fee of $100 per claim has been
imposed by the federal government on unpatented mining claims in lieu of the
prior requirement for annual assessment work. During the last several
Congressional sessions, bills have been repeatedly introduced in the U.S.
Congress which would supplant or radically alter the General Mining Law. As of
February 23, 1999, no such bills have been passed.

         Such bills have proposed, among other things, to:

         o    permanently eliminate or greatly limit the right to a mineral 
              patent;

         o    impose royalties; and


                                       12

<PAGE>   14

         o    impose new federal reclamation, environmental control and other
              restoration requirements.

         Royalty proposals have ranged from a 2% royalty on "net profits" from
mining claims to an 8% royalty on modified gross income/net smelter returns. If
enacted, such legislation could substantially impair the ability of companies to
economically develop mineral resources on federal lands. The extent of the
changes, if any, which may be made by Congress to the General Mining Law is not
presently known, and the potential impact on us as a result of future
Congressional action is impossible to predict. Although a majority of our
existing mining operations occur on private or patented property, the proposed
changes to the General Mining Law could adversely affect our ability to
economically develop mineral resources on federal lands. We dispose of
overburden and beneficiation wastes on both private and federal lands. We also
conduct exploration activities on both private and federal lands.

         Other legislative initiatives relating to environmental laws
potentially applicable to mining include proposals to substantially alter
CERCLA, the Clean Water Act, Safe Drinking Water Act, and the ESA, bills which
introduce additional protection of wetlands and various initiatives to increase
the regulatory control over exploration and mining activities. Adverse
developments and operating requirements resulting from these initiatives could
substantially impair our economic ability, as well as others, to develop mineral
resources. Because none of these bills have passed and because revisions to
current versions of these bills could occur prior to passage, we do not know the
potential impact of such legislative initiatives.

ENVIRONMENTAL MATTERS AND SAFETY

         Environmental Liability. We are subject to potential risks and
liabilities associated with pollution of the environment and the disposal of
waste products that could occur as a result of our mineral exploration,
development and production.

         The gold ore located on the Getchell Property and the existing tailings
ponds and waste dumps located on the Getchell Property contain relatively high
levels of arsenic compounds, and the milling of such ore involves the use of
other toxic substances, including, but not limited to, sodium cyanide, sodium
hydroxide, sulfuric acid and nitric acid.

         Environmental liability also may result from mining activities
conducted by others prior to our ownership of a property. Historic mining
disturbances, facilities, waste materials and other discrete areas of potential
contamination associated with gold, tungsten, and molybdenum production between
1937 and 1969 by previous owners and operators are encompassed within the area
of the Getchell Property. Under CERCLA and other federal, state and local
environmental laws, ordinances, and regulations, a current or previous owner or
operator of real property may be liable for the costs of removal or remediation
of hazardous or toxic substances on, under or in such property or other property
to which such substances may have migrated. Such laws may impose liability
whether or not the owner or operator knew of, or was responsible for, the
presence of such hazardous or toxic substances. In connection with our current
or prior ownership or operation of property or facilities, we may be potentially
liable for any such costs or liabilities. Although we are currently not aware of



                                       13
<PAGE>   15

any material environmental claims pending or threatened against us, we cannot
assure you that a material environmental claim will not be asserted against us.

         We have undertaken to restore certain areas of historic disturbance and
contamination in conjunction with current mining operations and we have
incorporated such restoration into our state permits in coordination with the
federal land management agency. This restoration will not necessarily result in
removal of all hazardous substances located on the Getchell Property nor will it
relieve us of all potential liability for such substances under CERCLA or
similar laws.

         To the extent we are subject to environmental liabilities, the payment
of such liabilities or the costs that we may incur to remedy environmental
pollution would reduce funds otherwise available to us and could have a material
adverse effect on us. If we are unable to fully remedy an environmental problem,
we might be required to suspend operations or enter into interim compliance
measures pending completion of the required remedy. The potential exposure may
be significant and could have a material adverse effect on us. We have not
purchased insurance for environmental risks (including potential liability for
pollution or other hazards as a result of the disposal of waste products
occurring from exploration and production) because it is not generally available
at a reasonable price.

         Environmental Permits. All of our exploration, development and
production activities are subject to regulation under one or more of the various
state and federal environmental laws and regulations. Many of the regulations
require us to obtain permits for our activities.

         We maintain permits required for our facilities and operations which
provide for ongoing compliance and monitoring. Some of the permits include:

         o    Bureau of Land Management Plan of Operations No. N24-87-003P;

         o    EPA Hazardous Waste Facility No. NVD986774735;

         o    Nevada water pollution control permits NEV86014 (for mining and
              mineral processing) and NEV95113 (for excess mine water disposal);

         o    Nevada reclamation permits 0105 and 0148; and

         o    Nevada class II air quality permit AP1041-0292.

         We must update and review our permits from time to time, and we are
subject to environmental impact analyses and public review processes prior to
approval of the additional activities. It is possible that future changes in
applicable laws, regulations and permits or changes in their enforcement or
regulatory interpretation could have a significant impact on some portion of our
business, causing those activities to be economically re-evaluated at that time.

         Environmental Compliance and Capital Costs. With respect to our
operations and its compliance with federal, state and local regulations relating
to the discharge of material into the environment, or otherwise relating to the



                                       14
<PAGE>   16

protection of the environment, we estimate that we spent capital expenditures of
approximately $2.4 million in 1998 including $1.2 million on the mill facility,
$1.0 million on the tailing facilities and $0.2 million on other facilities. We
estimate that we will spend approximately $1.4 million of capital expenditures
for environmental compliance in 1999, primarily at the mill facility.

         Restoration. We accrue expenses over the productive life of our mine
for anticipated costs associated with restoration of the mine site. Activities
which result in restoration costs include the permanent closure of mining and
milling operations and reclamation of disturbed land to a productive use. This
includes restoration of historic and current mining and milling operations and
associated land disturbances. Restoration takes place concurrently with and
after the productive life of mining operations. Activities which result in
restoration costs after permanent closure and reclamation primarily relate to
monitoring and other post mining management activities.

         The uncertainties related to future restoration costs result from
unknown future additional regulatory requirements, new facilities or surface
disturbances, and the potential for recognition in the future of additional
activities needed for restoration. The technologies for restoration are
evolving. We conduct periodic review of the activities and costs for
restoration, and consequent adjustments to the ongoing accrual. We have programs
for evaluating various restoration technologies during mining and milling
operations. We have begun restoration of the Getchell Property, conduct
concurrent restoration and anticipate an ongoing program of concurrent
restoration over the productive life of the mining operations. Our restoration
activities have included regrading, fertilizing, mulching, seeding, live
planting, monitoring and restoration research.

         In accordance with applicable state and federal laws, we have posted a
reclamation bond of $4.5 million in 1998 based on previously permitted
activities. This bonding amount was under normal periodic review with state and
federal agencies and is expected to be revised in 1999. As of December 31, 1998,
the total estimated restoration costs for the current disturbances on the
Getchell Property were $5.4 million. At December 31, 1998, the total estimated
restoration costs at the planned future full level of development were $8.7
million, of which we had accrued $2.8 million at December 31, 1998. The amount
of total estimated restoration costs will increase over time as the planned
future full level of development is approached. Additional increases may occur
as expanded mining and mineral processing activities are proposed and regulatory
requirements become more stringent or additional requirements are added.

         Safety. We incurred compliance costs of $1.3 million during the year
ended December 31, 1998, related to safety department operations, safety
training and industrial hygiene.

EMPLOYEES

         At December 31, 1998, we had 590 employees, none of which were
unionized.



                                       15
<PAGE>   17

         We face competition from other mining companies in connection with the
recruitment and retention of qualified employees. We maintain an ongoing
evaluation of the labor market for qualified mining industry employees.

ITEM 3.  LEGAL PROCEEDINGS

         There are material pending legal proceedings to which we are a party or
to which any of our property is subject.

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

         No matters were submitted to a vote of our security holders, through
the solicitation of proxies or otherwise during the quarter ended December 31,
1998.



                                       16

<PAGE>   18
                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is traded on the American Stock Exchange under the
symbol "GGO." Provided in the table below are the high and low recorded prices
of our common stock on the American Stock Exchange. No dividends have been
declared since our initial public offering in May 1988, and dividends are not
anticipated for the foreseeable future. We intend to retain earnings to support
current operations and to fund exploration and development projects. There were
approximately 3,818 stockholders of record as of February 23, 1999.

<TABLE>
<CAPTION>
                                1997                                     High        Low
                                ----                                     ----        ---
<S>                                                                        <C>        <C>   
First Quarter........................................................      $51.50     $32.00
Second Quarter.......................................................      $43.50     $34.25
Third Quarter........................................................      $41.00     $29.38
Fourth Quarter.......................................................      $42.25     $19.50

                                1998
                                ----
First Quarter........................................................      $26.50     $17.25
Second Quarter.......................................................      $26.00     $14.44
Third Quarter........................................................      $21.25     $ 8.88
Fourth Quarter.......................................................      $29.69     $14.13

                                1999
                                ----
First Quarter  (through February 23, 1999)...........................      $32.19     $25.63
</TABLE>



                                      17
<PAGE>   19
ITEM 6.  SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE)

<TABLE>
<CAPTION>
                                                                                                                
                                                                                                                Six Months
                                                                         Year Ended December 31,                   Ended
                                                          ---------------------------------------------------   December 31,
FOR THE PERIODS ENDED:                                         1998            1997              1996              1995        
                                                          ---------------  ----------------  ---------------- ----------------
<S>                                                       <C>              <C>               <C>              <C>
Sales                                                     $       53,471   $        64,797   $        67,878  $        34,425  
                                                          ===============  ================  ================ ================ 

Income (loss) before cumulative effect
     of change in accounting principle                    $      (11,452)  $       (19,427)  $       (13,952) $        (5,027) 
Cumulative effect of change in
     accounting principle                                              -                 -                 -                -  
                                                          ---------------  ----------------  ---------------- ----------------
Net income (loss)                                         $      (11,452)  $       (19,427)  $       (13,952) $        (5,027) 
                                                          ===============  ================  ================ ================ 

Income (loss) per share - basic and diluted:
     Before cumulative effect of change
          in accounting principle                         $        (0.38)  $         (0.73)  $         (0.54) $         (0.25)
     Cumulative effect of change in
          accounting principle                                         -                 -                 -                -  

                                                          ---------------  ----------------  ---------------- ----------------
     Net income (loss)                                    $        (0.38)  $         (0.73)  $         (0.54) $         (0.25)
                                                          ===============  ================  ================ ================ 

AT END OF PERIOD:
Total assets                                              $      302,560   $       241,887   $       208,808  $       210,493  
Long-term debt, including current portion                 $       28,799   $        27,057   $        25,336  $        23,783  
Stockholders' equity                                      $      238,294   $       179,895   $       151,222  $       164,264  
</TABLE>


<TABLE>
<CAPTION>
                                                                  Year Ended June 30,
                                                          --------------------------------
FOR THE PERIODS ENDED:                                         1995              1994
                                                          ----------------- --------------
<S>                                                       <C>               <C>
Sales                                                     $       71,485    $      95,150 
                                                          ================= ==============

Income (loss) before cumulative effect
     of change in accounting principle                    $      (18,357)   $       4,299
Cumulative effect of change in
     accounting principle                                              -            1,350
                                                          ----------------- --------------
Net income (loss)                                         $      (18,357)   $       5,649
                                                          ================= ==============

Income (loss) per share - basic and diluted:
     Before cumulative effect of change
          in accounting principle                         $        (1.01)   $        0.24
     Cumulative effect of change in
          accounting principle                                         -             0.07
                                                          ----------------- --------------
     Net income (loss)                                    $        (1.01)   $        0.31
                                                          ================= ==============

AT END OF PERIOD:
Total assets                                              $       85,120    $      88,747
Long-term debt, including current portion                 $       40,900    $      29,339
Stockholders' equity                                      $       31,744    $      49,719
</TABLE>



                                      18


<PAGE>   20
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

         The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of our
consolidated results of operations and financial condition. The discussion
should be read in conjunction with Item 8 - "Financial Statements and
Supplementary Data."

         The information set forth in this discussion and analysis includes
"forward looking statements" within the meaning of Section 21E of the Exchange
Act and is subject to the safe harbor created by that section. Factors that
realistically could cause results to differ materially from those projected in
the forward looking statements are set forth in "Risk Factors."

         On December 11, 1998, we entered into an Agreement and Plan of Merger
with Placer Dome Inc., a Canada-based, international gold mining company, and
Bullion Acquisition Corp., a Delaware corporation and a wholly owned subsidiary
of Placer Dome, pursuant to which Bullion Acquisition will be merged with and
into us, with us surviving the merger and becoming a wholly owned subsidiary of
Placer Dome. Under the terms of the merger agreement, each issued and
outstanding share of our common stock, other than shares owned by Placer Dome or
us, will be converted into 2.45 shares of Placer Dome's common stock. The merger
is subject to various regulatory approvals and other conditions. We currently
expect the merger to be consummated in April 1999.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

         Our financial results were a net loss of $11.5 million ($0.38 per
share) for the year ended December 31, 1998 compared with a net loss $19.4
million ($0.73 per share) in 1997 and a net loss of $14.0 million ($0.54 per
share) in 1996. Lower operating, exploration and interest expenses more than
offset lower net sales for 1998 as compared to 1997 and 1996.

         Sales revenue of $53.5 million in 1998 was down from $64.8 million and
$67.9 million in 1997 and 1996, respectively. We hedged a portion of our
production in all three years, which resulted in higher realized prices than the
average market prices.

<TABLE>
<CAPTION>
                                           Year Ended December 31,
                                   ----------------------------------------
                                       1998           1997         1996
                                   ------------    ----------   -----------
<S>                                  <C>            <C>           <C>    
Ounces of gold sold                  159,546*       179,676       171,343
Average realized price per ounce        $335           $361         $396
Average market price per ounce          $293           $328         $387
</TABLE>

*   Does not include 15,756 ounces of gold sold from the development of
Turquoise Ridge for which the revenues were offset against the deferred 
development costs of the project.



                                      19
<PAGE>   21

         The effects of the changes in the average realized price per ounce and
the annual ounces of gold sold on sales revenues between years are reflected in
the following table (in millions):


<TABLE>
<CAPTION>
                                                         1998               1997
                                                          vs.                vs.
                                                         1997               1996
                                                     -------------      -------------
<S>                                                  <C>                <C>
Increase (decrease) in net sales due to:
 
         Change in price per ounce of gold sold      $      (4.6)      $       (6.1)
         Change in ounces of gold sold               $      (6.7)      $        3.0
                                                     -----------       ------------
               Total change in net sales             $     (11.3)      $       (3.1)
                                                     ===========       ============
</TABLE>

         Except as described above, inflation and changing prices have not had a
material effect on our net sales or loss from operations in 1998, 1997 or 1996.

         The decrease in the ounces sold in 1998 as compared to 1997 and 1996
resulted from our December 1997 decision to suspend the use of two of the three
autoclaves in the mill until the production of higher grade ore was sufficient
to operate the second and third autoclaves. In 1998, we only processed low grade
stockpile ore as a supplement to the higher grade ores in filling a complete
autoclave, whereas in 1997 and 1996 we operated all three autoclaves, regardless
of how much low grade stockpile ore was used. The increase in the ounces sold in
1997 as compared to 1996 resulted from improvements in the underground mining
operations, which improved the overall grade of ore milled.

         Mill feed for 1998 consisted of approximately 80% Getchell Underground
ore and Turquoise Ridge development ore compared to approximately 46% and 38% of
Getchell Underground ore in 1997 and 1996, respectively, improving the grade of
the ore milled. The gold recovery rate increased in 1998 over 1997 and 1996 as a
result of a fine-grind plant that was added to the mill in December 1997.

<TABLE>
<CAPTION>
                                                             Year Ended December 31,
                                                   -------------------------------------------
                                                       1998            1997           1996
                                                   ------------    ------------   ------------
<S>                                                  <C>            <C>            <C>      
Ore milled (dry tons)                                591,993        1,085,099      1,119,547
Average grade of ore milled (ounces per ton)           0.328            0.187          0.162
Gold recovery                                           90.5%           87.9%          88.7%
</TABLE>

         Ore production from the Getchell Underground mine decreased in 1998
compared to 1997 due to the December 1997 decision to focus production at the
Getchell Underground mine on the higher grade Northwest Ore Zones; resulting in
the increase in the average grade of ore mined. The increased underground ore
production at the Getchell Underground mine in 1997 as compared to 1996 was
principally the result of the introduction of long-hole stoping in certain parts
of the Getchell Underground mine in the first quarter of 1997.



                                      20


<PAGE>   22

<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                         -------------------------------------------
                                                             1998            1997           1996
                                                         ------------    ------------   ------------
<S>                                                        <C>             <C>            <C>    
Getchell Underground ore mined (tons)                      419,195         500,459        424,156
Getchell Underground ore mined per operating day (tons)      1,184           1,410          1,188
Average grade of ore mined (ounces per ton)                  0.404           0.313          0.302
</TABLE>

         Cost of sales was $63.4 million in 1998, down from $86.3 million in
1997 and $78.8 million in 1996, and cash costs per ounce produced were $321,
$418 and $402 for the three periods, respectively. On a cash cost and cash cost
per ounce basis, milling, mining and mine site general and administrative
("G&A") costs were lower in 1998 as compared to 1997 and 1996. Decreases in
underground mining and milling costs were related to lower production levels in
1998 versus 1997 and 1996. Decreases in underground mining costs also reflected
improved mining practices and lower maintenance expenses. Milling and mine site
G&A costs expensed were lower in 1998 compared to 1997 and 1996 reflecting the
capitalization of the portion of costs associated with the Turquoise Ridge mine
while development ore was being processed. Cost of sales includes higher
depreciation and depletion expense in 1998 as compared to 1997 and 1996
reflecting the addition of assets during 1996 and 1997, mostly at the mill and
in the Getchell Underground operation.

         Corporate G&A costs were $5.2 million in 1998 versus $5.5 million in
1997 and $4.7 million in 1996. The higher corporate G&A costs in 1997 over 1998
and 1996 was primarily due to $0.8 million of non-cash compensation expense
associated with the grant in February 1997 of stock appreciation rights ("SARS")
for certain corporate executives and key employees. Our Board of Directors
authorized the granting of these SARS under our 1996 Long Term Equity Incentive
Plan with respect to 75,983 shares at a weighted average option price of $8.21
per share. Compensation with respect to stock appreciation rights is accounted
for on a variable basis and is "marked to market" at the end of each fiscal
quarter based on the market price of our common stock. Accordingly, our
quarterly financial results since December 1997 reflect additional compensation
expense if the market price of the common stock increases from the end of the
preceding quarter or an offset to compensation expense if such market price
decreases from the end of the preceding quarter. The non-cash compensation
expense charged to Corporate G&A in 1998 totaled $0.1 million. The Corporate G&A
costs in 1998 also include $0.9 million of expenses associated with the proposed
merger with Placer Dome.

         Exploration expenses totaled $0.8 million in 1998, $1.5 million in 1997
and $3.6 million in 1996. Lower exploration expenses in 1998 than in 1997 and
1996 reflected our current focus on the delineation and expansion of known ore
zones, for which drilling expenditures are capitalized.


                                      21
<PAGE>   23


          Net interest expense was $0.7 million in 1998 compared to $0.8 million
in 1997 and $1.1 million in 1996. Net interest expense has decreased from 1996
through 1998 as a result of capitalized interest associated with our current
development project, Turquoise Ridge.

         Interest and other income of $4.2 million in 1998 compared to $4.1
million in 1997 and $5.4 million in 1996. Other income in 1998 included $1.5
million of gains on call option contracts outstanding at December 31, 1998,
which were marked to market. Interest income in 1998 of $2.5 million was lower
than interest income of $3.8 million in 1997 and $5.1 million in 1996 due to
lower cash and cash equivalent balance in 1998 compared to 1997 and 1996.

         Based upon a settlement negotiated with the Internal Revenue Service in
the fourth quarter of 1998, we recorded a tax benefit of $0.9 million
representing the excess of the amount we had previously accrued for the IRS's
claim over the settlement amount. Completion of the 1996 tax return in the fall
of 1997 and long-range tax planning undertaken in the fourth quarter of 1997
indicated that it is more likely than not that we will be able to utilize a
larger portion of our federal net operating loss carryforwards than previously
estimated. As a result, we adjusted the valuation allowance for deferred tax
assets and recorded a tax benefit of $5.9 million in the fourth quarter of 1997.
A $0.9 million tax benefit was recognized on the pretax loss in the first
quarter of 1996 based upon tax planning strategies and estimates of future
operations.

LIQUIDITY AND CAPITAL RESOURCES

         Cash used in operating activities was $0.7 million in 1998 as compared
to cash used in operations of $9.1 million in 1997 and cash provided by
operations of $1.8 million in 1996. The differences resulted primarily from
reduced operating losses.

         Cash used for investing activities increased in 1998 to $77.9 million
from $66.8 million in 1997 and $51.7 million in 1996 primarily due to increased
capital expenditures related to the Turquoise Ridge mine.

         Cash provided by financing activities was $62.4 million in 1998 as
compared to cash provided by financing activities of $46.0 million in 1997 and
cash used in financing activities of $0.6 million in 1996. We received $69.7
million in net proceeds from a public offering of our common stock in March 1998
compared to $47.7 million received from a public offering of our common stock in
March 1997. The principal balance of the our promissory note to ChemFirst was
$28.7 million at December 31, 1998. Interest on this note is accrued and
compounded for a period selected by us. Principal and all accrued interest is
due on September 22, 2000 or upon a change in control of Getchell Gold. The
proposed merger with Placer Dome would constitute a change in control.

         Cash and cash equivalents at December 31, 1998 were $18.1 million. We
estimate that we will require approximately $30 million for capital
expenditures in 1999 related to the Turquoise Ridge and Getchell mines, mill
improvements, equipment and exploration and development drilling.

                                       22
<PAGE>   24
         We intend to finance these expenditures with our cash resources as
well as cash provided by our operating activities. Any shortfall in funds
required to meet these needs may be supplemented by additional funds raised
through external equity or debt financing. However, there can be no assurance
that such financing will be available on a timely basis or on favorable terms,
if at all. In the event that such financing is not obtained on a timely basis,
we would be forced to delay certain expenditures.

RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes accounting
and reporting standards for derivative instruments and for hedging activities.
SFAS 133 is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. We have not completed an assessment of the impact of SFAS 133 on
our financial statements because of the complex nature of the statement.

         In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial reporting of
start-up costs and organization costs. It requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 is effective for
fiscal years beginning after December 15, 1998 with initial adoption reported as
the cumulative effect of a change in accounting principle. We estimate the
adoption of SOP 98-5 will result in an approximate $5 million charge in the
first quarter of 1999 as the cumulative effect of a change in accounting
principle. This charge reflects the costs, net of revenues, incurred in 1998 in
the production of development ore from the Turquoise Ridge mine. Such costs
include costs of mining, milling, minesite general and administrative, royalties
and depreciation and depletion.

THE YEAR 2000 ISSUE

The Problem
         The Year 2000 issue is the result of the inability of hardware,
software and control systems to correctly identify two-digit references to
specific years, beginning with the year 2000. This could result in system
failures or miscalculations causing disruptions of our operations and our
suppliers.

Our State of Readiness
         We have instituted a Year 2000 project. As a part of the project, we
have completed an initial evaluation of our computer systems and significant
software programs. This evaluation included our network hardware and operating
system, software operating the hoists at Turquoise Ridge, the control system at
the mill and accounting and business process software. We currently believe that
our network hardware and operating system, software operating the hoists at
Turquoise Ridge and accounting and business process software are all Year 2000
compliant. The control system at the mill, and other less critical hardware and
software, require further evaluation, which we expect to complete by the end of

                                      23
<PAGE>   25
the second quarter of 1999. Our less critical software programs are
predominantly "off-the-shelf" products with Year 2000 versions now available.
Therefore, if the software programs are not Year 2000 compliant, we will
replace these software programs by utilizing vendor provided upgrades by the
end of the third quarter of 1999. Based on work performed to date, no material
issues have been identified with our existing computer systems and significant
software programs. However, subsequent work may lead to discovery of material
issues.

         As part of our Year 2000 project, we plan to contact our significant
third-party suppliers, such as our refiners and suppliers of power, oxygen and
chemicals, to determine the extent to which we are vulnerable to our refiner's
or supplier's failure to remediate their Year 2000 issues. We plan to complete
the contacts by the end of the second quarter 1999. However, we cannot assure
that third-party suppliers will adequately address their Year 2000 issues or
that failure of the third-party suppliers to address their Year 2000 issues
would not have a material adverse effect on us or our operations.

The Costs to Address Our Year 2000 Issues
         Expenditures through December 31, 1998 have been minimal. Based upon
the findings at December 31, 1998, our estimated costs of becoming Year 2000
compliant are less than $0.1 million.

The Risks Associated with Our Year 2000 Issues
         Our failure to resolve Year 2000 issues on or before December 31, 1999
could result in system failures or miscalculation causing disruption in
operations and normal business activities as well as a lack of safety for our
employees. Additionally, failure to timely remediate Year 2000 issues by third
parties upon whom our business relies could result in disruptions in our supply
of parts and materials or result in other problems related to our daily
operations.

Contingency Plan
         We are currently working on a contingency plan for all critical aspects
of the Year 2000 issues and plan to have such a plan completed by the second
quarter of 1999.



                                      24
<PAGE>   26
RISK FACTORS
         Readers should carefully consider the risk factors set forth below; as
well as all of the other information in this document.

GOLD PRICE VOLATILITY

         Changes in the price of gold significantly affect our profitability.
Gold prices may fluctuate widely. In August 1998, the market price of gold
declined to levels that were the lowest in over eighteen years and has remained
below $300 for most of 1998.

         Numerous industry factors affect gold prices, including:

         o   industrial and jewelry demand;

         o   central bank lending, sales and purchases of gold;

         o   forward sales of gold by producers and speculators;

         o   production and cost levels in major gold-producing regions; and

         o   rapid short-term changes in supply and demand because of 
             speculative or hedging activities.

         Gold prices are also affected by macroeconomic factors, including:

         o   confidence in the global monetary system;

         o   expectations of the future rate of inflation;

         o   the strength of, and confidence in, the U.S. dollar (the currency 
             in which the price of gold is generally quoted) and other 
             currencies;

         o   interest rates; and

         o   global or regional political or economic events.

         The current demand for, and supply of, gold affects gold prices. The
supply of gold consists of a combination of new production from mining and
mobilization of existing stocks of bullion held by government central banks,
public and private financial institutions, industrial organizations and private
individuals. As the amounts produced by all producers in any single year
constitute a small portion of the total potential supply of gold, normal
variations in current production do not usually have a significant impact on the
supply of gold or on its price. Mobilization of gold stocks held by central
banks through lending and official sales may have a significant adverse impact
on the gold price. If revenue from gold sales declines for a substantial period
below the cost of production at any or all of our operations, we could be
required to reduce our reserves and could determine that it is not economically
feasible to continue (1) commercial production at any or all current operations
or (2) the development of some or all of our current projects.

                                      25
<PAGE>   27

         The following table of the annual high, low and average London P.M. Fix
illustrates the volatility of gold prices:

<TABLE>
<CAPTION>
                                                                                PRICE PER OUNCE
CALENDAR YEAR                                                     HIGH                 LOW              AVERAGE
-------------                                                     ----                 ---              -------
<S>                                                               <C>                 <C>                 <C> 
1989.................................................             $416                $356                $381
1990.................................................             $424                $346                $383
1991.................................................             $403                $344                $362
1992.................................................             $360                $330                $344
1993.................................................             $406                $326                $360
1994.................................................             $396                $370                $384
1995.................................................             $396                $372                $384
1996.................................................             $415                $367                $388
1997.................................................             $367                $283                $331
1998 ................................................             $313                $273                $294
1999 (through February 23, 1999).....................             $291                $284                $287
</TABLE>

         The London P.M. Fix on February 23, 1999, was $287 per ounce.

ORE RESERVE ESTIMATES MAY NOT BE REALIZED

         We estimate our reserves of gold on the Getchell Property as either
"proven reserves" or "probable reserves." We estimate proven reserve quantities
through extensive sampling and testing of sites containing gold that allow us to
have an established estimate as to the amount of gold we expect to extract from
a site. Probable reserves are computed with similar information to that used for
proven reserves, but the sites for sampling are less extensive, and the degree
of certainty as to the content of a site is less. The figures presented for both
proven and probable reserves herein are only estimates. We cannot assure you
that we will obtain (1) indicated levels of gold recovery or (2) the prices
assumed in determining gold reserves. Estimated reserves may have to be
recalculated based on actual production experience. Market price fluctuations of
gold, as well as increased production costs or reduced recovery rates, may
render the present proven and probable reserves unprofitable to develop at a
particular site or sites for certain periods of time. This could cause us to
reduce our reserves.

PRODUCTION ESTIMATES MAY NOT BE ACHIEVED

         We prepare estimates of future production for our operations. We
develop plans based on, among other things, mining experience, reserve
estimates, assumptions regarding ground conditions and physical characteristics
of ores (such as hardness and presence or absence of certain metallurgical
characteristics) and estimated rates and costs of mining and processing. Our
actual production may vary from estimates for a variety of reasons, including:

                                      26
<PAGE>   28

         o    risks and hazards of the types discussed in this section;

         o    actual ore mined varying from estimates of grade, tonnage, 
              dilution and metallurgical and other characteristics;

         o    the short-term operating factors relating to the ore reserves, 
              such as the need for sequential development of ore bodies and the
              processing of new or different ore grades;

         o    mine failures, cave-ins or equipment failures;

         o    natural phenomena such as inclement weather conditions, floods, 
              and earthquakes;
 
         o    unexpected labor shortages or strikes; and

         o    restrictions or regulations imposed by government agencies.

         Each of these factors also applies to sites not yet in production and
to operations that are to be expanded. In these cases, we do not have the
benefit of actual experience in our estimates, and there is a greater likelihood
that actual results will vary from the estimates.

SPECULATIVE NATURE OF GOLD EXPLORATION

         Gold exploration is highly speculative in nature. Our exploration
projects involve many risks and frequently are unsuccessful. We cannot assure
you that our future gold exploration efforts will be successful. Success in
increasing our reserves is the result of a number of factors, including the
following:

         o    quality of management;

         o    geological and technical expertise;

         o    quality of land available for exploration; and

         o    capital available for exploration and development.

         Once we discover a site with gold mineralization, it may take several
years from the initial phases of drilling until production is possible.
Substantial expenditures are required to establish proven and probable ore
reserves and to construct mining and processing facilities. As a result of these
uncertainties, we cannot assure you that current and future exploration programs
will result in the expansion or replacement of current production with new
proven and probable ore reserves.

UNCERTAINTY OF DEVELOPMENT PROJECTS

         From time to time we engage in the development of new ore bodies.
Specific risks associated with our development of the Turquoise Ridge mine are
discussed below. See "Certain Turquoise Ridge Mine Risks." Our ability to

                                      27
<PAGE>   29

sustain or increase our present level of gold production is dependent in part on
the successful development of such new ore bodies and/or expansion of existing
mining operations. The economic feasibility of such development projects is
based upon many factors, including:

         o    estimates of reserves;

         o    metallurgical recoveries;

         o    capital and operating costs of such projects; and

         o    future gold prices.

Development projects are also subject to the successful completion of
feasibility studies, issuance of necessary governmental permits and receipt of
adequate financing.

         Development projects have no operating history upon which to base
estimates of future cash flow. Our estimates of proven and probable ore reserves
and cash operating costs are, to a large extent, based upon detailed geologic
and engineering analysis. We also conduct feasibility studies which derive
estimates of capital and operating costs based upon many factors, including:

          o    anticipated tonnage and grades of ore to be mined and processed;

          o    the configuration of the ore body;

          o    ground and mining conditions;

          o    expected recovery rates of the gold from the ore; and

          o    anticipated environmental and regulatory compliance costs.

         It is possible that actual costs and economic returns may differ
materially from our best estimates. It is not unusual in the mining industry for
new mining operations to experience unexpected problems during the start-up
phase and to require more capital than anticipated.

CERTAIN TURQUOISE RIDGE MINE RISKS

         The Turquoise Ridge mine involves numerous risks. These include the
following:

         Reserves. We cannot assure that we will actually mine and mill the
probable reserves set forth in our reserve reports for the Turquoise Ridge mine
on an economic basis. These reports are based upon many assumptions, which may
not prove to be accurate. The failure of any such assumptions to prove accurate
may alter the conclusions of our reserve reports and may have a material adverse
affect on us. The reserve estimates were prepared using geological and
engineering judgment based on available data. In the absence of underground
development, such estimates must be regarded as imprecise and some of the
assumptions made may later prove to be incorrect or unreliable. The grade
distribution at Turquoise Ridge is generally between 0.2 to 0.75 ounces per ton.

                                       28
<PAGE>   30

Small changes in cutoff grade can cause large shifts in the reserves. If
dilution and/or mining costs related to hydrology or poor ground conditions are
higher than expected, the reserves could be substantially reduced, resulting in
a shortening of mine life and a reduced or negative cash flow.

         Dilution. Our reserve reports estimated the tonnage and grade of the
mill feed by applying dilution factors to certain resource data. The dilution
agents are backfill, waste from the back of overcut crosscuts and drifts, and
from the walls. If estimated dilution increases, there will be corresponding
negative effects on the tonnage and grade to mill. This risk is related to the
irregular configuration of the ore body which, even with the tight cut-and-fill
stoping method used, could make achievement of a dilution thickness of one foot
impossible to achieve in practice.

         Mining Cost. As part of the project risk assessment, sensitivities were
run on various mining costs. Due to uncertainties about actual ground conditions
and productivities, these costs are only predictable within a broad range and
the predictions may not be valid. Increased actual mining costs may have a
material adverse effect on the viability of the Turquoise Ridge project and on
us.

         Hydrology. Drainage of the ore body and surrounding rock will be
critical to the achievement of the mining efficiencies and costs estimated by
the study. If the deposit is not drained and water remains in this clay-rich
environment, mining conditions could worsen, and ground support costs would
increase. If, due to the presence of fine clays, the deposit drains slowly, the
start of production may be delayed, and the build-up to full production may be
of longer duration. Additionally, depending upon the quantity and quality of
water encountered, the water treatment/disposal options presently available to
us may be insufficient to meet estimated amounts needed to treat water pumped
from Turquoise Ridge during dewatering. Currently, the infiltration basins are
accepting and disposing of all water delivered from both the Getchell
Underground and the Turquoise Ridge mines.

         Geotechnical Considerations. The Turquoise Ridge ore zones may contain
areas of localized poor ground conditions. As a result, we may be required to
make expenditures on additional ground support.

DEPENDENCE ON A SINGLE PROPERTY

         All of our revenues are derived from our mining and milling operations
at the Getchell Property. If the operations at the Getchell Underground or
Turquoise Ridge mines, or at any of our processing facilities, are reduced,
interrupted or curtailed, our ability to generate future revenues and profits
could be materially adversely affected.

IMPACT OF HEDGING ACTIVITIES AND OTHER PRECIOUS METAL CONTRACT COMMITMENTS

         Precious metals contracts between us and various counterparties involve
the requirement that we deliver gold to the counterparty at agreed-upon prices.
If the counterparty is unable to fulfill its purchase obligations, there is no
guarantee that we will be able to receive the agreed-upon sales price in the

                                       29
<PAGE>   31

open market. If we are unable to produce sufficient gold to meet our hedging
contract obligations, we may be obligated to purchase such gold at the then
market price. We cannot assure that we will have the funds necessary to purchase
such gold or that we will be able to do so without causing a material adverse
effect on us.

         Our accounting treatment for hedging and other precious metal contract
commitments is outlined in Notes 2 and 3 to our consolidated financial
statements included in Item 8 "-Financial Statements and Supplementary Data."
See also Item 7 "-Management's Discussion and Analysis of Market Risk."

DEPENDENCE ON KEY PERSONNEL

         We are dependent on the services of certain key officers and employees,
including our Chief Executive Officer, our Chief Financial Officer, our Chief
Operating Officer, our Chief Administrative Officer and our Vice President of
Exploration. Competition in the mining industry for qualified individuals is
intense, and the loss of any of these key officers or employees, if not
replaced, could have a material adverse effect on us. We currently do not have
key person insurance. We have entered into Termination Agreements with our Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief
Administrative Officer and Vice President of Exploration which provide for
certain payments upon termination or resignation resulting from a change of
control (as defined in such agreements).

         In connection with the development of Turquoise Ridge, we expect that
we will require a significant number of additional skilled employees. We face
intense competition from other mining companies in connection with the
recruitment and retention of such employees. Additionally, although we do not
currently have any unionized employees, we cannot assure that unionization will
not occur in the future.

GOVERNMENT REGULATION

         Safety. Our mining operations are subject to inspection and regulation
by the Mine Safety and Health Administration of the United States Department of
Labor ("MSHA") under the provisions of the Mine Safety and Health Act of 1977.
The Occupational Safety and Health Administration ("OSHA") also has jurisdiction
over safety and health standards not covered by MSHA. It is our policy to comply
with applicable directives and regulations of MSHA and OSHA.

         On February 15, 1999, a mine site accident involving the Turquoise
Ridge mine's underground compressed air system resulted in the death of one of
our employees. We have notified the appropriate state and federal safety
authorities and we expect, as required by federal law, the accident will be
investigated by MSHA. At this time, the results of this investigation are
unknown.

         Current Environmental Laws and Regulations. We must comply with
environmental standards, laws and regulations that may result in greater or
lesser costs and delays depending on the nature of the regulated activity and
how stringently the regulations are implemented by the regulatory authority. The

                                       30
<PAGE>   32

costs and delays associated with compliance with such laws and regulations could
stop us from proceeding with the development of a project or the operation or
further development of a mine. Laws and regulations involving the protection and
remediation of the environment and the governmental policies for implementation
of such laws and regulations are constantly changing and are generally becoming
more restrictive. We have made, and expect to make in the future, significant
expenditures to comply with such laws and regulations. These requirements
include regulations under many state and federal laws and regulations,
including:

         o    the Comprehensive Environmental Response, Compensation and 
              Liability Act of 1980 ("CERCLA" or "Superfund") which regulates 
              and establishes liability for the release of hazardous substances;

         o    the ESA;

         o    the Clean Water Act;

         o    the Clean Air Act;

         o    RCRA;

         o    the Migratory Bird Treaty Act;

         o    the Safe Drinking Water Act;

         o    the Emergency Planning and Community Right-to-Know Act;

         o    the Federal Land Policy and Management Act;

         o    the National Environmental Policy Act; and

         o    the National Historic Preservation Act.

         The EPA continues the development of a solid waste regulatory program
specific to mining operations such as ours, whose mineral extraction and
beneficiation wastes are not regulated as hazardous wastes under RCRA.

         Regulations promulgated under Section 313 of the Emergency Planning and
Community Right to Know Act have significantly expanded Toxic Release Inventory
("TRI") reporting requirements to include the metal mining industry. We expect
to incur additional costs in complying with the new TRI reporting requirements.
The public availability of the TRI reports, which must be filed with the EPA by
July 1, 1999, could adversely affect us, along with the rest of the metal mining
industry.

         Environmental laws and regulations may also have an indirect impact on
us, such as increased cost for electricity due to acid rain provisions of the
Clean Air Act Amendments of 1990. Charges by refiners to which we sell our
metallic concentrates and products have substantially increased over the past
several years because of requirements that refiners meet revised environmental
quality standards. We have no control over the refiners' operations or their
compliance with environmental laws and regulations.

                                       31
<PAGE>   33

         Potential Legislation. Changes to the current laws and regulations
governing the operations and activities of mining companies, including changes
in permitting, environmental, title, health and safety, labor and tax laws, are
actively considered from time to time. We cannot predict such changes, and such
changes could have a material adverse impact on our business. Expenses
associated with the compliance with such new laws or regulations could be
material. Further, increased expenses could prevent or delay exploration or
development projects and could therefore affect future levels of mineral
production.

ENVIRONMENTAL MATTERS

         Environmental Liability. We are subject to potential risks and
liabilities associated with pollution of the environment and the disposal of
waste products that could occur as a result of our mineral exploration,
development and production.

         The gold ore located on the Getchell Property and the existing tailings
ponds, and the waste rock piles located on the Getchell Property contain
relatively high levels of arsenic compounds. The milling of such ore involves
the use of other toxic substances, including, but not limited to, sodium
cyanide, sodium hydroxide, sulfuric acid and nitric acid.

         Environmental liability may result from mining activities conducted by
others prior to our ownership of a property. Historic mining disturbances,
facilities, waste materials and other discrete areas of potential contamination
associated with the production of gold, tungsten, and molybdenum between 1937
and 1969 by previous owners and operators are contained within the area of the
Getchell Property. Under CERCLA and other federal, state and local environmental
laws, ordinances, and regulations, a current or previous owner or operator of
real property may be liable for the costs of removal or remediation of hazardous
or toxic substances on, under or in such property or other property to which the
substances may have migrated. Such laws may impose liability whether or not the
owner or operator knew of, or was responsible for, the presence of such
hazardous or toxic substances. In connection with our current or prior ownership
or operation of property or facilities, we may be potentially liable for any
such costs or liabilities. Although we are currently not aware of any material
environmental claims pending or threatened against us, we cannot assure that a
material environmental claim will not be asserted against us.

         To the extent we are subject to environmental liabilities, the payment
of such liabilities or the costs that we may incur to remedy environmental
pollution would reduce funds otherwise available to us and could have a material
adverse effect on us. If we are unable to fully remedy an environmental problem,
we might be required to suspend operations or enter into interim compliance
measures pending completion of the required remedy. The potential exposure may
be significant and could have a material adverse effect on us. We have not
purchased insurance, including insurance for potential liability for pollution
and other hazards as a result of the disposal of waste products occurring from
exploration and production for environmental risks, because it is not generally
available at a reasonable price.

         Environmental Permits. All of our exploration, development and
production activities are subject to regulation under one or more of the various
state and federal environmental laws and regulations. Many of the regulations

                                       32
<PAGE>   34

require that we obtain permits for our activities. We must update and review our
permits from time to time, and these permits are normally subject to
environmental impact analyses and public review processes prior to approval of
the activity. It is possible that future changes in applicable laws, regulations
and permits or changes in their enforcement or regulatory interpretation could
have a significant impact on some portion of our business, causing those
activities to be economically re-evaluated at that time.

         Restoration. We accrue expenses over the productive life of our mine
for anticipated costs associated with restoration of the mine site. Permanent
closure of the mining and milling operations and the reclamation of the
disturbed land to a productive use may result in restoration costs. This
includes restoration of historic and current mining and milling operations and
associated land disturbances. Restoration takes place concurrent with and after
the productive life of mining operations. Activities which result in restoration
costs after permanent closure and reclamation primarily relate to monitoring and
other post mining management activities.

         The uncertainties related to future restoration costs result from
unknown future additional regulatory requirements, significant new facilities or
surface disturbances, and the potential for recognition in the future of
additional activities needed for restoration. In accordance with applicable
state and federal laws, we have posted a reclamation bond of $4.5 million in
1998 based on previously permitted activities. This bonding amount was under
normal periodic review with state and federal agencies and is expected to be
revised in 1999. As of December 31, 1998, the total estimated restoration costs
for the current disturbances on the Getchell Property were $5.4 million. At
December 31, 1998, the total estimated restoration costs at the planned future
full level of development were $8.7 million, of which we had accrued $2.8
million at December 31, 1998. The amount of total estimated restoration costs
will increase over time as the planned future full level of development is
approached. Additional increases may occur as expanded mining and mineral
processing activities are proposed and regulatory requirements become more
stringent or additional requirements are added.

MINING RISK AND INSURANCE

         The gold mining industry is generally subject to a number of risks and
hazards including:

         o    environmental hazards;

         o    industrial accidents;

         o    labor disputes;

         o    the encounter of unusual or unexpected geological conditions;

         o    slope failures;

         o    changes in the regulatory environment; and

         o    natural phenomena such as inclement weather conditions, floods, 
              blizzards and earthquakes.

         Such occurrences could result in:



                                       33
<PAGE>   35


         o    damage to, or destruction of, mineral properties or production 
              facilities;

         o    personal injury or death;

         o    environmental damage;

         o    delays in mining;

         o    monetary losses; and

         o    possible legal liability.

         We maintain insurance against risks that are typical in the gold mining
industry and in amounts that we believe to be reasonable, but which may not
provide adequate coverage in certain unforeseen circumstances. However, we have
not purchased insurance, including insurance against certain liabilities for
environmental pollution or other hazards as a result of exploration and
production, against certain risks because such coverage is not generally
available at a reasonable price to us or to other companies within the industry.
This lack of coverage could result in material economic harm to us.

TITLE TO PROPERTIES

         Certain of our mineral rights consist of "unpatented" mining claims
created and maintained in accordance with the General Mining Law. Unpatented
mining claims are unique U.S. property interests, and are generally considered
to be subject to greater title risk than other real property interests because
the validity of unpatented mining claims is often uncertain. This uncertainty
arises, in part, out of the complex federal and state laws and regulations under
the General Mining Law. Also, unpatented mining claims are always subject to
possible challenges of third parties or contests by the federal government. The
validity of an unpatented mining claim, in terms of both its location and its
maintenance, is dependent on strict compliance with a complex body of federal
and state statutory and decisional law. In addition, there are few public
records that definitively control the issues of validity and ownership of
unpatented mining claims.

         In recent years, the U.S. Congress has considered a number of proposed
amendments to the General Mining Law. Although no such legislation has been
adopted to date, we cannot assure you that such legislation will not be adopted
in the future. If ever adopted, such legislation could, among other things,
impose royalties on gold production from currently unpatented mining claims
located on federal lands. If such legislation is ever adopted, it could have an
adverse impact on earnings from our operations, it could reduce estimates of our
present probable reserves and it could reduce the amount of our future
exploration and development activity on federal lands.




                                       34
<PAGE>   36
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Gold Price

         Our business is the exploration, production and sale of gold. Changes
in the price of gold significantly affect our profitability. Gold prices may
fluctuate widely. In August 1998, the market price of gold declined to levels
that were the lowest in over eighteen years and has remained below $300 for
most of 1998. For factors that affect gold prices, see "Risk Factors --Gold
Price Volatility."

         At current 1999 estimates of production at an estimated average gold
price of $300, including the effects of our hedging position and our estimate of
our operating expenses, a $10 change in the gold price would result in an
increase or decrease of approximately $3.3 million in net income and $2.8
million in cash flows. The estimate does not give effect to changes in the fair
values of written and embedded written options which are not considered hedges
of future production. Changes in the fair values of all written options are
recognized in income currently. The market risk of these instruments is related
to changes in the underlying gold price, changes in gold lease rates and the
volitility of gold prices, which will change the amount we would pay to cancel
the option. We are also at risk if we are unable to deliver the gold and the
market price were to exceed the exercise price of the option. 

         We have utilized commodity instruments for purposes other than trading
purposes to protect the selling price of some of our production. The market risk
of these commodity instruments to our cash flow is related to the possible
failure of all counterparties to honor their contractual obligations. Also,
precious metals contracts between us and various counterparties involve the
requirement that we deliver gold to the counterparty at agreed-upon prices. If
the counterparty is unable to fulfill its purchase obligations, there is no
guarantee that we will be able to receive the agreed-upon sales price in the
open market. If we are unable to produce sufficient gold to meet our hedging
contract obligations, we may be obligated to purchase such gold at the then
market price.

         At December 31, 1998, our outstanding spot deferred contracts were for
380,000 ounces at a projected average price of $318 per ounce. Of these
contracts, 155,000 ounces are to be delivered in 1999 at a projected weighted
average price of $311 per ounce, 120,000 ounces are to be delivered in 2000 at a
projected weighted average price of $321 per ounce and 105,000 ounces are to be
delivered in 2001 at a projected weighted average price of $323 per ounce.

         On February 19, 1999 we closed out spot deferred contracts covering
250,000 ounces for cash consideration of approximately $4.7 million. The
proceeds will be recorded as deferred revenue and recognized in net sales when
the originally designated hedged future gold production is sold.

         Additionally, in November 1997, we entered into a forward sales
contract covering the sale of 250,000 ounces of gold along with an option by the
counterparty to purchase up to an additional 225,000 ounces of gold, if the
gold price equals or exceeds certain price increments. The agreement calls for
us to deliver 50,000 ounces of gold on December 31 in each of the years 1998
through 2002 and up to an additional 75,000 ounces of gold in each of the years
2000 to 2002. Delivery in 1999 will be at approximately $355 per ounce and
deliveries in 2000 through 2002 will be at approximately $343 per ounce. These
projected forward selling prices assume a constant future gold lease rate of
2%. The actual forward prices under the contract are adjusted up or down based
on the actual future gold lease rate.

         The option feature of the contract is similar to a written call option
in that if the gold spot price equals or exceed certain price increments, we
would be required to sell additional ounces of gold at the specified price. If
at any time on or between December 27, 1997 and December 27, 2000, the gold
spot market price equals or exceeds a price increment, for each price increment
equaled or exceeded, we would be required to deliver 15,000 additional ounces
of gold at $343 per ounce on December 31 in each of the years 2000, 2001 and
2002. The price increments are $380, $387, $394, $401 and $408. In total, if
all five price increments are equaled or exceeded prior to December 27, 2000,
we would be required to deliver 75,000 additional ounces at $343 per ounce on
December 31 in each of the years 2000, 2001 and 2002. As of February 16, 1999,
none of the specified price levels had been reached.


                                       35

<PAGE>   37


         If any price increment has not been equaled or exceeded prior to or on
December 27, 2000 but is equaled or exceeded during the period on or between
December 28, 2000 and December 27, 2001, we would be required to deliver, for
each increment equaled or exceed, 15,000 ounces of gold at $343 per ounce on
December 31, 2001 and 2002. Similarly, if any price increment has not been
equaled or exceeded prior to or on December 27, 2001, but is equaled or
exceeded during the period on or between December 28, 2001 and December 27,
2002, we would be required to deliver, for each increment equaled or exceed,
15,000 ounces of gold at $343 per ounce on December 31, 2002.

         The premium related to the option feature is included in the forward
sales price of the 250,000 ounces of gold. For accounting purposes, the contract
sales price of the 250,000 ounces of gold has been allocated between the forward
sales component of the contract and the premium for the embedded option. The
revenue associated with the forward sales component of the contract will be
recognized when the gold is delivered. The option premium portion of the forward
sales is deferred, adjusted for changes in the market value of the option, and
recognized in earnings when the option expires or is exercised.

         On February 19, 1999 we closed the forward sales contract covering the
remaining 200,000 ounces of gold and cancelled the related option to purchase up
to an additional 225,000 ounces of gold in exchange for cash consideration of
approximately $3.3 million. The amount received, adjusted for the value of the
option cancelled and the deferred cost associated with the forward sales
contract will be recorded as deferred revenue. The resulting deferred revenue of
approximately $2.6 million will be recognized in net sales when the originally
designated hedged future gold production is sold.

         In addition, at December 31, 1998, we had outstanding European call
option contracts for 40,000 ounces of gold at a price of $309 per ounce which
expire in 1999. Risk of loss on European call option contracts exists if we are
unable to deliver the required quantity of gold and the market price were to
exceed the exercise price of the option on the date designated in the contract.

Interest Rates

         At December 31, 1998, our long-term debt was primarily a promissory
note to ChemFirst for $28.7 million. The interest rate on the note is currently
5 5/8% and reflects the London Interbank Offered Rate for a period selected by
us, plus an applicable margin. Since the interest rate on the note is variable
and is reset periodically, we are not exposed to significant interest rate risk.

Foreign Currency

         The price of gold is denominated in United States dollars, and all of
our operations and expenses are incurred in United States dollars. Therefore we
have no foreign currency exposure.


                                       36
<PAGE>   38
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                         <C>
INDEPENDENT AUDITORS' REPORT.................................................. 38

CONSOLIDATED STATEMENTS OF OPERATIONS-                                        
Years ended December 31, 1998, 1997 and 1996.................................. 39    

CONSOLIDATED BALANCE SHEETS-                                                  
December 31, 1998 and 1997.................................................... 40

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY-                              
Years ended December 31, 1998, 1997 and 1996.................................. 41

CONSOLIDATED STATEMENT OF CASH FLOWS-                                         
Years ended December 31, 1998, 1997 and 1996 ................................. 42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-
December 31, 1998 and 1997.................................................... 43
</TABLE>




                                      37

<PAGE>   39


                          INDEPENDENT AUDITORS' REPORT

THE BOARD OF DIRECTORS AND STOCKHOLDERS
GETCHELL GOLD CORPORATION:

         We have audited the accompanying consolidated balance sheets of
Getchell Gold Corporation and subsidiary as of December 31, 1998 and 1997, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three year period ended December 31,
1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

         In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Getchell Gold Corporation and subsidiary as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the years in
the three year period ended December 31, 1998, in conformity with generally
accepted accounting principles.


                                    KPMG LLP

Denver, Colorado
February 19, 1999


                                      38

<PAGE>   40


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                                       ------------------------------------------
                                                          1998            1997            1996
                                                       ----------      ----------      ----------
<S>                                                    <C>             <C>             <C>       
Net sales                                              $   53,471      $   64,797      $   67,878
Cost of sales                                              63,378          86,320          78,784
                                                       ----------      ----------      ----------
     Gross margin                                          (9,907)        (21,523)        (10,906)

General and administrative expenses                         5,242           5,515           4,669
Exploration expenses                                          796           1,537           3,580
                                                       ----------      ----------      ----------
     Loss from operations                                 (15,945)        (28,575)        (19,155)

Interest expense, net of capitalized interest                (668)           (839)         (1,082)
Interest and other income                                   4,229           4,055           5,415
                                                       ----------      ----------      ----------
      Loss before income taxes                            (12,384)        (25,359)        (14,822)
Income tax benefit                                            932           5,932             870
                                                       ----------      ----------      ----------
      Net loss                                         $  (11,452)     $  (19,427)     $  (13,952)
                                                       ==========      ==========      ==========


Loss per share                                         $    (0.38)     $    (0.73)     $    (0.54)
                                                       ==========      ==========      ==========


Weighted average number of shares outstanding              30,080          26,571          25,727
                                                       ==========      ==========      ==========
</TABLE>



        The accompanying notes are an integral part of these statements.



                                      39

<PAGE>   41



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                   (In thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                                        At December 31,
                                                                                  --------------------------
                                                                                     1998            1997
                                                                                  ----------      ----------
<S>                                                                               <C>             <C>
                                     ASSETS
Current assets:
     Cash and cash equivalents                                                    $   18,073      $   34,247
     Accounts receivable:
          Trade                                                                        2,191           1,790
          Employee                                                                         1             182
          Other                                                                          926             261
                                                                                  ----------      ----------
               Total accounts receivable                                               3,118           2,233
                                                                                  ----------      ----------
     Inventories:
          Ore and ore in process                                                       1,565           1,873
          Materials and supplies                                                      11,509          10,873
                                                                                  ----------      ----------
               Total inventories                                                      13,074          12,746
                                                                                  ----------      ----------
     Other current assets                                                              1,090             808
                                                                                  ----------      ----------
               Total current assets                                                   35,355          50,034
Property, plant and equipment, net (Note 4)                                          259,815         188,242
Other assets (Note 5)                                                                  7,390           3,611
                                                                                  ----------      ----------
               Total assets                                                       $  302,560      $  241,887
                                                                                  ==========      ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                             $    7,025      $   13,506
     Accrued expenses                                                                  3,013           2,258
     Current portion of capital lease obligations (Note 7)                             3,539           2,248
     Stock appreciation rights (Note 10)                                               1,393           1,238
     Deferred revenue                                                                  3,617             198
     Income taxes payable to ChemFirst Inc. (Note 8)                                     666              --
                                                                                  ----------      ----------
               Total current liabilities                                              19,253          19,448
Long-term debt, principally to ChemFirst Inc. (Note 6)                                28,799          27,057
Capital lease obligations, less current portion (Note 7)                              10,399           6,685
Deferred income taxes (Note 8)                                                           211           1,809
Reclamation liabilities (Note 14)                                                      2,793           2,701
Deferred call option premium                                                           2,000           3,400
Other liabilities                                                                        811             892
                                                                                  ----------      ----------
               Total liabilities                                                      64,266          61,992
                                                                                  ----------      ----------
Commitments and contingencies (Note 15)                                                   --              --
Stockholders' equity:
     Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued
     Common stock, $0.0001 par value; 100,000,000 shares authorized;
       issued and outstanding 30,797,536 in 1998 and 26,784,351 in 1997                    3               3
     Contributed and paid-in capital                                                 290,830         220,979
     Accumulated deficit                                                             (52,539)        (41,087)
                                                                                  ----------      ----------
               Total stockholders' equity                                            238,294         179,895
                                                                                  ----------      ----------
               Total liabilities and stockholders' equity                         $  302,560      $  241,887
                                                                                  ==========      ==========
</TABLE>

        The accompanying notes are an integral part of these statements.



                                      40

<PAGE>   42

                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                       
                                                      Common Stock        Contributed                               Total 
                                                -----------------------   and Paid-In   Unearned    Accumulated Stockholders'
                                                  Shares        Amount     Capital    Compensation    Deficit      Equity
                                                ----------   ----------   ----------   ----------   ----------   ----------
<S>                                             <C>          <C>          <C>          <C>          <C>          <C>
Balance at December 31, 1995                        25,658          257      171,722           (7)      (7,708)     164,264
     Shares issued for stock options exercised         108            1          956           --           --          957
     Change in par value from $0.01 to
          $0.0001 per share                             --         (255)         255           --           --           --
     Additional costs of 1995 equity offering           --           --          (54)          --           --          (54)
     Amortization of unearned compensation              --           --           --            7           --            7
     Net loss                                           --           --           --           --      (13,952)     (13,952)
                                                ----------   ----------   ----------   ----------   ----------   ----------
Balance at December 31, 1996                        25,766            3      172,879           --      (21,660)      151,222
     Shares issued in equity offering, net of
          costs (Note 9)                             1,000           --       47,698           --           --       47,698
     Shares issued for stock options exercised          18           --          402           --           --          402
     Net loss                                           --           --           --           --      (19,427)     (19,427)
                                                ----------   ----------   ----------   ----------   ----------   ----------
Balance at December 31, 1997                        26,784   $        3   $  220,979   $       --   $  (41,087)  $  179,895
     Shares issued in equity offering, net of
          costs (Note 9)                             4,002           --       69,723           --           --       69,723
     Shares issued for stock options exercised          12           --          128           --           --          128
     Net loss                                           --           --           --           --      (11,452)     (11,452)
                                                ----------   ----------   ----------   ----------   ----------   ----------
Balance at December 31, 1998                        30,798   $        3   $  290,830   $       --   $  (52,539)  $  238,294
                                                ==========   ==========   ==========   ==========   ==========   ==========
</TABLE>


        The accompanying notes are an integral part of these statements.



                                       41

<PAGE>   43



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                            Year Ended December 31,
                                                                     ------------------------------------
                                                                        1998         1997         1996
                                                                     ----------   ----------   ----------
<S>                                                                  <C>          <C>          <C>
Cash flows from operating activities:
     Net loss                                                        $  (11,452)  $  (19,427)  $  (13,952)
     Adjustments to reconcile net loss to net cash
          provided by (used in) operating activities:
          Depreciation and depletion                                     11,948       10,996        9,770
          Deferred income tax benefit                                      (932)      (5,932)        (870)
          Gain on call option premiums                                   (1,400)          --           --
          Accrued interest converted to loan principal                    1,801        1,643        1,522
          Other                                                              26           48          427
          Net change in operating assets and liabilities:
               Accounts receivable                                         (191)         732        1,697
               Inventories                                                 (327)      (2,254)        (742)
               Other current assets                                        (282)         290         (539)
               Accounts payable                                          (4,175)       2,511        2,775
               Accrued expenses                                             754          518        1,038
               Deferred revenues                                          3,419          560          685
               Stock appreciation rights                                    155        1,238           --
                                                                     ----------   ----------   ----------
                    Cash provided by (used in) operating activities        (656)      (9,077)       1,811
                                                                     ----------   ----------   ----------

Cash flows from investing activities:
     Additions to property, plant and equipment                         (78,008)     (66,771)     (51,677)
     Proceeds from sale of property                                         123           --            9
                                                                     ----------   ----------   ----------
                    Cash used in investing activities                   (77,885)     (66,771)     (51,668)
                                                                     ----------   ----------   ----------

Cash flows from financing activities:
     Proceeds from issuance of common stock                              69,851       48,088          903
     Proceeds from long-term debt                                            --           --           31
     Principal payments under capital lease obligations                  (2,951)      (1,912)      (1,580)
     Restricted cash                                                     (4,559)          --           --
     Other                                                                   26         (211)          --
                                                                     ----------   ----------   ----------
                    Cash provided by (used in) financing activities      62,367       45,965         (646)
                                                                     ----------   ----------   ----------

Net decrease in cash and cash equivalents                               (16,174)     (29,883)     (50,503)
Cash and cash equivalents at beginning of year                           34,247       64,130      114,633
                                                                     ----------   ----------   ----------
Cash and cash equivalents at end of year                             $   18,073   $   34,247   $   64,130
                                                                     ==========   ==========   ==========
</TABLE>

See Note 13 for supplemental cash flow information.

        The accompanying notes are an integral part of these statements.


                                       42

<PAGE>   44



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


(1) THE COMPANY

         Getchell Gold Corporation (the "Company") is engaged in gold
exploration and production at its Getchell Property in Nevada. The Getchell
Property is in the Potosi Mining District on the eastern side of the Osgood
Mountain Range, approximately 43 miles northeast of Winnemucca, Nevada. The
Getchell Property consists of approximately 18,900 acres of unpatented load and
mill site mining claims and 14,100 acres of fee land owned by the Company.
Located on the Getchell Property are the Getchell Underground and Turquoise
Ridge underground mines. Commercial production from the Getchell Underground
mine began in May 1995. Construction of the Turquoise Ridge mine began in
January 1996 and production of development ore began in January 1998.

         The Company was incorporated in August 1987 as a subsidiary of
ChemFirst Inc. ("ChemFirst") (formerly known as First Mississippi Corporation).
On September 24, 1995, ChemFirst's Board of Directors approved the spin-off of
ChemFirst's stock in the Company to ChemFirst shareholders of record on October
10, 1995 (the "Spin-Off"). On October 20, 1995, ChemFirst distributed its 81%
interest in the Company to ChemFirst shareholders. In connection with the
Spin-Off, on September 24, 1995, the Company entered into certain agreements
with ChemFirst, including a loan agreement for the outstanding balances due from
the Company to ChemFirst at the date of the Spin-Off (described in Note 6), an
agreement to settle certain tax sharing arrangements (see Note 8) and an
agreement to undertake a public offering of at least $50 million prior to April
28, 1996.

         On December 11, 1998, the Company entered into an Agreement and Plan of
Merger with Placer Dome Inc., a Canada-based, international gold mining company,
and Bullion Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Placer Dome (the "Merger Sub"), pursuant to which the Merger Sub
will be merged (the "Merger") with and into the Company, with the Company
surviving the Merger and becoming a wholly owned subsidiary of Placer Dome.
Under the terms of the Merger Agreement, each issued and outstanding share of
the Company's common stock, other than shares owned by Placer Dome or the
Company, will be converted into 2.45 shares of Placer Dome's common stock. The
Merger is subject to various regulatory approvals and other conditions. The
Company currently expects the Merger to be consummated in April 1999.



                                       43

<PAGE>   45

                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements include the financial statements
of Getchell Gold Corporation and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated.

CASH AND CASH EQUIVALENTS

         For the purposes of the consolidated balance sheets and consolidated
statements of cash flows, the Company considers all debt and highly liquid
instruments with original maturities of three months or less to be cash
equivalents. Cash equivalents at December 31, 1998 and 1997 consisted of
commercial paper.

INVENTORIES

         Inventories of ore, ore in process and precious metals are stated at
the lower of average cost or net realizable value. Materials and supplies are
stated at the lower of average cost or replacement cost.

         The Company provides an allowance for obsolescence for certain
materials and supplies inventory items. The allowance is based on estimates of
technical obsolescence which result from normal ongoing upgrades, improvements
and betterments of plant and equipment. At December 31, 1998 and 1997, the
allowance for obsolescence was $0.7 million and $1.0 million, respectively.

PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are stated at cost. Maintenance and
repairs related to operations are charged to expense as incurred, and are
capitalized on construction and development projects.

Mineral Exploration and Mine Development

         Exploration costs are charged to expense as incurred. After a project
is determined by management to be commercially feasible, such costs are
capitalized. Expenditures for mine development are capitalized until production
reaches a commercial level. Prior to achieving commercial production, revenues
relating to development ore, net of mining and processing costs associated with
its production, are applied to mine development costs. Mine development costs
incurred to access reserves on producing mines are also capitalized.



                                       44

<PAGE>   46



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


Mineral Properties

         Mining projects and properties are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of these
assets may not be recoverable. Events or circumstances that may indicate that
the carrying amount may not be recoverable include a significant decrease in
current or forward commodity prices, a significant reduction in estimates of
proven and probable reserves, and significant increases in operating costs,
capital requirements or reclamation costs. If estimated future cash flows
expected to result from the use of the mining project or property and its
eventual disposition are less than the carrying amount of the mining project or
property, an impairment is recognized based upon the estimated fair value of the
mining project or property. Fair value generally is based on the present value
of estimated future net cash flows for each mining project or property,
considering estimates of proven and probable mineable reserves, future prices,
operating costs, capital requirements and reclamation costs.

Capitalization of Interest

         Interest expense allocable to construction or development projects is
capitalized until commercial production is achieved.

Depreciation and Depletion

         Property, plant and equipment, with useful lives as long or longer than
existing ore reserves, are depreciated or depleted using the unit-of-production
method. Plant and equipment, with useful lives shorter than existing ore
reserves, are depreciated using the straight-line method, generally over five
years. Capitalized mine development costs and mine development costs estimated
to be incurred over the life of the mine, are depleted on a unit-of-production
method. Depreciation and depletion rates are subject to periodic review to
ensure that asset costs are amortized over their useful lives.

         Depletion computed on a unit-of-production method is based on the ratio
of tons of ore mined or ounces of gold produced during the period, to the
estimated total proven and probable reserves to which the capitalized costs
relate.

RECLAMATION OF MINING AREAS

         As of December 31, 1998, the total estimated costs for restoring
certain disturbed mining and milling areas to comply with existing reclamation
standards totaled $5.4 million. At December 31, 1998, the total estimated
restoration costs at the planned future full level of development was $8.7
million, of which $2.8 million has been accrued at December 31, 1998. These
amounts are based on management's estimate of future reclamation costs to be
incurred considering environmental and regulatory requirements. Such costs are
charged to operations on a unit-of-production basis over the life of the mine.
Reclamation cost estimates are reviewed by management on a regular basis and are
appropriately revised for changes in future estimated costs, regulatory
requirements or mine life.


                                       45

<PAGE>   47



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         The Company performs concurrent reclamation to the extent possible.
However, most of the estimated costs are anticipated to be expended at the end
of the mine life. Based on existing reserves and mineral resources, the
Getchell Underground mines life is estimated to be approximately 9 years and
the Turquoise Ridge mines life is estimated to be in excess of 10 years.

REVENUE RECOGNITION

         Revenue from spot sales are recorded when gold is ready for shipment.
Revenue from shipments under forward sales agreements are recorded at the
settlement date of the agreements.

Total ounces of gold sold were:

<TABLE>
<CAPTION>

                        Period                                  Ounces Sold
                        ------                                  -----------
<S>               <C>                                           <C>
                  Year ended December 31, 1998                    159,546*

                  Year ended December 31, 1997                    179,676

                  Year ended December 31, 1996                    171,343
</TABLE>

                  * For the year ended December 31, 1998, gold ounces sold does
                  not include 15,756 ounces of gold sold from the development of
                  the Turquoise Ridge mine for which revenues were offset 
                  against the mine development costs of the project.

DERIVATIVE FINANCIAL INSTRUMENTS

         The Company enters into certain financial transactions as a hedge
against changes in prices of the gold produced. Hedging transactions have
included spot deferred and forward sales contracts. In determining when hedge
accounting is appropriate, the Company considers the correlation of anticipated
production to the designated delivery date and the instrument's effectiveness in
reducing price risk related to gold sales. Gains and losses on the spot deferred
and forward sale contract transactions, as well as any costs or revenues
associated therewith, are recognized in sales when the related gold production
is delivered.

         The Company has sold written call options in the form of European call
option contracts and certain options imbedded in forward sales contracts. Where
call option premiums are included in the price of forward sales, proceeds from
the forward sales are allocated between forward sales revenue and the call
option premiums. Recognition of premiums received for call options sold are
deferred until the option expires or the related transaction occurs at which
time the deferred amounts are recognized in income. The premiums received are 
recorded in the accompanying balance sheet as deferred call option premiums and 
are adjusted for changes in their market values.

                                       46
<PAGE>   48


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


EMPLOYEE STOCK COMPENSATION

         The Company applies the intrinsic value based method of accounting
prescribed by APB Opinion No. 25 "Accounting for Stock Issued to Employees" and
related Interpretations in accounting for its stock-based incentive plans. Under
the intrinsic value based method, compensation cost is the excess, if any, of
the quoted market price of the stock at grant date over the amount an employee
must pay to acquire the stock.

INCOME TAXES

         The Company utilizes the asset and liability method of accounting for
income taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amount of existing assets
and liabilities and their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. The Company records a
valuation allowance against the portion of the deferred tax assets that it
believes will not likely be realized.





                                       47

<PAGE>   49


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997

LOSS PER SHARE

         Loss per share is computed by dividing the net loss attributable to
common stock by the weighted average number of common shares outstanding during
each period. The effect of potentially dilutive stock options outstanding was
antidilutive in 1998, 1997 and 1996.


FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair value of the Company's financial assets and liabilities
approximates their book values as a result of the short-term nature of the
instruments or the variable interest rate associated with the instruments,
except for the fair values of the hedging and other precious metals contracts
disclosed in Note 3.

ESTIMATES, RISKS AND UNCERTAINTIES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ
from those estimates.

         Gold mining requires the use of specialized facilities and technology.
The Company relies heavily on such facilities to maintain production levels.
Also, the market price of gold significantly affects the profitability of the
Company's operations. Market gold prices can fluctuate widely and are affected
by numerous factors beyond the Company's control. Although the Company has
limited its sales to a small number of customers, the Company is not
economically dependent on a limited number of customers for the sale of its
product because gold commodity markets are well-established worldwide.

RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes accounting
and reporting standards for derivative instruments and for hedging activities.
SFAS 133 is effective for all fiscal quarters of all fiscal years beginning
after June 15, 1999. The Company has not completed its assessment of the impact
of SFAS 133 on its financial statements because of the complex nature of the
statement.



                                       48

<PAGE>   50


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         In April 1998, the American Institute of Certified Public Accountant's
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") which provides guidance on the financial reporting of
start-up costs and organization costs. It requires costs of start-up activities
and organization costs to be expensed as incurred. SOP 98-5 is effective for all
fiscal years beginning after December 15, 1998 with initial adoption reported as
the cumulative effect of a change in accounting principle. The Company estimates
the adoption of SOP 98-5 will result in an approximate $5 million charge in the
first quarter of 1999 as the cumulative effect of a change in accounting
principle. This charge reflects the costs, net of revenues, incurred in 1998 in
the production of development ore from the Turquoise Ridge mine. Such costs
include costs of mining, milling, minesite general and administrative, royalties
and depreciation and depletion.

RECLASSIFICATIONS

         Certain prior year amounts have been reclassified to conform with the
1998 financial statement presentation.

(3) HEDGING AND OTHER PRECIOUS METAL CONTRACT COMMITMENTS

         Precious metal contracts consist of spot deferred, forward sales, call
option and lease rate swap contracts. The Company currently uses spot deferred
and forward sales contracts to mitigate the impact on earnings and cash flows of
decreases in gold prices. Risk of loss on the spot deferred and forward sales
contracts arises from the possible inability of a counterparty to fulfill its
obligations under the contracts and from the Company's potential inability to
deliver gold, although non-performance by the counterparty to the contracts is
not anticipated.

         At December 31, 1998, the Company's outstanding spot deferred contracts
were for 380,000 ounces at a projected average price of $318 per ounce. Of these
contracts, 155,000 ounces are to be delivered in 1999 at a projected weighted
average price of $311 per ounce, 120,000 ounces are to be delivered in 2000 at a
projected weighted average price of $321 per ounce and 105,000 ounces are to be
delivered in 2001 at a projected weighted average price of $323 per ounce.

         On February 19, 1999 the Company closed out spot deferred contracts
covering 250,000 ounces for cash consideration of approximately $4.7 million.
The proceeds will be recorded as deferred revenue and recognized in net sales
when the originally designated hedged future gold production is sold.

         Additionally, in November 1997, the Company entered into a forward
sales contract covering the sale of 250,000 ounces of gold along with an option
by the counterparty to purchase up to an additional 225,000 ounces of gold, if
the gold price equals or exceeds certain price increments. The agreement calls
for the Company to deliver 50,000 ounces of gold on December 31 in each of the
years 1998 through 2002 and up to an additional 75,000 ounces of gold in each of
the years 2000 to 2002. Delivery in 1998 was at $356 per ounce while delivery in
1999 will be at approximately $355 per ounce and deliveries in 2000 through 2002
will be at approximately $343 per ounce. These projected forward selling prices
assume a constant future gold lease rate of 2%. The actual forward prices under
the contract are adjusted up or down based on the actual future gold lease rate.


                                       49

<PAGE>   51



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         The option feature of the contract is similar to a written call option
in that if the gold spot price equals or exceed certain price increments, the
Company would be required to sell additional ounces of gold at the specified
price. If at any time on or between December 27, 1997 and December 27, 2000, the
gold spot market price equals or exceeds a price increment, for each price
increment equaled or exceeded, the Company would be required to deliver 15,000
additional ounces of gold at $343 per ounce on December 31 in each of the years
2000, 2001 and 2002. The price increments are $380, $387, $394, $401 and $408.
In total, if all five price increments are equaled or exceeded prior to December
27, 2000, the Company would be required to deliver 75,000 additional ounces at
$343 per ounce on December 31 in each of the years 2000, 2001 and 2002. As of
December 31, 1998, none of the specified price levels had been reached.

         If any price increment has not been equaled or exceeded prior to or on
December 27, 2000 but is equaled or exceeded during the period on or between
December 28, 2000 and December 27, 2001, the Company would be required to
deliver, for each increment equaled or exceed, 15,000 ounces of gold at $343 per
ounce on December 31, 2001 and 2002. Similarly, if any price increment has not
been equaled or exceeded prior to or on December 27, 2001, but is equaled or
exceeded during the period on or between December 28, 2001 and December 27,
2002, the Company would be required to deliver, for each increment equaled or
exceed, 15,000 ounces of gold at $343 per ounce on December 31, 2002.

         The premium related to the option feature is included in the forward
sales price of the 250,000 ounces of gold. For accounting purposes, the contract
sales price of the 250,000 ounces of gold has been allocated between the forward
sales component of the contract and the premium for the embedded option. The
revenue associated with the forward sales component of the contract will be
recognized when the gold is delivered. The option premium portion of the forward
sales is deferred, adjusted for changes in the market value of the option, and
recognized in earnings when the option expires or is exercised.

         On February 19, 1999 the Company closed the forward sales contract
covering the remaining 200,000 ounces of gold and cancelled the related option
to purchase up to an additional 225,000 ounces of gold in exchange for cash
consideration of approximately $3.3 million. The amount received, adjusted for
the value of the option cancelled and the deferred cost associated with the
forward sales contract will be recorded as deferred revenue. The resulting
deferred revenue of approximately $2.6 million will be recognized in net sales
when the originally designated hedged future gold production is sold.

         Deferred revenue also includes premiums received for call options sold.
The deferred amounts are adjusted to reflect the market value of the call option
and are recognized in income when the option expires or is exercised. At
December 31, 1998, the Company had outstanding European call option contracts
for 40,000 ounces of gold at a price of $309 per ounce which expire in 1999.
Risk of loss on European call option contracts exists if the Company is unable
to deliver the required quantity of gold and the market price were to exceed the
exercise price of the option on the date designated in the contract.

         The following table represents the carrying amounts and estimated fair
values of the Company's derivative financial instruments at December 31, 1998
and 1997. The fair value of a

                                       50

<PAGE>   52


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


financial instrument is the estimated amount the Company would receive or (pay)
to terminate the agreement (dollar amounts in thousands):

<TABLE>
<CAPTION>

                                                                           CARRYING
                                                        OUNCES              AMOUNT            FAIR VALUE
                                                  ------------------  ------------------  ------------------
                                                    1998      1997      1998      1997      1998      1997
                                                  --------  --------  --------  --------  --------  --------
<S>                                                <C>       <C>      <C>       <C>       <C>       <C>
Spot deferred contracts ........................   380,000   130,000  $    279        --  $  4,523  $  4,908
European call options ..........................    40,000   115,000  $      8  $    176  $      8  $     77
Forward sales contract 
     Forward sales .............................   200,000   250,000  $  3,400     3,400  $  5,900  $  7,000
     Embedden option ...........................   225,000   225,000  $ (2,000) $ (3,400) $ (2,000) $ (3,400)
</TABLE>


(4)  PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>

                                                         At December 31,
                                                    -----------------------
                                                       1998         1997
                                                    ----------   ----------
                                                        (In thousands)
<S>                                                 <C>          <C>       
Land and land improvements                          $   14,241   $   14,214
Buildings and equipment                                132,934      124,249
Mine development                                        64,122       54,929
Construction-in-progress                               154,470       88,742
                                                    ----------   ----------
         Total property, plant and equipment           365,767      282,134
Accumulated depreciation and depletion                (105,952)     (93,892)
                                                    ----------   ----------
         Net property, plant and equipment          $  259,815   $  188,242
                                                    ==========   ==========
</TABLE>

         Capitalized mine development and construction-in-progress at December
31, 1998 and 1997 are comprised of the following (in thousands):

<TABLE>
<CAPTION>

                                             MINE              CONSTRUCTION-IN-
                                          DEVELOPMENT              PROGRESS
                                     ----------------------  ----------------------
PROJECT                                 1998        1997        1998        1997
                                     ----------  ----------  ----------  ----------
<S>                                  <C>         <C>         <C>         <C>
Getchell Underground mine .........  $   51,581  $   45,423  $      944  $    1,486
Turquoise Ridge mine ..............      11,889       8,854     137,031      72,075
Mill improvements .................          --          --      16,459      15,015
Other projects ....................         652         652          36         166
                                     ----------  ----------  ----------  ----------
                                     $   64,122  $   54,929  $  154,470  $   88,742
                                     ==========  ==========  ==========  ==========
</TABLE>


                                       51


<PAGE>   53


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         Depletion of mine development and construction costs related to the
Turquoise Ridge mine and other projects will begin once commercial production
has been achieved.

         Depreciation and depletion expense was $11.9 million, $11.0 million and
$9.8 million for the years ended December 31, 1998, 1997 and 1996, respectively.

(5) OTHER ASSETS

         Included in other assets at December 31, 1998 is $4.6 million of
restricted cash. The restricted cash is held as collateral against a standby
letter of credit relating to the federal and state bonding requirements for mine
reclamation projects.

         Also included in other assets at December 31, 1998 and 1997 is $2.7
million and $3.4 million, respectively, of deferred costs associated with the 
forward sales contract discussed in Note 3.

(6) DEBT

Promissory Note

         Contemporaneous with the Spin-Off (discussed in Note 1), the Company
and ChemFirst executed a promissory note, upon which all promissory notes
previously entered into between the two companies were canceled. The principal
balance of the promissory note was equal to the indebtedness of the Company to
ChemFirst for advances and accrued interest thereon, as of the date of the
Spin-Off, net of a $13.9 million receivable resulting from the settlement of the
tax sharing agreement (see Note 8).

         The principal balance of the promissory note was $28.7 million and
$26.9 million at December 31, 1998 and 1997, respectively. The promissory note
is due September 22, 2000 or upon a change in control of the Company and may be
prepaid without penalty. The interest rate on the loan is the London Interbank
Offered Rate for a period selected by the Company, plus an applicable margin.
The interest rate was 5 5/8% and 6 22/32% at December 31, 1998 and 1997,
respectively. Since the inception of the promissory note, interest has been
converted to note principal at the end of each interest period.

         The promissory note contains covenants that require minimum net worth,
as defined, of $27.0 million and a ratio of indebtedness to tangible net worth,
as defined, of no more than 2.0:1.0.

Capitalized Interest

         Capitalized interest was $2.3 million, $1.7 million and $1.3 million
for the years ended December 31, 1998, 1997 and 1996, respectively.


                                       52

<PAGE>   54


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


(7) LEASES

         The Company is obligated under capital leases for mobile mining
equipment for remaining terms ranging from two to four years. All capital lease
agreements provide that the Company can purchase the leased equipment at fair
value at the end of the lease term. At December 31, 1998 and 1997, $12.3 million
and $7.1 million, respectively, of leased property was included in property,
plant and equipment, net of $8.4 million and $5.6 million, respectively, of
accumulated depreciation and depletion.

         The Company is also obligated under non-cancelable operating leases for
mining equipment, vehicles and office space. Rental expense under these leases
for the years ended December 31, 1998, 1997 and 1996, was $0.5 million, $0.7
million and $1.0 million, respectively.

         Future capital lease payments and future minimum lease payments under
noncancelable operating leases with initial or remaining lease terms in excess
of one year as of December 31, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                   Capital      Operating
                                                                    Leases        Leases
                                                                   --------      --------
<S>                                                                <C>          <C>
Year Ended December 31, 1999                                       $  5,270      $    548

Year Ended December 31, 2000                                          5,141           144

Year Ended December 31, 2001                                          2,594            --

Year Ended December 31, 2002                                          3,133            --
                                                                   --------      --------
     Total minimum lease payments                                    16,138      $    692
                                                                                 ========
Less amounts representing interest                                   (2,200)
                                                                   --------
     Present value of minimum capital lease payments                 13,938

Less current portion                                                 (3,539)
                                                                   --------
Capital lease obligations, less current portion                    $ 10,399
                                                                   ========
</TABLE>


(8)  INCOME TAXES

         Until the Spin-Off (see Note 1), the Company and ChemFirst operated
under the terms of a Tax Sharing Agreement. In connection with the Spin-Off,
ChemFirst and the Company entered into an Amended Tax Sharing Agreement. The
Amended Tax Sharing Agreement provided for

                                       53

<PAGE>   55



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


the termination of the Tax Sharing Agreement, and sets forth the parties'
obligations with respect to taxes relating to taxable periods prior to the
Spin-Off.

         The Amended Tax Sharing Agreement obligated ChemFirst to pay the
Company (by either an actual payment or a reduction in the Company's outstanding
indebtedness to ChemFirst) an agreed upon amount of approximately $13.9 million,
representing the tax benefit received by the affiliated group, of which
ChemFirst is the common parent corporation (the ChemFirst Affiliated Group),
from its use of the Company's losses, deductions, credit and allowances in
periods prior to the Spin-Off. As a result of this agreement, the Company
relinquished its rights to, and eliminated the deferred tax balances relating
to, certain federal net operating loss carryforwards and alternative minimum tax
credit carryforwards totaling $10.8 million and $8.6 million, respectively, and
the related valuation allowance of $6.7 million.

         The Company agreed in the Amended Tax Sharing Agreement to indemnify
ChemFirst for any taxes attributable to the Company and assessed with respect to
consolidated or combined tax returns which include the Company and relate to
periods prior to the Spin-Off, to the extent any liability for such taxes
exceeds $0.3 million. Conversely, ChemFirst agreed to indemnify the Company
against any liability for taxes attributable to members of the ChemFirst
Affiliated Group, other than the Company, but imposed on the Company as a result
of its inclusion in ChemFirst's consolidated or combined tax returns for periods
prior to the Spin-Off. 

         In September 1997, October 1996 and December 1998, the Internal Revenue
Service ("IRS") filed notices of deficiencies, stating that the IRS is
proceeding against ChemFirst for income taxes associated with ChemFirst's
consolidated income tax returns filed in 1989 through 1994, for which the
Company is liable for a portion. Subsequent negotiations between the Company and
the IRS have resulted in settlement of all issues in the 1989 through 1994
periods.

         The IRS has also conducted an audit of tax returns filed in 1995 and
1996 up to the Spin-Off and has asserted claims for additional taxes for these
two periods. ChemFirst has agreed to settle certain of the claims. The Company
believes it has adequately provided for any remaining liabilities that may
result from the final settlement of the audit of the returns filed in 1995 and
1996. The liability for the amount of the settlements attributable to the
Company, including interest payable, has been reflected on the Company's balance
sheet at December 31, 1998 as income taxes payable to ChemFirst Inc.


                                       54

<PAGE>   56



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         Components of the Company's deferred income tax liabilities and assets
are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                           At December 31,
                                                                      --------------------------
                                                                         1998            1997
                                                                      ----------      ----------
<S>                                                                   <C>             <C>
Deferred tax liabilities:
   Plant and equipment, principally due to capitalization,
        depletion and depreciation differences                        $  (12,605)     $   (9,168)
   Other, net                                                               (210)         (1,243)
                                                                      ----------      ----------
        Total gross deferred tax liabilities                             (12,815)        (10,411)
Deferred tax assets:
   Accrued pension costs                                                     771             762
   Accrued reclamation costs                                                 977             963
   Inventory valuation adjustment                                            243             327
   Federal net operating loss carryforward                                20,025          13,720
   Alternative minimum tax ("AMT") credit carryforward                       566             566
   Deferred compensation                                                     488             433
   Deferred revenues                                                         771              --
   Other, net                                                                121              69
                                                                      ----------      ----------
        Total gross deferred tax assets                                   23,962          16,840
        Less valuation allowance                                         (11,358)         (8,238)
                                                                      ----------      ----------
        Total deferred tax assets                                         12,604           8,602
                                                                      ----------      ----------
        Net deferred tax liabilities                                  $     (211)     $   (1,809)
                                                                      ==========      ==========
</TABLE>

         A valuation allowance has been recorded to reduce such federal net
operating loss and AMT credit carryforwards to an amount expected to be realized
through the reversal of temporary differences. The valuation allowance at
December 31, 1998 increased by $3.1 million from December 31, 1997.


                                       55

<PAGE>   57


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         As of December 31, 1998, the Company had net operating loss and AMT
loss carryforwards for federal income tax purposes of approximately $57.2
million and $76.7 million, respectively, which may be used by the Company to
offset future Federal taxable income, if any. These loss carryforwards will
expire in the years from 2010 to 2013.

         As of December 31, 1998, the Company had AMT credit carryforwards of
$0.6 million available to reduce future regular income taxes, if any, in excess
of alternative minimum taxes. The AMT credit carryforwards do not expire.

         The Company's income tax benefit for income taxes consists of (in
thousands):

<TABLE>
<CAPTION>

                                                                              Year Ended December 31,
                                                                      ------------------------------------------
                                                                         1998            1997            1996
                                                                      ----------      ----------      ----------
<S>                                                                   <C>             <C>             <C>       
Federal:
   Current                                                            $       --      $       --      $       --
   Tax settlements payable to ChemFirst Inc.                                 666              --              --
   Deferred                                                               (1,598)         (5,932)           (870)
                                                                      ----------      ----------      ----------
                                                                      $     (932)     $   (5,932)     $     (870)
                                                                      ==========      ==========      ==========
</TABLE>

         The Company's benefits for income taxes differ from amounts computed by
applying the U.S. corporate income tax rate of 35% for the following reasons (in
thousands):

<TABLE>
<CAPTION>

                                                                              Year Ended December 31,
                                                                      ------------------------------------------
                                                                         1998            1997            1996
                                                                      ----------      ----------      ----------
<S>                                                                   <C>             <C>             <C>        
U.S. corporate income tax benefit at statutory rate                   $   (4,334)     $   (8,876)     $   (5,188)
Increase in valuation allowance for net deferred tax assets                3,120           2,932           5,306
Nondeductible expenses and other                                             282              12              14
Employee stock option exercises                                               --              --          (1,002)
                                                                      ----------      ----------      ----------
Actual tax benefit                                                    $     (932)     $   (5,932)     $     (870)
                                                                      ==========      ==========      ==========
</TABLE>

(9) STOCKHOLDERS' EQUITY

COMMON STOCK OFFERINGS

         In March 1997, the Company completed an equity offering of 1,000,000
common shares under an existing "shelf" registration statement filed with the
Securities and Exchange Commission and a shelf prospectus with the securities
regulatory authorities in certain provinces of Canada which resulted in net
proceeds to the Company of $47.7 million after offering costs and expenses of
$2.3 million. Net proceeds of the offering were used for the development of the
Turquoise Ridge mine, for exploration on the Getchell property and for general
corporate purposes.


                                       56

<PAGE>   58



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         In June 1997, the Company filed a new shelf registration statement with
the Securities and Exchange Commission and a shelf prospectus with the
securities regulatory authorities in certain provinces of Canada allowing for
the sale of $300 million in debt and equity securities. In March 1998, the
Company completed an equity offering of 4,002,000 common shares under the shelf
registration statement. This offering resulted in net proceeds to the Company of
$69.7 million after offering costs and expense of $3.3 million. Net proceeds of
the offering are being used for the completion of the Company's Turquoise Ridge
mine, an increase in mill capacity, exploration on the Getchell Property and for
general corporate purposes.

SHAREHOLDER RIGHTS PLAN

         In connection with the Shareholder Rights Plan amended and restated on
December 31, 1996, and amended as of December 11, 1998, rights have been issued
(and will be issued for any newly outstanding common stock) to the outstanding
shares of common stock. The rights may be exercised only after the earlier of
10 days a public announcement that a person has become (or the directors have
knowledge that someone has become) an Acquiring Person and 10 days after
commencement of a public announcement of a tender or exchange offer if, upon
its consummation, the offeror would beneficially own 15% or more of the common
stock. An "Acquiring Person" was defined to be a person who holds at least 15%
of the shares of common stock but does not include Getchell Gold or any of its
subsidiaries. In the event someone becomes an Acquiring Person, each holder of
rights (except the Acquiring Person, whose rights are voided) has the right to
purchase one one-thousandth of a Series A Junior Participating Preferred Stock
or, in lieu of shares of preferred stock, to receive a number of shares of
common stock specified by formula at 50% of the market price the shares of
common stock. The rights, which do not have voting rights, expire in December
2006 and may be redeemed by the Company at a price of $0.01 per right prior to
a specified period of time after the occurrence of certain events. The Company
may also exchange all of the outstanding rights for shares of common stock at a
ratio of one share of common stock per right (as adjusted), any time after the
first time someone becomes an Acquiring Person. If, following an acquisition of
15% or more of the shares of common stock, the Company is acquired in a merger
or other business combination or sells 50% of its assets or earnings power,
each right (other than rights voided as above) will entitle its holder to
purchase a number of shares specified by formula of the acquiring company with
a value of twice the then current exercise price. On December 11, 1998, the
Board amended the Rights Plan to render the rights inapplicable to the proposed
merger with Placer Dome. As of December 31, 1998, 30,797,536 rights had been
issued and are outstanding. Although the Board of Directors have authorized the
creation of the Preferred Stock, such series has not been authorized for
issuance.



                                      57

<PAGE>   59



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997



(10) EMPLOYEE BENEFIT PLANS

STOCK COMPENSATION PLANS

         At December 31, 1998, the Company has three stock-based incentive plans
which are described below. The Company applies APB Opinion 25 and related
Interpretations in accounting for its plans. Stock options are granted with an
exercise price equal to the fair market value of the Company's Common Stock at
the date of grant. Accordingly, no compensation cost has been recognized on
these stock option plans. Had compensation cost for the plans been determined
based on the fair value at the grant dates for awards under those plans
consistent with the method of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company's net
loss and loss per share would have been increased to the pro forma amounts
indicated below (in thousands except per share amounts).

<TABLE>
<CAPTION>

                                                             For the Year Ended December 31,
                                                    --------------------------------------------------
                                                         1998              1997             1996
                                                    ---------------   --------------   ---------------
<S>                            <C>                  <C>               <C>               <C>
Net loss                        As reported            $(11,452)        $(19,427)         $(13,952)

                                Pro forma              $(14,366)        $(21,955)         $(15,333)

Basic loss per share            As reported            $  (0.38)        $  (0.73)         $  (0.54)

                                Pro forma              $  (0.46)        $  (0.81)         $  (0.59)
</TABLE>


         For purposes of the forgoing table, the fair value of option grants
made in the years ended December 31, 1998, 1997 and 1996 were estimated on the
date of grant using the Black-Scholes option-pricing model with the following
weighted average assumptions:

<TABLE>
<CAPTION>

                                        Year Ended December 31,
                              -----------------------------------------------
                                  1998             1997              1996
                              ------------      ------------     ------------
<S>                           <C>               <C>              <C>
Volatility                         65%              46%              37%

Risk Free Interest Rate           5.40%            6.10%            6.40%

Expected Lives                   5 Years          5 Years          5 Years

Expected Dividends                 None             None             None
</TABLE>




                                       58


<PAGE>   60


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         Directors, officers and certain key employees of the Company
participated in the 1987 Long Term Incentive Plan ("1987 LTIP") under which the
Company had reserved 900,000 shares of Common Stock for issuance. The 1987 LTIP
terminated in October 1997. Therefore no future grants will be made from the
plan. Awards were in the form of stock options, options to purchase debentures
convertible into Common Stock or convertible preferred stock, stock appreciation
rights, performance units, restricted stock, supplemental cash and such other
forms as directed by the Board of Directors. Stock options granted under 1987
LTIP were granted only with an exercise price of not less than 100% of the fair
market value of the Common Stock on the date of grant. The debenture options
outstanding give the holder the right to purchase a debenture from the Company,
which is convertible into preferred stock which is then convertible into the
Common Stock of the Company at the original option price. The Board of Directors
in its discretion, determined the recipients, the amounts of all awards and
vesting period of awards. All awards expire no later than ten years from the
date of grant.

         Officers and eligible employees of the Company participate in the
Amended 1996 Long Term Equity Incentive Plan, ("1996 LTIP") under which the
Company had reserved 1,600,000 shares of Common Stock for issuance. Awards under
the 1996 LTIP include stock options, stock appreciation rights, restricted stock
or performance shares. Stock options granted under the 1996 LTIP may be granted
only with an exercise price of not less than 100% of the fair market value of
the Common Stock on the date of grant. The Board of Directors in its discretion,
determines the recipients, the amounts of all awards and vesting period of
awards. All awards expire no later than ten years from the date of grant. As of
December 31, 1998, awards for 530,032 common shares remained available for
granting.

         On February 14, 1997, the Board of Directors of the Company granted
stock appreciation rights ("SARS") under the Company's 1996 LTIP with respect
to 75,983 shares at a weighted average grant price of $8.21 per share to
certain executives and other employees of the Company. The SARs outstanding as
of December 31, 1998 are vested and expire on various dates through 2005.
Compensation with respect to SARS is accounted for on a variable basis and is
"marked to market" at the end of each fiscal quarter based on the market price
of the Company's Common Stock. Based on the $27.25 and $24.50 market prices of
the Company's Common Stock at December 31, 1998 and 1997, the Company
recognized compensation expense of $0.2 million, or $0.01 per share, and $1.2
million, or $0.05 per share, in the years ended December 31, 1998 and 1997,
respectively. Of the $0.2 million recognized in 1998, $0.1 million was charged
to general and administrative expenses and $0.1 million was charged to cost of
sales. Of the $1.2 million recognized in 1997, $0.8 million was charged to
general and administrative expenses and $0.3 million was charged to cost of
sales and $0.1 million was charged to exploration expense. The Company's future
quarterly results will reflect 

                                       59

<PAGE>   61



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


adjustments to compensation expense thereto based on the change in the market
price of the Common Stock as compared to the market price at the end of the
preceding quarter.

         Directors of the Company participate in the 1998 Stock Option Plan for
outside Directors ("1998 LTIP for Directors") under which the Company
originally reserved 170,000 shares of Common Stock for issuance. Each person
who was an Outside Director at the time the 1998 LTIP for Directors was adopted
by the Board of Directors received a non-qualified stock option grant to
purchase 5,000 shares of Common Stock. Any person who was not an Outside
Director at such time, but who later becomes an Outside Director within six
months following an Annual Meeting of Stockholders of the Company, shall be
granted on the date of his election or appointment as an Outside Director an
option to purchase 5,000 shares of Common Stock at an option exercise price
equal to the fair market value of the Common Stock on the date of grant.
Additionally, at each Annual Meeting of the Company's Stockholders, each such
Outside Director will automatically receive an option to purchase 5,000 shares
of Common Stock at an option exercise price equal to the fair market value of
the Common Stock on the date of grant; provided, however, that no Outside
Director may acquire options to purchase more than an aggregate of 15,000 share
of Common Stock under the 1998 LTIP for Directors. The options will be
exercisable on the later of November 14, 1999 or the date of grant. As of
December 31, 1998, awards for 80,000 common shares remained available for
granting.

         Prior to the adoption of the 1998 LTIP for Directors, Outside Directors
of the Company participated in the 1996 Stock Option Plan for Outside Directors
("1996 LTIP for Directors") under which the Company had originally reserved
100,000 shares of Common Stock for issuance. Each person who (i) was an outside
director at the time the 1996 LTIP for Directors was adopted or (ii) was first
elected or appointed as an outside director thereafter received a non-qualified
stock option grant to purchase the number of shares of Common Stock equal to
$22,500 divided by one-third of the closing price of the Common Stock on the
date of grant at an option exercise price equal to the fair market value of the
stock on the date of grant. Following such initial grant, each such Outside
Director who served until the third, sixth or ninth anniversaries of the initial
date of grant automatically received an additional number of shares of Common
Stock equal to $22,500 divided by one-third of the closing price of the Common
Stock on the date of grant on each such anniversary at an aggregate option
exercise price equal to the fair market value of the stock on the date of grant,
so long as the person was an Outside Director at the close of business on the
date of such anniversary. Generally the options vested over three years and
expire five years after the date of grant.



                                       60

<PAGE>   62


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


         A summary of the status of the Company's three option plans as of
December 31, 1998, 1997, 1996 and 1995 and changes during 1998, 1997 and 1996 is
presented below:

<TABLE>
<CAPTION>

                                              Stock Options                 Debenture Options                   SARS
                                        ---------------------------    --------------------------     --------------------------
                                                          Weighted                       Weighted                      Weighted
                                                          Average        Number          Average        Number         Average
                                           Number         Exercise         of            Exercise         of           Exercise
                                         of shares         Price         shares           Price         shares          Price
                                        ----------      ----------     ----------      ----------     ----------      ----------
<S>                                     <C>            <C>            <C>             <C>            <C>              <C>
Outstanding at December 31, 1995           479,323      $    13.92         69,500      $     8.02             --              -- 
   Granted ........................        577,400      $    32.29             --              --             --              -- 
   Exercised ......................        (56,271)     $     9.27        (57,000)     $     8.11             --              -- 
   Expired or canceled ............        (39,000)     $    32.59             --              --             --              -- 
                                        ----------      ----------     ----------      ----------     ----------      ----------
Outstanding at December 31, 1996           961,452      $    24.47         12,500      $     7.63             --              --
   Granted ........................        391,098      $    37.86             --              --         75,983      $     8.21
   Exercised ......................        (14,480)     $    27.03             --              --             --              -- 
   Expired or canceled ............       (114,520)     $    35.03             --              --             --              -- 
                                        ----------      ----------     ----------      ----------     ----------      ----------
Outstanding at December 31, 1997         1,223,550      $    27.73         12,500      $     7.63         75,983            8.21
   Granted ........................        433,850      $    20.76             --                             --              -- 
   Exercised ......................         (5,082)     $    11.44         (8,500)     $     7.15         (3,175)     $    10.24
   Expired or canceled ............       (155,891)     $    35.32             --              --             --              -- 
                                        ----------      ----------     ----------      ----------     ----------      ----------
Outstanding at December 31, 1998         1,496,427      $    25.41          4,000      $     8.63         72,808      $     8.12
                                        ==========      ==========     ==========      ==========     ==========      ==========
</TABLE>


         The weighted average fair value of options granted during the year
ended December 31, 1998, 1997 and 1996 was $12.15, $19.12 and $13.68,
respectively.

         The following table summarizes exercisable options and SARs
outstanding:

<TABLE>
<CAPTION>

                                                  Exercisable Options
                            ---------------------------------------------------------------
                                Stock Options      Debenture Options           SARS
                            -------------------   -------------------   -------------------
                                       Weighted              Weighted              Weighted
                                       Average               Average               Average
                                       Exercise              Exercise              Exercise
                             Number     Price      Number     Price      Number      Price
                            --------   --------   --------   --------   --------   --------
<S>                         <C>       <C>         <C>        <C>        <C>        <C>
At December 31, 1998         555,628   $  21.20      4,000   $   8.63     72,808   $   8.12

At December 31, 1997         439,167   $  18.27     12,500   $   7.63     75,983   $   8.21

At December 31, 1996         258,514   $  10.91     12,500   $   7.63         --   $     --
</TABLE>

         The following table summarizes information about options and SARs
outstanding at December 31, 1998:


                                       61

<PAGE>   63


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997

<TABLE>
<CAPTION>

                                             Options Outstanding                      Options Exercisable
                         ----------------------------------------------------     --------------------------
                                                 Weighted-
                                                  Average           Weighted-                      Weighted-
                                                 Remaining           Average                       Average
 Range of Exercise            Number            Contractual         Exercise        Number         Exercise
       Prices               Outstanding        Life in Years         Price        Exercisable       Price
----------------         -----------------    ----------------    -----------     -----------    -----------
Stock Options
<S>                      <C>                  <C>                 <C>             <C>            <C>
    $6.69-$10.03                   161,850          5.9           $      7.44         157,150    $      7.40
   $10.04-$15.04                    87,527          8.3           $     12.53          36,627    $     11.19
   $15.05-$22.57                   368,082          7.0           $     20.11         146,982    $     20.29
   $22.58-$33.86                   604,533          7.7           $     28.54         152,542    $     30.77
   $33.87-$50.00                   274,435          8.2           $     40.28          62,327    $     40.61
----------------         -----------------    ----------------    -----------     -----------    -----------
    $6.69-$50.00                 1,496,427          7.4           $     25.40         555,628    $     21.20
================         =================    ================    ===========     ===========    ===========
                                                                                                            
Debenture Options                                                                                           
                                                                                                            
     $7.63-$9.75                     4,000          2.4           $      8.63           4,000    $      8.63
================         =================    ================    ===========     ===========    ===========
                                                                                                            
SARS                                                                                                        
                                                                                                            
    $6.69-$10.03                    59,256          5.8           $      7.41          59,256    $      7.41
    10.04-$11.44                    13,552          6.3           $     11.19          13,552    $     11.19
----------------         -----------------    ----------------    -----------     -----------    -----------
    $6.69-$11.44                    72,808          4.7           $      8.12          72,808    $      8.12
================         =================    ================    ===========     ===========    ===========
</TABLE>

Pension Benefits

         Employees who participated in ChemFirst's qualified noncontributory
defined benefit pension plan the ("Plan") as of September 30, 1995 were eligible
to participate in the Company's pension plan at inception. All other employees
are eligible to participate in the Company's pension plan following six months
of service. The Company's plan covers all full-time permanent employees. Under
the plan, an employee becomes a participant after six months of service,
provided that the employee is regularly employed for at least 1,000 hours per
year.

         Effective April 15, 1998, the Company amended the Plan to provide that
Plan participants who had at least five years of vesting service or who had
reached age 50 by April 15, 1998 could choose to have their ultimate retirement
benefits determined under the benefit formula prior to

                                       62

<PAGE>   64



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


the amendment or under a new cash balance alternative. Benefits for all other
participants are determined using the new cash balance alternative.

         The benefits determined using the benefit formula prior to the
amendment were based on years of service and participants' compensation during
the last five years of employment. Under the cash balance alternative, the
Company makes annual contributions to each participant's account based upon a
certain percent of pay, which is based on the participant's age plus service.
Each participant's account is also increased annually for interest based on the
interest rate for 30- year treasury securities. On April 15, 1998, each cash
balance alternative participant's account was credited with the present value
of the benefits earned under the benefit formula prior to the amendment. Total
vesting under the cash balance alternative occurs after three years of vesting
service. Upon termination, participants are given a lump-sum distribution of
their vested cash balance account. The change in benefit obligation at December
31, 1998 and 1997 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                         At December 31,
                                                  --------------------------
                                                     1998            1997
                                                  ----------      ----------
<S>                                               <C>             <C>
Change in benefit obligation:

Benefit obligation at beginning of year           $    4,025      $    2,639

     Decrease in liability                              (614)            (95)

     Assumption change                                   179             180

     Plan amendments                                  (1,104)             --

     Service cost                                        509           1,111

     Interest cost                                       207             190

     Benefits paid                                      (154)             --
                                                  ----------      ----------
Benefit obligation at end of year                 $    3,048      $    4,025
                                                  ==========      ==========
</TABLE>


                                       63

<PAGE>   65



                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


     The change in plan assets at December 31, 1998 and 1997 are as follows (in 
thousands):

<TABLE>
<CAPTION>
                                                          At December 31,
                                                    --------------------------
                                                       1998            1997
                                                    ----------      ----------
<S>                                                 <C>             <C>
Change in plan assets:

Fair value of plan assets at beginning of year      $    2,070      $      558

     Employer contributions                                685           1,279

     Benefit payments made                                (154)             --

     Investment return                                     350             233
                                                    ----------      ----------
Fair value of plan assets at end of year            $    2,951      $    2,070
                                                    ==========      ==========
</TABLE>

     The plan assets consist of mutual fund investments. The assumptions at
December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                                     At December 31,
                                                ----------------------
                                                  1998          1997
                                                --------      --------
<S>                                             <C>           <C> 
Weighted-average assumptions:

Discount rate                                     6.75%         7.25%

Expected return on plan assets                    7.5%          7.5%

Rate of compensation increase                     3.5%          3.5%
</TABLE>


     Pension expense for the years ended December 31, 1998 and 1997 are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                      ----------------------
                                                        1998          1997
                                                      --------      --------
<S>                                                   <C>           <C>
Pension expense:

Service cost                                          $    509      $  1,111

Interest cost on projected benefit obligation              207           190

Expected return on plan assets                            (179)          (86)

Amortization of prior service costs                         27            77

Net gain recognition                                       (15)           --
                                                      --------      --------
Pension expense                                       $    549      $  1,292
                                                      ========      ========
</TABLE>



                                       64


<PAGE>   66


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


(11) EMPLOYEE BENEFIT PLANS

SAVINGS PLAN

         Substantially all employees who have completed six months of service
are eligible to participate in the Company's 401(k) thrift plan. Under the
savings plan, employees may elect to contribute from 1% to 15% of monthly base
pay, with the Company matching contributions up to 4% of monthly base pay. Total
expense under the plan amounted to $0.5 million, $0.5 million and $0.4 million
for the years ended December 31, 1998, 1997 and 1996, respectively.

(12)  MAJOR CUSTOMERS

         The Company is not economically dependent on a limited number of
customers for the sale of its product because gold commodity markets are
well-established worldwide. During 1998 and 1997, one customer accounted for
100% of total sales. During 1996, one customer accounting for $54.1 million or
82% of total sales. For the years ended December 31, 1998, 1997 and 1996, export
sales were less than 10% of total sales.

(13)  SUPPLEMENTAL CASH FLOW INFORMATION

         Net cash provided by operating activities includes the following cash
payments (in thousands):

<TABLE>
<CAPTION>

                                                                 Year Ended December 31,
                                                       ------------------------------------------
                                                          1998            1997            1996
                                                       ----------      ----------      ----------
<S>                                                    <C>             <C>             <C>        
Interest, net of amounts capitalized (Note 6)          $   (1,121)     $     (838)     $     (448)
Income taxes paid                                      $       --      $       --      $       --
</TABLE>


         Excluded from the statement of consolidated cash flows are the effects
of certain non-cash transactions. In the years ended December 31, 1998, 1997 and
1996, interest payable in the amounts of $1.8 million, $1.6 million and $1.5
million, respectively, was capitalized to the note payable to ChemFirst. During
the year ended December 31, 1997, the $3.4 million option premium associated
with the imbedded option of the forward sales contract discussed in Note 3 was
recorded as deferred costs associated with the forward sales contract and as
deferred call option premium. Capital lease obligations of $8.0 million and $7.2
million were incurred to acquire equipment during the year ended December 31,
1998 and 1996, respectively.



                                       65


<PAGE>   67


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


(14)  COMMITMENTS AND CONTINGENCIES

Environmental Obligations

         The Company's mining and exploration activities are subject to various
federal and state laws and regulations governing the protection of the
environment. These laws and regulations are continually changing and are
generally becoming more restrictive. The Company conducts its operations so as
to protect the public health and environment and believes its operations are in
compliance with all applicable laws and regulations. The Company has made, and
expects to make in the future, expenditures to comply with such laws and
regulations. The Company cannot predict such future expenditures.

Major Contracts

         The Company has an agreement with an independent contractor who
provides oxygen for the autoclave process in the mill. The agreement requires,
among other things, that the Company must pay the independent contractor at a
rate (subject to future adjustments for inflation) of approximately $0.2 million
a month. The Company is also obligated to a termination fee if the contract is
terminated prior to January 2004. The termination fee is $2.0 million in 1999
and decreases each year until reaching $0.4 million in 2004.

Royalties

         The Company is obligated to pay a 2% royalty on net smelter returns of
the current mineral production from certain of its mining properties. Royalties,
recorded as operating costs, amounted to $1.0 million, $1.1 million and $1.5
million for the years ended December 31, 1998, 1997 and 1996, respectively.



                                       66


<PAGE>   68


                    GETCHELL GOLD CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1998 and 1997


Financing Fees on Proposed Merger with Placer Dome

         The Company has entered into an agreement with its investment bankers
relating to the fees associated with the proposed merger with Placer Dome. The
agreement requires the Company to pay a financing fee, based on a formula, if
the proposed merger is completed. This fees is currently estimated to be $6.5
million.

Letter of Credit

         At December 31, 1998, the Company has a $4.5 million secured letter of
credit outstanding for bonding of reclamation plans relating to the Getchell 
Property.

(15)  FINANCIAL DATA (UNAUDITED)

         The following is a summary of selected quarterly financial information
(amounts in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                                              YEAR ENDED DECEMBER 31, 1998
                               ------------------------------------------------------------------------------------------
                                                        Three Months Ended                          
                               ---------------------------------------------------------------------         Year Ended
                                  March 31,          June 30,       September 30,      December 31,         December 31,
                               ----------------   --------------   ----------------   --------------       --------------
<S>                            <C>                <C>              <C>                <C>                  <C>          
Net sales                      $         10,803   $       11,808   $         14,631   $       16,229       $      53,471
Gross margin                   $         (4,230)  $       (2,334)  $         (1,475)  $       (1,868)      $      (9,907)
Loss before income taxes       $         (4,906)  $       (2,338)  $         (2,549)  $       (2,591)      $     (12,384)
Net loss                       $         (4,906)  $       (2,338)  $         (2,549)  $       (1,659)      $     (11,452)
Loss per share                 $          (0.18)  $        (0.08)  $          (0.08)  $        (0.05)      $       (0.38)
</TABLE>

<TABLE>
<CAPTION>

                                                              YEAR ENDED DECEMBER 31, 1997
                               ------------------------------------------------------------------------------------------
                                                        Three Months Ended                          
                               ---------------------------------------------------------------------         Year Ended
                                  March 31,          June 30,       September 30,      December 31,         December 31,
                               ----------------   --------------   ----------------   --------------       --------------
<S>                            <C>                <C>              <C>                <C>                  <C>          
Net sales                      $         14,862   $       18,675   $         17,587   $       13,673       $      64,797
Gross margin                   $         (4,949)  $       (3,051)  $         (4,074)  $       (9,449)      $     (21,523)
Loss before income taxes       $         (7,979)  $       (3,084)  $         (4,902)  $       (9,394)      $     (25,359)
Net loss                       $         (7,979)  $       (3,084)  $         (4,902)  $       (3,462)      $     (19,427)
Loss per share                 $          (0.31)  $        (0.12)  $          (0.18)  $        (0.13)      $       (0.73)
</TABLE>



                                       67



<PAGE>   69



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE.

None.



                                       68
<PAGE>   70

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

         The names, ages and positions for the past five years of our officers
and directors as of February 23, 1999 are as follows:

J. KELLEY WILLIAMS, 64, is our Chairman of the Board and has been since October
1987. He is the Chairman of the Board and Chief Executive Officer of ChemFirst
and has been since November 1988. He has been one of our directors since 1987,
and his current term expires in 2000. Mr. Williams is also a Director of
Deposit Guaranty Corporation.

G. W. THOMPSON, 57, has been our President and Chief Executive Officer since
September 1994. He was a private investor and consultant in the mining business
from May 1992 until September 1994. Mr. Thompson has been a director since 1994
and his current term expires in 2001.

R. DAVID RUSSELL, 42, has been our Vice President and Chief Operating Officer
since February 1995. He was General Manager of Lac Minerals U.S.A. Ltd., a gold
mining company and wholly owned subsidiary of Lac Minerals Ltd., from April
1994 to February 1995. From June 1993 to April 1994, Mr. Russell was a Manager
at Independence Mining Company, a gold mining company and a subsidiary of
Minorco Inc.

DONALD S. ROBSON, 46, is our Vice President and Chief Financial Officer and has
been since March 1995. He has also served as Corporate Secretary since October
1995. From May 1990 to September 1994, he was Vice President, Finance of Lac
Minerals Ltd., a gold mining company.

DONALD O. MILLER, 52, is our Vice President - Human Resources and Chief
Administrative Officer and has been since April 1995. From January 1993 to
April 1995, Mr. Miller had his own consulting firm, GEM 2000, at which he
consulted on human resources issues, primarily in the mining industry.

RICHARD F. NANNA, 50, is our Vice President, Exploration and has been since
August 1991.

SARAH JONES FARMAR, 40, is our Controller and has been since August 1998. From
April 1996 to August 1998, she served as our Assistant Controller. From 1994 to
April 1996, Ms. Farmar was Manager of Financial Reporting at Newmont Mining
Corporation, a mining company.

ROGER D. PALMER, 49, is our Manager, Financial Planning and Taxation. From
April 1995 to August 1998, he was our Controller. From December 1993 to April
1995, Mr. Palmer was our Assistant Controller.

WALTER A. DREXEL, 68, is one of our directors and is a private investor. From
September 1987 to June 1996, he was part owner of the Chicago Central and
Pacific Railroad. He is a member of the Compensation, Human Resource and
Director Affairs Committee, he has been a director since 1995 and his current
term expires in 1999.


                                     69

<PAGE>   71


PETE INGERSOLL, 68, is one of our directors and is the principal partner of
Ingersoll, Parker & Longabaugh, a mining consulting firm. He is a member of the
Compensation, Human Resource and Director Affairs Committee and has been a
director since 1994. Mr. Ingersoll's current term expires in 2001.

WILLIAM E. NETTLES, 55, is one of our directors and is the Chairman and Chief
Executive Officer of Stillwater Mining Company and has been since October 1997.
From 1995 to October 1997, Mr. Nettles served as Vice President and Chief
Financial Officer of Engelhard Corporation ("Engelhard"), a producer of
catalysts, pigments, environmental technologies and precious metal-based
products and services, and from 1982 through 1994 he served as Vice President
and General Manager of various groups at Engelhard. He is a member of the
Audit, Budgeting and Finance Committee. Mr Nettles' current term expires in
2001.

JOHN RACICH, 63, is one of our directors and is a mining consultant. He retired
in 1989 as Senior Vice President and Chief Financial Officer of Placer Dome
Inc., a gold mining company. He is Chairman of the Audit, Budgeting and Finance
Committee. He has been a director since 1996, and his current term expires in
1999.

CHARLES E. STOTT, JR., 65, is one of our directors and is a mining consultant.
From 1994 to 1995, he was President and Chief Executive Officer of Gold Capital
Corporation, a gold mining company. From 1993 to 1994, he was Executive Vice
President, American Mine Services Inc., a mining contracting and engineering
firm. He is a member of the Audit, Budgeting and Finance Committee, he has been
a director since 1996 and his current term expires in 1999.

R. MICHAEL SUMMERFORD, 50, is one of our directors and is President and Chief
Operating Officer of ChemFirst Inc. as of September 14, 1998. Previously, he
had been Vice President and Chief Financial Officer of ChemFirst since 1988. He
is a member of the Compensation, Human Resource and Director Affairs Committee.
Mr. Summerford has been a director since 1987, and his current term expires in
2000.

ALLEN S. WINTERS, 58, is one of our directors and is a consultant for various
mining companies. He retired in 1995 as Vice President of Homestake Mining
Company and General Manager of Homestake Mine. Mr. Winters is a member of the
Audit, Budgeting and Finance Committee. He has been a director since 1996, and
his current term expires in 2000.

ROBERT L. ZERGA, 58, is one of our directors and has been self-employed since
January 1995. From July 1990 to November 1994, he served as Chief Executive
Officer and Chairman of the Board of Independence Mining Company Inc., a gold
mining company which is an indirect wholly-owned subsidiary of Minorco Inc.
During the same time period, he served as Vice President and director of
Minorco (U.S.A.) Inc., a gold mining company and subsidiary of Minorco Inc. He
is Chairman of the Compensation, Human Resource and Director Affairs Committee.
Mr. Zerga has been a director since 1995, and his current term expires in 1999.
Mr. Zerga is also a Director of Rayrock Resources, Inc., a mining company.


                                     70

<PAGE>   72

ITEM 11.  EXECUTIVE COMPENSATION

         The following table sets forth certain information regarding the
annual and long-term compensation for the years ended December 31, 1998 1997
and 1996 of those persons who were either (i) our chief executive officer
during the prior year or (ii) one of our other four most highly compensated
executive officers as of the end of the prior year (whose annual salary and
bonuses exceeded $100,000) (collectively, the "Named Executive Officers").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                                 Annual Compensation
                                                        --------------------------------------   ----------
                                                                                     Other       Securities
                                                                                     Annual      Underlying         All Other
                                                        Salary        Bonus       Compensation   Option/SAR       Compensation
Name and Principal Position                   Year        ($)          ($)           (1) ($)     Awards (2)         (3) ($)
-----------------------------------           ----      -------     ----------    ------------   ----------   --------------------
<S>                                           <C>       <C>         <C>           <C>            <C>          <C>
G.W. Thompson                                 1998      360,000          --              --        32,000        31,580(5)(6)
   President and                              1997      360,000          --              --        91,640        40,390(5)(6)
   Chief Executive Officer                    1996      300,000     127,500(4)           --            --       104,384(5)(6)(7)
                                                                                                                                   
R. David Russell                              1998      220,000          --              --        18,000        20,347(5)(6)(10)
   Vice President and                         1997      220,000          --              --        43,140        25,725(5)(6)(10)
   Chief Operating Officer                    1996      175,000      63,000(4)           --            --        41,526(5)(6)(7)(10)
                                                                                                                                   
Donald S. Robson                              1998      175,000          --              --         5,000         9,632(5)(6)
   Vice President and                         1997      158,333          --              --        20,905        10,680(5)(6)
   Chief Financial Officer                    1996      140,000      36,750(4)       42,914            --        13,277(5)(6)(7)
                                                                                                                                   
Donald O. Miller                              1998      135,000          --              --         7,000         7,575(5)(6)
   Vice President, Human Resource             1997      128,333          --              --        14,745         7,812(6)
   and Chief Administrative Officer           1996      110,000      29,700(4)       24,267            --         3,591(6)
</TABLE>

(1)  Other Annual Compensation included direct cash payments related to tax
     reimbursement payments, tax planning and tax return preparation services
     provided to the Named Executive Officer at our expense, and tax
     reimbursements paid on imputed income resulting from the personal use of
     our automobiles and club dues and memberships, including imputed income on
     the same, but only if such payments exceed the lesser $50,000 or 10% of
     the total salary and bonus of the Named Executive Officer.
(2)  Represents non-qualified stock options ("NQSOs") and stock appreciation
     rights ("SARs") granted under our long-term equity incentive plans.
(3)  All Other Compensation consists of contributions by us related to our
     401(k) Plan, relocation expenses and executive life insurance paid by us
     on the Executive Officer's behalf.
(4)  Represents bonus earned for the year ended December 31,1996 which was paid
     in the year ended December 31, 1997.
(5)  Contributions by us related to our 401(k) Plan for the year ended December
     31, 1998 were $6,400 for Mr. Thompson, $6,400 for Mr. Russell, $5,042 for
     Mr. Robson and $1,800 for Mr. Miller. For the year ended December 31,
     1997, they were $4,850 for Mr. Thompson, $8,425 for Mr. Russell and $4,792
     for Mr. Robson. For the year ended December 31, 1996, they were $10,053
     for Mr. Thompson, $6,766 for Mr. Russell and $9,627 for Mr. Robson.
(6)  Executive Life Insurance paid by us for the year ended December 31, 1998
     was $25,180 for Mr. Thompson, $3,171 for Mr. Russell, $4,590 for Mr.
     Robson and $5,775 for Mr. Miller. For the year ended December 31, 1997, it
     was $35,540 for Mr. Thompson, $4,500 for Mr. Russell, $5,888 for Mr.
     Robson and $7,812 for Mr. Miller. For the year ended December 31, 1996, it
     was $16,547 for Mr. Thompson, $2,120 for Mr. Russell, $1,663 for Mr.
     Robson and $3,591 for Mr. Miller.
(7)  Relocation expenses paid by us during the year ended December 31, 1996 on
     behalf of Mr. Thompson were $77,784, on behalf of Mr. Russell were $24,107
     and on behalf of Mr. Robson were $1,987.
(8)  Includes direct cash payments related to tax reimbursement payments of
     $26,316, tax planning and tax return preparation services at our expense
     of $6,641, and tax reimbursements paid on imputed income resulting from
     the personal use of our automobiles of $4,560 and club dues and
     memberships of $5,397, including imputed income on the same.
(9)  Includes direct cash payments related to tax reimbursement payments of
     $12,884, tax planning services at our expense of $2,398, and tax
     reimbursements paid on imputed income resulting from the personal use of
     our automobiles of $4,748 and club dues and memberships of $4,237,
     including imputed income on the same.
(10) Includes imputed interest calculated at 5.2%, 8% and 8% in 1998, 1997 and
     1996, respectively, on a $160,000 interest-free bridge loan related to Mr.
     Russell's northern California residence, which total $10,776, $12,800 and
     $8,533 in 1998, 1997 and 1997, respectively.


                                     71

<PAGE>   73


                             OPTION GRANTS IN 1998

         The following table sets forth certain information with respect to
grants of stock options to Named Executive Officers during 1998.

<TABLE>
<CAPTION>

                        Number of      % of Total                                                  Potential Realizable ($) Value
                       Securities       Options                     Market                             at Assumed Annual Rates
                       Underlying      Granted to                  Price on                          of Stock Price Appreciation
                        Options            All        Exercise      Date of                               for Option Term (3)
                        Granted         Employees       Price       Grant                          --------------------------------
  Name                    (1)              (2)        ($/Share)    ($/Share)     Expiration Date           5%              10%
----------------       ----------      ----------     ---------    ---------     ---------------        -------         ---------
<S>                    <C>             <C>            <C>          <C>           <C>                    <C>             <C>.
G.W. Thompson            32,000            8.2          23.69        23.69          2/12/2008           476,699         1,208,055
R. David Russell         18,000            4.6          23.69        23.69          2/12/2008           268,143           679,531
Donald S. Robson          5,000            1.3          23.69        23.69          2/12/2008            74,484           188,759
Donald O. Miller          7,000            1.8          23.69        23.69          2/12/2008           104,278           264,262
</TABLE>

(1)  Options represent NQSOs that vest over five years from the date of grant
     at a rate of 20% per year. All options were granted for a term of ten
     years, subject to earlier termination in certain events. The exercise
     price is equal to the fair market value of our common stock on the date of
     grant.
(2)  Based on 388,850 total options granted to employees in the year ended
     December 31, 1998.
(3)  The amounts shown are for illustrative purposes only. Potential gains are
     net of the exercise price. Amounts represent hypothetical gains that could
     be achieved for the respective options if exercised at the end of the
     option term. The assumed 5% and 10% rates of stock price appreciation
     are provide in accordance with the rules of the Securities and Exchange
     Commission and do not represent our estimate or projection of the future
     common stock price. Actual gains, if any, on stock option exercises are
     dependent upon our future financial performance, overall market conditions
     and the option holders' continued employment through the vesting period.
     This table does not take into account any appreciation in the price of the
     common stock from the date of grant to the date of this Annual Report
     other than the columns reflecting assumed rates of appreciation of 5% and
     10%.

                    AGGREGATED OPTION EXERCISES IN 1998 AND
                          1998 YEAR-END OPTION VALUES

         The following table sets forth certain information with respect to the
Named Executive Officers concerning the exercise of options and SARs in 1998
and unexercised options and SARs held at December 31, 1998.

<TABLE>
<CAPTION>

                                                      Number of Securities
                                                     Underlying Unexercised                  Value of Unexercised
                       Shares                           Options/SARs at                   In-the-Money Options/SARs at
                      Acquired                       December 31, 1998 (#)                 December 31, 1998 (1) ($)
                         on          Value     ---------------------------------       ----------------------------------
       Name          Exercise (#)   Realized   Exercisable(2)    Unexercisable(2)      Exercisable(2)    Unexercisable(2)
------------------   ------------  ----------  -------------     ---------------       --------------    ----------------
<S>                  <C>           <C>         <C>               <C>                   <C>                <C>    
G.W. Thompson            --            --        176,968            141,672             2,814,252           555,000
R. David Russell         --            --         70,692             69,448             1,002,286           253,125
Donald S. Robson         --            --         39,701             30,204               580,950           118,613
Donald O. Miller         --            --         24,297             23,948               325,365            87,938
</TABLE>

(1)  Value was computed as the difference between the individual option price
     or SAR price and the closing sales price of our common stock on December
     31, 1998 ($27.25). Only options and SARs with fair market value in excess
     of the exercise price are reflected in this column.
(2)  If the merger with Placer Dome is consummated, all options and SAR's will
     immediately vest and become fully exercisable.

                               OTHER COMPENSATION

         Employees participate in our noncontributory Retirement Plan
(Retirement Plan). Prior to April 15, 1998, employees became 100% vested after
five years of employment. The plan provided for normal retirement at age
sixty-five with actuarially adjusted provisions for early and postponed
retirement dates. Retirement benefits were based on years of service and
average compensation (wage and salary) of the five highest consecutive years
during employment.

                                     72

<PAGE>   74


Effective April 15, 1998, the Retirement Plan was amended to include a cash
balance feature. All employees on April 15, 1998, at least age 50 or with at
least 5 years of service, where given the option of being covered under the
cash balance feature or the old plan provisions. All other employees are
covered under the cash balance feature of the plan. All Named Executive
Officers elected to be covered under the cash balance feature of the Retirement
Plan. Theoretical benefits payable under the cash balance feature of the plan
are reflected in the estimated retirement plan table below and are not subject
to any reduction for social security benefits or other offset amounts. This
table shows the estimated annual retirement benefit payable to participating
employees retiring at age 65 including Named Executive Officers in final year
earnings and years of service classifications as indicated.

<TABLE>
<CAPTION>

                                  Estimated Annual Benefits for Years of Credited Service
Average Annual Compensation       -------------------------------------------------------
(Five Highest Consecutive Years)    10 Years      20 Years      30 Years      40 Years
-------------------------------   -----------   -----------   -----------  --------------
<S>                               <C>           <C>           <C>          <C>   
$25,000                                $1,474        $3,192        $5,162       $7,408
$50,000                                 2,948         6,384        10,324       14,816
$100,000                                6,394        13,805        22,247       31,847
$150,000 or greater                    10,128        21,830        35,101       50,167
</TABLE>

         Effective November 14, 1997, the Compensation Committee recommended
and the Board of Directors approved a non-qualified and unfunded Supplemental
Executive Retirement Plan. The plan will provide executives who were over the
age of 50 at the time of adoption of the plan, specifically G.W. Thompson and
Donald O. Miller, two years credited service for each year of employment from
the approval of the plan, until retirement, up to a maximum of 25 years, with
Mr. Thompson receiving one extra year to his first two-year credit. Additional
executives shall receive such benefit at the discretion of the Compensation
Committee. Years of service for the Named Executive Officers are: G.W.
Thompson, four years; R. David Russell, Donald S. Robson and Donald O. Miller,
three years each.

         During the year ended December 31, 1997, we entered into new
termination agreements with G.W. Thompson, R. David Russell, Donald S. Robson
and Donald O. Miller (collectively, the "Termination Agreements") as the prior
termination agreements expired in 1997. The Termination Agreements have
substantially similar terms to the old termination agreements. The Termination
Agreements expire on June 30, 2000 unless a Change of Control (as defined
therein) occurs, in which case the Termination Agreements expire three months
from the end of the month in which the Change of Control occurred. Upon
termination without Cause (as defined therein) or for Disability (as defined
therein) or upon Voluntary Resignation (as defined therein), each of Messrs.
Thompson, Russell, Robson and Miller would be paid two times the sum of his
annual base salary and bonuses averaged over the three year period ending on
the date of termination, with certain benefit plans continuing for a period of
36 months. No individual would receive payments in the event of death. The
Termination Agreements also provide for, among other things, an additional
payment to be made by us to the individual if any of the severance payments
provided for in the Termination Agreement or any other payments made pursuant
to a Change of Control of the Company (the "Total Payments") become subject to
an additional tax ("Excise Tax") imposed by Section 4999 of the Code, such that
the net of all of the payments received by the individual after the imposition
of the Excise Tax on the Total Payments and the federal income tax on the
additional payment will be equal to the Total

                                     73

<PAGE>   75

Payments. The proposed merger with Placer Dome would constitute a change in
control under the Termination Agreements.

           COMPENSATION, HUMAN RESOURCE & DIRECTOR AFFAIRS COMMITTEE
                      INTERLOCKS AND INSIDER PARTICIPATION

         Messrs. Drexel, Ingersoll, Summerford and Zerga, who are members of
the Compensation, Human Resource & Director Affairs Committee, are not now and
never have been officers or employees of Getchell.

DIRECTOR COMPENSATION

         In 1998, the Chairman of the Board was compensated for his services
with an annual retainer of $22,500, whereas directors who were chairmen of
committees of the Board of Directors received annual retainers of $10,000.
Other directors who are not employees of the Company (together with the
Chairman and "Outside Directors") were compensated for their services with an
annual retainer of $7,500. In addition, all Outside Directors received $750 per
day for attendance at board meetings, and an additional $500 per day for
attendance at committee meetings, $750 per day for special service requests
made by the Chairman of the Board or the Chief Executive Officer and $250 per
day for travel. No compensation, in addition to his regular salary and
benefits, is payable to the Chief Executive Officer for his services as a
director. In accordance with the 1998 Stock Option Plan for Outside Directors
("1998 Director Plan"), an Outside Director may elect to forego cash payment of
all or any of his fees during a fiscal year and receive an option to purchase
the number of shares equal to the fees divided by one-third of the closing
price of our common stock on the last day of the fiscal year. No Outside
Directors made this election in 1998.

         Also in accordance with the 1998 Director Plan, each person who is
elected or appointed as an Outside Director at the time the 1998 Director Plan
was adopted by the Board of Directors received an option to purchase 5,000
shares of common stock at an option exercise price equal to the fair market
value of the Common Stock on the date of grant. Any person who was not an
Outside Director at such time, but who later becomes an Outside Director within
six months following an Annual Meeting of Stockholders, is granted on the date
of his election or appointment as an Outside Director an option to purchase
5,000 shares of common stock at an option exercise price equal to the fair
market value of the common stock on the date of grant. Additionally, at each
Annual Meeting of our Stockholders, each Outside Director will automatically
receive an option to purchase 5,000 shares of common stock at an option
exercise price equal to the fair market value of the common stock on the date
of grant; provided, however, that no Outside Director may be granted options to
purchase more than an aggregate of 15,000 share of common stock under the 1998
Director Plan, excluding any options they receive in their election to forgo
cash payment of fees. The options granted under the 1998 Director Plan are
exercisable on the later of November 14, 1999 or the date of grant. The 1998
Director Plan replaced the 1996 Stock Option Plan for Outside Directors.

                                     74

<PAGE>   76


ITEM 12.  SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS

     The following table sets forth as of February 23, 1999, the number and
percentage of the outstanding shares of common stock which, according to the
information supplied to us, were beneficially owned by (i) each person who is
currently a director, (ii) each Named Executive Officer, (iii) all current
directors and executive officers as a group and (iv) each person who, to our
knowledge, is the beneficial owner of more than 5% of the outstanding common
stock. Except as otherwise indicated, the persons named in the table have sole
voting and dispositive power with respect to all shares beneficially owned,
subject to community property laws where applicable.


<TABLE>
<CAPTION>

                                        Debenture
                                         Options
                                          and/or                                 Total Common
                                          NQSOs                                      Stock
                                       Beneficially  Percent       Common        Beneficially     Percent
Name and Address of Beneficial Owner    Owned (1)    of Class      Stock           Owned (2)      of Class
------------------------------------   ------------  --------   ------------    ---------------   --------
<S>                                    <C>           <C>        <C>             <C>               <C>
DIRECTORS AND NAMED
     EXECUTIVE OFFICERS (3):
Walter Drexel                                                      1,000
     NQSOs                                 3,333        *                           4,333             *
Pete Ingersoll
     1994-A Series                         1,000      100%
     NQSOs                                 3,333        *                           4,333             *
Donald O. Miller                                                     646  (4)
     NQSOs                                23,887      1.6%                         24,533             *
John Racich                                                          300
     NQSOs                                 1,333        *                           1,633             *
Donald S.  Robson                                                  1,833
     NQSOs                                38,101      2.5%                         39,934             *
R. David Russell                                                   3,089
     NQSOs                                70,712      4.6%                         73,801             *
Charles E. Stott, Jr.                                                275
     NQSOs                                 1,333        *                           1,608             *
R. Michael Summerford                                             20,350
     NQSOs                                 3,333        *                          23,683             *
G. W. Thompson                                                    12,309
     NQSOs                               171,068     11.1%                        183,377             *
J. Kelley Williams                                               606,238  (5)
     NQSOs                                 7,396        *                         613,634           2.0%
</TABLE>


                                     75

<PAGE>   77


<TABLE>
<CAPTION>

                                        Debenture
                                         Options
                                          and/or                                 Total Common
                                          NQSOs                                      Stock
                                       Beneficially  Percent       Common        Beneficially     Percent
Name and Address of Beneficial Owner    Owned (1)    of Class      Stock           Owned (2)      of Class
------------------------------------   ------------  --------   ------------    ---------------   --------
<S>                                    <C>           <C>        <C>             <C>               <C>
Allen S. Winters                                                      300
          NQSOs                           1,333         *                           1,633             *
Robert L. Zerga NQSOs
           NQSOs                          3,333         *                           3,333             *

ALL CURRENT DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP (16 PERSONS)                                  646,638
     1989-A Series                        1,000       100%
     1990-A Series                        2,000       100%
     1994-A Series                        1,000       100%
     NQSOs                              371,919      23.9%                      1,022,557           3.3%
5% BENEFICIAL HOLDERS (6):
John A. Levin & Co.
One Rockefeller Plaza, 24th Floor
New York, NY 10020 and
Baker Fentress & Company
200 West Madison Street
Chicago, IL 60606                                               2,051,561       2,051,561           6.7%

FMR Corp.
82 Devonshire Street
Boston, MA 02109                                                4,072,207       4,072,207          13.2%
</TABLE>

*    Represents less than one percent of class.

(1)  Numbers represent shares of our common stock underlying the convertible
     subordinated debentures and NQSOs beneficially owned by the directors and
     Named Executive Officers that are exercisable within 60 days of February
     23, 1999. The debenture options are immediately convertible into debentures
     that are immediately convertible into the specified number of shares of
     convertible preferred stock of the same series and then immediately
     convertible into the specified number of shares of common stock.

(2)  In connection with the Shareholder Rights Plan amended and restated on
     December 31, 1996, and amended as of December 11, 1998, rights have been
     issued (and will be issued for any newly outstanding common stock) to the
     outstanding shares of common stock. The rights may be exercised only after
     the earlier of 10 days a public announcement that a person has become (or
     the directors have knowledge that someone has become) an Acquiring Person
     and 10 days after commencement of a public announcement of a tender or
     exchange offer if, upon its consummation, the offeror would beneficially
     own 15% or more of the common stock. An "Acquiring Person" was defined to
     be a person who holds at least 15% of the shares of common stock but does
     not include us or any of our subsidiaries. In the event someone becomes an
     Acquiring Person, each holder of rights (except the Acquiring Person,
     whose rights are voided) has the right to purchase one one-thousandth of a
     Series A Junior Participating Preferred Stock or, in lieu of shares of
     preferred stock, to receive a number of shares of common stock specified
     by formula at 50% of the market price the shares of common stock. The
     rights, which do not have voting rights, expire in December 2006 and may
     be redeemed by us at a price of $0.01 per right prior to a specified
     period of time after the occurrence of certain events. We may also
     exchange all of the outstanding rights for shares of common stock at a
     ratio of one share of common stock per right (as adjusted), any time after
     the first time someone becomes an Acquiring Person. If, following an
     acquisition of 15% or more of the shares of common stock, we are acquired
     in a merger or other business combination or sells 50% of its assets or
     earnings power, each right (other than rights voided as above) will
     entitle its holder to purchase a number of shares specified by formula of
     the acquiring company with a value of twice the then current exercise
     price. On December 11, 1998, the Board amended the Rights Plan to render
     the rights inapplicable to the merger with Placer Dome.
(3)  A mailing address for Messrs. Drexel, Ingersoll, Miller, Nanna, Racich,
     Robson, Russell, Stott, Summerford, Thompson, Williams, Winters and Zerga
     is c/o Getchell Gold Corporation, 5460 S. Quebec Street, Suite 240,
     Englewood, Colorado 80111.
(4)  Included are 333 shares owned by Mrs. Miller, of which Mr. Miller has no
     voting and investment power and disclaims beneficial ownership.
(5)  Includes 43,747 shares held by the Jean Pittman Williams Revocable Trust,
     of which Mr. Williams' wife is trustee and of which Mr. Williams disclaims
     beneficial ownership and has no voting or investment power; 116,985 shares
     held by JKW Holdings, Inc. of which Mr. Williams has shared voting and
     investment power; and 400,000 shares held by The Greenover Group, L.P., a
     limited partnership of which Mr. Williams is a general partner. Mr.
     Williams disclaims beneficial ownership of shares of our common stock held
     by The Greenover Group except to the extent of his pecuniary interest in
     such shares.
(6)  Based on a Schedule 13G filed by the investor with the Securities and
     Exchange Commission.


                                     76

<PAGE>   78


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Prior to November 1998, we had a $160,000 interest-free bridge loan to
Mr. R. David Russell, Vice President and Chief Operating Officer, representing
an approximation of the equity value of a residence in northern California.
Such amount was repaid to us in November 1998 at which time we purchased the
residence for $260,793.


                                     77

<PAGE>   79


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

FINANCIAL STATEMENTS AND SCHEDULES

         The financial statements which are filed with this Annual Report on
Form 10-K are set forth in the Index to Financial Statements at page X, which
immediately precedes the financial statements. No schedules are required under
the applicable instructions or are inapplicable and have therefore been
omitted.

EXHIBITS

         The following exhibits are, as indicated below, either filed herewith
or have previously been filed with the Commission and are referred to and
incorporated herein by reference to such filings.

<TABLE>

<S>  <C>  <C>
2 (a) -   Agreement and Plan of Merger dated as of December 11, 1998 among
          Placer Dome Inc., Bullion Acquisition Corp. and Getchell Gold
          Corporation. Incorporated by reference to Exhibit 2.1 of our Report
          on Form 8-K dated December 15, 1998.
3 (a) -   Certificate of Incorporation, as amended. Incorporated by reference
          to Appendix D to our definitive proxy statement dated May 3, 1996.
3 (b) -   Bylaws, as amended. Incorporated by reference to Appendix E to our
          proxy statement dated May 3, 1996.
3 (c) -   Amendment to our Certificate of Incorporation. Incorporated by
          reference to Exhibit 3(c) to our Annual Report on Form 10-K for the
          year ended December 31, 1997.
4 (a) -   Resolutions authorizing the 1989-A Series Convertible Preferred
          Stock, effective August 9, 1989. Incorporated by reference to
          Exhibit 4(f) to our Annual Report on Form 10-K for the year ended
          June 30, 1989.
4 (b) -   Resolutions authorizing the 1990-A Series Convertible Preferred
          Stock, effective August 8, 1990. Incorporated by reference to
          Exhibit 4(f) to our Annual Report on Form 10-K for the fiscal year
          ended June 30, 1990.
4 (c) -   Amended and Restated Rights Agreement between us and Harris Trust &
          Savings Bank, dated as of December 31, 1996. Incorporated by
          reference to Exhibit 4(l) to our Annual Report on Form 10-K for the
          fiscal year ended December 31, 1996.
4 (d) -   Rights Agreement Amendment dated as of December 11, 1998 between us
          and Harris Trust and Savings Bank. Incorporated by reference to 4.1
          to our Report on Form 8-K dated December 15, 1998.
10(a) -   Amended and Restated Long-Term Incentive Plan, as amended November
          14, 1992. Incorporated by reference to Exhibit 10(I) to our Annual
          Report on Form 10-K for the fiscal year ended June 30, 1993. .
10(b) -   Oxygen Supply Agreement, dated August 27, 1987, and Air Rights Lease
          Agreement, dated as of August 27, 1987. Incorporated by reference to
          Exhibit 10(j) to our Annual Report on Form 10-K for the fiscal year
          ended June 30, 1989.
10(c) -   Post Spin-Off Agreement dated as of September 24, 1995, by and
          between ChemFirst and us. Incorporated by reference to 10(a) to our
          Report on Form 8-K dated September 24, 1995.
10(d) -   Tax Ruling Agreement dated as of September 24, 1995, by and between
          ChemFirst and us. Incorporated by reference to Exhibit 10(b) to our
          Report on Form 8-K dated September 24, 1995.
10(e) -   Amended Tax Sharing Agreement dated as of September 24, 1995, by and
          between ChemFirst and us. Incorporated by reference to Exhibit 10(d)
          to our Report on Form 8-K dated September 24, 1995.
10(f) -   Loan Agreement, dated as of September 24, 1995, by and between
          ChemFirst and us. Incorporated by reference to Exhibit 10(c) to our
          Report of Form 8-K dated September 24, 1995.
10(g) -   Turquoise Ridge Shaft No. 1 Construction contract between Thyssen
          Mining and us dated January 2, 1996. Incorporated by reference to
          Exhibit 10(a) to our Quarterly Report on Form 10-Q for the quarter
          ended June 30, 1996.
</TABLE>


                                     78

<PAGE>   80


<TABLE>
<S>   <C> <C>
10(h) -   Turquoise Ridge Shaft No. 2 Construction contract between Thyssen
          Mining and us dated May 1, 1996. Incorporated by reference to Exhibit
          10(b) to our Quarterly Report on Form 10-Q for the quarter ended June
          30, 1996.
10(i) -   1996 Stock Option Plan for Outside Directors. Incorporated by
          reference to Exhibit 4(a) to our Registration Statement on Form S-8
          dated February 19, 1997.
10(j) -   Amended and Restated 1996 Long Term Equity Incentive Plan.
          Incorporated by reference to Exhibit 4(b) to our Registration
          Statement on Form S-8 dated October 14, 1998.
10(k) -   Form of Termination Agreement between us and Richard F. Nanna.
          Incorporated by reference to Exhibit 10(a) to our Quarterly Report on
          Form 10-Q for the quarter ended September 30, 1997.
10(l) -   Form of Termination Agreement between us and G.W. Thompson, Donald S.
          Robson, R. David Russell and Donald O. Miller (Company's Termination
          Agreement with each individual contains identical provisions to those
          contained in the form). Incorporated by reference to Exhibit 10(b) to
          our Quarterly Report on Form 10-Q for the quarter ended September 30,
          1997.
10(m) -   Form of Termination Agreement between us and Sarah Jones Farmar.
          Incorporated by reference to Exhibit 10(a) to our Quarterly Report on
          Form 10-Q for the quarter ended September 30, 1998.
10(n) -   1998 Stock Option Plan for Outside Directors. Incorporated by
          reference to Exhibit 4(a) to our Registration Statement on Form S-8
          dated October 14, 1998.
21.       List of our subsidiaries.
23.       Consent of KPMG LLP.
27.       Financial Data Schedule.
</TABLE>

REPORTS ON FORM 8-K

         We filed a Report on Form 8-K on December 15, 1998, regarding the
Agreement and Plan of Merger dated as of December 11, 1998 among Placer Dome
Inc., Bullion Acquisition Corp. and us.


                                     79

<PAGE>   81


                                   SIGNATURES

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

                                        Getchell Gold Corporation

Date:     February 23, 1999             By:   /s/ G.W. Thompson 
      -------------------------             --------------------------
                                                  G.W. Thompson, President 

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

<TABLE>
<CAPTION>

       SIGNATURE                               Title                                  Date
       ---------                               -----                                  ----
<S>                                <C>                                            <C> 
/s/ G.W. Thompson                  President and Chief Executive Officer          February 23, 1999
-----------------------------      (Principal Executive Officer) and Director     -----------------
    G. W. Thompson                    

/s/ Donald S. Robson               Vice President and Chief Financial Officer     February 23, 1999
-----------------------------      (Principal Financial Officer)                  -----------------
   Donald S. Robson                   

/s/ Sarah Jones Farmar             Controller                                     February 23, 1999
-----------------------------      (Principal Accounting Officer)                 -----------------
    Sarah Jones Farmar                  

/s/ J. Kelley Williams             Director and Chairman of the                   February 23, 1999
-----------------------------      Board of Directors                             -----------------   
    J. Kelley Williams                   

/s/ Walter A. Drexel               Director                                       February 23, 1999
-----------------------------                                                     -----------------
    Walter A. Drexel

/s/ Pete Ingersoll                 Director                                       February 23, 1999
-----------------------------                                                     -----------------   
    Pete Ingersoll 

/s/ William E. Nettles             Director                                       February 23, 1999
-----------------------------                                                     -----------------
    William E. Nettles 

/s/ John Racich                    Director                                       February 23, 1999
-----------------------------                                                     -----------------   
    John Racich 

/s/ Charles E. Stott, Jr.          Director                                       February 23, 1999
-----------------------------                                                     -----------------   
    Charles E. Stott, Jr.

/s/ R. Michael Summerford          Director                                       February 23, 1999
-----------------------------                                                     -----------------   
    R. Michael Summerford

/s/ Allen S. Winters               Director                                       February 23, 1999
-----------------------------                                                     -----------------
    Allen S. Winters 

/s/ Robert L. Zerga                Director                                       February 23, 1999 
-----------------------------                                                     ----------------- 
    Robert L. Zerga
</TABLE>

                                      80
<PAGE>   82


                                 EXHIBIT INDEX
<TABLE>
<CAPTION>

EXHIBIT           
  NO.                              DESCRIPTION
-------                            -----------
<S>       <C>                  
2 (a) -   Agreement and Plan of Merger dated as of December 11, 1998 among
          Placer Dome Inc., Bullion Acquisition Corp. and Getchell Gold
          Corporation. Incorporated by reference to Exhibit 2.1 of our Report
          on Form 8-K dated December 15, 1998.
3 (a) -   Certificate of Incorporation, as amended. Incorporated by reference
          to Appendix D to our definitive proxy statement dated May 3, 1996.
3 (b) -   Bylaws, as amended. Incorporated by reference to Appendix E to our
          proxy statement dated May 3, 1996.
3 (c) -   Amendment to our Certificate of Incorporation. Incorporated by
          reference to Exhibit 3(c) to our Annual Report on Form 10-K for the
          year ended December 31, 1997.
4 (a) -   Resolutions authorizing the 1989-A Series Convertible Preferred
          Stock, effective August 9, 1989. Incorporated by reference to
          Exhibit 4(f) to our Annual Report on Form 10-K for the year ended
          June 30, 1989.
4 (b) -   Resolutions authorizing the 1990-A Series Convertible Preferred
          Stock, effective August 8, 1990. Incorporated by reference to
          Exhibit 4(f) to our Annual Report on Form 10-K for the fiscal year
          ended June 30, 1990.
4 (c) -   Amended and Restated Rights Agreement between us and Harris Trust &
          Savings Bank, dated as of December 31, 1996. Incorporated by
          reference to Exhibit 4(l) to our Annual Report on Form 10-K for the
          fiscal year ended December 31, 1996.
4 (d) -   Rights Agreement Amendment dated as of December 11, 1998 between us
          and Harris Trust and Savings Bank. Incorporated by reference to 4.1
          to our Report on Form 8-K dated December 15, 1998.
10(a) -   Amended and Restated Long-Term Incentive Plan, as amended November
          14, 1992. Incorporated by reference to Exhibit 10(I) to our Annual
          Report on Form 10-K for the fiscal year ended June 30, 1993. .
10(b) -   Oxygen Supply Agreement, dated August 27, 1987, and Air Rights Lease
          Agreement, dated as of August 27, 1987. Incorporated by reference to
          Exhibit 10(j) to our Annual Report on Form 10-K for the fiscal year
          ended June 30, 1989.
10(c) -   Post Spin-Off Agreement dated as of September 24, 1995, by and
          between ChemFirst and us. Incorporated by reference to 10(a) to our
          Report on Form 8-K dated September 24, 1995.
10(d) -   Tax Ruling Agreement dated as of September 24, 1995, by and between
          ChemFirst and us. Incorporated by reference to Exhibit 10(b) to our
          Report on Form 8-K dated September 24, 1995.
10(e) -   Amended Tax Sharing Agreement dated as of September 24, 1995, by and
          between ChemFirst and us. Incorporated by reference to Exhibit 10(d)
          to our Report on Form 8-K dated September 24, 1995.
10(f) -   Loan Agreement, dated as of September 24, 1995, by and between
          ChemFirst and us. Incorporated by reference to Exhibit 10(c) to our
          Report of Form 8-K dated September 24, 1995.
10(g) -   Turquoise Ridge Shaft No. 1 Construction contract between Thyssen
          Mining and us dated January 2, 1996. Incorporated by reference to
          Exhibit 10(a) to our Quarterly Report on Form 10-Q for the quarter
          ended June 30, 1996.
10(h) -   Turquoise Ridge Shaft No. 2 Construction contract between Thyssen
          Mining and us dated May 1, 1996. Incorporated by reference to Exhibit
          10(b) to our Quarterly Report on Form 10-Q for the quarter ended June
          30, 1996.
10(i) -   1996 Stock Option Plan for Outside Directors. Incorporated by
          reference to Exhibit 4(a) to our Registration Statement on Form S-8
          dated February 19, 1997.
10(j) -   Amended and Restated 1996 Long Term Equity Incentive Plan.
          Incorporated by reference to Exhibit 4(b) to our Registration
          Statement on Form S-8 dated October 14, 1998.
10(k) -   Form of Termination Agreement between us and Richard F. Nanna.
          Incorporated by reference to Exhibit 10(a) to our Quarterly Report on
          Form 10-Q for the quarter ended September 30, 1997.
10(l) -   Form of Termination Agreement between us and G.W. Thompson, Donald S.
          Robson, R. David Russell and Donald O. Miller (Company's Termination
          Agreement with each individual contains identical provisions to those
          contained in the form). Incorporated by reference to Exhibit 10(b) to
          our Quarterly Report on Form 10-Q for the quarter ended September 30,
          1997.
10(m) -   Form of Termination Agreement between us and Sarah Jones Farmar.
          Incorporated by reference to Exhibit 10(a) to our Quarterly Report on
          Form 10-Q for the quarter ended September 30, 1998.
10(n) -   1998 Stock Option Plan for Outside Directors. Incorporated by
          reference to Exhibit 4(a) to our Registration Statement on Form S-8
          dated October 14, 1998.
21.       List of our subsidiaries.
23.       Consent of KPMG LLP.
27.       Financial Data Schedule.


</TABLE>