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

                                   FORM 10-K/A
                                (Amendment No. 1)

|X|      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

|_|      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM  _______________ TO
         _______________

                            ALTAIR INTERNATIONAL INC.
 ------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

       Province of
        Ontario,
         Canada                       1-12497                  None
----------------------------   ---------------------     -------------------
(State or other jurisdiction   (Commission File No.)       (IRS Employer
    of incorporation)                                    Identification No.)

                         1725 Sheridan Avenue, Suite 140
                               Cody, Wyoming 82414
 ------------------------------------------------------------------------------
          (Address of principal executive offices, including zip code)


       Registrant's telephone number, including area code: (307) 587-8245

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

|X|         Securities registered pursuant to Section 12(g) of the Act:

Common Shares, no par value          Nasdaq Stock Market, Alberta Stock Exchange
---------------------------          -------------------------------------------
        (Title of Class)             (Name of each exchange on which registered)

         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. |_|

         The aggregate market value of the Common Shares held by  non-affiliates
of the Registrant on February 27, 1998, based upon the closing sale price of the
Common  Shares on the NASDAQ  Stock  Market of $13.438 per share on February 27,
1998,  was  approximately  $168,557,980.  Common Shares held by each officer and
director  and by each other  person who may be deemed to be an  affiliate of the
Registrant have been excluded.

         As of February 27, 1998, the  Registrant  had 15,510,245  Common Shares
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None.
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         Altair  International  Inc. (the "Company") is filing this amendment on
Form 10-K/A  (the  "Amendment")  to its Annual  Report on Form 10-K for the year
ended December 31, 1997 for the purpose of  supplementing  the discussion of the
business and  properties of the Company  required by Item 1 and Item 2 of Part I
of Form 10-K in order to clarify that the Company is a development stage company
for financial and accounting purposes only and provide a small scale map showing
the  location  and  accessibility  of  mineral  property  located  near  Camden,
Tennessee.

Item 1.           Business
                  --------

General

         A glossary of technical terms used in the following  description of the
Company's business is set forth at the conclusion of this Item 1.

         The Company was incorporated under the laws of the Province of Ontario,
Canada  in April  1973 for the  purpose  of  acquiring  and  developing  mineral
properties.  Since 1994, the Company has increasingly  shifted its emphasis from
the  acquisition  and  development of mineral  properties to the development and
testing of mineral  processing  equipment for use in the recovery of fine, heavy
mineral  particles,   including   titanium,   zircon,   gold  and  environmental
contaminants.  From a  financial  and  accounting  standpoint,  the Company is a
development  stage firm and has been since its  inception.  To date, the Company
has derived no revenues from product sales or otherwise and has  experienced  an
operating loss in every year of operation. In the fiscal year ended December 31,
1997, the Company experienced operating losses of $1,831,471.

         Throughout  this Form 10-K,  the  Company is  sometimes  referred to or
defined as a  "development  stage"  company  or firm.  Such  references  are for
financial  and  accounting  purposes  only and are  intended to signify that the
Company is  devoting  substantially  all of its  efforts to  establishing  a new
business, and planned principal operations have commenced, but there has been no
significant revenue therefrom.  References to the Company as a development stage
company are not intended to imply that  exploration  activities  with respect to
the Company's  Camden,  Tennessee  mineral deposit or any other mineral deposits
have disclosed a commercially  viable  reserve.  For purposes of Regulation S-K,
Item 802, Guide 7 promulgated  under the Exchange Act of 1934, the Company is an
exploration stage company.

         During  1996,   the  Company   acquired  the  rights  to  the  Campbell
Centrifugal  Jig,  since  modified and renamed the Altair  Centrifugal  Jig (the
"CJ"), through a merger involving the Company, Fine Gold Recovery Systems, Inc.,
a wholly owned  subsidiary of the Company ("Fine Gold"),  and Trans Mar, Inc., a
Washington  corporation  ("TMI").  The  CJ  is  a  patented  device  capable  of
segregating  and recovering  extremely fine mineral  particles or  contaminants,
many of which are not economically recoverable utilizing conventional techniques
or processes.  See "--Technology and Proprietary  Rights." The Company views the
acquisition  of  and  development  of  the  CJ  as  strategically   significant.
Management  believes  the CJ can be  successfully  developed in order to recover



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extremely  fine,  heavy  particulate  matter.  The CJ has added to the Company's
historical  minerals  acquisition and  exploration  operations an opportunity to
become a developer of unique minerals processing technology. Further, efforts to
develop and test CJ technology have led Altair to identify and lease rights to a
mineralized  deposit  located  in Camden,  Tennessee  (the  "Tennessee  Minerals
Property").  Management  believes that the Tennessee  Minerals  Property,  which
would not have been  economically  developed  without the CJ  technology,  might
feasibly  be  developed  and  mined  using  the CJ.  See  "--Tennessee  Minerals
Property."

         The CJ segregates  particles  based on  differences  in their  specific
gravity.  Such technology may be categorized as a "gravity  separation" process.
Gravity  separators are widely used in minerals  beneficiation  because of their
relative  simplicity,  low cost of operation and ability to  continuously  treat
large  tonnage   throughout.   Management  believes  the  CJ  will  be  able  to
economically  recover  smaller  particles  than can  presently  be  economically
recovered by competing  gravity  technologies.  While not yet confirmed  through
actual operations,  the cost to manufacture and operate the CJ is expected to be
similar to the cost to manufacture  and operate  competing  gravity  separators,
which can efficiently  process only particles larger than 150 mesh. In contrast,
the  Company's  tests  suggest  that  the CJ will be able to  maintain  relative
efficiency when processing feeds as small as 400 mesh. See  "--Competition."  In
tests conducted to date using the CJ to process relatively small particles,  the
CJ has yielded  product  quality  (grade and  contaminates)  equivalent  to that
yielded by alternative technologies processing larger particles.
See  "--Target Markets" and "--Competition."

         Several prototype and demonstration  jigs have been built and tested by
the Company and TMI.  Continued  field testing of the CJ is being  undertaken to
increase the volume  capacity,  identify any design  problems that may reside in
the CJ technology,  evaluate the CJ's ability to perform  sustained  operations,
determine  the potential for downtime  during such  operations  and estimate the
anticipated maintenance costs associated with continued operations. In addition,
field  testing is being  carried out to improve  operating  design for  specific
applications.  There  can be no  assurance  that  the  testing  program  will be
successful for all  applications  or that testing will  demonstrate the CJ to be
economically  attractive  to end users.  See  "--Factors  That May Affect Future
Results."

         During 1997,  the Company  focused much of its operations on testing of
its Series 12 CJ,  designed to be capable of  processing  120 tons of solids per
day.  Although the test results on the Series 12 CJ suggest that  commercial use
of the Series 12 CJ is  technically  feasible,  the Series 12 CJ is a test model
with limited capacity, and therefore,  use of the Series 12 CJ is not economical
for most intended  applications or target  markets,  excepting small placer gold
mines or similar operations.  During late 1997, the Company designed and built a
larger Series 30 CJ, designed to be capable of processing 500 tons of solids per
day,  which  intended  capacity  management  believes is sufficient for minerals
processing,  coal washing, and many other intended commercial applications.  See
"--Target Markets." The Series 30 CJ has been installed for testing at a mineral
recovery  plant  operated  by a large heavy  mineral  sand  producer  located in
northern Florida,  with testing  completion  planned for the first half of 1998.
See "--Plan of  Operation."  The volumes of solids per day that the Series 12 CJ



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and  Series  30 CJ  are  actually  capable  of  processing  have  not  yet  been
established through testing;  however,  the Company expects that planned testing
over the next  twelve  months will  confirm  that the two models can process the
volumes they have been designed to process.  The Company  believes that CJ units
larger than the Series 30 CJ could be designed  and readily  constructed  in the
future. Also, multiple units might be used in series or parallel  configurations
to process high volume operations.

         Preliminary  demonstration  tests  conducted  by the  Company  and  TMI
suggest  that the CJ may be  commercially  viable in a number  of  applications,
including:

         o        Recovery  of ultra  fine gold  from  waste  streams  or former
                  tailings;
         o        Recovery  of zircon,  rutile,  leucoxene,  and other  valuable
                  fractions from heavy mineral sand operations,  especially from
                  finely sized waste piles;
         o        Sulfur and ash removal from fine coal;
         o        Recovery of iron ore fines from fine tailings;
         o        Concentration  of heavy  minerals,  such as anatase,  aparite,
                  barite, cassiterite, chromite, columbite, industrial diamonds,
                  fluorite, various garnets, monazite, tantalite and wolframite;
         o        Remediation of nuclear waste.


Target Markets

         The Company's  present  focus is on developing  markets for the CJ that
have the greatest near-term profit potential. Although management of the Company
believes that, in the long run, the CJ may potentially be useful for a number of
applications, management believes that, the most promising markets for the CJ in
the short run are for use in (i)  processing  of heavy mineral sands in order to
recover heavy minerals,  particularly zircon and titanium,  (ii) washing of coal
fines in order to remove fine pyrite  particles  and ash,  and (iii) to a lesser
extent, environmental remediation.

         Heavy Minerals  Recovery.  In the minerals arena,  the Company seeks to
enter into royalty or limited  licensing  agreements  under which the CJ can add
value to the beneficiation  process,  especially the processing of heavy mineral
sands.  Verification  testing with the Series 12 CJ suggests the CJ's  potential
for  recovering  zircon from heavy  minerals sand dry mill tails in Florida.  In
Phase 1 and 2 trials conducted by the Company involving separation of commercial
grade zircon  products  from mineral  sands,  the Series 12 CJ withdrew a larger
portion  of  zircon  from  the  feed ore than  other  mineral  sands  processing
equipment in use today.  In tests on  zircon/contaminate  feeds conducted by the
Company,  the Series 12 CJ has yielded greater than 90% zircon  concentrates and
recovered up to 75% of the zircon fed to the unit.

         The primary  valuable  minerals  produced  from heavy mineral sands are
titanium and zircon. Titanium is used primarily as a basic component of pigments
which are used in the production of paints,  plastics, and paper. Zircon is used



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primarily for foundry molds and in the manufacture of certain types of glass and
ceramics.  The Company believes the domestic and international  markets for both
of these products are  significant  and well  established.  Both are commodities
traded in bulk,  usually under long term contracts,  and are also sold in 50-100
lbs. bags, usually traded as a spot-priced product. The U.S. Geologic Survey has
reported that  production  of titanium  dioxide in the United States during 1997
was  approximately  1,330,000  metric  tons,  representing  a  market  value  of
approximately $2.73 billion.  The U.S. Geologic Survey does not report zirconium
production  for the  United  States;  however,  according  to the  1993  Mineral
Commodities Summaries prepared by the U.S. Department of the Interior, Bureau of
Mines,   consumption   of  zirconium  in  the  United  States  during  1992  was
approximately  75,000 metric tons,  representing a market value of approximately
$16.1 million.  There can be no assurance that testing will demonstrate that the
CJ can economically extract heavy minerals from heavy minerals sands or that the
CJ will prove attractive to end users.

         Coal  Washing.  During  1997,  the  Company  tested the Series 12 CJ to
evaluate its ability to remove fine pyrite particles and ash from coal fines, in
an attempt to create a saleable  product from material  currently  discharged as
mine  waste.  The tests were  carried  out at Southern  Illinois  University  in
conjunction  with a major coal producer.  Tests were conducted on a crushed coal
middlings  material  with  difficult  cleaning  characteristics.  The  following
conclusions,  have  been  provided  to  the  Company  by the  Southern  Illinois
University Department of Mining Engineering:

         "1.      For the 28 x 325 mesh  particle  size fraction of a Pittsburgh
                  No. 8 seam  coal,  the  Altair  Centrifugal  Jig was  found to
                  provide a reduction  in ash content  from an average of 30% to
                  10% while  recovering  86% of the  combustible  material.  The
                  corresponding reduction in total sulfur content was from 2.50%
                  to  1.40%.  This  separation  performance  resulted  in a  78%
                  rejection of ash-bearing material and 62.5% rejection of total
                  sulfur.   Considering  that  the  feed  material  contained  a
                  significant  amount  of  near-gravity   material  due  to  its
                  origination  from  the  middlings  stream  of a jig,  the high
                  separation  efficiency  value of  around  55% is a  remarkable
                  achievement for the Altair Jig.

         2.       Partition  curves  derived  from Altair Jig  washability  data
                  indicate  the  ability to achieve a  relatively  low  specific
                  gravity  cut point  (D50) of nearly  1.50 at a probable  error
                  value (Ep) of 0.10.  These  performance  values rank among the
                  best  of   those   reported   for   other   enhanced   gravity
                  concentrators.

         3.       The  separation  performance  achieved  on the  28 x 325  mesh
                  particle  size  fraction  by the  Altair  Jig was  found to be
                  superior to the results  obtained  from  advanced  washability
                  (release) analysis,  which represents the ultimate performance
                  achievable by any flotation technology.

         4.       The separation  performance  results obtained as a function of
                  particle  size  indicates  that  the  optimum  separation  was
                  achieved on the 100 x 200 mesh  particle size  fraction.  This
                  


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                  fact was  confirmed  by both  the  metallurgical  and  process
                  efficiency results.  For the coarsest particle size fractions,
                  the  ash-forming  material  was  found to have  difficulty  in
                  passing through the screen.  Thus, ash recovery to the product
                  is sufficiently higher than the finer material.  However,  the
                  excellent  separation  performances  achieved on the  particle
                  size   fractions   below  100  mesh  are   superior  to  other
                  commercially  available  enhanced gravity  technologies.  This
                  finding is  especially  unique due to the use of a  relatively
                  low centrifugal force of 45 g's.

         5.       A circuit  utilizing the Altair Jig to clean the 28 x 325 mesh
                  particle  size  fraction  and a flotation  column to treat the
                  -325 mesh  fraction was predicted to provide a 10% product ash
                  content while recovering 78% of the combustible  material.  In
                  comparison,  the use of a flotation column to treat the entire
                  -28  mesh  coal  would  only  recover  60% of the  combustible
                  material while  achieving the same product ash content.  Thus,
                  the use of the Altair Jig to treat the high middlings  content
                  coal used in this study would result in an overall increase in
                  recovery of 18% weight units.

         6.       A  complete   parametric   study  was  conducted  based  on  a
                  statistically  designed  test program and response  evaluation
                  software.   Empirical  equations  describing  the  effects  of
                  operating  parameters value on important  response  variables,
                  i.e.,   combustible  recovery,   ash  rejection,   and  sulfur
                  rejection,  have been  developed  and utilized to identify the
                  optimum test conditions."

         Based on these test results, and others, the Company believes utilities
in the  eastern  United  States may be able to use the CJ to remove  pyrite from
high sulphur eastern coals,  potentially  reducing the need to incur the expense
of transporting low-sulphur western coals. For example, the cost of transporting
coal from  Wyoming,  a large coal mining area, to the  midwestern  United States
typically  comprises 75% of the cost of the delivered coal product. In addition,
the  Company  believes  the CJ may be used to remove ash from coal,  which would
benefit  utilities  because ash  reduces  the  thermal  value of coal and causes
undesirable environmental impacts. Currently, the Company has established a coal
wash test program with  Kerr-McGee  Coal Corp.  and the  University  of Southern
Illinois.  The program is utilizing the Series 12 CJ in processing coal feeds in
an on-line coal wash plant  production  environment.  See "--Plan of Operation."
There  can  be no  assurance  that  testing  will  demonstrate  that  the CJ can
economically  remove  pyrite,  ash, or other  substances  or that the CJ will be
attractive to coal purchasers.

         Environmental Remediation.  Testing of the Series 12 CJ conducted under
a grant from the U. S.  Environmental  Protection  Agency at Montana  College of
Mineral  Science  and  Technology  during  1994  indicated  that  the  CJ may be
effective in removing heavy  minerals from old mine and mill tailing sites.  The
1994 tests  indicated that the CJ removed  approximately  64% of the fine pyrite
contained in mill  tailings in a single pass through the machine.  Nearly 80% of
the fine pyrite  content of such tailings was removed in two passes  through the
machine.  In 1995, the U.S.  Department of Energy (the "D.O.E.") sponsored tests



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suggesting  that the CJ may be capable of removing dense nuclear  particles from
radioactive  waste.  The tests conducted by the D.O.E.  reported that the CJ was
able to remove up to 54% of the contained nuclear  contaminate in a single pass.
Company  management  is  currently   exploring  these  potential   environmental
remediation applications.

         Other Testing.  The Company has licensed a Series 12 CJ to BHP Minerals
International   Inc.  ("BHP")  for  installation  at  BHP's  worldwide   testing
laboratory  in Reno,  Nevada.  Under the terms of the  license,  in exchange for
nominal  consideration,  the Company has granted BHP a non-exclusive license for
use of the Series 12 CJ until September 1, 1998, subject to a one year extension
at the option of BHP.  BHP is not  restricted  in its choice of ores or minerals
for testing.  The Series 12 CJ has been delivered to BHP and is currently in the
process of being installed.  The Company has committed to train BHP personnel to
operate and conduct routine  maintenance,  and to provide limited  consulting to
BHP on an on-going basis. See "---Plan of Operation."

Tennessee Minerals Property

         The Tennessee  Minerals Property consists of approximately  4,300 acres
of land that the Company has leased (or has binding  commitments to lease) in or
near Camden,  Tennessee,  containing  fine, heavy minerals.  [GRAPHIC  DEPICTING
LOCATION OF TENNESSEE  MINERALS  PROPERTY  OMITTED]  During 1997,  the Company's
exploration activities on the Tennessee Minerals Property have included geologic
mapping,  sample  collection,  drilling  of 72 auger  holes and  preparation  of
geologic and deposit models.  The deposit model also incorporates 40 drill holes
completed  by an  earlier  exploration  company.  Deposit  model  estimates  are
consistent  with  deposit  estimates  previously  determined  by other  resource
companies.  The mineralized  deposit on the Tennessee  Minerals Property has not
yet been proven to be a reserve (as defined in Regulation S-K, Item 802, Guide 7
promulgated  under the Exchange Act), and the Company's  limited  operations and
proposed plan with respect to it are exploratory in nature.

         The  production of saleable  heavy minerals from heavy mineral sand ore
is a two-stage process. At the mine site, heavy mineral ore is treated in a "wet
mill"  where  a 90%  total  heavy  mineral  concentrate  is  prepared  typically
utilizing gravity separation equipment. This concentrate is then taken to a "dry

                                                               

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mill" where  individual  mineral  constituents  are extracted using magnetic and
high tension electrical separators.

         In order to assess the amenability of the Tennessee  Minerals  Property
ore to  processing  with the CJ, two bulk samples were  collected by the Company
from the Tennessee Minerals Property.  Test work completed by the Company on the
first sample during the spring of 1997 suggested the sands can be processed with
the CJ. Tests performed by the Company which emphasized recovery have yielded up
to 94% heavy mineral  recovery with a six-to-one  concentration  ratio.  (Stated
differently,  after a single  pass  through  the CJ, 94% of the ore's  value was
concentrated in about one-sixth of its original  volume,  and five sixths of the
sand  rendered a  non-valuable  discard.)  As is  typical of gravity  separation
processing,  several  passes  through the CJ will be  necessary to produce a 90%
total heavy mineral  concentrate.  Further,  in the event the Tennessee Minerals
Property is proven to contain  significant  heavy mineral  reserves the CJ would
likely be used in conjunction with  traditional  gravity  separators,  primarily
spirals,  to most  efficiently  process the sand ore in the "wet mill". A second
bulk  sample was  collected  during  late 1997.  Approximately  5,000  pounds of
representative  mineralized material was collected from an exposed sand horizon.
This sample is being  processed by an  independent  Florida heavy sands producer
and the Company  utilizing  both "wet mill" and "dry mill"  processes to produce
representative samples of saleable products. See "--Plan of Operation."

         Management  believes  that  because the sands are  unconsolidated,  and
hence easily worked,  the Tennessee Minerals Property deposit may be amenable to
large-scale,  low-cost mining.  Initial  pre-feasibility  tests on the Tennessee
Minerals Property,  based on tonnage and grade features,  indicate the potential
for a large-scale  sand mining  operation with a multi-decade  life. In order to
better assess the  feasibility  of  economically  mining the Tennessee  Minerals
Property, the Company has retained an independent consulting group to commence a
technical  pre-feasibility study to be completed in late 1998. If the results of
the  pre-feasibility  study  suggest  that the  Tennessee  Minerals  Property is
amenable to large-scale,  low-cost mining, the Company will undertake a thorough
feasibility  study  beginning  late in the 1998 fiscal year.  Such a feasibility
study would involve the actual  design,  pricing,  and analysis of equipment and
facilities  that  would be used to mine the  Tennessee  Minerals  Property.  The
Company expects that  completion of a feasibility  study will take 12-18 months.
If the feasibility  study suggests that  cost-effective  mining of the Tennessee
Minerals  Property is  feasible,  mining could begin on the  Tennessee  Minerals
Property  within 24-36 months after  completion of the study,  subject to, among
other  things,  the price of, and demand for,  extractable  heavy metals and the
Company's  ability to obtain  necessary  financing,  permits,  and  governmental
approvals.   See  "--Plan  of  Operation"  and   "--Government   Regulation  and
Environmental Concerns."

Technology and Proprietary Rights

         In operation,  the CJ utilizes a combination of standard mechanical jig
and  centrifugal  technologies.  Without  having  tested  the  CJ in  sustained,
commercial  operations,  management  believes  production  models  of the CJ, if
completed,  will be capable of sustaining  high  reliability and low maintenance



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costs in a  production  environment.  See "--Plan of  Operation."  Use of the CJ
requires no  chemical  additives.  The Series 12 CJ stands  about six feet tall,
requires  floor  space of about 25 square  feet and weighs  approximately  2,000
pounds.  Recently  constructed jigs have been mounted on metal frames along with
jig  auxiliary  equipment--pulse  water  pump and tank  and  control  panel--for
transport by truck and rapid on-site installation.

         A conventional jig separates a slurry of mineral  particles as it flows
across the top of a screen.  Water is periodically  pulsed up through the screen
to eliminate interparticle friction and allow differential settling according to
the variations in the net specific  gravities of the ore.  Heavier  minerals are
allowed to pass downward through the screen while lighter  materials flow across
the screen to a discharge point.  The CJ operates  according to conventional jig
principles  except  that the  screen  surface is  cylindrical  and is rotated to
subject the particles to centrifugal forces. As currently designed, materials to
be  processed  by the CJ are  introduced  into the top of the CJ in a slurry mix
with water.  The slurry is diffused across the top of the interior of a vertical
cylindrical  screen  which is  rotating.  Water is  pulsed  through  the  screen
allowing  differential  separation in the slurry material.  Heavy particles pass
through  the screen,  are  collected,  and exit the  machine in a  "concentrate"
stream.  Lighter particles flow down the screen interior, are collected and exit
out the bottom of the machine in a separate "tails" stream.

         The  Company  does  not  intend  to  establish  its  own  manufacturing
facility. Management is considering options for manufacture of the CJ, including
manufacturing  under  contract,  exclusive  licensing,  or a joint venture.  The
arrangement  could  eventually  include an  exclusive  license for  manufacture,
warehousing and  distribution of spare parts, as well as maintenance and leasing
of the CJ.  Currently,  the Company has entered into an agreement with a machine
shop located in Marysville, California, to manufacture the initial models of the
CJ.  Under the terms of the  agreement,  the machine shop has  constructed  four
Series 12 CJs and one Series 30 CJ.

         Initial patents on the CJ have been issued in the United States,  South
Africa, United Kingdom,  Australia,  and Canada. Patent applications are pending
in Germany,  France and Japan.  A series of second patents have been issued with
respect  to a critical  component  of the CJ in the  United  States,  Australia,
Canada,  Great  Britain,  and South Africa,  as well as under  General  European
procedures.  The Company filed an  application  in the United  States  seeking a
third  patent for a recently  developed  component of the CJ on May 15, 1997 and
intends to file applications in Canada and certain European nations.

         In two separate transactions in 1996 and 1997, the Company purchased an
aggregate  of  83%  of  the  capital  stock  of   Intercontinental   Development
Corporation  ("Indeco") for total  consideration of $355,835.  Indeco has as its
sole  asset  a  royalty  agreement  entitling  Indeco  to  10% of  the  cost  of
manufacturing  any CJs which are placed in  production,  sold or  exploited  for
profit worldwide.



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Competition

         Alternative  Technologies.   Various  mineral  processing  technologies
perform  many  functions  similar  or  identical  to those  for  which the CJ is
designed.  See "Factors That May Affect Future  Results--Competing  Products and
Alternative   Technologies."  Minerals  processing  technologies  are  generally
predicated on the physical and chemical  characteristics  of the materials being
processed.   Contrasts   in   size,   specific   gravity,   hardness,   magnetic
susceptibility,  and electrical  conductivity are physical  characteristics that
the  processor   exploits  to  selectively   extract  and  concentrate   mineral
constituents.  Variations in chemical reactivity and molecular affinity are also
used to selectively segregate feed components.

         The CJ competes in an arena in which particle  specific  gravity is the
primary  criteria for particle  segregation  and capture.  Spirals and cones are
mechanical gravity separation devices commercially used in the recovery of heavy
minerals from sand-sized  feeds and are generally most effective when feed sizes
are larger than 150 mesh.  Recovery  efficiency falls  dramatically with smaller
feeds.  In  contrast,  the  Company's  preliminary  tests  indicate  that the CJ
maintains  relative  efficiency when separating  particles sized from 100 to 400
mesh.

         Froth   floatation  is  a  minerals   beneficiation   process  used  to
selectively  separate  sulfide  particles by introducing  chemical  agents which
attach to certain  sulfides;  once  attached,  the  sulfides  are  separated  by
floatation.  This method may be  effective  on  particles  as small as 200 mesh.
Froth  floatation  requires  the use of  chemical  agents and does not  separate
particles  based on density as does the CJ. Froth  floatation  applications  are
limited  principally to certain sulfide particles and generally do not work on a
broad range of heavy minerals.

         Heavy media  separation  is a process in which a feed  containing  both
dense and light  particles  is fed into a  solution  whose  specific  gravity is
midway between the particles to be separated.  The light  particles float to the
surface of the solution,  while the heavy particles sink. Heavy media separation
is  effective  primarily  in the  removal  of ash from  coal and in small  scale
analytic laboratory applications. Its application elsewhere is limited, however,
because  the  process  is time  consuming  where  the media  required  is highly
viscous. Also, the cost of the media may limit the commercial usefulness of this
method.

         Competing  Products.  The Company  believes that the CJ currently faces
several forms of competition in the  commercial  segregation of dense  particles
contained in feeds between 150 and 400 mesh. See "Factors That May Affect Future
Results--Competing  Products and Alternative  Technologies." Another centrifugal
jig device,  the Kelsey jig, has been  developed in Australia  subsequent to the
invention of the CJ. The Kelsey jig is more  complicated  in design than the CJ,
which the Company  believes makes it more expensive to manufacture,  operate and
maintain in a production  environment.  As of mid-1995,  according to the Kelsey
jig's  manufacturer,  Geologics  Pty. Ltd., 36 Kelsey jigs were in service at 28
sites  worldwide,  including two machines at one site in the United  States.  In
addition,  there exists another device that separates dense particles from feeds
sized  between 50 and 400 mesh,  the Knelsen  Bowl.  The Knelsen unit is a batch



                                        9

<PAGE>



concentrator, which management believes is best suited to small volumes. Knelsen
units  have been  installed  in various  mining  applications,  primarily  gold,
throughout the world.

         The Company is a small player in an industry  comprised of major mining
companies   possessing   tremendous  capital   resources.   The  Company  is  an
insignificant  competitive  factor in the industry.  There is no assurance  that
competitors,  many of whom may have significant capital and resources,  will not
develop or are not now in the process of developing  competitive  equipment that
may be functionally or economically superior to the Company's equipment.

Plan of Operation

         Business  Development.   Testing  conducted  to  date  by  the  Company
indicates  the CJ may have economic  potential in a wide variety of  industries,
and  management  believes  the CJ can be used for finely  sized  heavy  minerals
recovery, coal cleaning and environmental  remediation.  See "--Target Markets".
During 1998,  the Company  plans to continue  developing  these target  markets,
which  may  have  near-term  profit  potential,  through  implementation  of the
following critical steps:

         (1)      Continued field testing and  demonstration of the Series 12 CJ
                  and  experimentation  with  design  manipulations  to  improve
                  effectiveness for certain specific applications.  In addition,
                  sustained  operational  testing is critical in  determining if
                  any material design  problems reside in the CJ technology,  if
                  the CJ is capable of sustained operation with little downtime,
                  and  if  its   maintenance   costs   are   satisfactory.   See
                  "--Research, Testing and Development."

         (2)      Initial  field  testing,   including   sustained   operational
                  testing,  of the larger volume,  more marketable Series 30 CJ.
                  See "--Research, Testing and Development."

         (3)      Development   of  royalty,   rental,   or  limited   licensing
                  agreements with prospective  industrial users and introduction
                  of the CJs into targeted markets.

         In addition, the Company plans to continue  pre-feasibility  testing of
the heavy  mineral sand deposits on the Tennessee  Minerals  Property.  Assuming
final pre-feasibility results are consistent with those the Company has received
to date,  the Company  intends to hire a consulting  firm to commence a complete
feasibility study with respect to the Tennessee Minerals Property. Completion of
such a  feasibility  study is expected to take 12-18  months.  Furthermore,  the
Company  intends  to  explore  acquisition  of  additional   undervalued  proven
mineralized  deposits for which the Company's patented technology may provide an
economic means of recovery.

         The Company's  marketing efforts in the near future will continue to be
directed to  opportunities  within North  America,  with future  expansion  into
foreign  markets  developing  over time.  Because the Company does not intend to
engage in the actual  manufacture  of its own  products,  the  Company  does not



                                       10

<PAGE>



expect to purchase a  manufacturing  facility or any  significant  manufacturing
equipment.  Management does not anticipate that the number of Company  employees
will significantly  increase until the Company has sufficient sales and business
activity to warrant  additional  employees.  Management hopes that circumstances
will  warrant the  addition of as many as twelve new  employees  during the next
12-month period;  however,  the actual number of new employees hired will depend
on the  Company's  operating  results.  If hired,  such new  employees  would be
primarily  engineering and technical staff to support  testing,  development and
commercialization programs.

         Research, Testing and Development.  Field testing to date suggests that
the CJ possesses the ability to process continuous tonnage throughput in several
applications.  The CJ has multiple operating  parameters -- primarily rotational
speed, pulsing pressure, and screen characteristics -- which must be adjusted to
fit the processing  requirements  of the  particular  feed stream being treated.
Management  believes that more extensive  testing is needed to identify the most
efficient  operating  parameters  for  specifically   identified   applications.
Further,  demonstration of sustained operation is critical to marketing efforts.
To this end, the Company has installed or is in the process of installing the CJ
in several test sites.  Specifically designed research,  testing and development
efforts planned for the upcoming twelve months include the following:

         (1)      The Company has installed and commenced testing of a Series 30
                  CJ at a mineral  recovery  plant located in Northern  Florida.
                  The tests are intended to assess the unit's ability to recover
                  zircon  from dry mill  tails.  The Series 30 CJ is designed to
                  process   500   tons   per  day  and  is   considered   to  be
                  commercial-sized  for  this  application.   Testing  scheduled
                  during  the  first  half of  1998 is  intended  to  verify  CJ
                  processing   capacity  and  improve  other  operating   design
                  parameters. Also, sustained operational testing is intended to
                  determine the CJ's  capability for sustained  operations  with
                  limited downtime. To this end, the high-volume testing will be
                  done on a stream in the normal plant operating environment. CJ
                  concentrate  and tailings  products  will be  commingled  with
                  other  plant  outputs.  Access  to the  Florida  test  site is
                  controlled  by a  large  heavy  minerals  sand  producer  that
                  supplies test  materials for  processing.  On-site  testing is
                  being conducted by two Company  employees.  Additional Company
                  employees  provide  periodic  testing analysis and engineering
                  services  at the  site.  A Series  12 CJ unit  has  also  been
                  installed at the sand processing facility in Northern Florida.
                  This unit is being  used to perform  testing on various  other
                  plant  titanium  and  zircon  feedstreams  and to  test  heavy
                  mineral  sand  feeds  from other  Florida  locations.  Testing
                  utilizing  the  Series  12 CJ is being  performed  by  Company
                  personnel.

         (2)      A joint coal wash test program with  Kerr-McGee Coal Corp. and
                  the  University of Southern  Illinois was  established  during
                  late  1997.  The  program  is  intended  to  test  the  CJ  in
                  processing  coal feeds in an on-line  production  environment.
                  For the  initial  stage of the test  program  the  Company has
                  installed  a  Series  12  CJ  in  Kerr-McGee's   Galatia  Coal
                  Preparation  Plant  near  Harrisburg,  Illinois.  Testing  has
                  commenced  with the CJ treating  feeds from the Galatia  Plant
                  coal  processing  streams to remove fine  particles of ash and
                  


                                       11

<PAGE>



                  pyrite.  During the second  stage of  testing,  a Series 30 CJ
                  will be installed and tested in the Galatia Plant.  Testing is
                  being  performed  by two  Southern  Illinois  University  test
                  facility  employees with periodic reviews conducted by Company
                  employees. Altair management has planned the testing procedure
                  and monitors test  performance.  Completion of this testing is
                  scheduled to occur during the first half of 1998.

         (4)      The Company has  established a CJ testing  facility near Reno,
                  Nevada to test samples supplied by mineral companies and other
                  potential   users  of  the  CJ.  The   facility  is  used  for
                  demonstrations  of the  CJ  technology,  provides  amenability
                  testing  for a variety of mineral  ores,  and serves as a test
                  site for  on-going  equipment  design.  The test  facility  is
                  equipped  with a  Series  12 CJ,  placed  in a  "closed  loop"
                  circuit  designed to take an initial  charge of solids (0.5 to
                  2.0 tons) which can be continuously  fed in slurry form to the
                  CJ.  Concentrate  and tails streams  produced by the CJ may be
                  accessed for sampling prior to recombination and return to the
                  feed  circuit.  Amenability  testing  performed  at  the  test
                  facility  during 1997  included  heavy mineral sand feeds from
                  California  and from the Tennessee  Minerals  Property.  Other
                  amenability testing involved a chromite/nickel  tailings feed.
                  Operation of the CJ test facility is performed  exclusively by
                  Company personnel.

         (5)      Additional  testing of fine gold recovery in placer operations
                  is planned  during  1998.  The  Company  plans to use  Company
                  personnel,  located at operating mine sites,  to perform these
                  tests.

         (6)      The Company has commenced a project  pre-feasibility  study on
                  the Tennessee Minerals  Property.  The purpose of the study is
                  to  determine  mine and  processing  characteristics,  provide
                  initial  estimates  of mine  capital and  operating  costs and
                  define project  economics.  The study will also  independently
                  review  the  Company's  mineralized  deposit  estimates.   The
                  Company  has  engaged  an  independent  consulting  group with
                  expertise in all aspects of the heavy  mineral sand  industry.
                  The  study  is   designed   to   establish   mineral   product
                  characteristics,  determine mine and mineral processing steps,
                  provide  initial  estimates of mine capital and operating cost
                  and initially define project economics.  The Company presently
                  anticipates  that the study will be completed during the first
                  half of 1998.


                  If the results of the  pre-feasibility  study suggest that the
                  Tennessee   Minerals  Property  is  amenable  to  large-scale,
                  low-cost  mining,   the  Company  will  undertake  a  thorough
                  feasibility  study  beginning late in 1998. Such a feasibility
                  study  would  involve  the  actual  design of  facilities  and
                  equipment,  the solicitation of quotes from  manufacturers and
                  contractors,  and  other  steps  designed  to  obtain  a  more
                  accurate picture of project economics.  The process would also
                  involve  additional  testing  of the  quantity,  quality,  and
                  precise  location  of the  mineralized  deposit.  The  Company
                  


                                       12

<PAGE>



                  expects that  completion  of the  feasibility  study will take
                  between 12-18 months.  If the feasibility  study suggests that
                  cost-effective  mining of the Tennessee  Minerals  Property is
                  feasible,   mining  could  begin  on  the  Tennessee  Minerals
                  Property  within 24-36 months after  completion  of the study,
                  subject to,  among other  things,  the price of and demand for
                  extractable  heavy metals and the Company's  ability to obtain
                  necessary financing, permits, and government approvals.

                  In conjunction  with the  pre-feasibility  study,  the Company
                  intends to perform  additional  geological  and  mineralogical
                  studies.   Additional  drill  holes  are  planned  to  confirm
                  geologic   interpretations   and  mineral  continuity  in  the
                  Tennessee  Minerals  Property  deposit.   Heavy  mineral  sand
                  samples taken from the drill holes is being taken for analysis
                  the  laboratories of Commercial Test and Engineering  ("CT&E")
                  in Denver,  Colorado. As sample results are completed at CT&E,
                  data is inputted  into a computer  generated  geologic/deposit
                  model, which has been developed for Altair by Mine Development
                  Associates of Reno, Nevada.  Also, the Company has collected a
                  bulk sample of  approximately  5,000 lbs from an exposed  sand
                  horizon on the property. The bulk sample is being processed to
                  produce  representative  samples  of  saleable  products.  The
                  sample was  transported  to the  Company's CJ test facility in
                  Reno, Nevada.  Material sized smaller than 320 mesh and larger
                  than 50 mesh has been removed  (these sizes contain  almost no
                  titanium).  The  remaining  50 to 325 mesh  fraction  is being
                  separated by screen at 200 mesh. The +200 mesh material, which
                  represents approximately 65% of the total sample by weight but
                  only  contains  about  35% of the  titanium,  will  be sent to
                  Northern   Florida  for   preparation   of  a  heavy   mineral
                  concentrate using  conventional  spiral  technology.  The -200
                  mesh  material  (approximately  12%  by  weight,  65%  of  the
                  titanium)  will  be  processed  in  the CJ to  produce  a fine
                  mineral  concentrate.  The heavy mineral  concentrates will be
                  further processed into potentially  marketable  products using
                  electrostatic and magnetic separators. Altair plans to utilize
                  a combination  of Company  employees and  consultants  for the
                  bulk sample  work.  Bulk  sample  testing is  scheduled  to be
                  completed during the first half of 1998.

         During  1997,  the Company  incurred  $480,248 in deferred  exploration
expenditures on the Tennessee Minerals  Property.  Expenditures were incurred on
leasehold  minimum  advance  royalty  payments,  auger hole drilling,  sampling,
sample analysis and assay,  geological and mineralized deposit  characterization
studies and other related exploration activities.

         Provided that the planned testing of the CJ over the next twelve months
as described above is successful, the Company believes the Series 30 CJ would be
ready at that time for commercial use in applications  involving the recovery of
titanium,  zircon  and gold.  While  such  capabilities  of the CJ could then be
marketed,  the Company expects that the CJ's multiple operating parameters would
need to be adjusted to fit the  requirements of each  particular  customer's and



                                       13

<PAGE>



application's  requirements.  In the  event any of the  foregoing  tests are not
successful,  the Company expects that it would conduct additional  testing,  the
nature of which would  depend upon the results  obtained in the  above-described
tests.

Subsidiaries

         Altair  International  Inc.1  was  incorporated  under  the laws of the
province  of  Ontario,  Canada in April  1973.  The  Company  currently  has two
wholly-owned  subsidiaries,  Fine Gold Recovery Systems,  Inc. ("Fine Gold") and
Mineral  Recovery  Systems,   Inc.,  a  Nevada  corporation   ("MRS"),  and  one
majority-owned subsidiary, Intercontinental Development Corporation ("Indeco").

         Fine Gold was acquired by the Company in April 1994.  Fine Gold is, for
accounting  purposes,  a development  stage  company with no operating  revenues
earned to date.  The Company's  acquisition of TMI in February 1996 was effected
by merging  TMI with and into Fine Gold (the "TMI  Merger").  Fine Gold also now
includes the  operations of a  wholly-owned  subsidiary of the Company  formerly
known as Mineral  Recovery  Systems,  Inc.,  which was merged with and into Fine
Gold in June 1996. As discussed below,  another  wholly-owned  subsidiary of the
Company,  formerly known as Carlin Gold Company,  is now operated under the name
Mineral Recovery Systems,  Inc. The Company intends that Fine Gold will hold and
maintain CJ technology rights,  including patents, and will enter into a royalty
arrangements to allow MRS to develop and commercially utilize the CJ.

          As a result of the TMI Merger: (i) TMI was merged with Fine Gold, with
Fine Gold  surviving  as a  wholly-owned  subsidiary  of the  Company;  (ii) the
Articles of  Incorporation  of Fine Gold became the Articles of Incorporation of
the surviving corporation and the officers and directors of Fine Gold became the
officers  and  directors of the  surviving  corporation,  (iii) all  outstanding
options to purchase TMI stock were  terminated  and, in exchange  therefor,  the
Company issued  580,000 Series E warrants,  each entitling the holder thereof to
purchase  one share of Common Stock for $2.00 until  January 31, 1997;  (iv) all
shares  of the  capital  stock of TMI were  converted  into  and  exchanged  for
1,919,957  shares of Common Stock,  which were issued and deposited  into escrow
pursuant to the terms of two escrow agreements. Of the 580,000 Series E Warrants
issued,  561,585 were exercised prior to January 31, 1997; the remaining  18,415
warrants have been canceled.

         Of the  1,919,957  shares  of Common  Stock  initially  deposited  into
escrow,  in connection  with the TMI Merger,  749,957  shares have been released
pursuant to the terms of the governing  agreements.  Of the remaining  1,170,000
shares of Common  Stock  initially  deposited  into escrow,  266,170  shares are
subject to a Performance  Escrow Agreement dated February 29, 1996 ("Performance
Escrow Agreement"),  which provides for release of one share of Common Stock for
each $1.80 in cash flow received by Altair, provided that no more than one-third

--------------------
1          The Company was incorporated in April 1973 under the name Diversified
Mines  Limited,  which was  subsequently  changed to Tex-U.S.  Oil & Gas Inc. in
February 1981, then to Orex Resources Ltd. in November 1986, then to Carlin Gold
Company Inc. in July 1988, to Altair  International Gold Inc. in March 1994, and
to Altair International Inc. in November 1996.


                                       14

<PAGE>



of the original number of shares of Common Stock escrowed may be released in any
one year over the first three years of the escrow.  Shares of Common Stock still
in  escrow  at the  end of five  years  may be  canceled  by the  Alberta  Stock
Exchange.

         The remaining  903,830 shares of Common stock initially  deposited into
escrow were subject to the terms of the Performance  Escrow Agreement.  However,
on March 19,  1998,  the Alberta  Stock  Exchange  approved  (and  thereby  made
effective)  a  settlement  agreement  (the  "Settlement")  with  respect to such
903,830  shares.  Pursuant to the  Settlement,  180,765 of the affected  903,830
shares will be released  effective  March 19,  1998  (subject to certain  resale
restrictions) to the beneficial owners, and the remaining 723,065 shares subject
to the Settlement will be canceled.

         MRS was incorporated by the Company in April, 19872. MRS previously has
been  involved in the  exploration  for minerals and  development  of unpatented
mining claims in Nevada, Oregon and California.  All mining claims have now been
abandoned.  The  Company  currently  intends  that  MRS  will  arrange  for  the
manufacture of the CJ for commercial sales, rental or royalty  arrangements with
end users.  In addition  the Company  intends that MRS will lease or acquire and
develop  mineral  properties,   particularly  properties  that  contain  mineral
resources that may be processed with the CJ.

         In numerous  transactions  in 1996 and 1997,  the Company  purchased an
aggregate  of 83% of the  capital  stock of Indeco  for total  consideration  of
$355,835.  Indeco has as its sole asset a royalty agreement  entitling Indeco to
10% of the cost of manufacturing any CJs which are placed in production, sold or
exploited for profit  worldwide.  The Company's  acquisition  of Indeco has been
accounted for using the purchase  method,  and the entire amount of the purchase
price of Indeco stock has been allocated to the CJ royalty agreement.

Government Regulation and Environmental Concerns

         Government  Regulation.   The  Company's  present  exploration  of  the
Tennessee Minerals Property, and testing of the CJ, and any prospective testing,
construction  or mining  activities  the  Company  may  conduct  are  subject to
numerous  federal,  state,  and local laws and  regulations  concerning mine and
machine safety and environmental  protection,  including without  limitation the
Clean Air Act, the Clean Water Act, the Resource  Conservation  and Recovery Act
and the Comprehensive Environmental Response Compensation Liability Act. Some of
the laws and regulations  that would pertain to mining,  construction or testing
activities  require,  among other things,  maintenance  of air and water quality
standards, the protection of threatened endangered and other species of wildlife
and  vegetation,  the  preservation  of  certain  cultural  resources,  and  the
reclamation  of  exploration,  mining and  processing  sites.  In addition,  the
Company will be required to obtain certain  permits,  approvals  and/or licenses
from  federal,  state  and local  entities  before  developing  and  mining  the
Tennessee  Minerals  Property  or any  other  mining  property.  These  laws and

----------------------
2           MRS was formerly known as Carlin Gold Company.  The  name change was
effective in June 1996.


                                       15

<PAGE>



requirements are continually changing and, as a general matter, are becomingmore
restrictive.  Although  compliance  with  federal,  state or  local  ordinances,
regulations,  and  permitting  requirements  represents  a  small  part  of  the
Company's  present  budget,  continued  compliance  or  procurement  of required
approvals may necessitate  significant  capital  expenditures.  In the event the
Company fails to comply,  or is delayed in coming into  compliance with any such
ordinances or regulations, the Company may be subject to substantial fees or may
be required to expend significant capital to ensure compliance.

         The Company is committed to complying with and, to its knowledge, is in
compliance with all governmental regulations. The Company's primary product, the
CJ, does not require the addition of chemicals  in its  processing  of minerals.
The Company cannot, however,  predict the extent to which future legislation and
regulation  could  cause the  Company to incur  additional  operating  expenses,
capital  expenditures,  and/or restrictions and delays in the development of the
Company's products and properties.

         Environmental  Regulation and Liability.  Any proposed mining operation
of the Company on the Tennessee  Minerals Property or any subsequently  acquired
or leased  property  will be subject to  environmental  regulation  by  federal,
state,  and local  authorities.  Under federal and state law, the Company may be
jointly and  severally  liable  with prior  property  owners for the  treatment,
cleanup,  remediation,  and/or removal of substances discovered on the Tennessee
Minerals Property or any other property used by the Company, which are deemed by
the  federal  and/or  state  government  to be  toxic or  hazardous  ("Hazardous
Substances").  Liability may be imposed,  among other  things,  for the improper
release,  discharge,  storage,  use,  disposal or  transportation  of  Hazardous
Substances. The Company might use Hazardous Substances and, although the Company
intends to employ all reasonably practicable safeguards to prevent any liability
under applicable laws relating to Hazardous Substances,  mineral exploration and
extraction by its very nature will subject the Company to substantial  risk that
remediation will be required.

Employees

         The  business of the  Company is  currently  managed by Dr.  William P.
Long,  President  and Chief  Executive  Officer of the  Company,  Mr. C. Patrick
Costin,  Vice  President of the Company and President of MRS and Fine Gold,  and
Mr.  Edward  Dickinson,  Director of Finance of MRS. In addition,  MRS employs a
senior  process  engineer,  a  metallurgist,  a geologist,  a  controller  and a
part-time  employee  in  an  office  management  and  administrative  assistance
capacity. There are no other employees of the Company or its subsidiaries.

         Other  than  the  employment  agreements  of Dr.  Long  and Mr.  Costin
described below, and our employment  agreement with Mr. Dickinson,  there are no
employment  agreements  between  the  Company  or  its  subsidiaries  and  their
respective  executive  officers.   See  "Item  11.  Executive   Compensation  --
Employment  Agreements." The future success of the Company will depend, in part,
on its ability to attract and retain highly qualified  technical,  marketing and
management  personnel.  There is no assurance  the Company will be successful in



                                       16

<PAGE>



retaining or attracting  highly  qualified  individuals  in key  positions.  See
"Factors That May Affect Future Results-- Dependence on Key Personnel."

Glossary of Terms

         Amenability means responsiveness of an ore deposit to processing.

         Ash means inorganic residue remaining after coal combustion.  Ash is an
undesirable  component of coal because it reduces  thermal  value and produces a
waste product after combustion.

         Assay  means to  analyze an ore or other  substance  to  determine  the
present, absence, and quantity of one or more components.

         Benificiate means to improve the grade of ore by processing.

         Centrifugal force means the component of force on a body in curvilinear
motion that is directed away from the axis of rotation.

         Coal fines  means  finely  pulverized  coal  particles  which will pass
through a 28 mesh screen.

         Coal washing  means  processing  of  pulverized  coal to remove ash and
pyrite.

         Environmental  remediation  means removal of harmful mineral  particles
from a site previously altered by human activities.

         Heavy  minerals  sands means beach or dune sands which  contain a small
fraction of heavy  particles.  Heavy  mineral  sands are  commercially  mined to
produce titanium minerals and zircon.

         Jig means a device for concentrating minerals based on specific gravity
and particle size.

         Mesh means one of the openings or spaces in a screen.  The value (size)
of the mesh is given as the number of openings per linear inch.

         Mill means a building  with  machinery  for  processing  ore. (Dry mill
refers to heavy minerals sand processing of dry materials.)

         Mineralized  Deposit or Mineral Deposit means a mineralized  body which
has been delineated by appropriately spaced drilling and/or underground sampling
to support a sufficient tonnage and average grade of metals. Such a deposit does
not qualify as a reserve until a comprehensive  evaluation based upon unit cost,
grade,  recoveries  and other  material  factors  conclude  legal  and  economic
feasibility.


                                       17

<PAGE>




         Placer means  deposits of sand,  gravel and other  detrital or residual
material  containing a valuable mineral which has accumulated through weathering
and natural mechanical concentration processes.

         Pyrite means a  yellowish-brown  mineral  sulfide  containing  iron and
sulphur.  Pyrite is an undesirable component of coal because sulphur dioxide gas
is released when it is burned with coal.

         Specific  gravity  means  the ratio of the mass of a solid or liquid to
the mass of an equal volume of water at a specified temperature.

         Tails or tailings  means those portions of washed ore that are regarded
as too poor to be treated further, as distinguished from material (concentrates)
that is to be smelted or otherwise utilized.

         Thermal  value  means a  measure  of the  ability  of a fuel  (coal) to
produce energy when ignited.

Factors That May Affect Future Results

         This  Form  10-K  contains  various   forward-looking   statements  and
information that are based on management's  belief,  as well as assumptions made
by, and  information  currently  available  to,  management.  When used in these
documents,  the words "anticipate,"  "expect," "estimate,"  "project," "likely,"
"believe,"   "intend,"  and  similar   expressions   are  intended  to  identify
forward-looking statements.  Although the Company believes that the expectations
reflected in such  forward-looking  statements  are  reasonable,  it can give no
assurance  that  such  expectations  will  prove  to  have  been  correct.  Such
statements are subject to certain risks,  uncertainties and assumptions.  Should
one or more of these risks or uncertainties  materialize,  or should  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
anticipated,  estimated,  projected,  or expected,  or  intended.  Among the key
factors that may have a direct  bearing on the Company's  operating  results are
the risks and  uncertainties  described  below.  The reader  should also consult
other  factors  identified  from time to time in the  Company's  reports  to the
Commission.

         Absence of Operating  Revenues;  Operating Losses.  The Company is, for
accounting  purposes,  a  development  stage  company  and has  been  since  its
inception.  To date, the Company has not generated  revenues from  operations or
realized a profit.  The Company's losses from operations in 1996 were $1,327,226
and the Company's  losses from  operations in 1997 were  $1,831,471.  Based upon
management's  current  estimates for revenues and operation  expenses during the
fiscal year ending December 31, 1998,  management currently anticipates that the
Company will  experience a net loss from  operations in 1998 and may continue to
experience  losses  into  the  future.   The  Company  is  presently   investing
substantial  resources in the testing and  development of the CJ and the testing



                                       18

<PAGE>



of the Tennessee Minerals  Property.  There can be no assurance that the CJ, the
Tennessee Minerals Property or any other project being undertaken or proposed by
the Company  will  enable the  Company to generate  revenues or that the Company
will ever realize a profit from operations.

         Product  Development  Risk.  The CJ is in the  development  stage.  The
Company has completed only preliminary  testing of the Series 12 CJ, designed to
process  approximately 120 tons of solids per day. The Company has not completed
sufficient  testing of the Series 12 CJ to  determine  the volume of solids that
the Series 12 CJ is capable of processing. In addition, even if the Series 12 CJ
proves  capable of  processing  120 tons of solids per day, such capacity is too
small for most  commercial  operations,  with the  possible  exception  of small
placer  gold mines or similar  operations.  There can be no  assurance  that the
Series 12 CJ will prove capable of  processing  120 tons of solids per day or of
recovering all of the minerals it is designed to recover.  Even if the Series 12
CJ performs to design specifications, because of its small capacity, the Company
does not  expect  that the Series 12 CJ will be able to  recover  minerals  in a
cost-effective manner for most applications.

         In 1997, the Company  designed and constructed a Series 30 CJ, designed
to be  capable  of  processing  500  tons of  solids  per day.  There  can be no
assurance  that the Series 30 CJ or larger CJ will prove  capable of  processing
the volume of solids it is designed  to process or that such a larger  volume CJ
will prove capable of recovering the minerals it is designed to recover. Even if
the Series 30 CJ or larger CJ performs to design specifications, there can be no
assurance  that  the  Series  30 CJ  will  be  able  to  recover  minerals  in a
cost-effective  manner or otherwise prove  attractive to end users. In addition,
the introduction of new  technologies by competitors  could render the Series 30
CJ or larger CJ obsolete or unmarketable  or require costly  alterations to make
it marketable.

         Property Development Risk. The Tennessee Minerals Property is currently
in the exploratory stage. The Company is engaged in  pre-feasibility  testing to
determine the size and quality of mineralized deposits on the Tennessee Minerals
Property. If the results of such tests suggest that the deposits are amenable to
large scale,  low-cost mining, the Company will undertake a feasibility study of
the Tennessee  Minerals  Property.  Such a  feasibility  study would involve the
actual design,  pricing,  and analysis of equipment and facilities that would be
used  to  mine  the  Tennessee  Minerals  Property.  The  Company  expects  that
completion  of a  feasibility  study  will take 12-18  months  and that,  if the
feasibility study suggests that cost-effective  mining of the Tennessee Minerals
Property is  feasible,  a mine would not be  operational  for 24-36 months after
completion  of the study.  There can be no  assurance  that the  pre-feasibility
testing or the  feasibility  study will  indicate  that the  Tennessee  Minerals
Property contains minable quantities of heavy minerals or that such deposits are
amenable to large-scale,  low-cost mining, as contemplated by the Company.  Even
if the testing and studies suggest that mining is  economically  feasible on the
Tennessee Minerals Property,  there can be no assurance that the Company will be
able to  obtain  the  capital,  resources,  and  permits  necessary  to mine the
Tennessee Minerals Property. Nor can there be any assurance that market factors,
such as a decline in the price of, or demand for,  minerals  recoverable  at the
Tennessee Minerals Property,  will not have an adverse effect on the development
of mining operations on such property.


                                       19

<PAGE>




         Dependence  on  Third  Party   Manufacturers.   The  Company  currently
contracts with a machine shop located in central  California for assembly of the
CJ. If the Company  completes  testing and develops a final  production model of
the CJ, of which there can be no assurance,  the Company does not currently have
the  know-how  or  resources  to  establish  its  own  manufacturing   facility.
Management  is  considering   options  for  manufacture  of  the  CJ,  including
manufacturing under contract,  exclusive licensing or a joint venture. There can
be no assurance that the Company will obtain suitable  manufacturing capacity or
that  such   manufacturing   capacity,   if  found,  will  produce   affordable,
high-quality  units capable of sustaining  high  reliability and low maintenance
costs in a production environment.

         Sufficiency  and  Price  of  Capital.  Due  to,  among  other  factors,
unanticipated expenses of development, the absence of manufacturers or licensees
interested in entering into an alliance, increases in costs of necessary capital
equipment,  uncertainties  relating to  acquisitions  of equipment,  properties,
intellectual property rights or companies,  general and industry market factors,
or other unforeseen  events affecting the Company's use of and need for capital,
the Company's  existing  capital may prove  insufficient to complete testing and
development of the CJ, the Tennessee Minerals Property,  or other new or ongoing
projects.  In  addition,  depending  on market  factors  affecting  the costs of
capital generally,  the performance of the Company, the Company's capital needs,
the market  perception of mining or mining  equipment  stocks,  the economics of
projects being pursued,  industry perception of the Company's ability to recover
minerals with the CJ or otherwise,  and other factors affecting the availability
of capital and/or price of obtaining  capital,  the Company may unable to obtain
necessary  capital,  or may be forced to pay a price for capital  that is higher
than the Company is presently paying or is generally  available in the industry.
If the Company is unable to obtain sufficient capital or is forced to pay a high
price for capital, the Company may be unable to pursue or fully exploit existing
or future development  opportunities.  Also,  because of their size,  resources,
history and other  factors,  certain  competitors of the Company may have better
access to capital  than the  Company  and,  as a result,  may be able to exploit
opportunities more easily or thoroughly than the Company.

         Competing Products and Alternative Technologies.  The CJ competes in an
arena in which particle  specific  gravity is the primary  criteria for particle
segregation and capture.  Mechanical  gravity separation devices such as spirals
and cones,  froth flotation  devices,  and heavy media separators may be used to
perform  some of the  functions  for  which  the CJ is  designed.  See  "Item 1.
Business--Competition--Alternative  Technologies."  In addition,  competitors of
the Company have designed jig or jig-like  devices for use in the  separation of
mineral  particles and  environmental  contaminants.  These devices  include the
Kelsey Jig and the Knelsen batch  concentrator  unit,  which are currently being
used  worldwide.  As of mid-1995,  according  to the Kelsey jig's  manufacturer,
Geologics  Pty.  Ltd.,  36 Kelsey  jigs were in service  at 28 sites  worldwide,
including two machines at one site in the United States. Knelsen units have been
installed in various mining applications,  primarily gold, throughout the world.
See  "Competition--Competing  Products."  Results from  further  tests or actual
operations  may  reveal  that  existing  alternative  technologies  or  jig-like
products  are  better  adapted  to any or all of the  uses for  which  the CJ is



                                       20

<PAGE>



intended.  Regardless  of test  results,  consumers  may view  such  alternative
technologies  or products as  technically  superior  to, or more cost  effective
than, the CJ. Moreover, there is no assurance that competitors, many of whom may
have significant capital and resources,  will not develop, or are not now in the
process of developing, superior or less expensive alternatives to the CJ.

         Dependence on Commodities Markets. If the CJ is successfully  developed
and manufactured, of which there can be no assurance, the Company intends to use
the CJ to separate and recover  valuable,  heavy  mineral  particles at deposits
owned or leased by the Company,  including the Tennessee Minerals Property,  and
market the CJ to other companies.  Active international  markets exist for gold,
titanium,  zicron, and many other minerals potentially  recoverable with the CJ.
Prices of certain minerals have fluctuated widely, and are beyond the control of
the Company.  A significant  decline in the price of minerals  being produced or
expected to be  produced,  among other  factors,  could have a material  adverse
effect on the Company. In addition, a general economic downturn in the mining or
mineral  industries  or the global  economy  may have an  adverse  effect on the
Company.

         Risk of Development,  Construction and Mining Operations. In connection
with the  development  of a  mineralized  deposits,  the  ability  to meet  cost
estimates and  construction  and production  time  estimates  cannot be assured.
Technical  considerations,   delays  in  obtaining  governmental  approvals  and
permits,  inability to obtain  financing or other  factors could cause delays in
developing mineralized deposits.

         Government  Regulation;   Environmental  Permits  and  Liability.   The
Company's present  exploration of the Tennessee Minerals  Property,  its ongoing
testing  of  the  CJ,  and  any  prospective  testing,  construction  or  mining
activities the Company may conduct are subject to certain permitting or approval
requirements  and  numerous  federal,  state,  and  local  laws and  regulations
concerning  mine and machine  safety and  environmental  protection,  including,
without  limitation,  the  Clean Air Act,  the Clean  Water  Act,  the  Resource
Conservation  and Recovery  Act, and the  Comprehensive  Environmental  Response
Compensation  Liability Act. Some of the laws and regulations that would pertain
to mining,  construction  or testing  operations  require,  among other  things,
maintenance  of air and water quality  standards,  the  protection of threatened
endangered and other species of wildlife and  vegetation,  the  preservation  of
certain  cultural  resources,  and the  reclamation of  exploration,  mining and
processing sites. These laws and approval  requirements are continually changing
and, as a general matter,  are becoming more  restrictive.  Although  compliance
with federal state or local ordinances,  regulations, and permitting or approval
requirements represents a small part of the Company's present budget,  continued
compliance   may   necessitate   significant,   and  even   crippling,   capital
expenditures.  In the  event  the  Company  fails to  comply  with  such laws or
regulations,  fails to obtain a necessary  permit or approval,  or is delayed in
coming into compliance with any governing ordinances or regulations, the Company
may be forced to cease  operations,  be  subject to  substantial  fees or may be
required to expend significant  capital to ensure  compliance.  Although no such
problems or delays are  anticipated,  there can be no assurance that the Company
will be able to  comply  with  all  applicable  laws  and  regulations,  or that
compliance or necessary approvals will be obtained without substantial delays or
expenses.


                                       21

<PAGE>




         In addition,  under federal law and  applicable  state law, the Company
may be  jointly  and  severally  liable  with  prior  property  owners  for  the
treatment, cleanup, remediation,  and/or removal of substances discovered on the
Tennessee Minerals Property or any other property used by the Company, which are
deemed  by  the  federal  and/or  state  government  to be  toxic  or  hazardous
("Hazardous Substances").  Liability may be imposed, among other things, for the
improper  release,  discharge,  storage,  use,  disposal  or  transportation  of
Hazardous  Substances.  The Company might use Hazardous Substances and, although
the Company intends to employ all reasonably  practicable  safeguards to prevent
any liability under  applicable laws relating to Hazardous  Substances,  mineral
exploration  and  extraction  by its very  nature  will  subject  the Company to
substantial risk that remediation will be required.

         Enforceability  of  Civil  Liabilities  Against  Foreign  Persons.  The
Company is an Ontario corporation,  a majority of its directors are residents of
Canada,   and  certain  of  the  Company's  experts   (including  its  principal
accountants and Canadian legal counsel) are located in Canada.  As a result,  it
may be difficult  for  shareholders  or  investors to effect  service of process
within the United States upon such persons or to enforce court judgments against
such persons in United States predicated upon civil liability  provisions of the
federal  securities  laws.  It is uncertain  whether  Canadian  courts would (i)
enforce  judgments of United States courts obtained  against the Company or such
directors, officers or experts predicated upon the civil liability provisions of
United  States  securities  laws or (ii) impose  liability  in original  actions
against the Company or its directors, officers or experts predicated solely upon
United States securities laws.

         Patents for the  Centrifugal  Jig.  Initial patents on the CJ have been
issued in the United  States,  South  Africa,  United  Kingdom,  Australia,  and
Canada. Patent applications are pending in Germany,  France, and Japan. A second
series of patents have been issued with  respect to a critical  component of the
CJ in the United States, Australia,  Canada, Great Britain, and South Africa, as
well as under  General  European  procedures.  The  Company  has  also  filed an
additional  application  in the  United  States  seeking  a third  patent  for a
critical  component  of the CJ. There can be no  assurance  that pending  patent
applications  will be granted or that  persons in countries in which the Company
has not patented the CJ, or certain  critical  components,  will not develop and
market infringing  products.  The cost of, and other obstacles to, enforcing the
Company's  patents,  especially  outside  of North  America,  may also limit the
Company's ability to prevent infringing products from entering the market.

         Dependence on Key  Personnel.  The continued  success of the Company is
dependent  to a  significant  extent on the  services  of Dr.  William  P. Long,
President and Chief Executive Officer of the Company, and Mr. C. Patrick Costin,
Vice  President of the Company and President of Fine Gold and MRS, the Company's
subsidiaries.  The loss or unavailability of Mr. Long or Mr. Costin could have a
material  adverse effect on the Company.  No key man insurance is carried on the
lives of such key officers.  In addition to Dr. Long and Mr. Costin, the Company
employs a Director of Finance,  a senior process  engineer,  a  metallurgist,  a
geologist,  and  a  part-time  administrative  assistant.  There  are  no  other
employees of the Company or its  subsidiaries.  Aside from Dr. Long,  Mr. Costin



                                       22

<PAGE>



and the Director of Finance,  the Company has no employment  agreements with any
of its personnel. Competition for such personnel is intense, and there can be no
assurance  that the Company will be able to attract and  maintain all  personnel
necessary for the  development  and  operation of its business.  The loss of the
services  of key  personnel  or an  inability  to attract,  retain and  motivate
qualified  personnel  could  have a  material  adverse  effect on the  business,
financial condition or results of operations of the Company.

         Acquisition  Risks. The Company is currently  evaluating,  and plans to
continue to evaluate, additional opportunities for the license or acquisition of
additional  mining products or properties,  as well as the possible  acquisition
of, or development of strategic  relations  with,  other  companies who may have
products,  assets,  manufacturing  capabilities,  or  other  qualities  that are
compatible with the Company's business objectives.  The Company must compete for
attractive  acquisition  or strategic  alliance  candidates  with numerous other
companies,  many of whom have significantly  greater financial and technological
resources  than the Company.  There can be no assurance that the Company will be
able to  successfully  identify  attractive  acquisition  or strategic  alliance
opportunities.  Such acquisitions and alliances, if identified and completed, of
which there can be no  assurance,  could  involve the  incurrence  of additional
debt,  amortization  expenses  related to goodwill and intangible  assets or the
dilutive issuance of equity securities,  all of which could adversely affect the
Company's  operating  results  or  financial  condition.   Accordingly,   future
acquisitions and alliances may have an adverse effect on the Company's operating
results and financial condition,  particularly in periods immediately  following
the consummation of such  transactions,  while the operations of the acquired or
combined business are being integrated into the Company's operations.  There can
be no assurance that capital sought by the Company to pursue such  opportunities
can be obtained on terms favorable to the Company, if at all. The failure of the
Company to obtain  such  financing  could  restrict  its  ability to pursue such
business  opportunities.  Further, there can be no assurance that any particular
acquisition  or alliance  will be  successfully  integrated  into the  Company's
operations or will achieve profitability.

         Possible  Issuance of Substantial  Amounts of Additional Shares Without
Stockholder  Approval.  The Company's  Articles of  Incorporation  authorize the
issuance of an unlimited  number of shares of Common Stock.  All such shares may
be issued  without  any action or  approval by the  Company's  stockholders.  In
addition,  the Company has a stock option plan which has  potential for dilution
of the ownership interests of the Company's  stockholders.  Any shares of Common
Stock issued would further dilute the  percentage  ownership of the Company held
by existing stockholders.

         Possible  Volatility of Stock Price.  The Common Stock is listed on the
Alberta Stock  Exchange  (subject to voluntary  delisting on April 24, 1998) and
has been listed on the Nasdaq  National  Market  System since  January 26, 1998.
Between March 24, 1997 and January 23, 1998,  the Common Stock was listed on the
Nasdaq SmallCap Market.  Trading in the Common Stock has been characterized by a
high degree of volatility. See "Item 5. Market for the Registrant's Common Stock
and Related Shareholder  Matters--Market  Price." Trading in the Common Stock to
date has been  dominated  by a small number of firms which make a market in such




                                       23

<PAGE>



securities.  To the extent that the market for the Common Stock  continues to be
dominated  by a small  number of market  makers,  the  market  may  continue  to
experience a high degree of volatility. Such market dominance and volatility may
adversely  affect the price and liquidity of the Common Stock in the future.  In
addition,  the  trading  price of the Common  Stock  could  fluctuate  widely in
response to  variations in quarterly  financial  results,  announcements  by the
Company or its  competitors,  industry trends,  general  economic  conditions or
other events or factors. Among other factors, it is possible that in some future
quarters  the  Company's  operating  results will be below the  expectations  of
public market analysts and investors.  Regardless of the general outlook for the
Company's  business,  the  announcement of financial or research and development
results that differ from analyst and investor expectations could have a material
and adverse effect on the market price of the Common Stock.

         Shares   Eligible  for  Future   Sales.   The  resale  of   "restricted
securities,"  as well as securities held by "affiliates" of the Company (as such
terms are defined in releases and rules  promulgated  under the Securities Act),
is  generally  subject  to the  provisions  of Rule 144  promulgated  under  the
Securities Act ("Rule 144"). In general,  under Rule 144 as currently in effect,
a person (or persons whose shares are  aggregated)  who has  beneficially  owned
restricted securities for at least one year (including the holding period of any
prior  owner  except  an  affiliate),   including  persons  who  may  be  deemed
"affiliates"  of the Company,  would be entitled to sell within any  three-month
period a number of shares  that does not exceed the  greater of 1% of the number
of shares of Common Stock then  outstanding or the average weekly trading volume
of the Common Stock during the four  calendar  weeks  preceding  the filing of a
Form 144 with respect to such sale.  In addition,  a person who is not deemed to
have been an affiliate of the Company at any time during the 90 days preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
two  years  (including  the  holding  period  of  any  prior  owners  except  an
affiliate),  would be  entitled to sell such  shares  under Rule 144(k)  without
regard to the requirements described above. The Company is unable to predict the
effect that future sales under Rule 144 may have on the then  prevailing  market
price of Common  Stock.  In  addition,  shares  issued upon  exercise of options
granted  pursuant to the  Company's  employee  stock  option plan are  presently
registered  under the Securities  Act and,  subject to certain  restrictions  on
resale by affiliates,  may be sold without restriction.  It can be expected that
the sale of any  substantial  number  of shares of  Common  Stock  would  have a
depressive effect on the market price of the Common Stock.

         Absence of Dividends.  The Company has never declared or paid dividends
on the Common  Stock.  Moreover,  the  Company  currently  intends to retain any
future  earnings for use in its business  and,  therefore,  does not  anticipate
paying dividends on the Common Stock in the foreseeable future.

Item 2.  Properties
         ----------

         The Company  maintains a registered  office at 67 Richmond Street West,
Suite 500,  Toronto,  Ontario M5H 1Z5. The Company does not lease any space for,
or conduct any operations out of, the Toronto,  Ontario  registered  office.  In



                                       24

<PAGE>



addition,  the Company  leases 900 square feet of office space at 1725  Sheridan
Avenue,   Suite  140,  Cody,  Wyoming  82414,  which  serves  as  the  corporate
headquarters  for the Company and its  subsidiaries.  The Company's lease to the
Cody,  Wyoming  office space may be terminated by either party on 30 days' prior
written notice.

         Fine Gold and MRS lease 4,500  square feet of office space at 230 South
Rock Boulevard,  Suite 21, Reno,  Nevada 89502.  The lease for the Reno,  Nevada
offices expires on January 31, 2000. MRS leases  approximately 1,550 square feet
of laboratory  space at 7950 Security  Circle,  Reno,  Nevada 89506,  for its CJ
testing  operations.  The test facility  lease may be terminated by either party
upon eight weeks prior  written  notice.  Management  believes that the existing
offices and test facilities of the Company and its subsidiaries are adequate for
their current needs. In the event that alternative or additional office space is
required,  the Company  believes it could obtain  additional space on commercial
acceptable terms.

         The Tennessee  Minerals Property consists of approximately  4,300 acres
of real  property  located  near  Camden,  Tennessee,  which MRS  leases (or has
binding  commitments to lease) from multiple  owners of the real property.  Such
leases grant MRS certain exclusive rights, including the right to explore, test,
mine,  extract,  process,  and sell any minerals or other materials found on the
land, in exchange for the payment of minimum annual  advanced  royalty  payments
prior to commencement of production on the properties (or after  commencement of
production,  to the extent  production  royalty  payments  do not equal  nominal
royalty  payments) and,  thereafter,  production  royalty  payments in an amount
equal to a percentage of the value of minerals mined and sold from the property.
See Note 5 to the Consolidated  Financial  Statements for information  regarding
present and future minimum advanced royalty  payments.  The leases typically are
for a minimum term of ten years, and may be extended  indefinitely  provided the
Company is actively conducting exploration,  development,  or mining operations.
The leases are  cancelable by MRS at any time,  and are cancelable by the lessor
in the event MRS breaches the terms of the lease. The mineralized deposit on the
Tennessee  Minerals  Property  has  not  yet  proven  to be a  reserve,  and the
Company's  operations  and proposed plan with respect to it are  exploratory  in
nature.  See "Item 1.  Business--Tennessee  Minerals  Property."  The  Tennessee
Minerals  Property is accessed by public roads and, to the Company's  knowledge,
has not been used in prior mining operations.

                  During  1997 and  1996,  the  Company  incurred  $480,249  and
$126,302  respectively  in deferred  exploration  expenditures  on the Tennessee
Minerals  Property.  Expenditures  were  incurred on leasehold  minimum  advance
royalty  payments,  auger hole drilling,  sampling,  sample  analysis and assay,
geological and mineralized deposit  characterization  studies, and other related
exploration activities.




                                       25

<PAGE>


                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amendment to be signed on
its behalf by the undersigned, thereunto duly authorized, on May 15, 1998.

                                              ALTAIR INTERNATIONAL INC.



                                          By: /s/ William P. Long
                                              ----------------------------------
                                              William P. Long,
                                              President, Chief Executive Officer

















                                       26