---

# SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

# FORM 40-F/A
(Amendment No. 1)

|[ ] | Registration statement pursuant to Section 12 of the Securities
Exchange Act of                1934 or
|--- | ------------------------------------------------------------------------------------------------------

|[X] | Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934
|--- | ---------------------------------------------------------------------------------------

|For
the fiscal year ended: July 31, 2003 | Commission File Number: 001-31739
|---------------------------------------- | ---------------------------------

_________________

Gammon Lake Resources Inc. (Exact name of
registrant as specified in its charter)

|Quebec
(Province or Other Jurisdiction of
Incorporation or Organization) | 1040
(Primary Standard Industrial
Classification Code) | N/A
(I.R.S. Employer
Identification No.)
|------------------------------------------------------------------------ | ------------------------------------------------------ | ----------------------------------------

|                                                                                                                                                                                                                             | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Martin Pomerance
Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10177, USA
(212) 415-9200
(Name, address (including zip code) and telephone number
(including area code) of agent for service in the United
States) | 

Securities to be registered pursuant
to Section 12(b) of the Act:

|Title of Each Class:Common Shares, No par value | Name of Each Exchange On Which Registered:American Stock ExchangeToronto Stock Exchange
|----------------------------------------------- | ---------------------------------------------------------------------------------------

Securities registered pursuant to
Section 12(g) of the Act:    None

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

For annual reports, indicate by check
mark the information filed with this form:

|[X]    Annual Information Form | [X]    Audited Annual Financial Statements
|------------------------------ | ------------------------------------------

Indicate the number of outstanding
shares of each of the issuer's classes of capital or common stock as of the close of the
period covered by the annual report.

|Title of Each Class:Common Shares | Outstanding at July 31, 2003:40,934,286
|--------------------------------- | ---------------------------------------

Indicate by check mark whether the
Registrant by filing the information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934 (the Exchange Act). If Yes is marked, indicate the filing
number assigned to the Registrant in connection with such Rule.
     
[  ]  Yes      
     [X]  No

Indicate by check mark whether the
Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act 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.     
[X]  Yes      
     [  ]  No

---

# EXPLANATORY NOTE

This
Amendment No. 1 to the Annual Report on Form 40-F of Gammon Lake Resources Inc. (the
Registrant), including exhibits hereto, is being filed by the Registrant to
amend its Annual Report on Form 40-F for the year ended July 31, 2003, filed with the
Commission on December 22, 2003, by replacing in its entirety the Annual Information Form
filed as Exhibit 99.1 thereto with the Registrants subsequently prepared Renewal
Annual Information Form which the Registrant has filed with Canadian regulatory
authorities. By this Amendment No. 1 to its Annual Report on Form 40-F, the Registrant is
also amending its previously filed Annual Report to file its Audited Comparative
Consolidated Financial Statements and the notes thereto for fiscal 2003 together with the
report of the auditors thereon, including a U.S. GAAP reconciliation as an exhibit. The
financial statements were inadvertently omitted from the initial Form 40-F filing.

# UNDERTAKINGS AND
CONSENT TO SERVICE OF PROCESS

The
Registrant undertakes to make available, in person or by telephone, representatives to
respond to inquiries made by the Commission staff, and to furnish promptly, when requested
to do so by the Commission staff, information relating to: the securities registered
pursuant to Form 40-F; the securities in relation to which the obligation to file an
annual report on Form 40-F arises; or to transactions in said securities.

The
Registrant has previously filed a Form F-X with the Commission on July 18, 2003.

---

# SIGNATURES

Pursuant
to the requirements of the Exchange Act, the Registrant certifies that it meets all of the
requirements for filing on Form 40-F and has duly caused this Amendment No. 1 to its
Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | GAMMON LAKE RESOURCES INC./s/ Fred George
Fred George
President
| | ---------------------------------------------------------------

Date:   August 20, 2004

---

# EXHIBIT INDEX

The
following exhibits have been filed as part of this Amendment No. 1 to the Annual Report:

| | Exhibit |  | Description
| | ------- |  | -----------

| | 99.1 |  | Renewal
Annual Information Form dated May 12, 2004 as amended July 15, 2004, including
Management's               Discussion and Analysis for fiscal 2003 found at pages 46 to 55
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.2 |  | Audited
Comparative Consolidated Financial Statements of the Registrant, and the notes thereto
for               fiscal 2003 together with the report of the auditors thereon, including
a U.S. GAAP reconciliation
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.3 |  | Notice
of Annual and Special  Meeting of Shareholders and Management Information Circular dated
              September 22, 2003*
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------

| | 99.4 |  | Form
of Proxy*
| | ---- |  | --------------

| | 99.5 |  | Consent
of Grant Thornton LLP*
| | ---- |  | ------------------------------

| | 99.6 |  | Section
302 Certifications
| | ---- |  | --------------------------

| | 99.7 |  | Section
906 Certifications
| | ---- |  | --------------------------

*   Previously filed

---

GAMMON LAKE RESOURCES INC.

REVISED ANNUAL INFORMATION FORM

May 12, 2004

(Amended July 15, 2004)

---

# GAMMON LAKE RESOURCES
INC. 
(the Corporation) 

REVISED ANNUAL INFORMATION FORM 

TABLE OF CONTENTS

|REVISED ANNUAL INFORMATION FORM | 1
|------------------------------- | -

|ITEM 1: CORPORATE STRUCTURE | 1
|--------------------------- | -

| | 1.l | Name, Address and Incorporation | 1
| | --- | ------------------------------- | -

| | 1.2 | Intercorporate Relationships | 1
| | --- | ---------------------------- | -

|ITEM 2: GENERAL DEVELOPMENT OF THE BUSINESS | 1
|------------------------------------------- | -

| | 2.1 | Three Year History | 1
| | --- | ------------------ | -

| | 2.2 | Significant Acquisitions | 2
| | --- | ------------------------ | -

|ITEM 3: DESCRIPTION OF THE BUSINESS | 2
|----------------------------------- | -

| | 3.1 | General | 2
| | --- | ------- | -

| | 3.2 | Mineral Projects | 2
| | --- | ---------------- | -

| | 1. | Ocampo Project | 2
| | -- | -------------- | -

| |  | Location and Description | 2
| |  | ------------------------ | -

| |  | Figure 1: Location of Project | 3
| |  | ----------------------------- | -

| |  | SOYOPA AGREEMENT | 5
| |  | ---------------- | -

| |  | MINERA FUERTE AGREEMENT | 5
| |  | ----------------------- | -

| |  | MINIMUM INVESTMENT (assessment work) | 9
| |  | ------------------------------------ | -

| |  | MINING DUTY (tax) | 11
| |  | ----------------- | --

| |  | Project History | 11
| |  | --------------- | --

| |  | Geology and Mineralization | 13
| |  | -------------------------- | --

| |  | Figure 3: Regional Geologic Map | 14
| |  | ------------------------------- | --

| |  | Figure 4: District Geology Map | 15
| |  | ------------------------------ | --

| |  | Exploration | 17
| |  | ----------- | --

| |  | Figure 5: Ramp | 20
| |  | -------------- | --

| |  | Figure 6: San Juan Long Section | 22
| |  | ------------------------------- | --

| |  | Figure 7: Aventurero Grade x Thickness Long Section | 23
| |  | --------------------------------------------------- | --

| |  | Figure 8: Aventurero Ramp Area | 24
| |  | ------------------------------ | --

| |  | SURFACE SAMPLES | 24
| |  | --------------- | --

| |  | UNDERGROUND SAMPLES | 24
| |  | ------------------- | --

| |  | RC DRILLING SAMPLES | 24
| |  | ------------------- | --

| |  | CORE SAMPLES | 24
| |  | ------------ | --

| |  | Resource Estimates | 27
| |  | ------------------ | --

| |  | INFERRED RESOURCE | 28
| |  | ----------------- | --

| |  | INDICATED RESOURCE | 28
| |  | ------------------ | --

| |  | MEASURED RESOURCE | 28
| |  | ----------------- | --

| |  | Figure 9: Las Animas Cross Section LA235 | 
| |  | ---------------------------------------- | 

| |  | MEASURED RESOURCE: | 31
| |  | ------------------ | --

| |  | INDICATED RESOURCE: | 31
| |  | ------------------- | --

| |  | INFERRED RESOURCE: | 31
| |  | ------------------ | --

| |  | Table 2: Northeast Area measured and Indicated Resources | 32
| |  | -------------------------------------------------------- | --

| |  | Table 3: Northeast Area Inferred Resources | 32
| |  | ------------------------------------------ | --

| |  | Inferred Resources, Surface | 32
| |  | --------------------------- | --

| |  | C. Ocampo Area Resources | 33
| |  | ------------------------ | --

| |  | Table 4: Ocampo Measured and Indicated Resources | 33
| |  | ------------------------------------------------ | --

| |  | Figure 10: Plaza de Gallos, Pit Section PDG 290 | 35
| |  | ----------------------------------------------- | --

| |  | 2. Investment in Mexgold Resources Inc. | 37
| |  | --------------------------------------- | --

| | 3.3 | Risk Factors | 37
| | --- | ------------ | --

| |  | 1. No History of Profitability | 37
| |  | ------------------------------ | --

| |  | 2. Exploration Stage Corporation | 38
| |  | -------------------------------- | --

| |  | 3. Foreign Operations | 38
| |  | --------------------- | --

| |  | 4. Government Regulations | 38
| |  | ------------------------- | --

| |  | 5. Market Fluctuation and Commercial Quantities | 39
| |  | ----------------------------------------------- | --

| |  | 6. Mining Risks and Insurance | 39
| |  | ----------------------------- | --

| |  | 7. Environmental Protection | 39
| |  | --------------------------- | --

| |  | 8. Capital Investment | 39
| |  | --------------------- | --

| |  | 9. Conflicts of Interest | 40
| |  | ------------------------ | --

| |  | 10. Dependence on Key Personnel | 40
| |  | ------------------------------- | --

| |  | 11. Lack of Active Market | 40
| |  | ------------------------- | --

| |  | 12. Currency | 40
| |  | ------------ | --

| |  | 13. Dividends | 41
| |  | ------------- | --

| |  | 14. Competition | 41
| |  | --------------- | --

| |  | 15. Possible PFIC Status | 41
| |  | ------------------------ | --

|ITEM 4: DIVIDENDS | 41
|----------------- | --

|ITEM 5: DESCRIPTION OF CAPITAL STRUCTURE | 42
|---------------------------------------- | --

| |  | Common Shares | 42
| |  | ------------- | --

| |  | Class A and Class B Preferred Shares | 42
| |  | ------------------------------------ | --

|ITEM 6: MARKET FOR SECURITIES | 42
|----------------------------- | --

| | 6.1 | Trading Price and Volume | 42
| | --- | ------------------------ | --

| | 6.2 | Prior Sales | 43
| | --- | ----------- | --

|ITEM 7: ESCROWED SECURITIES | 43
|--------------------------- | --

|ITEM 8: DIRECTORS AND OFFICERS | 43
|------------------------------ | --

|ITEM 9: PROMOTERS | 45
|----------------- | --

|ITEM 10: LEGAL PROCEEDINGS | 45
|-------------------------- | --

|ITEM 11: INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 45
|------------------------------------------------------------------- | --

|ITEM 12: TRANSFER AGENTS AND REGISTRARS | 46
|--------------------------------------- | --

|ITEM 13: MATERIAL CONTRACTS | 46
|--------------------------- | --

|ITEM 14: INTERESTS OF EXPERTS | 46
|----------------------------- | --

|ITEM 15: MANAGEMENT'S DISCUSSION AND ANALYSIS | 47
|--------------------------------------------- | --

| | 15.1 | Date and Scope of Management's Discussion and Analysis | 47
| | ---- | ------------------------------------------------------ | --

| | 15.2 | Overall Performance | 47
| | ---- | ------------------- | --

| | 15.3 | Selected Annual and Quarterly Information | 48
| | ---- | ----------------------------------------- | --

| | 15.4 | Results of Operations | 49
| | ---- | --------------------- | --

| | 15.5 | Liquidity | 51
| | ---- | --------- | --

| | 15.6 | Capital Resources | 54
| | ---- | ----------------- | --

| | 15.7 | Off-Balance Sheet Arrangements | 55
| | ---- | ------------------------------ | --

| | 15.8 | Transactions with Related Parties | 55
| | ---- | --------------------------------- | --

|SEE "ITEM 10:  INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS" | 55
|-------------------------------------------------------------------------- | --

| | 15.9 | Proposed Transactions | 55
| | ---- | --------------------- | --

| | 15.10 | Critical Accounting Estimates | 55
| | ----- | ----------------------------- | --

| | 15.11 | Changes in Accounting Policies including Initial Adoption | 55
| | ----- | --------------------------------------------------------- | --

| | 15.12 | Financial Instruments and Other Instruments | 55
| | ----- | ------------------------------------------- | --

|ITEM 16: ADDITIONAL INFORMATION | 56
|------------------------------- | --

---

# REVISED ANNUAL INFORMATION
FORM

for the twelve months ended July 31, 2003 
containing information as at May 12, 2004

ITEM 1:   CORPORATE
STRUCTURE

# 1.1      Name, Address and
Incorporation

Gammon Lake
Resources Inc. (the Corporation) has a head office located at 202 Brownlow
Avenue, Cambridge 2, Suite 306, Dartmouth, Nova Scotia, B3B 1T5. The registered office of
the Corporation is located at 1, Place Ville-Marie, Suite 3900, Montreal, Quebec, H3B 4M7.

The
Corporation was incorporated under Part 1A of the Companies Act (Quebec) on
February 25, 1986, under the name Golden Rock Explorations Inc.. By articles
of amendment dated April 7, 1998, the Corporation changed its name to its current form of
name, Gammon Lake Resources Inc., and consolidated its common shares on a 15:1
basis.

# 1.2   Intercorporate Relationships

The Corporation
has the following direct and indirect wholly-owned subsidiaries:

|                             
|-----------------------------
|
|                             
|Gammon Lake Resources        
|(Barbados) Inc.              
|("Gammon Lake Barbados")     
|                             
|Gammon Lake de Mexico S.A. de
|C.V. ("Gammon Lake Mexico")  
|                             

Notes:  (1) All of the subsidiaries
are sometimes referred to together herein as the "Corporation".

ITEM 2:   GENERAL
DEVELOPMENT OF THE BUSINESS

2.1   Three Year History

During
the past three years the Corporation has focussed on the exploration and development of
its mineral interests (comprising a total of 44 mining concessions encompassing
approximately 3,500 hectares) in the municipality of Ocampo, in the state of Chihuahua,
Mexico (collectively referred to herein as the Ocampo Project). The Ocampo
Project is described under, Item 3: Description of the Business.

---

2

# 2.2   Significant Acquisitions

The
Corporation has not completed any significant acquisitions during the twelve months ended
July 31, 2003, except as noted herein. The Corporations primary focus at this time
is on the exploration and development of the Ocampo Project.

On
November 6, 2003, the Corporation terminated a joint venture agreement with Bolnisi Gold
NL upon payment of U.S. $5.0 million to Bolnisi Gold N.L. As a result of this termination,
the Corporation has a 100% interest in the Ocampo Project.

The
Corporation has made strategic investments in Mexgold Resources Inc., as described under
Item 3: Description of the Business  3.2 Mineral Projects  2. Investment
in Mexgold Resources Inc..

ITEM 3:   DESCRIPTION OF THE BUSINESS

# 3.1   General

The
Corporation is a mineral exploration and development company which is currently engaged in
the exploration for and development of gold and silver deposits in the State of Chihuahua,
Mexico. The Corporations mineral interests in the State of Chihuahua, Mexico are
comprised of a total of 44 mining concessions encompassing approximately 3,500 hectares
located in the Municipality of Ocampo (herein referred to herein as the Ocampo
Project). The Corporation has a total of 96 employees and contract workers. The
Corporations immediate objective is to complete a feasibility study for the Ocampo
Project by the six months ended January 31, 2005. In general, see Item 3:
Description of the Business  3.3 Risk Factors.

# 3.2   Mineral Projects

1.     Ocampo Project

Certain
portions of this section, particularly as they relate to the descriptions of the geology,
mineralization, resource audit and feasibility study plans of the Corporations
exploration projects are derived from a report dated March 31, 2004, prepared by Glenn R..
Clark & Associates Limited entitled, Ocampo Gold-Silver Project Review,
Chihuahua, Mexico (the Clark Report). The author of the Clark Report has
made a site visit to examine the geology and exploration work carried out on the
exploration properties of the Corporation. The Clark Report embodies work completed by the
Corporation as at the date of the Clark Report which includes updates of the results
detailed in earlier technical reports. Where appropriate, references are made to the
earlier technical reports completed prior to the Clark Report.

Location and Description

a)    Location

The
Ocampo Project is located approximately 235 km west southwest of the state capital
Chihuahua, within the Ocampo Municipio, in the State of Chihuahua, Mexico.

---

3



Scale:  1:5,000,000 approx.

# Figure 1: Location of
Project

b)    Access

The
State of Chihuahua has two International airports located at the cities of Ciudad Juarez
and Chihuahua. Within the State there is over 4,000 km of paved highway, 7,000 km of
improved road and 2,100 km of railway.

Federal
Highway 16 is a major transportation route that crosses the Sierra Madre. The property can
be accessed using Government maintained gravel roads from Cahuisori (27 km). Alternatively
the property can be reached from Highway 16 by a government maintained gravel road to
Morris then east to Ocampo. The property is 310 km by road from Chihuahua.

---

4

c)    Infrastructure and Local Resources

The
Town of Ocampo is at the eastern edge of the project area. It has an estimated population
of 500 people and is the seat of the municipal government.

Ocampo
has recently been connected to the National Electrical grid. The feasibility study will
consider whether it is practical to rely on the National Grid and/or on site power
generation to supply the power for the mining project due to the cost and time of hooking
up to the grid.

Mining
and forestry are the major industries in the area. An adequate workforce that is familiar
with mining is present in the region.

Although
there is a reasonable amount of rainfall each year there are no large bodies of water or
large rivers nearby to supply the water required for the Corporations planned
operation. The required water will need to be supplied from ground water wells.

d)    Climate

The
cool winters and mild summers are typical of the temperate climate in the area. The
rainfall is erratic and mainly occurs during the summer monsoon season. Snow does occur
sporadically in the winter. The average annual precipitation is approximately 800 mm. The
weather conditions should not affect planned operations.

e)    Topography and Vegetation

The
Ocampo Project is within the Sierra Madre Occidental physiographic province. This province
is mountainous, however there are features that suggest an incised plateau rather than a
true mountain range.

The
Project area ranges in elevation from 1,600 m to 2,200 m in elevation and is located near
the eastern edge of the Barranca (canyon) country.

The
town of Ocampo is in a steep-sided canyon. There is adequate space on the
Corporations mining concessions for the plant, tailings pond and other necessary
facilities.

The
vegetation in the area consists of pine and mixed pine and deciduous stands of trees.
There is sufficient forestation in the area to support a number of sawmills. The
Corporation may be able to source some of its lumber requirements from these local
sawmills.

f)    The Concessions

The Ocampo Project concessions are
located in the Municipality of Ocampo in the State of Chihuahua in Mexico, and consist of
44 concessions that cover 3,524.54 hectares.

The concessions are held by Gammon
Lake de Mexico, S.A. de C.V., a wholly owned subsidiary of the Corporation (Gammon
Mexico). The records show that Gammon Mexico has a 100% interest in the claims.
Twenty-seven of the claims are filed free of any liens or encumbrances while the other 17
claims are subject to fulfilling the Soyopa Agreement (as defined below).
Seven claims that are filed free of encumbrances are subject to further payment terms
under the Minera Fuerte Agreement (as defined below).

---

5

SOYOPA AGREEMENT

The Soyopa Agreement outlines the
terms for the Corporation to purchase the concessions from Minerales de Soyopa, S.A. de
C.V. This agreement was entered into on March 1, 2000 with amendments, August 17, 2000,
April 24, 2001 and November 24, 2001 (collectively, the Soyopa Amending
Agreements).

To date all of the terms of these
agreements have been met and the only the following terms are outstanding.

The Corporation is required to make
an additional payment of U.S. $7,000,000. This payment can be made in two separate
installment with U.S. $3,5000,000 to be paid on or before November 23, 2006 and the
remaining U.S. $3,500,000 to be paid on or before November 23, 2007 except if the property
is placed into production prior to November 23, 2006, in which case an annual advance
payment of U.S. $1,000,000 shall be made to Soyopa which will be credited against the U.S.
$7,000,000 obligation and, if the property is sold to a third party, the balance of U.S.
$7,000,000 shall be due and owing immediately. The obligation to complete the payment of
U.S. $7,000,000 is secured by a charge registered on the mining concessions. In a related
arms length agreement with Compania Minera Global S.A. de C.V. (Minera
Global) dated July 17, 2000, pursuant to which consulting services were provided
with respect to the Soyopa Amending Agreements, a balance of U.S. $1,000,000 is due to
Minera Global upon the sale of the Ocampo Project.

The concessions subject to the Soyopa
Agreement are numbered 170141-170153, 191736, 192048, 204194, 212551.

MINERA FUERTE AGREEMENT

In January 6, 1999 the Corporation
entered into a joint venture agreement with Minera Fuerte Mayo, S.A. de C.V. (the
Minera Fuerte Agreement) covering 17 concessions. This agreement was
amended December 2, 1999, March 5, 2001 and February 21, 2003 (the Minera Fuerte
Amending Agreements). Ten of the concessions were bought outright and 7 concessions
are subject to the terms of the February 21, 2003 Minera Fuerte Amending Agreements which
provides for a purchase (the Minera Fuerte Buy-Out Agreement). With the Minera
FuerteBuy-Out Agreement, Gammon Mexico acquired a 100% interest in the Minera Fuerte
Agreement in consideration for the grant of an 8% net profits royalty up to the maximum of
U.S. $2,000,000. An additional U.S. $250,000 is due if, as a result of exploration of the
property, a minimum mining reserve of two million ounces of equivalent gold is obtained,
as determined by an independent third party consulting firm of international repute which
is mutually acceptable to the parties thereto. In the event that the Corporation were to
sell the property, the full U.S. $2,000,000 becomes dues and payable at that time.

The concessions subject to this
agreement are numbered 147733, 150528, 151997, 153207, 155697, 155698 and 192789.

A list of all the mining concessions
and a map of the concessions (Figure 2) follows.

|Table 1: Gammon Lake Schedule of Properties
|-------------------------------------------
|                                           
|
|                                           
|1                                          
|2                                          
|3                                          
|4                                          
|5                                          
|6                                          
|7                                          
|8                                          

---

6

|  
|--
|
|  
|9 
|10
|11
|12
|13
|14
|15
|16
|17
|18
|19
|20
|21
|22
|22
|23
|24
|25
|26
|27
|28
|29
|30
|31
|32
|33
|34
|35
|36
|37
|38
|39
|40
|41
|42
|42
|  
|  

The Concessions that are named in
blue are the concessions that are the subject of the Soyopa Agreement.

The Concessions that are named in purple
are the concessions that are the subject of the Minera Fuerte Agreement.

All of the concessions are
exploitation concessions except the eight that have the numbers shown in red. These
concessions are exploration concessions, numbers 212992, 213422-213424, 213571, 214374,
214375 and 217082.

As noted above, the Ocampo Project
includes both exploration and exploitation concessions. All of the concessions are
surveyed prior to being granted.

---

7

Exploration concessions have a six
year period before they expire and can be elevated to an exploitation concession.

Exploitation concessions have a
50-year life and can be renewed for as long as the mine is active. The elevation of a
mining concession from exploration to exploitation can be a lengthy process but all rights
concerning exploration and exploitation remain in force during the conversion period.

The concessions are for mineral
rights only and the Corporation has secured the surface rights in the current areas of
interest. On March 20, 2002, Gammon Mexico and Minerales de Soyopa, S.A. de C.V.
(Soyopa) entered into a surface rights lease with the Common Land (Ejido)
Commissariat covering the mining concessions of Gammon Mexico and Soyopa. This agreement
covers approximately 2000 hectares. The agreement is for 30 years for the initial and only
payment of U.S. $20,000. The agreement has been registered with the National Agrarian
Registry.

In order to engage in exploration and
commercial mining activity, an environmental permit is required. The Corporation currently
has all necessary environmental permits for exploration activity and does not envision any
obstacles in obtaining the necessary environmental permits for commercial mining activity
on these concessions.

All concessions have an annual
minimum investment to complete and an annual mining tax must be paid to keep the
concessions in good standing.

It should be noted that some small
concessions, held by others, exist within the Corporations concession blocks. These
small holdings can be seen on the concession map. These concessions are not in areas of
significant mineralization and are not considered a problem to the Ocampo Project.

---

8



map provided by GLR

Figure 2: Concession Map

---

9

MINIMUM INVESTMENT
(assessment work)

To keep the concessions in good
standing a minimum investment or assessment work (MI) must be made each year and the work
filed. The amount of the MI varies based on the size, age and type of the concession. The
MI required changes each year with the Department of Mines publishing a new list at the
first of the year and it varies with the consumer price index.

It is possible to group concessions
together and carry forward the excess work from previous years. The current work programs
coupled with the past work by the Corporation should satisfy the minimum requirements for
many years.

Exploitation Concessions

For exploitation concessions the
annual amount of MI only varies with the size of the concessions. The smallest concessions
up to 30 ha only have a requirement of 45.14 pesos/ha or approximately Cdn. $5.40/ha.
Twenty-eight of the concessions are in that category. As the concessions get larger the MI
increases. For 30 to 100 ha the annual MI is 90.27 pesos or approximately Cdn. $10.80 Cha.
Five of the concessions fall into that category. The concessions that are greater than 100
ha have a fixed fee per concession plus an amount per ha. Gammon has 2 concessions just
over 100 ha and the average MI is 187.71 pesos/ha for the 105 ha concession and 187.52
pesos/ha for the 108 ha concession or approximately Cdn. $22.50/ha. The largest concession
1657.92 ha has an MI of 724.90 pesos/ha or approximately Cdn. $87/ha.

The average MI on the
Corporations 2,471.6 ha of exploitation concessions is currently 518.45 pesos or
approximately Cdn. $62.21/ha totaling Cdn. $153,767.

Exploration Concessions

The MI for the exploration
concessions varies with size and age of the concession being greater for larger and older
concessions.

The Corporations exploration
concessions are all in either the 3rd or 4th period. Five of the 8
exploration concessions are in the lowest category at 30.09 pesos/ha (Cdn. $3.61). The
469.88 ha concession averages 91.87 pesos/ha (Cdn. $11.02) and the 505.67 ha concession
averages 90.22 pesos/ha (Cdn. $10.82).

The average MI on the
Corporations 1,052.94 ha of exploration concessions is currently 86.54 pesos/ha or
approximately Cdn. $10.38/ha totaling Cdn. $10,934.

Table 2: Minimum Investments(assessment work)

EXPLORATION CONCESSIONS

|              
|--------------
|
|              
|
|              
|Up to 30      
|              
|>30 up to 100 
|              
|>100 up to 500
|              

---

10

|                    |  |         |     |   
|------------------- |  | ------- | --- | --
|                   
|>500 up to 1,000    |  | 2,256   | .82 | 27
|                   
|>1,000 up to 5,000  |  | 4,513   | .64 | 25
|                   
|>5,000 up to 50,000 |  | 15,797  | .74 | 23
|                   
|More than 50,000    |  | 150,454 | .66 | 21
|                   

EXPLOITATION CONCESSIONS

|                  
|------------------
|
|                  
|Up to 30          
|                  
|>30 up to 100     
|                  
|>100 up to 500    
|                  
|>500 up to 1,000  
|                  
|>1,000 up to 5,000
|                  
|More than 5,000   
|                  

MINING DUTY (tax)

The rate of the mining duty (MD)
depends on the concession type and the age of the concession. The rate changes each
semester with the Mexico Department of Mines publishing the new rates in January and July.
The MD is due in both January and July.

Table 3: Mining Dutiesrate per hectare for the first semester of 2004
(in Mexican Pesos):

|EXPLORATION CONCESSIONS     
|----------------------------
|
|During the first year       
|From the 2nd to the 4th year
|From the 5th year           

---

11

|EXPLOITATION CONCESSIONS      
|------------------------------
|
|During the first and 2nd years
|From the 3rd and 4th year     
|From the 5th year             

The rates are effective if you pay
during January, but if the payment is delayed, every month you have to add some penalties
and actualizations that are also published in the Official Newspaper of the
Mexico Department of Mines.

The Ocampo Project exploitation
concessions are all at the high rate of 88.29 pesos/ha except for 3 concessions totaling
77.7 ha are at the rate of 50.34 pesos/ha. The average rate of MD for the exploitation
concessions is 87.10 pesos/ha.

The exploration concessions are all
at the rate of 6.01 pesos/ha.

The total MD for the Ocampo Project concessions
is approximately Cdn. $26,600 for the first quarter of 2004.

Project History

The
Ocampo area has been explored and exploited over the last 200 years. Large amounts of gold
and silver have been extracted from the area.

Exploration
of Northern Mexico by the Spanish started in 1554 and was quite successful with the first
significant mineral discovery in the Santa Barbara district by 1567. Further significant
discoveries were made during the next two hundred years.

The
Ocampo mineralization was discovered in 1804 by an employee of Jose de Herrero, a
Spaniard. The initial exploration and exploitation of the area was curtailed because of
the Mexican War for Independence, 1810 to 1820.

After
the war, French and English interests made significant investments in the Refugio and
Plaza de Gallos mines in the western part of the district. Other mines in the northeastern
portion were found at this time. In the mid 1800s the mining in the district was
idled due to the political unrest and some technical problems with water in the mines.

In
the late 1800s the government again encouraged foreign investment and the Ocampo
area was reactivated and it was from the 1880s onward that Ocampo had the greatest
period of development. This active period continued until the onset of the Mexican
Revolution in 1912, and then the mining in the Ocampo district was once again idled.

From
1907 to 1912, the Sierra Consolidated Mining Company was the major mining company in the
area. In 1912, shortly before the Mexican Revolution, the chief engineer of Sierra
Consolidated, estimated that up until that time, the total production of gold and silver
from Ocampo had exceeded 100 million U.S. dollars.

---

12

In
the 1930s with the rise in the official price of gold, activity in the area
increased. In personal communication with consultants to the Corporation, Soyopa reported
that in the period between 1939 and 1941, one high grade ore shoot at the Plaza de Gallos
mine produced over 3.8 tonnes of gold and 59 tonnes of silver. Since this mine was over
100 years old at the time, it was obvious that the historical miners had not found all of
the good veins.

Small
operators and gambosinos continued to operate in the area through the slow periods. In the
1980s the Consejo de Resources Minerales (CRM), an agency of the Mexican federal
Government, financed the construction of a mill equipped with a flotation circuit that can
process about 100 tonnes per day.

In
1994, the Mexican mining laws were changed to allow 100 percent foreign ownership of
mining properties. After that the Ocampo area became active again.

In
1997, Mogul Mining NL (Mogul) entered into a joint venture with Soyopa. Mogul conducted a
district scale mapping and sampling program focusing on the western portion of the
district. A total of 59 reverse circulation drill holes for a total of 6,288 m of drilling
was completed.

In
1999, Augusta Resources Corporation (Augusta) entered into an agreement to acquire
Moguls interest in the project. Augusta drilled 11 reverse circulation holes and
deepened one existing hole for a total of approximately 1,677 m drilled. Mogul and Augusta
did not meet the work commitments in the agreement and the property reverted to Soyopa.

In
1999, the Corporation entered the picture with an option to purchase 17 mining concessions
in the area from Minera Fuerta Mayo, S.A de C.V. (Minera Fuerta). During 1999, the
Corporation had an active exploration program consisting of mapping, sampling, underground
test mining and core drilling. A total of 50 holes were drilled totaling approximately
3,729 m.

In
2000, the Corporation entered a joint venture agreement with Soyopa. The joint venture
agreement was replaced with a purchase agreement dated November 24, 2001.

The
Corporation effectively consolidated the entire Ocampo mining area for the first time
since the Mexican Revolution of 1912.

In
2000, the Corporation continued exploring the properties. Drilling to delineate the
western deposits and to explore the potential of the northeastern structures at depth was
carried out. A total of 31,046 m of reverse circulation and core drilling was completed.

Metallurgical
testing was carried out by technical consultants in 2000, 2001 and 2002. A preliminary
design and a cost estimate for a heap leach pad and ponds were made by technical
consultants in March 2001. At the same time technical consultants completed a geotechnical
evaluation on the stability of potential open pits for the Picacho, Plaza de Gallos and
Refugio deposits. A detailed structural analysis was completed and additional structural
work was done by technical consultants.

During
2001, the Corporation completed a resource study that was audited by technical
consultants.

In
March 2002, Bolnisi entered an agreement with the Corporation to earn a 60% interest in
portions of the property. They were to complete a feasibility study and bring the property
to

---

13

production.  This
agreement was terminated in November 2003 with all of the technical data
          available to the Corporation.

The
Corporation has continued with exploration on the property including drilling, sampling,
underground exploration. A full feasibility study is currently being done.

Geology and Mineralization

a)    Regional Geology

The
Ocampo Project is within the Sierra Madre Occidental Province. This extensive
physiographic province extends from southwestern Mexico to the Arizona border and is host
to many precious and base metal deposits. Regionally it is a relatively undeformed high
plateau. (See Figure 2)

The
main feature of the province is the thick sequence of unmetamorphosed volcanic flows,
tuffs, agglomerates and related intrusives of andesitic to rhyolitic composition. These
Tertiary volcanic rocks overlay a basement of Precambrian to Jurassic rocks. Uplift and
erosion have created deep incised canyons. The basement rocks are found only in isolated
windows.

The
stratigraphy of the area has been divided into two main groups, the Lower Volcanic Group
(LVG) and the Upper (UPG). The LVG is the host to the majority of the Au-Ag deposits
exploited in the Sierra Madres.

The
regional structural fabric has a general northwest trend.

b)    Ocampo Area Geology

The LVG
rocks are dominant in the immediate project area and consist predominantly of massive
andesitic to rhyolitic flows, tuffs, agglomerates and volcaniclastics.

The
overlying UVG rocks are predominantly felsic ignimbrites, tuffs, flows and
volcaniclastics.

All
of the rocks have been intruded by andesite to dacite dykes and sills.

Within
the Ocampo area the structural regime is broken down into two discrete areas, the PGR
Trend and the Ocampo Northeast area.

---

14



# Figure 3: Regional
Geologic Map

---

15



north is to the left

# Figure 4: District Geology
Map

---

16

The
WNW striking PGR Trend extends from Altagracias in the southeast to beyond La Estrella in
the west and is over 5 km in length. This trend is made up of a series of NW trending
faults crosscut by WNW trending structures. There are a number of known mineral deposits
in the PGR Trend. From east to west they are Picacho, Plaza de Gallos, Refugio, Conico and
La Estrella.

The
Northeast Project area consists of numerous northwest trending faults that are cut by
north to northeast trending faults. This produces a rhombohedral pattern of horsts and
grabens. In the Northeast area there are a number of mineralized structures that include
Brenda, Maria, JM, Rosario, Aventurero, San Juan, Las Animas and Santa Juliana.

Structural
studies have documented six major periods of deformation produced by a combination of the
emplacement of a postulated intrusive beneath the district and extensional regional
tectonics. Both strike slip and dip slip movement accompanied each of the deformations.

In
the Ocampo area the total length of the known mineralized structures is in excess of 27
km.

c)    Mineral Deposits

The
Ocampo mineralization area appears to be classic gold-silver epithermal deposition. Based
on the mineralogy and alteration, the deposits, in both the PGR Trend and the Northeast
Area, are of the low sulphidation, quartz-adularia type.

The
low sulphidation systems contain quartz vein stockworks and breccias with gold, silver,
electrum, argentite and pyrite with minor and variable amounts of base metal sulphides.
These minerals probably were deposited in a high level (epizonal) to near surface
environment.

In
the northwest portion of the Ocampo Project, historic mines such as La Fe and other
prospects are considered to be of the high sulphidation, quartz enargite type deposits.
This type of system has veins, vuggy breccias, and sulphide replacements ranging from pods
to massive lenses associated with high level hydrothermal systems. The mineralization in
the La Fe area is hosted by rhyolite and dacite rocks. These rocks and mineralization may
be stratigraphically lower than the mineralization in the PGR Trend and the Northeast
area. This suggests that this type of mineralization may be found at depth under the PGR
Trend and the Northeast deposits.

d)    Mineralization

The
gold-silver mineralization in the project area is structurally controlled. Structures that
strike N, WNW, NW, NE and E-W all host mineralization that is potentially of economic
grade.

It
is interesting to note that andesitic agglomerates host the majority of the deposits found
to date in the area. These andesitic conglomerates are not considered the best host for
the mineralization. It is believed that this is only an apparent preference due to the
mineralization that has been exposed. Other rocks in the sequence are also expected to be
hosts of the mineralization.

The
 hydrothermal  mineralization  occurred  during  all  six  episodes  of structural
  deformation.   Quartz   deposition   took  place   during  all  the deformations. The
quartz occurs in a

---

17

number of forms such as banded creamy
white chalcedony, clear crystalline white quartz and drusy amethyst. The gold-silver
deposition only took place in the last two periods of deformation.

The
gold-silver mineralization is seldom found in discreet fissure type veins at Ocampo. The
structures that house the mineral zones of importance have a core of quartz breccia
surrounded by varying degrees of quartz stockworks and silicification. The true thickness
of the mineralization exceeds 50 m in some areas such as Plaza de Gallos and Refugio. An
argillized halo is often present surrounding the silicified structures.

The
gold-silver mineralization is always associated with quartz however all of the quartz does
not contain gold-silver mineralization due to the episodic quartz mineralization. The
precious metal consists of electrum, native silver and argentite. The base metals
sphalerite, galena and chalcopyrite occur in minor varying amounts and have no economic
importance in these veins and there does not appear to be an increase in concentration at
depth.

A
study completed by technical consultants suggests that Cu, Pb and Zn along with gold and
silver can be indicators for precious metal deposition. The same study found that
depletions of Li, Ba, Na, K and Ti can also be an indication of precious metal deposition.

Argillic
or clay caps may be an expression of the very tops of the precious metal depositional
horizons.

The
gold-silver mineralization is known to occur in this area over a vertical distance of 750
m. This vertical distance is not known from one deposit. It is based on the fact that the
lowest productive levels at the Santa Juliana mine were at an elevation of approximately
1,400 m and the vein outcrop at the Plaza de Gallos, the highest point, is at an elevation
of approximately 2,150 m.

Exploration

a)    Overview

The
Corporation has been actively exploring the Ocampo area properties since 1999. Between
March 2002 and November 2003, the Corporation had a partner in the PGR Trend area. Since
November 2003, the Corporation has been continuing the exploration in the entire project
area without a partner.

Sufficient
work has been done to outline resources that are the subject of a feasibility study now in
progress.

b)    Exploration Program

The
Corporation initiated exploration in 1999. Exploration since then has been multifaceted
with geological mapping, sampling both on surface and underground, diamond drilling and RC
drilling from surface, diamond drilling from underground and test mining.

A
number of studies have been done off site. These include mineralogy, metallurgy, slope
stability, preliminary economic evaluations.

---

18

In
1999, the initial exploration was in the Northeast area. As well as geological mapping and
sampling, test mining was carried out at the old Brenda mine and 50 diamond drill holes
were completed in the Northeast area.

In
2000, detailed surface geological mapping, trenching and road building were carried out. A
large drilling program was undertaken with a total of 180 RC and core holes completed.

The
Corporation expanded its holdings in 2000 and obtained the results of recent work that had
been done on the expanded property.

During 2000 and 2001, a program of
underground mapping and sampling in accessible workings was carried out. An exploration
drift was driven at this time.

In
2002 a portion of the property (PGR Trend area) was placed under a joint venture agreement
and the joint venture partner, Bolnisi Gold N.L., was the operator. The joint venture
partner carried out further drilling, metallurgical testing and process design work and
completed a feasibility study on open pit mining in the PGR Trend area.

The
Corporation continued to explore the Northeast area with diamond drilling in 2002, 2003
and 2004. In 2003, a ramp to access the Aventurero and associated veins was started. This
program of underground development and drilling is continuing in 2004.

c)    Drilling

Since
1997, this large project area has been the subject of a number of drilling campaigns by
the Corporation and other operators. The Corporation has the results of all the drilling
since 1997. The following table shows the number of holes that have been drilled for each
of the companies until the end of February 2004. The holes total more than 92,000 m in
length.

|Table 1: Drilling by Company
|----------------------------
|
|Gammon Lake Resources       
|Mogul Mining NL             
|Augusta Resource Corp.      
|Bolnisi Gold NL             
|

The
drilling has been done using reverse circulation (RC) sample collection or by diamond core
drilling.

The
drilling on the PGR trend has been mainly by reverse circulation. In the Northeast area
the drilling has been predominantly by diamond core drilling. The holes were often started
by RC drilling and then cored once the hole was approaching the target area.

Underground
drilling has been carried out from drill stations prepared in the old workings. Drilling
from the new ramp that has been started to access the Aventurero vein and the associated
Las Animas, Rosario and Maris veins is being carried out.

---

19

At
present, there are 3 surface drills and 1 underground machine working on the property. Two
additional surface and 1 additional underground drill will be operating by the end of
April.

d)    The Aventurero Ramp

The
GL Ramp was started in the spring of 2003. This ramp is a full production sized ramp.

The initial
plan is to access two levels, vertically 60 m apart. The first level has been accessed and
the ramp is currently being extended down to the lower level. Drifting on the veins on
both levels and trial stoping is planned.

---

20



# Figure 5: Ramp

The
Avenurero vein has been drifted along and sampled on the first level. To date, 102 m of
the Aventurero vein have been exposed and sampled. This section of the vein averaged 7.5 g
Au/t and 225 g Ag/t over an average width of 2.2 m. Drifting has started on the San Juan
vein. The first 8 m of drifting on the San Juan vein averaged 13.9 g Au/t and 355 g Ag/t
over and average width of 2.9 m. The results for the next 15 m of drifting on the vein are
pending.

---

21

The
Development to March 20, 2004 has totaled 946 m of advance including:

| |  |  | 591
m in the ramp including, spiral, remucks and sumps;
| | - |  | -------------------------------------------------------

| |  |  | 46
m in haulages (San Juan and Aventurero);
| | - |  | -------------------------------------------

| |  |  | 135
m in the underground shop; and
| | - |  | ----------------------------------

| |  |  | 184
m in veins (San Juan, Aventurero, Esperenza).
| | - |  | -------------------------------------------------

e)    Confirmation Diamond Drilling

Most
of the drilling that has been completed in the past year has been to confirm the results
of the initial wider spaced drill holes. The Clark Report concludes that the results are
in accordance with expectations and the zones that have been tested are much the same as
was predicted. The following is to show how the recent drilling has confirmed the previous
drilling results.

f)    San Juan

Drilling
from underground has located a new mineralized shoot. The new shoot is similar in grade to
previously drilled shoots in the San Juan vein. The drilling results on the new San Juan
shoot can be seen on the section below.

Drifting
has started on the San Juan vein. The first 8 m of drifting on the San Juan vein averaged
13.9 g Au/t and 355 g Ag/t over an average width of 2.9 m. The results for the next 15 m
of drifting on the vein are pending.

---

22



# Figure 6: San Juan
Long Section

g)    Aventurero

In
the sections below, the surface drill holes numbered OG62 and higher and the underground
holes have been drilled since the last resource estimate. They confirm the vein
expectations.

The
Avenurero vein has been drifted along and sampled on the first level. To date, 102 m of
the Aventurero vein have been exposed and sampled. This section of the vein averaged 7.5 g
Au/t and 225 g Ag/t over an average width of 2.2 m.

---

23



# Figure 7: Aventurero
Grade x Thickness Long Section



# Figure 8: Aventurero
Ramp Area

---

24

h)   Other Exploration Drilling

Some
drilling has been done to test the known zones at depth. These holes have been
encouraging, extending the known mineralization down dip below the proposed open pits. The
significance of these extensions will not be known until further drilling is completed.

i)   Sampling and Analysis

1.   Collection of Samples

The
Corporation has collected samples on surface, underground and by drilling. Both reverse
circulation (RC) drilling and core drilling were utilized.

SURFACE SAMPLES

The
surface samples were mostly in the form of channel chip samples that were collected by the
Corporations employees. The samples were generally 3 m in length. The sample lines
were surveyed by tape and compass methods and tied to the local grid using appropriate
points of control. Earlier exploration work used the same methods when collecting their
samples.

UNDERGROUND SAMPLES

The
underground samples were collected using chip samples across channels. When necessary, due
to groundwater scale, the face was cleaned prior to taking the sample. When the drift was
in the vein, back samples were taken usually with a single sample across the back. When
the exposure was in a cross cut a wall was sampled.

RC DRILLING SAMPLES

The
samples were continuously collected in a cyclone. At the end of each sample run (5 feet or
1.524 m) the sample was discharged through a Gilson Riffle. One half of the first split
was split again to form a sample for assaying and a duplicate sample. In zones of poor
recovery only one split was made. If the sample was wet due to injection or water inflow a
rotary wet splitter was used to collect the sample in buckets before being double split
through a riffle splitter. The drilling crew collected the samples. The quality of the
samples was under the Corporations supervision. The recovery was logged using a
qualitative scale of 1-5. An additional small sample was collected and placed in trays
designed to hold RC chip samples. The chips were geologically logged on site.

CORE SAMPLES

The
core was either HQ or NQ in size in the surface holes. Holes were started at the larger HQ
size and reduced to NQ if necessary. Underground holes were similarly started with HQ size
and reduced to NQ after 20 or 30 m during the 2001 and 2002 drill program. The longer
underground holes drilled in the 2000 and 2001 program utilized the smaller BQ size to
facilitate the drilling. All of the recent underground holes drilled in 2003 and 2004 were
drilled using HQ or NQ sized core.

---

25

The
drilling crew boxed the core and the Corporations employees transported it to the
core shack.

In
the core shack the core was geologically logged with sample lengths indicated. When the
sample lengths were determined the core was split using an impact splitter with one half
of the core being bagged and tagged for assay. The other half was returned to the core
trays for storage.

The
earlier BR and UGD holes used a sample length of 1 m. The surface ODH holes were sampled
on 1.5 m lengths. The current drilling is sampled at 4.5 m lengths until the stockwork
beside the quartz breccia/vein is reached. At that point the sample length is reduced to
1.5 m to sample the stockwork. When the quartz breccia/vein is reached the sample length
is reduced to 1 m in length and it usually stays that length until the end of the hole.
The length of the samples may vary due to the thickness of the vein.

2.   Sample Handling

The
handling procedure has always been the same. The bagged and tagged samples were turned
over to Chemex personnel at the site and Chemex took them to their sample preparation
facility. The sample rejects are stored in Chemexs facility in Hermosillo.

Chemex
crushed the samples and prepared 200-300 g pulp samples. Ninety percent of the pulp will
pass Tyler 150 mesh (106μm). The pulps were sent to Chemex in Vancouver for
analysis.

This procedure is continuing.

3. Assaying

All
of the BR holes drilled by the Corporation in 1999 and year 2000 holes, ODH-60 to 80,
including the holes drilled by Augusta Resource Corporation and the first four holes
drilled by Mogul Mining NL used a 30 g fire assay with AA finish for gold and Aqua-Regia
extraction with an AA finish for silver. Assay values that exceeded 10 g Au/t or 100 g
Ag/t were re-analyzed by fire assay with gravimetric finish.

All
of the Corporations holes, subsequent to hole ODH-80, were analyzed using a 1 assay
ton sample for fire assay with a gravimetric finish for both gold and silver. Except for
the first four, all of the Mogul Mining NL holes utilized this same analytical method.

Chemex
discovered a potential underestimation of silver values due to plugging of the AA pipette
when using Aqua-Regia/AA methods. For this reason the mineralized zones from holes ODH-71
to 80 and a number of the 1999 BR holes were reanalyzed utilizing a 1 assay ton sized
sample for fire assay with a gravimetric finish. This re-assaying by fire assay indicated
that significant (order of magnitude) underestimating of silver had occurred in less than
5 percent of the samples that had been assayed using an Aqua-Regia/AA finish.

4.   Sample Security

The
samples for assay are taken directly from the site to the Chemex facilities by the Chemex
staff. The sample rejects are stored at Chemexs Hermosillo facility.

---

26

The
RC duplicate samples from the drilling prior to the 2002-2003 program are stored in a pole
barn at a fenced and secured site near Picacho. This site has a 24 hour guard that lives
adjacent to the site. Starting with the 2002-2003 drilling program the RC duplicate
samples are stored in a locked building at the Soyopa complex below Picacho.

The
drill core in the early stages of the program was kept in a locked, closed and secure
building near the GLR field office at the Fomento mill just north of the Northeast
drilling area. This core has been moved and all the core is now stored in a cement block
building at the Soyopa complex. This facility is locked and secure and a security guard
lives on the site.

j)   Metallurgical Testing

There
has been considerable metallurgical test work carried out throughout the life of this
project. The Corporation has used technical consultants for bottle roll tests throughout
the project. In 2003 the consultants produced a scoping study regarding potential
production from the Northeast area deposits. Input from these technical consultants will
be used in the feasibility study that combines production from the Northeast area and the
PGR Trend that is currently being prepared.

The
mineralogy of the deposits in the Ocampo district is simple and consists of electrum,
native silver and argentite. Trace amounts of galena and chalcopyrite are present. Based
on visual examination of the core, the mineralization is generally fine grained. In the
high grade sections large portions of visible native silver, electrum or gold are not
seen.

The
gold and silver mineralization has been shown to be cyanide soluble.

In
the scoping study of the Northeast deposits, the technical consultants found that the ore,
generally was very high grade, averaging 3.27 gpt Au and 517 gpt Ag. The projected gold
recovery for use in this study, 96% was determined by averaging the 48-hour results of the
test on the composite sample, and then applying process efficiency adjustments. The silver
recovery used in this study, 93% was taken from the 24-hr result of the 5,000 gm NaCN/MT
test (no process efficiency adjustments were applied, as these should be offset by longer
leach time).

In
a report prepared for Bolnisi Gold NL on the potential of exploiting the PGR Trend zones
only, the recoveries that were used in that study were 95% for gold and 93% for silver
based on the planned flotation followed by cyanidation.

k)   Feasibility Studies

Bolnisi
Gold N.L. and consultants retained by it produced a positive bankable
feasibility report in September 2003. This feasibility report was based on an open pit
mine in the PGR trend, producing 1.25 million tonnes per year. The Corporation and its
consultants have determined that a new feasibility study incorporating open pit mining and
higher grade production from underground is warranted. Much of the data contained in the
Bolnisi report will be used in the Corporations feasibility study. In addition, the
Corporations feasibility study will consider design changes in the production plans.
These changes may involve a different metallurgical process, different annual production
levels and feed grade as well as different site locations for the plant and the tailings
impoundment. A new block model for the open pit reserve and resource estimations will be
considered.

---

27

M3
Engineering & Technology Corp. has been retained by the Corporation to prepare a
report on the feasibility of placing the property into production. These consultants are
to use all of the test work and studies that have been done for the Corporation and other
companies in the evaluation. M3 is currently working on this report.

The
completed report is to include but is not limited to the following:

| |  |  | New
Reserve and Resource calculations;
| | - |  | --------------------------------------

| |  |  | Mining
plans for open pits of the PGR trend deposits;
| | - |  | -----------------------------------------------------

| |  |  | Mining
plans for underground mining of the Adventurero, San Juan, Las Animas, Rosario and Maria
vein systems in the Northeast area;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------

| |  |  | Process
plant (Mill) design;
| | - |  | ----------------------------

| |  |  | A
possible heap leach circuit;
| | - |  | ------------------------------

| |  |  | Site
plans; and
| | - |  | ---------------

| |  |  | Financial
evaluation.
| | - |  | ---------------------

l)   Mining Plan

The
current plans call for mining from open pits and from underground. The ore will be
processed in a mill that recovers the gold and silver with cyanide leach.

Resource Estimates

Resource
estimates have been carried out by the Corporation in 2001, 2002 and 2003. These resources
have been audited by technical consultants and found to be in keeping with generally
accepted industry practice, and the standards adopted by National Instrument 43-101.

Considerable
work has been done since the last resource estimate. Most of the drilling and the
underground work was and still is directed at the confirmation of the known zones or
extending these zones at depth or along strike. The Corporation is compiling the new
drilling and sampling results in preparation for an up to date resource estimation. The
metallurgical and other studies were directed at the necessary details to complete a
production feasibility study.

The
Corporation releases to the public the results of their drilling and other studies and can
be accessed at www.gammonlake.com.

Based
on the examination of the results of this years drilling and underground sampling it
appears that the resource is essentially as previously estimated with the grade and
tonnage being quite close within the volume of the previous resource estimate. The
difference in the resource will come from the closer spaced sampling giving added
confidence to the zones. Over all, it is expected that the work in this past year will
increase the Measured Resource and increase the Inferred Resource.

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28

The
overall project resource will be increased as drilling has extended the zones both along
stike and down dip. The underground drilling along strike in the San Juan structure has
disclosed a previously unknown shoot. The recently discovered La Esperanza vein
demonstrates the effectiveness of the underground development program adding to the
resource base.

A.   Resource Classification

The
Corporation uses the classifications as prescribed in the National Instrument 43-101 for
the categories of resource estimates.

Mineral resources are sub-divided
into 3 categories depending on the geological confidence. The lowest level or the resource
with the least confidence is the Inferred category. The next level of confidence is the
Indicated category and the level with the most confidence is the Measured category.

The
definitions for each of the categories are given here for clarity.

INFERRED RESOURCE

An
Inferred Mineral Resource is that part of a mineral resource for which quantity and grade
or quality can be estimated on the basis of geological evidence and limited sampling and
reasonably assumed, but not verified, geological and grade continuity. The estimate is
based on limited information and sampling gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes.

INDICATED RESOURCE

An
Indicated Mineral Resource is that part of a mineral resource for which quantity, grade or
quality, densities, shape and physical characteristics, can be estimated with a level of
confidence sufficient to allow the appropriate application of technical and economic
parameters, to support mine planning and evaluation of the economic viability of the
deposit. The estimate is based on detailed and reliable exploration and testing
information gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely enough for geological and
grade continuity to be reasonably assumed.

MEASURED RESOURCE

A
Measured Mineral Resource is that part of a mineral resource for which quantity, grade or
quality, densities, shape and physical characteristics are so well established that they
can be estimated with confidence sufficient to allow the appropriate application of
technical and economic parameters, to support production planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed and reliable
exploration, sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes that are spaced
closely enough to confirm both geological and grade continuity.

B.   Northeast Area Resources

The
Northeast Area resources were calculated originally as part of the overall project review
that was done in 2001. The results of the project view are given later. Based on further
information the resources of the Northeast Area were re-estimated in 2002 and 2003. Both
of these estimates were audited by technical consultants. As the 2003 estimate is the most
up to date the details are given below.

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29

i)   Method of Estimation

The
estimation method used by the Corporation in 2003 was similar to the methods used in the
previous estimations.

Zone outlines (mineralized
boundaries) were digitized by the Corporation in AutoCAD on cross sections using local
geologic control. An external cut-off grade of 3 g/t equivalent Gold (eAu) was used for
the underground portion of the resources. The silver to gold ratio used was
65:1. The 3 g/t eAu cutoff was derived from data generated by technical consultants in a
2002 report and reflects a reasonably realistic underground mining cut-off grade.

A
minimum true thickness of 1 m was required to define a resource block. This is based on
the realistic minimum mining thickness as indicated by the Corporations mining
contractor.

Up
to 3 samples (4.6 m) of internal waste could be incorporated into the composite, as long
as the next sample exceeds the 3 g/t eAu cut-off and the composite grade exceeds 3 g/t
eAu.

The
average gold and silver grades were calculated using Excel spreadsheets. The assay data
was imported into the spreadsheets directly from assay laboratory files.

The
assay length was a consistent 1.5 m if the metric drill pipe was used or 1.524 m if the
pipe was of English manufacture.

In
a technical report completed in 2003, the technical consultants concluded that, in
general, the deposits are structurally controlled and have good continuity along strike
and down dip. The zones are open at depth in most areas. These technical consultants
participated in some of thezone interpretations on the cross sections.

The
digitized cross sectional outlines were divided into mineralized blocks, projecting half
of the distance to adjacent drill holes on each section and between sections. Intercepts
that were below the cut-off grade or the minimum true thickness were used to interpret the
zone continuity but were not used in the resource estimate. The interpretation of the
zones was aided by the information from the surface and underground old workings, but was
not used for grade estimation.

The
areas of the blocks was determined in AutoCad and multiplied by the width of the block
(the distance between the sections) to give a volume. The volume was converted to tonnes
using a density of 2.5 tonnes per cubic metre (t/m3). This density has been
determined on many samples and checked by both technical consultants. Examination of the
core and the mineralization suggests that it is reasonable.

The
tonnage and grade was estimated for each mineralized block on each section and tabulated.
All calculations were made using Excel spreadsheets. Cross section A730 shown in FIGURE 8
is an example of the method used.

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30



# Figure 9: Las Animas
Cross Section LA235

ii)   Grade Capping

It
should be noted that for the resource estimations there has been no attempt to cap or
otherwise limit the effect of very high grade gold or silver samples. On examination of
the assay results and the check analysis, especially of the bottle roll test results, it
appears that it may be necessary to introduce some method to limit the high grades for the
reserve estimations. Additional studies on the appropriate procedures for grade capping
are recommended by the Clark Report.

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31

iii)   Method of Classification

The
resource was classified as measured, indicated or inferred based on the spacing of the
information and allowable projections.

MEASURED RESOURCE:

Blocks
that were projected 25 m or less from any drill hole between cross sections and had data
support on all four sides were categorized as Measured. One section allowed an additional
5 m projection length to 30 m in one direction only.

INDICATED RESOURCE:

Blocks
that were projected half way to the nearest drill hole up to 50 m and generally defined as
blocks that had support on three sides or less, where section spacing exceeded 50 m or
where the block was at the end of the zone were categorized as Indicated. The end of the
zone could be either the strike or down dip extension of the mineralization. The average
total width of the blocks for the Indicated Resource was 70 m.

INFERRED RESOURCE:

The
Inferred blocks were estimated based on the average true thickness of all measured and
indicated blocks. This was calculated separately for each mineralized structure. The Au
and Ag grades were based on the weighted average (by strike length and down dip extension)
for each structure. Inferred blocks were projected up to 100 m up or down dip from
indicated blocks. If the structure was open along strike the projection distance from
indicated blocks was 100 m.

Previous
studies estimated an Inferred Resource for untested or under drilled portions of the
mineralized structures. The estimated volume was based on the known length and width of
the mineralization and an assumed depth projection. The average grade of the known
intercepts was used. A percentage factor of 50% to account for the assumed
proportion of mineralized structure was then applied to the volume calculation to arrive
at an Inferred Resource. Since the information on the surface areas of the NE deposits is
essentially the same as it was for the previous estimate in April 2002. This previous
method was used to estimate an Inferred Resource for the Northeast surface resources. Dip
length was restricted to 100 m.

The
previous surface resources that were audited by technical consultants used an eAu of 0.5
g/t as a cut-off and a gold to silver ratio of 1:50. The current eAu is calculated at a
gold to silver ratio of 1:65. Using this new ratio a previous 0.5 g/t eAu if made up
solely of silver would now only be 0.38 g/t.

iv)   Northeast Area
Resources calculated in 2003 Technical Study

The
total of the Measured and Indicated (M & I) Resources in the Northeast Area, both
underground and at surface is approximately 5.9 million tonnes grading 4.0 g Au/t and 202
g Ag/t.

The
total of the Measured and Indicated Resources that would be mined underground is
approximately 3.5 million tonnes grading 5.9 g Au/t and 302 g Ag/t.

---

32

|Table 2: Northeast Area measured and Indicated Resources
|--------------------------------------------------------
|                                                        
|                                                        
|
|                                                        
|Aventurero                                              
|Rosario                                                 
|San Juan                                                
|Total NE Underground Measured                           
|Brenda Surface Measured                                 
|                                                        
|Total Northeast Ocampo Measured                         
|                                                        
|
|
|                                                        
|Aventurero                                              
|Las Animas                                              
|Rosario                                                 
|Maria                                                   
|San Juan                                                
|Total NE Underground Indicated                          
|Total NE Surface Indicated                              
|Total Northeast Ocampo Indicated                        
|                                                        
|TOTAL NORTHEAST OCAMPO M & I                            
|                                                        

Cut-off grades are the same as for
all resources.

|Table 3: Northeast Area Inferred Resources
|------------------------------------------
|                                          
|
|                                          
|Aventurero                                
|Las Animas                                
|Rosario                                   
|Maria                                     
|San Juan                                  
|                                          
|Total NE Underground, Inferred            
|                                          
|                                          
|
|                                          
|San Juan                                  
|Brenda                                    
|Maria                                     
|Total NE Surface, Inferred                
|                                          
|Total Northeast Ocampo Inferred           
|                                          

Cut-off grade for
Underground resources is 3 g/t eAU at 1:65 gold to silver ratio. Cut-off grade
for Surface was originally calculated at 0.5 g/t eAU at a 1:50 gold to silver
ratio.

---

33

The
Inferred Resource for underground is larger than the total of the underground Measured and
Indicated Resource. This is not surprising as the area has good potential.

The
total of the Inferred Resources in the Northeast Area, both underground and at surface is
approximately 5.6 million tonnes grading 5.1 g Au/t and 248 g Ag/t.

The
total of the Inferred Resources that would be mined underground is approximately 4.5
million tonnes grading 6.1 g Au/t and 298 g Ag/t.

C.   Ocampo Area Resources

i)   Ocampo Area Resources
calculated in 2001 Technical Study

The
resources of the area were estimated by the Corporation and audited by technical
consultants. The method of calculation was essentially the same as was described above and
for that reason it is not described here.

The
cut-off grade used for these estimations was 0.5 g eAu/t. At least 2 samples (3 m) were
needed to establish a resource block.

The
Aventurero and San Juan  Balvanera deposits were assumed to be underground targets
and for that reason the cut-off grade used for estimating those resources was 4.0 g eAu/t.

The
eAu was calculated on a gold to silver ratio of 1:50. This is different from the more
recent calculation and has been noted above.

The
projections for the Indicated category may have been more liberal in some areas but the
difference was not of a serious nature.

The
values in the following table that summarizes Measured and Indicated Resources of the area
has been taken from work prepared by technical consultants.

|Table 4: Ocampo Measured and Indicated Resources
|------------------------------------------------
|                                                
|
|                                                
|Measured                                        
|Indicated                                       
|                                                
|Total Ocampo Area                               
|Measured and Indicated Resources                
|                                                

Cut-off grade 0.5 g/t eAu calculated
at 1:50 gold to silver ratio

In
addition to the Measured and Indicated Resources there is an Inferred Resource of
approximately 5.8 million tonnes at a grade of about 1.7 g Au/t and 86 g Ag/t.

---

34

These
resources for all of the Ocampo area are inclusive of the Northeast Area that was detailed
above. The Northeast Area Measured and Indicated Resources included in this estimation are
approximately 3 million tonnes grading 2.44 g Au/t and 105 G Ag/t. The Northeast Area
accounts for about 25% of the eAu ounces in the total Measured and Indicated Resource. In
the total Inferred Resource, the Northeast Area accounts for about 16 % of the tonnage and
40% of the eAu ounces.

As
can be seen if the 2003 results for the Northeast Area are compared with the 2002 resource
estimate, the drill program in the Northeast Area had the effect of increasing the tonnage
but more dramatically increasing the grade.

The
PGR Trend deposits are also included in the Ocampo area resources. Four of the PGR
deposits account for the bulk of the tonnage. These four deposits are the Conico, Picacho,
Refugio and the Plaza de Gallos. Combined the Measured and Indicated Resources for these
four deposits total approximately 16.6 million tonnes. Some of these deposits are near
surface and potentially can be mined by open pit.

ii)   Pit Resources
calculated in 2002 Technical Study

Technical
consultants carried out a study in 2002 on the open pit potential of the resources in the
4 main PGR deposits. They examined the same data that was used for the 2001 resource
estimate that is given above and developed potential open pits. The section Figure 10 is
included to show the general distribution of the resources within the pits.



# Figure 10: Plaza de
Gallos, Pit Section PDG 290

---

35

The
resources were divided up into two groups, low grade and high grade resources. The high
grade resources were blocks above 1 g eAu/t and the low grade blocks were from 0.5 to 1.0
g eAu/t.

Combined,
the 4 pits, including the high and low grade blocks, account for approximately half of the
Resource in these 4 deposits.

The
total of the Measured and Indicated Resources in the potential pits on the four deposits
(Conico, Picacho, Refugio and the Plaza de Gallos) is 8.4 million tonnes grading 1.5 g
Au/t and 71 g Ag/t.

The
high grade portions (above 1 g eAU/t) account for 6.5 million tonnes grading 1.81 g Au/t
and 87 g Ag/t.

iii)   Summary of Resource
Estimates

The
first resource estimate for the Ocampo Area gave an overall Measured and Indicated
Resource of approximately 22.6 million tonnes grading 1.44 g Au/t and 57 g Ag/t.

As
exploration progressed, the potential for 4 pits in the PGR Trend and underground mining
in the Northeast Area was recognized. These were included the overall Ocampo Area.

The
pit resource estimation gave an Measured and Indicated Resource, within 4 pits, of
approximately 8.4 million tonnes at 1.5 g Au/t and 71 g Ag/t.

The
Northeast Area underground resource estimation gave an Measured and Indicated Resource of
3.5 million tonnes grading 5.9 g Au/t and 302 g Ag/t.

The
exploration done since these estimates has continued to confirm the tonnage and grades in
the deposits.

Overall
there is still a lot of potential in the area. Mining underground in the area of the pits
and other surface mining are possibilities.

Conclusions

The
Clark Report reached the following conclusions:

Exploration
by the Corporation and others since 1998 has confirmed the potential of the properties.

The
Corporation has conducted a staged, well run exploration program that has been well
carried out with accepted engineering practice. The sampling methods and protocols have
given results that can be relied upon for further development of the properties.

The
staged exploration has been very rewarding. As the exploration progressed the expectations
of each stage have increased and each stage has been able to confirm or exceed the

---

36

expectations for the deposits.
Currently the exploration is being carried out with drilling on surface and from the GL
ramp that is being driven at the Aventurero vein.

Although
there has been considerable exploration done by the Corporation at Ocampo there is still a
lot of potential for discovering additional resources.

Some
of the mineralized zones are accessible by open pits, however there appears to be a
significant tonnage of higher grade material that can be accessed from underground,
utilizing an adit and a ramp. The historical operations indicate that simple stoping
methods can be employed to extract the mineralization.

At
the present time, a production feasibility study is being carried out for the Corporation.
This will include all of the items necessary to be able to make economic evaluations
regarding production at the Ocampo Project. The current plans call for mining from open
pits and from underground. The ore will be processed in a mill that recovers the gold and
silver with cyanide leach.

Metallurgical
testing has indicated that good recoveries of the gold and silver can be obtained.

A
new resource and reserve estimate is being prepared as part of the feasibility study. It
is expected that the recent drilling in the Northeast Ocampo area will have increased the
tonnage of the Measured and Inferred Resources with the Indicated Resources staying much
the same. The current deep drilling program in the open pit PGR trend, if successful, will
further increase the overall project resource.

The
anticipated production has not yet been proven to be viable. Until all of the tests are
done, including geotechnical investigations, further metallurgical tests and appraisals
and the reserves estimated, it is not possible to reliably estimate the capital and
production costs. This is common to most properties at this stage of development.

Recommendations

The
program as it is now planned should continue. The current systems in place are working
well and there is no need for any immediate changes.

The
sample handling and assaying has been shown to be adequate. It is important for the
Corporation to continue to monitor the handling and storage of samples as well as
continuing to monitor the assaying labs with the Corporations own check samples and
with repeat analysis at another laboratory.

The
new reserve and resource study that is being prepared as part of the feasibility study
might indicate some changes to the drilling program. The grade distribution within the
zones and the effect, if any, on the proposed mining grade should be studied as part of
the reserve estimations.

The
ramp and the planned trial stoping should be continued.

---

37

2.   Investment in Mexgold
Resources Inc.

In
December 2002, the Corporation made a strategic investment by acquiring 5.0 million shares
of Mexgold Resources Inc. (Mexgold) for $500,000 ($0.10 per share). Mexgold is
a junior resource exploration Corporation engaged in locating, acquiring and exploring for
gold and base metals. Subsequent to making this investment, Mexgold completed a reverse
take-over transaction whereupon its common shares were listed for trading on the TSX
Venture Exchange under the trading symbol, MGR. Pursuant to an agreement with
Mexgold, these shares must be held until August 20, 2009, and there will be no sale,
transfer, assignment, pledge, encumbrance, grant of a security interest in or other form
of conveyance of these shares, directly, indirectly or beneficially, prior to that time
unless Mexgold so consents in writing thereto.

Mexgold
holds a 100% ownership of five mining concessions encompassing the Guadalupe y Calvo
gold/silver property. The Guadalupe y Calvo gold/silver project is located in the Sierra
Madres in the state of Chihuahua, Mexico, approximately 300 kilometres southwest of the
city of Chihuahua and 200 kilometers west of the city of Hidalgo de Parral.

On
February 26, 2004, the Corporation invested a further $11.8 million into Mexgold Resources
Inc. to maintain its 25% interest in Mexgold. This investment was part of a Mexgold
private placement financing consisting of the sale of 22.5 million Subscription Receipts
at $2.00 per Subscription Receipt for gross proceeds of $45,000,000. Each Subscription
Receipt represented the right to receive one Unit upon completion of the acquisition of
the El Cubo Gold-Silver Mine. Each Unit consists of one common share of Mexgold and
one-half of one common share purchase warrant. Each whole warrant entitles the holder to
acquire one common share for $2.50 until February 26, 2006. Gammon Lake acquired 5.9
million Subscription Receipts out of the total Mexgold financing of 22.5 million
Subscription Receipts for a total purchase price of $11.8 million on the same basis as all
the other investors in this financing.

On
March 5, 2004, Mexgold acquired the El Cubo Gold-Silver Mine in Guanajuato State, Mexico.
The El Cubo Gold-Silver Mine is located in the Guanajuato gold-silver district in the
Republic of Mexico, near the City of Guanajuato in Guanajuato State. Pursuant to the terms
of the Subscription Receipts, the Subscription Receipts were deemed to have been exercised
as at 5:00 p.m. (Toronto time) on March 15, 2004, and the common shares and warrants of
Mexgold underlying the Subscription Receipts were issued to the holders of the
Subscription Receipts.

Mexgold
and the Corporation have certain common directors and officers.

# 3.3   Risk Factors

An investment in the securities of
the Corporation is speculative and involves numerous and significant risks and should be
undertaken only by purchasers whose financial resources are sufficient to enable them to
assume such risks and who have no need for immediate liquidity in their investment.
Prospective investors should carefully consider the risk factors described below.

1.   No History of Profitability

The
Corporation is a development stage Corporation with no history of profitability. There can
be no assurance that the operations of the Corporation will be profitable in the future.
The Corporation has limited financial resources and will require additional financing to
further explore, develop, acquire and retain its property interests and if financing is
unavailable for any

---

38

reason, the Corporation may become
unable to acquire and retain its mineral concessions and carry out its business plan.

2.   Exploration Stage
Corporation

The
Corporation is engaged in the business of exploration and development of the Ocampo
Project in the hope of locating economic deposits of minerals. The property interests of
the Corporation are in the exploration and development stage only and are without a known
body of commercial ore. Accordingly, there is little likelihood that the Corporation will
realize any profits in the short to medium term. Any profitability in the future from the
business of the Corporation will be dependent upon locating an economic deposit of
minerals, which itself is subject to numerous risk factors. Further, there can be no
assurance, even if an economic deposit of minerals is located, that any of the
Corporations property interests can be commercially mined. The exploration and
development of mineral deposits involve a high degree of financial risk over a significant
period of time of which even a combination of careful evaluation, experience and knowledge
of management may not eliminate. While discovery of additional ore-bearing structures may
result in substantial rewards, few properties which are explored are ultimately developed
into producing mines. Major expenses may be required to establish reserves by drilling and
to construct mining and processing facilities at a particular site. It is impossible to
ensure that the current exploration programs of the Corporation will result in profitable
commercial mining operations. The profitability of the Corporations operations will
be, in part, directly related to the cost and success of its exploration programs which
may be affected by a number of factors. Substantial expenditures are required to establish
reserves which are sufficient to commercially mine some of the Corporations
properties and to construct, complete and install mining and processing facilities in
those properties that are actually mined and developed.

3.   Foreign Operations

All
of the Corporations property interests are located in the State of Chihuahua,
Mexico, and are subject to that jurisdictions laws and regulations. The Corporation
believes the present attitude of Mexico and the State of Chihuahua to foreign investment
and mining to be favourable but investors should assess the political risks of investing
in a foreign country. Any variation from the current regulatory, economic and political
climate could have an adverse effect on the affairs of the Corporation.

4.   Government Regulations

The
Corporations exploration operations are subject to government legislation, policies
and controls relating to prospecting, development, production, environmental protection,
mining taxes and labour standards. In order for the Corporation to carry out its mining
activities, the Corporations exploration licences must be kept current. There is no
guarantee that the Corporations exploration licences will be extended or that new
exploration licences will be granted. In addition, such exploration licences could be
changed and there can be no assurances that any application to renew any existing licences
will be approved. The Corporation may be required to contribute to the cost of providing
the required infrastructure to facilitate the development of its properties. The
Corporation will also have to obtain and comply with permits and licences which may
contain specific conditions concerning operating procedures, water use, waste disposal,
spills, environmental studies, abandonment and restoration plans and financial assurances.
There can be no assurance that the Corporation will be able to comply with any such
conditions.

---

39

5.   Market Fluctuation and
Commercial Quantities

The
market for minerals is influenced by many factors beyond the control of the Corporation
such as changing production costs, the supply and demand for minerals, the rate of
inflation, the inventory of mineral producing corporations, the international economic and
political environment, changes in international investment patterns, global or regional
consumption patterns, costs of substitutes, currency availability and exchange rates,
interest rates, speculative activities in connection with minerals, and increased
production due to improved mining and production methods. The metals industry in general
is intensely competitive and there is no assurance that, even if commercial quantities and
qualities of metals are discovered, a market will exist for the profitable sale of such
metals. Commercial viability of precious and base metals and other mineral deposits may be
affected by other factors that are beyond the Corporations control including
particular attributes of the deposit such as its size, quantity and quality, the cost of
mining and processing, proximity to infrastructure and the availability of transportation
and sources of energy, financing, government legislation and regulations including those
relating to prices, taxes, royalties, land tenure, land use, import and export
restrictions, exchange controls, restrictions on production, as well as environmental
protection. It is impossible to assess with certainty the impact of various factors which
may affect commercial viability so that any adverse combination of such factors may result
in the Corporation not receiving an adequate return on invested capital.

6.   Mining Risks and
Insurance

The
Corporation is subject to risks normally encountered in the mining industry, such as
unusual or unexpected geological formations, cave-ins or flooding. The Corporation may
become subject to liability for pollution, damage to life or property and other hazards of
mineral exploration against which it or the operator if its exploration programs cannot
insure or against which it or such operator may elect not to insure because of high
premium costs or other reasons. Payment of such liabilities would reduce funds available
for acquisition of mineral prospects or exploration and development and would have a
material adverse affect on the financial position of the Corporation.

7.   Environmental
Protection

The
mining and mineral processing industries are subject to extensive governmental regulations
for the protection of the environment, including regulations relating to air and water
quality, mine reclamation, solid and hazardous waste handling and disposal and the
promotion of occupational health and safety which may adversely affect the Corporation or
require it to expend significant funds.

8.   Capital Investment

The
ability of the Corporation to continue exploration and development of its property
interests will be dependent upon its ability to raise significant additional financing
hereafter. There is no assurance that adequate financing will be available to the
Corporation or that the terms of such financing will be favourable. Should the Corporation
not be able to obtain such financing, its properties may be lost entirely. A summary of
the Corporations financial commitments under the Corporations option and joint
venture agreements is provided in the following table. Also refer to Item 3:
Description of Business  3.2 Mineral Projects  1. Ocampo Project.

---

40

|                                     
|-------------------------------------
|
|                                     
|Minera Fuerte Joint Venture Agreement
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|Soyopa Joint Venture Agreement       
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     

9.   Conflicts of Interest

Certain
of the directors and officers of the Corporation also serve as directors of Mexgold
Resources Inc. and other companies involved in natural resource exploration and
development and consequently, the possibility of conflict exists. The Corporations
investment in Mexgold Resources Inc. is described in, Item 3: Description of the
Business  3.2 Mineral Projects  2. Investment in Mexgold Resources Inc..
Any decisions made by such directors involving the Corporation will be made in accordance
with the duties and obligations of directors to deal fairly and in good faith with the
Corporation and such other companies. In addition, such directors declare, and refrain
from voting on any matters in which such directors may have a conflict of interest.

10.   Dependence on Key
Personnel

The
success of the Corporation is heavily dependent on its key personnel and on its ability to
motivate, retain and attract highly skilled persons. The competition for qualified
personnel is strong. The Corporation considers Messrs. Fred George and Bradley H. Langille
to be key employees and maintains life insurance in the amount of $1,000,000 on the lives
of each of these officers. In order to attract and retain its key personnel, the
Corporation has sought to provide its personnel with challenging work and a variety of
opportunities for advancement through growth and expansion of the Corporations
business, and through equity participation.

11.   Lack of Active Market

There
can be no assurance that an active market for the common shares of the Corporation will
continue and any increased demand to buy or sell the common shares of the Corporation can
create volatility in price and volume.

12.   Currency

The
Corporation carries on its exploration activity outside of Canada. Accordingly, it is
subject to the risks associated with the fluctuation of the rate of exchange of the
Canadian dollar and foreign currencies, in particular the Mexican peso, the currency of
Mexico. Such fluctuations may materially affect the Corporations financial position
and results.

---

41

13.   Dividends

To date,  the  Corporation
 has paid no  dividends  on its Common  Shares and does not intend to pay  dividends  on
its Common Shares in the foreseeable future.  See "Item 4:  Dividends".

14.   Competition

The
international mining industry is subject to government controls and regulations which may
vary from time to time. The industry is highly competitive in all phases. The Corporation
competes with numerous other companies and individuals in the search for and the
acquisition of attractive mineral properties. The Corporations ability to acquire
properties and potential reserves in the future will depend not only on its ability to
develop its present properties, but also on its ability to select and acquire suitable
producing properties or prospects for mineral exploration. The Corporation will also be
required to compete in the future directly with other companies that may have greater
resources.

15.   Possible PFIC Status

Shareholders who are U.S. taxpayers
should be aware that the Corporation may be a passive foreign investment company ("PFIC")
for the current fiscal year; and may have been a PFIC in prior years or may become a PFIC
in the future.  If the Corporation is a PFIC for any year during a U.S. taxpayer's
holding period, then such U.S. taxpayer, generally, will be required to treat any so
called "excess distribution" received on its common shares, or any gain realized upon a
disposition of common shares, as ordinary income and to pay an interest charge on a
portion of such distribution or gain, unless the taxpayer makes a qualified electing fund
("QEF") election or a mark-to-market election with respect to the shares of the
Corporation.  In certain circumstances, the sum of the tax and the interest charge may
exceed the amount of the excess distribution received, or the amount of proceeds of
disposition realized, by the taxpayer.  There can be no assurance that the Corporation
will satisfy such information reporting requirements or the related record keeping
requirements.  A U.S. taxpayer who makes a QEF election generally must report on a
current basis its share of the Corporation's net capital gain and ordinary earnings for
any year in which the Corporation is a PFIC, whether or not the Corporation distributes
any amounts to its shareholders.  A U.S. taxpayer who makes the mark-to-market election,
generally, must include as ordinary income in each year, the excess of the fair market
value of the common shares over the taxpayer's tax basis therein.

ITEM 4:   DIVIDENDS

The
Corporation has not declared or paid any dividends on its Common Shares since the date of
its incorporation. The Corporation intends to retain its earnings, if any, to finance the
growth and development of its business and does not expect to pay dividends or make any
other distributions in the near future. The Corporations board of directors will
review this policy from time to time having regard to the Corporations financing
requirements, financial condition and other factors considered to be relevant.

ITEM 5:   DESCRIPTION OF
CAPITAL STRUCTURE

The
Corporations authorized capital consists of an unlimited number of common shares
without nominal or par value, an unlimited number of Class A preferred shares and an
unlimited number of Class B preferred shares. A total of 52,407,415 common shares are
issued and outstanding as at May 12, 2004. There are no Class A or Class B preferred
shares currently outstanding.

Common Shares

Each
common share ranks equally with all other common shares with respect to dissolution,
liquidation or winding-up of the Corporation and payment of dividends. The holders of
common shares are entitled to one vote for each share of record on all matters to be voted
on by such holders and are entitled to receive pro rata such dividends as may be declared
by the board of directors of the Corporation out of funds legally available therefor and
to receive pro rata the remaining property of the Corporation on dissolution. The holders
of common shares have no pre-emptive or conversion rights. The rights attaching to the
common shares can only be modified by the affirmative vote of at least two-thirds of the
votes cast at a meeting of shareholders called for that purpose.

---

42

Class A and Class B
Preferred Shares

The
Class A and Class B preferred shares are non-cumulative, non-participating, non-voting and
redeemable at their paid-in value. Dividends on the Class A and Class B preferred shares
are determined by the board of directors and are not to exceed 12% in the case of the
Class A preferred shares and 13% in the case of the Class B preferred shares. The Class A
and Class B preferred shares are entitled to preference over the Common Shares and any
other shares of the Corporation ranking junior to the Class A and Class B preferred shares
with respect to the payment of dividends and the distribution of assets in the event of
liquidation, dissolution or winding-up of the Corporation. Any amendment to the articles
of the Corporation to vary any rights, privileges, restrictions or conditions attaching to
the Class A or Class B preferred shares must, in addition to authorization by special
resolution, be authorized by at least two-thirds of the votes cast at a meeting of holders
of Class A or Class B preferred shares duly called for such purpose, each holder being
entitled to one vote for each preferred share held.

ITEM 6:   MARKET FOR
SECURITIES

# 6.1   Trading Price and
Volume

The
Common Shares of the Corporation have been listed and posted for trading on the Toronto
Stock Exchange (the TSE) since February 18, 2000, under the trading symbol
GAM. The Common Shares of the Corporation have been listed and posted for
trading on the American Stock Exchange since September 4, 2003, under the trading symbol
GRS. The following table sets forth the high and low trading prices and
trading volume of the Common Shares as reported by the TSE for the periods indicated:

|                
|----------------
|
|                
|May 1 - 12, 2004
|April 2004      
|March 2004      
|February 2004   
|January 2004    
|December 2003   
|November 2003   
|October 2003    
|September 2003  
|August 2003     
|July 2003       
|June 2003       
|May 2003        
|April 2003      
|March 2003      
|February 2003   
|January 2003    
|December 2002   
|November 2002   
|                

---

43

|              
|--------------
|
|              
|October 2002  
|September 2002
|August 2002   
|              

# 6.2   Prior Sales

The
following table contains details of the prior sales of securities of the Corporation
during the twelve months ended July 31, 2003 and to the date of this Annual Information
Form:

|                 
|-----------------
|
|                 
|August 15, 2003  
|                 
|November 21, 2003
|                 
|February 26, 2004
|                 
|                 
|                 
|                 

ITEM 7:   ESCROWED
SECURITIES

There
are no securities of the Corporation which are held pursuant to an escrow agreement.

ITEM 8:   DIRECTORS AND
OFFICERS

The
management of the Corporation consists of four (4) executive officers and five (5)
directors. The table presented below provides the names of and related information
concerning each executive officer and director. Each director holds office until the close
of the next annual meeting of shareholders or until his successor is duly elected or
appointed.

|Name, Position with the Corporation and/or Principal Occupation | CommonShares | StockOptions(5)
|--------------------------------------------------------------- | ------------ | ---------------
|FRED GEORGE                                                     |              | 1,147,200      
|Resident of Bedford, Nova Scotia                                |             
|Chairman & President of the Corporation                         |              |                
|Director of the Corporation since June, 1996                    |              |                
|                                                                |             
|BRADLEY H. LANGILLE(4)                                          |              | 844,900        
|Resident of Halifax, Nova Scotia                                |              |                
|Chief Executive Officer of the Corporation                      |              |                
|Director of the Corporation since June, 1996                    |              |                
|                                                                |             
|GREGORY K. LILLER                                               |              | nil            
|Resident of Tuscon, Arizona                                     |              |                
|Vice President, Exploration                                     |              |                
|Officer of the Corporation since January, 2000                  |              |                

---

44

|Name, Position with the Corporation and/or Principal Occupation | CommonShares | StockOptions(5)
|--------------------------------------------------------------- | ------------ | ---------------
|L. LEANNE DOWE, C.A                                             |              | nil            
|Resident of Halifax, Nova Scotia                                |              |                
|Chief Financial Officer                                         |              |                
|Officer of the Corporation since January, 2003                  |              |                
|                                                                |             
|RODOLFO NIEBLAS(1)(2)(3)                                        |              | nil            
|Resident of Mexico City, Mexico                                 |              |                
|Chief of Staff, Federal Electricity Commission, Mexico          |              |                
|Director of the Corporation since June, 2002                    |              |                
|                                                                |             
|ALEJANDRO CARAVEO(1)(2)(4)                                      |              | 29,550         
|Resident of Chihuahua City, Mexico                              |              |                
|President, Compania Tecnica Minera S.A. de C.V                  |              |                
|Director of the Corporation since June, 2002                    |              |                
|                                                                |             
|DALE M. HENDRICK(1)(2)(3)(4)                                    |              | 50,000         
|Resident of Toronto, Ontario                                    |              |                
|President of Dale M. Hendrick & Associates Inc.                 |              |                
|Director of the Corporation since January, 2000                 |              |                

Notes:

| | (1) |  | Member
of the Audit Committee.
| | --- |  | ------------------------------

| | (2) |  | Member
of the Nominating and Corporate Governance Committee.
| | --- |  | ------------------------------------------------------------

| | (3) |  | Member
of the Compensation Committee.
| | --- |  | --------------------------------------

| | (4) |  | Member
of the Health, Safety and Environment Committee.
| | --- |  | -------------------------------------------------------

| | (5) |  | A
portion of above-noted options held by directors and senior officers are
                    subject to shareholder approval: Fred George (1,080,000), Bradley H.
Langille                     (1,160,000), Gregory K. Liller (20,000), L. Leanne Dowe
(20,000), Alejandro                     Caraveo (10,000) and Dale M. Hendrick (10,000).
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Each of the directors and officers
has had the principal occupation listed under his name above for the last five years.

As at May 12, 2004, the directors and
senior officers of the Corporation, as a group, beneficially own, directly or indirectly,
or exercise control or direction over an aggregate of 2,030,850 Common Shares (8,878,150
Common Shares if all options held by them are exercised), representing 17% of the
currently outstanding Common Shares (13% of the Common Shares on a fully diluted basis).

ITEM 9:   PROMOTERS

Messrs. Fred
George, the President, Chairman and a director of the Corporation, and           Bradley
H. Langille, the Chief Executive Officer and a director of the           Corporation, are
the promoters of the Corporation by virtue of the initiative           they have taken in
founding the business of the Corporation. Messrs. George and           Langille hold the
shares and options as indicated under

---

45

"Item 8:  Directors  and  Officers".
 Messrs.  George and Langille  have  received  salary payments as described  under,
 "Item 11:  Interest of  Management  and Others in Material Transactions".

ITEM 10:   LEGAL PROCEEDINGS

There
are no legal proceedings involving the Corporation or its property as at the date of this
prospectus and, to the best knowledge of management, no such proceedings are contemplated.

ITEM 11:   INTEREST OF
MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

No
director, senior officer, principal holder of securities or any associate or affiliate
thereof of the Corporation has any interest, directly or indirectly, in material
transactions with the Corporation or any of its direct or indirect wholly-owned
subsidiaries, other than the following transactions, which were in the normal course of
operations:

| | 1. |  | During
the six months ended January 31, 2004, the Corporation paid a total of
               $2,400,696 (2003  $181,530) to companies controlled by directors of
the                Corporation for management fees, mineral property exploration
expenditures and                professional fees. Commencing in the 2004 period, the
Corporation has retained                mineral exploration and mining contracting
services through a corporation owned                by a director of the Corporation,
Alejandro Caraveo. See Item 8: Directors                and Officers. As at
January 31, 2004 these non-arms length mineral                exploration
expenditures totalled $2,329,811 (2003  $79,107). These                expenditures
are recorded on a cost recovery basis. The Corporation believes                that this
arrangement gives the Corporation better quality and control for                mineral
exploration and mining contracting services than it could otherwise
               receive through third party independent contractors.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. |  | During
the year ended July 31, 2003, the Corporation paid a total of $388,278
               (2002  $621,145; 2001-$482,831) to companies controlled by directors
of                the Corporation for management fees, mineral property exploration
expenditures,                promotional fees and professional fees;
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. |  | As
at July 31, 2003, the Corporation had bonuses payable to directors and
               officers in the amount of $225,000;
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------

| | 4. |  | Directors
and officers of the Corporation are entitled to hold management                incentive
stock options. For this purpose, the Corporation has adopted a Stock
               Option Plan for directors, officers, employees and consultants of the
               Corporation and its subsidiaries. The purpose of the Stock Option Plan is
to                encourage ownership of the Corporations common shares by the
persons who                are primarily responsible for the management and profitable
growth of the                Corporations business, as well as provide additional
incentive for                superior performance by such persons and attract and retain
valued personnel.                The plan provides that eligible persons thereunder
include any director, senior                officer, consultant or employee of the
Corporation. A consultant is defined as                an individual that is engaged by
the Corporation, under a written contract, to                provide services on an
ongoing basis and spends a significant amount of time on                the Corporations
business and affairs. The definition of consultant also                includes an
individual whose services are engaged through a personal holding
               corporation.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

46

In general, see "Item 3:
 Description of the Business - 3.3 Risk Factors - 9.  Conflicts of Interest".

ITEM 12:   TRANSFER AGENTS
AND REGISTRARS

The
Corporations transfer agent and registrar is Computershare Trust Company of Canada
(Computershare). Computershares register of transfers for the
Corporations Common Shares is located at 1500 University Street, Suite 700,
Montreal, Quebec, H3A 3S8.

ITEM 13:   MATERIAL
CONTRACTS

Except
for the Minera Fuerte Buy-Out Agreement of February 21, 2003, described under Item
3: Description of the Business  3.2 Mineral Projects  1. Ocampo Project 
f) The Concessions  Minera Fuerte Agreement, and for contracts entered
into in the ordinary course of business, the Corporation has not entered into any material
contracts for the twelve months ended July 31, 2003, and to the date of this annual
information form.

ITEM 14:   INTERESTS OF
EXPERTS

The
following persons and companies have prepared or certified a statement, report or
valuation on behalf of the Corporation as follows during the twelve months ended July 31,
2003, and to the date of this Annual Information Form:

| | a) |  | Grant
Thornton, LLP, Chartered Accountants, are the auditors of the Corporation;
| | -- |  | --------------------------------------------------------------------------------

| | b) |  | Pincock
Allen & Holt, Consulting Geologists, prepared a technical report                dated
April 8, 2003 entitled, Ocampo Gold-Silver Project Preliminary
               Assessment Chihuahua Mexico Technical Report; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | Glenn
R. Clark & Associates Limited, Consulting Engineers, prepared a
               technical report dated March 31, 2004 entitled, Ocampo Gold-Silver
Project                Review, Chihuahua, Mexico.
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

None of the above-noted persons or
companies hold a registered or beneficial interest, direct or indirect, in any securities
or other property of the Corporation and its associates and affiliates.

ITEM 15:   
MANAGEMENTS DISCUSSION AND ANALYSIS

# 15.1   Date and Scope of
Managements Discussion and Analysis

The
following discussion of the financial condition and results of operations of the
Corporation is made as of May 12, 2004, and constitutes managements review of the
factors that affected the Corporations financial and operating performance in the
years ended July 31, 2003, 2002 and 2001 (audited), and the six months ended January 31,
2004 and 2003 (unaudited). This document should be read in conjunction with the financial
statements of the Corporation, including the notes thereto.

The
consolidated financial statements of the Corporation have been prepared in accordance with
Canadian generally accepted accounting principles (Canadian GAAP) as described
in Note 2 to the Corporations audited consolidated financial statements for the
twelve

---

47

months ended July 31, 2003, which
differ in certain material respects from accounting principles generally accepted in the
United States (U.S. GAAP). Differences between Canadian GAAP and U.S. GAAP
applicable to the Corporation are described in Note 15 to the Corporations audited
consolidated financial statements for the twelve months ended July 31, 2003.

Certain
information regarding the Corporation contained herein may constitute forward-looking
statements within the meaning of applicable securities laws. Forward-looking statements
may include estimates, plans, expectations, opinions, forecasts, projections, guidance or
other statements that are not statements of fact. Although the Corporation 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. These statements are
subject to certain risks and uncertainties and may be based on assumptions that could
cause actual results to differ materially from those anticipated or implied in the
forward-looking statements. The Corporations forward-looking statements are
expressly qualified in their entirety by this cautionary statement.

# 15.2   Overall Performance

The
Corporation has ongoing advanced stage exploration and development at its Ocampo Project.
As a result, the Corporation has no current sources of revenue other than interest earned
on cash and short-term money-market instruments, all of which were derived from issuances
of share capital. The Corporations immediate objective is to complete a feasibility
study for the Ocampo Project by the six months ended January 31, 2005. There are no known
deposits of commercial minerals on any of the mineral exploration properties of the
Corporation and any activities of the Corporation thereon will constitute exploratory
searches for minerals. In general, see Item 3: Description of the Business 
3.3 Risk Factors.

# 15.3   Selected Annual and
Quarterly Information

|1. |  | Consolidated
Balance Sheet Data  Twelve Months Ended July 31, 2003, 2002 and 2001 (audited) and
Six Months Ended January 31, 2004 (Unaudited)
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

|                                       
|---------------------------------------
|
|                                       
|Working Capital                        
|Current Assets                         
|Capital Assets                         
|Mineral Properties and Related Deferred
|Costs                                  
|Total Assets                           
|Current Liabilities                    
|Total Long-Term Financial Liabilities  
|Shareholders' Equity                   
|Deficit                                
|                                       

Notes:

|(1) |  | This
amount has been restated as a result of a restatement of the financial
               statements of Gammon Lake Mexico for the twelve months ended July 31, 2001
               following a determination that certain capitalized costs with respect to
mineral                properties and related deferred costs were not eligible to be
deducted against                future taxable income under Mexican law.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

48

|2. |  | Consolidated
Statement of Loss and Deficit Data  Twelve Months Ended July 31, 2003,
2002 and 2001(Audited) and Quarterly Information for the Prior Eight
Quarters from the Three Months Ended January 31, 2004 to the Three Months Ended
April 30, 2002 (Unaudited)
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                       
|---------------------------------------
|
|                                       
|Interest Income                        
|Management Fee Revenue                 
|Expenses                               
|Loss Before Other Items                
|Foreign Exchange Gains                 
|Write-off of Abandoned Mineral         
|Properties and Related Deferred Costs  
|Net (Loss) Earnings                    
|(Loss) Earnings per Share              
|Net Loss (per share, fully diluted) (1)
|                                       

|                            
|----------------------------
|
|                            
|
|                            
|Revenue                     
|Working Capital             
|Exploration Properties and  
|Deferred Exploration        
|Expenditures                
|Expenses                    
|Other items                 
|Net (Loss) Income           
|Net (Loss)  Income per share
|                            

|                           
|---------------------------
|
|                           
|
|                           
|Revenue                    
|Working Capital            
|Exploration Properties and 
|Deferred Exploration       
|Expenditures               
|Expenses                   
|Other items                
|Net (Loss) Income          
|Net (Loss) Income per share
|                           

Notes:

|(1) |  | Net
loss per share on a fully diluted basis is the same as net loss per share on           an
undiluted basis, as all factors which were considered in the calculation are
          anti-dilutive.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 15.4   Results of
Operations

Twelve Months Ended
July 31, 2003 and 2002

---

49

During this
period, the Corporation earned income of $466,143 (2002  $143,039), of which
$106,143 (2002  $23,039) was due to interest on short-term investments and $360,000
(2002  $120,000) to management fees paid by a former joint venture partner. The net
loss for the year ended July 31, 2003 was $534,771 ($0.02 per common share) compared to a
net loss of $2,207,661 for the year ended July 31, 2002 ($0.09 per common share). Before a
non-cash foreign exchange gain for the period of $3,005,526 (2002  $83,000) related
to gains on U.S. dollar denominated long-term debt and other balances held in Mexican
pesos, the loss for the period was $3,540,297 (2002  $2,290,661).

The
increasing losses before non-cash foreign exchange gains reflects the expenses of
supporting the Corporations objective of completing a feasibility study for the
Ocampo Project by the six months ended January 31, 2005. The Corporation incurred expenses
of $4,006,440 (2002  $2,433,700), of which $60,462 (2002  $4,188) was due to
amortization, $1,431,859 (2002  $928,475) to general and administrative expenses,
$282,938 (2002  $30,000) to management fees, $2,025,985 (2002  $1,382,699) to
professional fees and $205,196 (2002  $88,338) to wages and benefits. Amortization
expense has increased significantly due to the purchase of mining equipment during the
year. The equipment purchased is utilized as part of the project to construct underground
ramps, tunnels and drilling stations on the Companys 100% owned Ocampo Project.
General and administrative and professional fees have increased due to general support for
the Corporations activities, as well as promotional and shareholder relations costs
related to the operation of a public company. These costs are expected to continue at the
same level. Wages and benefits have increased due to additional staffing in the management
and finance departments. The Corporation will continue to experience foreign currency
exchange fluctuations given its U.S. dollar denominated debt and Mexican operations. To
minimize the exposure to foreign currency fluctuations, the Corporation holds all surplus
funds in Canadian dollars.

Twelve Months Ended
July 31, 2002 and 2001

During this
period, the Corporation earned income of $143,039 (2001  $108,703), of which $23,039
(2001  $108,703) was due to interest on short-term investments and $120,000 (2001
 $nil) to management fees paid by a former joint venture partner. The net loss for
the year ended July 31, 2002 was $2,207,661 ($0.09 per common share) compared to a net
loss of $1,711,336 for the year ended July 31, 2001 ($0.12 per common share). Before a
non-cash foreign exchange gain for the period of $83,000 (2001  $nil) related to
gains on U.S. dollar denominated long-term debt and other balances held in Mexican pesos,
and a write off of abandoned Canadian mineral properties and related deferred costs of
$nil (2001  $150,784), the loss for the period was $2,290,661 (2001 
$1,560,552).

The
increasing losses before non-cash foreign exchange gains reflects the expenses of
supporting the Corporations ongoing exploration and development activities on the
Ocampo Project. The Corporation incurred expenses of $2,433,700 (2001  $1,669,255),
of which $4,188 (2001  $5,428) was due to amortization, $928,475 (2001 
$610,547) to general and administrative expenses, $30,000 (2001  $36,000 to
management fees, $1,382,699 (2001  $947,027) to professional fees and $88,338 (2001
 $70,253) to wages and benefits.

Six Months Ended
January 31, 2004 and 2003

During
this period, the Corporation earned income of $444,704 (2003  $244,530), of which
$207,704 (2003  $64,530) was due to interest on short-term investments and $237,000
(2003  $180,000) to management fees paid by a former joint venture partner. The net
loss for the

---

50

six months ended January 31, 2004 was
$4,326,013 ($0.089 per common share) compared to a net earnings of $692,364 for the six
months ended January 31, 2003 ($0.021 per common share). Before a non-cash foreign
exchange gain for the period of $1,770,673 (2003  $1,872,009) related to gains on
U.S. dollar denominated long-term debt and other balances held in Mexican pesos, write-off
of Mexican mineral properties other than the Ocampo Project on which the Corporation is
not currently active in the amount of $1,063,448 (2003  $Nil) and a loss of $235,000
(2003  $Nil) relating to the Corporations pro rata portion of the loss in
Mexgold Resources Inc. which investment has a cost base of $12,300,000 and a market value
of $53,655,000 based on the closing price of $4.30 per share of Mexgold Resources Inc. on
the Toronto Venture Exchange on May 12, 2004 (see Item 3: Description of the
Business  3.2 Mineral Projects  Investment in Mexgold Resources Inc.),
the loss for the period was $4,798,238 (2003  $1,179,645).

The
increasing losses before non-cash foreign exchange gains reflects the expenses of
supporting the Corporations objective of completing a feasibility study for the
Ocampo Project by the six months ended January 31, 2005. The Corporation incurred expenses
of $5,242,942 (2003  $1,424,175), of which $20,348 (2003  $2,319) was due to
amortization, $1,335,616 (2003  $539,294) to general and administrative expenses,
$112,500 (2003  $Nil) to management fees, $3,438,941 (2003  $786,758) to
professional fees and $335,537 (2003  $95,804) to wages and benefits. Amortization
expense has increased significantly due to the purchase of mining equipment during the
year. The equipment purchased is utilized as part of the project to construct underground
ramps, tunnels and drilling stations on the Companys 100% owned Ocampo Project.
General and administrative and professional fees have increased due to general support for
the Corporations activities, as well as promotional and shareholder relations costs
related to the operation of a public company. These costs are expected to continue at the
same level. Wages and benefits have increased due to additional staffing in the management
and finance departments. The Corporation will continue to experience foreign currency
exchange fluctuations given its U.S. dollar denominated debt and Mexican operations. To
minimize the exposure to foreign currency fluctuations, the Corporation holds all surplus
funds in Canadian dollars.

Commencing
in the 2004 period, the Corporation has retained mineral exploration and mining
contracting services through a corporation owned by a director of the Corporation,
Alejandro Caraveo. See Item 8: Directors and Officers. As at January 31, 2004
these non-arms length mineral exploration expenditures totalled $2,329,811 (2003
 $79,107). These expenditures are recorded on a cost recovery basis. The Corporation
believes that this arrangement gives the Corporation better quality and control for
mineral exploration and mining contracting services than it could otherwise receive
through third party independent contractors. In general, see Item 2: General
Development of the Business  3.3 Risk Factors  9. Conflicts of Interest.

# 15.5   Liquidity

Six Months Ended
January 31, 2004 and 2003

The Corporations
balance of cash and cash equivalents as at January 31, 2004 was $19,985,284 compared to
$1,264,614 as at July 31, 2003.

Operating
activities consumed a cash amount of $2,699,008 in the six months ended January 31, 2004
compared to a cash amount of $395,374 in the six months ended January 31, 2003. This
increase in cash expenditures for operating activities reflects the fact that the
Corporation now undertakes all exploration and development on the Ocampo Project rather
than its former joint venture partner. This joint venture has been terminated during the
period as

---

51

described under, Item 2:
General Development of the Business  2.2 Significant Acquisitions. It is
expected that cash invested in operating activities will continue at current levels.

Financing
activities during the period totalled $33,958,070. The Corporation received cash
consideration of $30,058,580 pursuant to issue of 7,829,649 Common Shares pursuant to
private placements, $918,820 from the exercise of options for the purchase of 1,293,700
Common Shares under the terms of the Corporations Stock Option Plan, and $2,980,670
from the issuance of 2,349,780 Common Shares pursuant to the exercise of common share
purchase warrants.

Investing
activities during the period primarily relate to three cash expenditures. First, an
expenditure of a total of $11,975,687 was made on exploration of the Ocampo Project. The
expenditures relate to diamond drill programs, and the building of ramps and tunnels to
permit the extraction of the bulk samples and complete infill drilling from underground
drill stations. The Corporation believes that developing these ramps while still in
exploration will act to significantly reduce the capital required for mine development in
the operating stage of the project. An allowance of $588,423 for future income tax
recovery has been recorded for the period with respect to the Ocampo Project, with the
result that the net amount expended on the Ocampo Project is $11,387,264. Second, a total
of $440,028 was invested in capital assets related to the Ocampo Project, such capital
assets consisting of earth moving equipment, trucks, material handling equipment and
assorted mining equipment and tools required to complete ramps and tunnels and other
development work. Third, the Corporation advanced a total of $122,677 to affiliated
companies as non-interest bearing unsecured advances payable on demand. Of this amount,
$111,140 is due from Mexgold Resources Inc. (see Item 3: Description of the Business
 3.2 Mineral Projects  Investment in Mexgold Resources Inc.) which was
repaid after the end of the period, and $11,537 is due from Compania Tecnica Minera.
Compania Tecnica Minera is a private Mexican corporation in which the Corporation has a
controlling interest. The Corporation has assisted in the formation of Compania Tecnica
Minera in order to attract personnel with suitable mine development and management
experience for the Ocampo Project. Compania Tecnica Minera is now substantially
operational and the Corporation will be divesting its interest to the management of
Compania Tecnica Minera by July 31, 2004, whereupon the amount due will be repaid in full.
The investment made by the Corporation in Compania Tecnica Minera is nominal.

As
at January 31, 2004, the Corporation had working capital of $20,410,938, compared to
working capital of $727,517 as at July 31, 2003. Current liabilities declined to $840,694
as at January 31, 2004 from $1,307,239 as at July 31, 2003. This financial position
reflects a use of cash balances and supplier credit to finance the business of the
Corporation. To further augment working capital, subsequent to January 31, 2004, the
Corporation completed a financing by way of the private placement of 3,334,300 Special
Warrants for gross proceeds of $21,672,950. Each Special Warrant is automatically
exercised for one Common Share of the Corporation for no further consideration upon the
earlier of (i) June 27, 2004, and (ii) the sixth business day after the issuance of a
receipt by the last of the applicable securities for a (final) prospectus qualifying the
exercise of the Special Warrants. The Corporation invested $11.8 million of the proceeds
of this private placement in Mexgold Resources Inc. to maintain its ownership interest in
that corporation. This investment consisted of the purchase of 5,900,000 Subscription
Receipts of Mexgold Resources Inc. which was part of the sale of 22,500,000 Subscription
Receipts by Mexgold Resources Inc. for $2.00 per Subscription Receipt for gross proceeds
of $45,000,000. For details see Item 3: Description of the Business  3.2
Mineral Projects  Investment in Mexgold Resources Inc..

---

52

The
Corporation currently has an adequate liquidity base with which to support its general
operations and exploration and development mandate.

Twelve Months Ended
July 31, 2003 and 2002

The
Corporations balance of cash and cash equivalents as at July 31, 2003 was $1,264,614
compared to $6,398,305 as at July 31, 2002.

Operating
activities consumed a cash amount of $1,817,015 in the twelve months ended July 31, 2003
compared to a cash amount of $2,373,359 in the twelve months ended July 31, 2002. This
decline in cash expenditures for operating activities reflects certain work undertaken by
a joint venture partner on a portion of the Ocampo Project. This joint venture has been
terminated during the period as described under, Item 2: General Development of the
Business  2.2 Significant Acquisitions, and it is expected that cash invested
in operating activities will continue at the historical levels.

Investing
activities during the period primarily relate to three cash expenditures. First, an
expenditure of a total of $6,047,688 was made on exploration of the Ocampo Project. The
expenditures relate to diamond drill programs, and the building of ramps and tunnels to
permit the extraction of the bulk samples and complete infill drilling from underground
drill stations. The Corporation believes that developing these ramps while still in
exploration will act to significantly reduce the capital required for mine development in
the operating stage of the project. An allowance of $56,770 for future income tax recovery
has been recorded for the period with respect to the Ocampo Project, with the result that
the net amount expended on the Ocampo Project is $5,990,918. Second, a total of $576,658
was invested in capital assets related to the Ocampo Project, such capital assets
consisting of earth moving equipment, trucks, material handling equipment and assorted
mining equipment and tools required to complete ramps and tunnels and other development
work. Third, the Corporation made a strategic investment of $500,000 in Mexgold Resources
Inc., as described under, Item 3: Description of the Business  2. Investment
in Mexgold Resources Inc..

Financing
activities during the period totalled $3,750,900. The Corporation received cash
consideration of $1,165,800 from the exercise of options for the purchase of 1,275,500
Common Shares under the terms of the Corporations Stock Option Plan, and arms
length invoices totalling $1,147,250 were applied to the exercise of options for the
purchase of 900,000 Common Shares under the terms of the Corporations Stock Option
Plan. In addition, during the period the Corporation received $2,174,512 from the exercise
of 2,011,270 common share purchase warrants and $410,588 from the exercise of 293,750
compensation warrants issued pursuant to a private placement completed in 2002.

As
at July 31, 2003, the Corporation had working capital of $727,517, compared to working
capital of $6,573,133 as at July 31, 2002. Current liabilities increased to $1,307,239 as
at July 31, 2003, from $168,788 as at July 31, 2002. This financial position reflects a
use of cash balances and supplier credit to finance the business of the Corporation. To
augment working capital, the Corporation completed the financings in the subsequent period
as described under, Item 14: Managements Discussion and Analysis  14.5
Summary of Quarterly Results  Liquidity  Six Months Ended January 31, 2004 and
2003".

---

53

Twelve Months Ended
July 31, 2002 and 2001

The
Corporations balance of cash and cash equivalents as at July 31, 2002 was $6,398,305
compared to $469,915 as at July 31, 2001.

Operating
activities consumed a cash amount of $2,373,359 in the twelve months ended July 31, 2002
compared to a cash amount of $1,419,194 in the twelve months ended July 31, 2001. This
increase in cash expenditures for operating activities reflects a higher level of
corporate activity made possible by the availability of funds for exploration and
development of the Ocampo Project.

Investing
activities during the period relate to expenditures on the Ocampo Project which equalled a
cash outlay of $1,074,050 used to fund diamond drilling and some underground development
work and payments totalling U.S. $225,000 to acquire a 100% interest in a portion of the
Ocampo Project. During the period the Corporation recorded a total of $15,650,160 of
expenditures for the Ocampo Project which included $2,600,000 in deemed consideration for
the issuance of 5,000,000 common shares and $11,111,111 (U.S. $7,000,000) for the issuance
of long term debt all of which were incurred in consideration for the acquisition of a
100% interest in a portion of the Ocampo Project. In addition, an allowance of $865,000for
future income tax recovery was recorded for the period with respect to the Ocampo Project,
with the result that the cash amount expended on the Ocampo Project totalled $1,074,050,
as noted above. In addition to incurring exploration expenditures on the Ocampo Project, a
total of $530 was invested in capital assets related to the Ocampo Project, such capital
assets consisting of assorted mining equipment and tools.

Financing
activities during the period totalled $8,915,793. The Corporation received cash
consideration of $7,737,000 from the private placement of 7,525,000 shares, $760,000 from
the exercise of options for the purchase of 1,155,000 Common Shares under the terms of the
Corporations Stock Option Plan, cash consideration of $233,662 from the private
placement of 519,250 special warrants, $951,956 from the exercise of share purchase
warrants for the purchase of 1,410,700 Common Shares, and $99,888 from the exercise of
163,750 compensation warrants issued pursuant to a private placement. A total of $866,713
in issue costs for commissions, professional fees, regulatory fees and ancillary costs
were incurred with respect to the private placements. As at July 31, 2002, the Corporation
had cash and cash equivalents in the amount of $6,398,305 and working capital of
$6,573,133.

As
at July 31, 2002, the Corporation had working capital of $6,573,133, compared to working
capital of $1,018,392 as at July 31, 2001. Current liabilities declined to $168,788 as at
July 31, 2002, from $182,906 as at July 31, 2001.

# 15.6   Capital Resources

A
summary of the Corporations financial commitments all of which are contained in the
Corporations option and joint venture agreements is provided in the following table.
Also refer to Description of the Corporations Exploration Projects  1.
Ocampo Project.

---

54

|                                     
|-------------------------------------
|
|                                     
|Minera Fuerte Joint Venture Agreement
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|Soyopa Joint Venture Agreement       
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     

The
Corporation intends to fund these commitments with cash on hand, or through any other
financing alternative it may have available to it at the time in question.

The
discovery, development and acquisition of mineral properties are in many instances
unpredictable events and require significant expenditures prior to achieving commercial
production. Future precious metal prices, the success of exploration programs and other
property transactions can have a significant impact on capital requirements. There are no
known deposits of commercial minerals on any of the mineral exploration properties of the
Corporation and any activities of the Corporation thereon will constitute exploratory
searches for minerals. The Corporation does not expect to receive significant income from
the Ocampo Project in the near term. In the event that unanticipated business
opportunities or expenditures arise prior to such time, the Corporation may require
additional financing. The Corporation will also require additional financing to satisfy
the cash payment obligations of its property purchase agreements. If funding is required
for any of these reasons, or if a commercial body of ore is confirmed on any of the
Corporations properties and the Corporation requires additional financing to
initiate development of such body, it may fund its capital requirements by arranging
further equity financing, issuing long term debt, arranging joint ventures with other
companies or through a combination of the above. Accordingly, the ability of the
Corporation to continue exploration and development of its property interests will be
dependent upon its ability to raise significant additional financing. There is no
assurance that adequate financing will be available to the Corporation or that the terms
of such financing will be favourable. Should the Corporation not be able to obtain such
financing, its properties may be lost entirely. See Item 3: Description of the
Business  3.3 Risk Factors.

Other
than as discussed herein, the Corporation is not aware of any trends, demands,
commitments, events or uncertainties that may result in the Corporations liquidity
or capital resources either materially increasing or decreasing at present or in the
foreseeable future. Material increases or decreases in the Corporations liquidity
and capital resources will be substantially determined by the success or failure of the
Corporations exploration programs on its mineral properties and its ability to
obtain equity financing. See Item 3: Description of the Business  3.3 Risk
Factors.

15.7    Off-Balance Sheet Arrangements

The
Corporation does not have any off-balance sheet arrangements.

# 15.8   Transactions with
Related Parties

See
"Item 10:  Interest of Management and Others in Material Transactions".

---

55

# 15.9   Proposed
Transactions

The
Corporation has not entered into and has no plans to enter into any asset or business
acquisitions or dispositions.

# 15.10   Critical
Accounting Estimates

The
Corporation does not utilize any critical accounting estimates for the financial periods
discussed in this Annual Information Form.

# 15.11   Changes in
Accounting Policies including Initial Adoption

The
Corporation has not changed its accounting policies and it has no plans to change its
accounting policies except with respect to stock-based compensation. Effective August 1,
2003, the Corporation adopted the fair value method of accounting for employee and
non-employee stock-based compensation. Stock option costs are measured at the grant date
based on the fair value of the options and are charged to professional fees and wages with
a credit to contributed surplus. The consideration paid on exercise of options is credited
to capital stock. This policy has been adopted prospectively without retroactive
application to financial statements of prior periods.

# 15.12   Financial
Instruments and Other Instruments

The
Corporation has not used financial instruments in its business and operations and it has
no plans to use financial instruments in its business and operations, other than cash
equivalents.

ITEM 16:   ADDITIONAL
INFORMATION

(1)   Additional
information may be found on SEDAR at www.sedar.com.

(2)  Additional
information, including directors and officers          remuneration and
indebtedness, principal holders of the Corporations           securities and
securities authorized for issuance under equity compensation           plans is contained
in the Corporations information circular for the           Corporations most
recent annual meeting of securityholders that involved           the election of
directors, which was held on October 27, 2003.

Additional
information is provided in the Corporations financial statements and MD&A for
the most recently completed financial reporting periods.

---

---

EXHIBIT 99.2

Gammon Lake Resources Inc. 
Consolidated Financial Statements 
July 31, 2003 and 2002



---

# Contents

| | Page
| | ----

|Auditors' Report | 1
|---------------- | -

|Consolidated Statements of Operations and Deficit | 2
|------------------------------------------------- | -

|Consolidated Balance Sheets | 3
|--------------------------- | -

|Consolidated Statement of Cash Flows | 4
|------------------------------------ | -

|Notes to the Consolidated Financial Statements | 5-28
|---------------------------------------------- | ----

---

|Grant Thornton LLP
Chartered Accountants
Management Consultants | 
|--------------------------------------------------------------- | 

# Auditors Report

To the Shareholders of

# Gammon Lake Resources
Inc.

We have audited the consolidated
balance sheets of Gammon Lake Resources Inc. as at July 31, 2003 and 2002 and the
consolidated statements of operations and deficit and cash flows for the years then ended.
These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audit.

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

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

|Halifax, Nova Scotia, Canada
September 17, 2003 | Grant Thornton LLP
Chartered Accountants
|----------------------------------------------- | ----------------------------------------

P.O. Box 426 
Suite 1100 
2000 Barrington Street 
Halifax, Nova Scotia B3J 2P8 T    (902) 421-1734 F    (902) 420-1068 E     Halifax@GrantThornton.ca W    www.GrantThornton.ca 
Canadian Member of Grant Thornton International

1

---

Gammon Lake Resources Inc. 
Consolidated Statements of Operations and DeficitYears ended July 31

---

|                           | 2003 | 2002           
|-------------------------- | ---- | ---------------
|                           |      |                
|Revenue                    |      |                
|Interest                   |      | $    106,143   
|Management fees (Note 6 d) |      | 360,000        
|                           |      |                
|                           |      | 466,143        
|                           |      |                
|Expenses                   |     
|Amortization               |      | 60,462         
|General and administrative |      | 1,431,859      
|Management fees            |      | 282,938        
|Professional fees          |      | 2,025,985      
|Wages and benefits         |      | 205,196        
|                           |      |                
|                           |      | 4,006,440      
|                           |      |                
|Loss before other items    |      | (3,540,297     
|                           |     
|Foreign exchange gains     |      | 3,005,526      
|                           |      |                
|Net loss                   |      | $  (534,771    
|                           |      |                
|Loss per share (Note 10)   |      | $         (0.02
|                           |      |                
|                          
|Deficit, beginning of year |      | $(6,101,694    
|                           |     
|Net loss                   |      | (534,771       
|                           |      |                
|Deficit, end of year       |      | $(6,636,465    
|                           |      |                
|                          

See
accompanying notes to the consolidated financial statements.

| | 2
| | -

---

Gammon Lake Resources Inc.
Consolidated Balance SheetsJuly 31

|                                          | 2003 | 2002         
|----------------------------------------- | ---- | -------------
|                                          |      |              
|Assets                                    |      |              
|Current                                   |     
|Cash and cash equivalents (Note 16)       |      | $   1,264,614
|Receivables                               |     
|Commodity taxes                           |      | 732,554      
|Other                                     |      | 20,664       
|Prepaids                                  |      | 16,924       
|                                          |      |              
|                                          |      | 2,034,756    
|Investment in affiliated company (Note 3) |      | 500,000      
|Capital assets (Note 4)                   |      | 542,115      
|Mineral properties and related deferred   |     
|costs (Notes 5 and 6)                     |      | 54,833,669   
|                                          |      |              
|                                          |      | $ 57,910,540 
|                                          |      |              
|                                         
|Liabilities                               |     
|Current                                   |     
|Payables and accruals                     |      | $   1,307,239
|Long term debt (Note 7)                   |      | 9,870,000    
|Future income taxes (Note 8)              |      | 9,430,000    
|                                          |      |              
|                                          |      | 20,607,239   
|                                          |      |              
|Shareholders' Equity                      |     
|Capital stock (Note 9)                    |      | 43,939,766   
|Deficit                                   |      | (6,636,465   
|                                          |      |              
|                                          |      | 37,303,301   
|                                          |      |              
|                                          |      | $ 57,910,540 
|                                          |      |              
|                                         

Nature of operations and going
concern assumption (Note 1) 
Commitments and contingencies (Note 6) 
Subsequent events (Note 16)

On behalf of the Board

|Director | Director
|-------- | --------

See accompanying notes to the consolidated financial statements.

| | 3
| | -

---

Gammon Lake Resources Inc.
Consolidated Statements of Cash FlowsYears Ended July 31

---

|                                                     | 2003 | 2002       
|---------------------------------------------------- | ---- | -----------
|                                                     |      |            
|Increase (decrease) in cash and cash equivalents     |      |            
|                                                     |     
|Operating                                            |     
|Net loss                                             |      | $  (534,771
|Amortization                                         |      | 60,462     
|Foreign exchange gain                                |      | (3,005,526 
|Stock option expense                                 |      | 1,147,250  
|                                                     |      |            
|                                                     |      | (2,332,585 
|Change in non-cash operating                         |     
|working capital (Note 11)                            |      | 515,570    
|                                                     |      |            
|                                                     |      | (1,817,015 
|                                                     |      |            
|Financing                                            |     
|Net proceeds from issuance of capital stock          |      | 3,750,900  
|                                                     |      |            
|Investing                                            |     
|Acquisition of investment                            |      | (500,000   
|Acquisition of capital assets                        |      | (576,658   
|Expenditures on mineral properties                   |     
|and related deferred costs - net                     |      | (5,990,918 
|                                                     |      |            
|                                                     |      | (7,067,576 
|                                                     |      |            
|Net (decrease) increase in cash and cash equivalents |      | (5,133,691 
|                                                     |     
|Cash and cash equivalents                            |     
|Beginning of year                                    |      | 6,398,305  
|                                                     |      |            
|End of year (Note 11)                                |      | $ 1,264,614
|                                                     |      |            
|                                                    

See accompanying notes to the consolidated financial statements.

| | 4
| | -

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

1.      
          Nature of operations and going concern assumption

Gammon Lake Resources Inc. (the
Company) is a publicly traded company, engaged in the acquisition, exploration
and development of resource properties in Canada and Mexico. The Company is continued
under Part 1A of the Companies Act (Quebec) and its common shares are listed on the
Toronto Stock Exchange (TSX:GAM).

These financial statements have been
prepared on the basis of accounting principles applicable to a going concern, which assume
that the Company will continue in operation for the foreseeable future and will be able to
realize its assets and discharge its liabilities in the normal course of operations.

The Company is in the process of
exploring its mineral properties and has not yet determined whether these properties
contain ore reserves that are economically recoverable. The recoverability of amounts
shown for mineral properties and related deferred costs is dependent upon the discovery of
economically recoverable reserves, the securing and maintaining of title and beneficial
interest in the properties, the ability of the Company to obtain necessary financing to
complete the development thereof and upon future profitable production there-from or
alternatively upon the Companys ability to dispose of its interests on an
advantageous basis. Changes in future conditions could require material write downs of the
carrying values.

The Company will have to raise
additional funds over and above amounts raised subsequent to year end (Note 16) to
complete the acquisition, exploration and development of its interests and, while it has
been successful in doing so in the past, there can be no assurance that it will be able to
do so in the future. In addition, the Company will require further financing to meet
certain financial commitments under its joint venture and option buy out agreements.

If the going concern assumption were
not appropriate for these financial statements, then adjustments would be necessary in the
carrying values of assets and liabilities, the reporting revenues and expenses, and the
balance sheet classifications used.

---

2.      
          Summary of significant accounting policies

Basis of presentation
The accompanying consolidated
financial statements are prepared in accordance with Canadian generally accepted
accounting principles and contain all adjustments necessary to present fairly Gammon Lake
Resources Inc.s financial position as at July 31, 2003 as well as its results of
operations and cash flows for the year ended July 31, 2003 and 2002.

These consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiaries, Gammon
Lake Resources (NS) Incorporated, Gammon Lake de Mexico S.A. de C.V. and Gammon Lake
Resources (Barbados) Inc.

Use of estimates
The presentation of financial
statements in conformity with Canadian generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported period.
Actual results could differ from those reported.

Cash and cash equivalents
Cash and cash equivalents include
cash on hand and balances with banks, net of bank overdrafts, and highly liquid temporary
investments.

| | 5
| | -

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

2.      
          Summary of significant accounting policies (continued)

Mineral properties and related deferred costs
Acquisitions, exploration and
development costs relating to mineral properties are deferred until the properties are
brought into production, at which time they are amortized on the unit of production basis,
or until the properties are abandoned or sold or management determines that the mineral
property is not economically viable, at which time the cost of the property and related
deferred costs are written off. The units-of-production amortization is calculated based
on proven and probable reserves following commencement of production. The amounts at which
mineral properties and the related deferred costs are recorded do not necessarily reflect
present or future values.

Long term investments
The Company accounts for its
investment in a company over which it has significant influence using the equity method of
accounting whereby the investment is initially recorded at cost and subsequently adjusted
to recognize the Companys share of earnings or losses of the investee companies and
reduced by dividends received.

Capital assets and amortization
Capital assets are recorded at cost.
Amortization is calculated using the declining balance method at the annual rate of 30%
for computer equipment and 20-25% for exploration equipment and furniture and equipment.

Revenue recognition
Revenue is recognized when: (i)
persuasive evidence of an arrangement exists; (ii) the risks and rewards of ownership pass
to the purchaser including delivery of the product; (iii) the selling price is fixed or
determinable, and (iv) collectibility is reasonably assured.

Stock based compensation and change in accounting policy
Effective August 1, 2002, the Company
adopted the recommendations of Canadian Institute of Chartered Accountants Handbook
Section 3870, Stock-based Compensation and Other Stock-based Payments. This Section
defines recognition, measurement and disclosure standards for stock-based compensation to
non-employees and employees. Under these new standards, all stock-based payments made to
non-employees must be systematically accounted for in the enterprises financial
statements. These standards define a fair value-based method of accounting and encourage
entities to adopt this method of accounting for its stock-based employee compensation
plans. Under this method, compensation costs should be measured at the grant date based on
the fair value of the award and should be recognized over the related service period. An
entity that does not adopt the fair value method of accounting for its awards granted to
employees is required to include in its financial statements pro forma disclosures of net
earnings and earnings per share as if the fair value method of accounting had been
applied. The Company has chosen the latter alternative and the required pro forma
information is presented in Note 9.

This policy has been adopted
prospectively without retroactive application to financial statements of prior periods.

| | 6
| | -

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

2.      
          Summary of significant accounting policies (continued)

Foreign currency transactions
Monetary assets and liabilities
denominated in foreign currencies are translated at the period end exchange rate.
Non-monetary assets and liabilities, as well as revenue and expense transactions
denominated in foreign currencies are translated at the rate prevailing at the time of the
transaction. Translation gains or losses are recognized in the period in which they occur.

Income taxes
Income taxes are calculated using the
asset and liability method of tax accounting. Under this method, current income taxes are
recognized for the estimated income taxes payable for the current period. Future income
tax assets and liabilities are determined based on differences between the financial
reporting and tax basis of assets and liabilities and on unclaimed losses carried forward
and are measured using the substantially enacted tax rates that will be in effect when the
differences are expected to reverse or when unclaimed losses are expected to be utilized.
A valuation allowance is recognized to the extent that the recoverability of future income
tax assets is not considered more likely than not.

Loss per common share
Loss per common share is calculated
based on the weighted average number of common shares outstanding for the period. Diluted
loss per common share considers the potential exercise of outstanding options and warrants
using the treasury-based method.

Future site restoration and abandonment costs
Estimated costs of future site
restoration and abandonments, net of recoveries, will be provided for over the life of
future proved reserves on a unit-of-production basis. An annual provision will be recorded
as depletion and depreciation. As the Company has no proved reserves at July 31, 2003, no
provision has been provided in the consolidated financial statements.

---

3.      
          Investment in affiliated company

The Companys long-term
investment, carried at equity, consists of 5,000,000 shares, representing a 26.7%
subscribed interest in the issued and outstanding common shares of Mexgold Resources Inc.
(Mexgold). Mexgold is a public junior natural resource issuer, listed on the
TSX Venture Exchange (TSXV: MGR), which holds a 100% interest in a single Mexican gold and
silver mineral exploration property, known as the Guadalupe Gold-Silver
Project.

Pursuant to an agreement with
Mexgold, these shares must be held until August 20, 2009, and there will be no sale,
transfer, assignment, pledge, encumbrance, grant of a security interest in or other form
of conveyance of these shares, directly, indirectly or beneficially, prior to that time
unless Mexgold so consents in writing thereto.

| | 7
| | -

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 4.
      Capital assets

|                        | July 31, 2003 | July 31, 2002
|----------------------- | ------------- | -------------
|                        |               |              
|
|                        |               |              
|Computer equipment      |               | $  15,052    
|Exploration equipment   |               | 604,202      
|Furniture and equipment |               | 7,243        
|                        |               |              
|                        |               | $626,497     
|                        |               |              

---

5.      
          Mineral properties and related deferred costs

For the year ended July
31, 2003

|                          | Balance
July 31, 2002 | Expenditures
during the year | Balance
July 31, 2003
|------------------------- | --------------------- | ---------------------------- | ---------------------
|                          |                       |                              |                      
|Mexico                    |                       |                              |                      
|La Cuesta and Santa Maria |                       | $  1,063,448                 |                      
|Ocampo                    |                       | 47,722,533                   |                      
|                          |                       |                              |                      
|                          |                       | $48,785,981                  |                      
|                          |                       |                              |                      

Included in current year expenditures
are future income taxes of $56,770.

For the year ended July
31, 2002

|                          | Balance
July 31, 2002 | Expenditures
during the year | Balance
July 31, 2003
|------------------------- | --------------------- | ---------------------------- | ---------------------
|                          |                       |                              |                      
|Mexico                    |                       |                              |                      
|La Cuesta and Santa Maria |                       | $  1,063,448                 |                      
|Ocampo                    |                       | 32,072,373                   |                      
|                          |                       |                              |                      
|                          |                       | $33,135,821                  |                      
|                          |                       |                              |                      

During fiscal 2002, $2,600,000 of
expenditures related to the Ocampo property were incurred for non-cash share consideration
and $11,111,111 of expenditures related to the Ocampo property were incurred for long term
debt consideration. Included in expenditures for 2002 are future income taxes of $865,000.

| | 8
| | -

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 6.      Commitments and contingencies

# Option and joint venture
agreements

|a) |  | Minera
Fuerte Mayo, S.A. de C.V. (Fuerte Mayo)/Compania Minera
               Brenda, S.A de C.V. (Brenda)
|-- |  | --------------------------------------------------------------------------------------------------------------

The Company has a joint venture
agreement with Fuerte Mayo respecting the Ocampo property under which the Company has a
60% participating interest in 17 mining claims in Mexico. Under the terms of the joint
venture, the Company is the operator and 100% of the sales from production on the property
may be applied to the cash payment due to Fuerte Mayo in the joint venture stage. Under
the terms of the agreement, a balance of US $211,526 is due to Fuerte Mayo upon the sale
of the property.

In April 1999, the Company secured a
right to earn the remaining 40% interest in the property. Under the terms of this
agreement, to be eligible to acquire the additional interest, the Company must first
fulfill the above conditions of the joint venture agreement. The Company can acquire the
additional interest after completing CDN $1,000,000 of exploration which must include at
least 5,000 meters of drilling and agreeing to pay US $5.00 per ounce of proved gold
reserves.

The company has fulfilled all
drilling and exploration expenditures required under the contract to acquire the full 100%
interest. Fuerte Mayo has given the Company permission to contract with the underlying
concession holder directly to obtain the remaining 40% interest in the property.

On February 21, 2003, the Company
acquired the remaining 40% of the title and interest in a group of claims located in the
municipality of Ocampo from Compania Minera Brenda S.A. de C.V. (Minera
Brenda). The Company agreed to pay 8% of net profits attributable to the development
of the mining claims and their concessions up to a maximum of US $2,000,000. An additional
US $250,000 is due if, as a result of the exploration of the claims, a minimum mining
reserve of two million ounces of equivalent gold are obtained. In the event that the
Company were to sell the property, the full US $2,000,000 becomes due and payable at that
time.

|b) |  | Minerales
de Soyopa, S.A. de C.V. (Soyopa)
|-- |  | --------------------------------------------

On November 24, 2001, the Company and
Soyopa entered into an agreement amending previous option and joint venture agreements.
Under the terms of these agreements, the Company acquired 100% of the right, title and
ownership to 17 mining claims in the Ocampo district of Mexico. Consideration for title of
the properties was US $100,000 paid on November 24, 2001, US $125,000 paid on May 23,
2002, the issuance of 5,000,000 common shares of the Company to Soyopa and US $7,000,000
in long term debt as disclosed in Note 7.

Under the terms of the agreement, the
5,000,000 common shares may only be sold at a price of CDN $2.50 or greater per share
until November 24, 2003. After November 24, 2003, the shares may be sold at any price
except that if shares are to be sold at a price less than CDN $1.00 per share, only
one-half of the shares owned may be sold. The Company has determined a value of CDN $0.52
per share (approximating the trading value at the time the agreement was entered into) for
total share consideration of CDN $2,600,000.

| | 9
| | -

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

6.      
          Commitments and contingencies (continued)

|c) |  | Compania
Minera Global, S.A. de C.V. (Global)
|-- |  | -----------------------------------------------

On July 17, 2000, the Company entered
into an agreement with Global for consulting services to assist in the negotiations of an
agreement with Soyopa to secure the right to acquire the then remaining fifty-one percent
(51%) interest in the Ocampo property.

As part of the consideration for the
successful negotiation and execution of the agreement between the Company and Soyopa and
upon sale by the Company of the lands, claims and concessions described in the agreements,
the Company is required to pay Global U.S. $1,000,000.

|d) |  | Bolnisi
Gold NL (Bolnisi)
|-- |  | ---------------------------

On March 25, 2002, the Company
entered into an Earn in Agreement with Bolnisi over certain areas of the Ocampo property.

A summary of the significant terms
and conditions of the agreement are as follows:

|i.) |  | Bolnisi
will pay the Company $30,000 CDN per month commencing April 2002 until           the
completion of the earn-in period.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------

|ii.) |  | Bolnisi
will complete the feasibility           study commenced by the Company.
|---- |  | -------------------------------------------------------------------------------

|iii.) |  | At
the completion of the feasibility           study, Bolnisi may withdraw from the
agreement if it is not subjectively           satisfied with  the results of the study
without any further obligations to the Company.
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|iv.) |  | Bolnisi
will earn a 60% interest in the properties under agreement once the           project has
been placed into production at a rate of not less that 1.25 million           tonnes per
annum. Bolnisi is responsible for all costs associated with putting           the project
into production.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|v.) |  | If
the property is not placed into production within a period of 18 months, a
          $100,000 CDN penalty per month will apply until completion. If the property has
          not been placed into production within 24 months of the due diligence period,
          the earn in agreement will be null and void and the Company will retain 100%
          ownership of the properties.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|vi.) |  | If
Gammon receives an offer from a third party to develop the remaining Ocampo
          project area, Bolnisi is granted a right of first refusal to be exercised
within           30 days.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

6.      
          Commitments and contingencies (continued)

A summary of the future commitments
based on the above noted option and joint venture agreements at July 31, 2003 are set out
in the following table:

|                                    
|------------------------------------
|
|                                    
|Minera Fuerte Mayo, S.A. de C.V     
|                                    
|Compania Minera Global, S.A. de C.V 
|                                    
|Compania Minera, Brenda, S.A. de C.V
|                                    
|                                    
|                                    
|Compania Minera, Brenda, S.A. de C.V
|                                    

# 7.      Long term debt

|                                                 | 2003 | 2002      
|------------------------------------------------ | ---- | ----------
|                                                 |      |           
|Soyopa loan, non-interest bearing, translated to |      |           
|Canadian dollars at the balance sheet date       |      | $9,870,000
|                                                 |      |           

The long term debt payable to Soyopa
is non-interest bearing with terms of repayment as follows:

|i.) |  | US
$3,500,000 on or before November 23, 2006;
|--- |  | ---------------------------------------------

|ii.) |  | US
$3,500,000 on or before November 23, 2007;
|---- |  | ---------------------------------------------

|iii.) |  | In
the event that the Company has commenced production of gold and/or silver
                    from the mining title acquired prior to November 23, 2006, the
Company is                     required to pay Soyopa US $1,000,000, annually, commencing
on the first                     anniversary of the start of production which will reduce
the remaining amount                     due;
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|iv.) |  | In
the event the Company sells or transfers title to the concessions to a third
                    party, the US $7,000,000 or the amount remaining, becomes due.
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

If Bolnisi Gold NL (Note 6d) proceeds
to establishing a joint venture under the agreement with the Company, they will be
responsible for 60% of the above payments as part of the proposed joint ventures
production expenses.

The long term debt is secured by a
first charge over certain mineral properties.

| | 11
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 8.      Income taxes

The following table reconciles the
expected income tax payable (recovery) at the statutory income tax rate to the amounts
recognized in the consolidated statements of operations for the years ended July 31, 2003
and 2002.

|                                              | 2003 | 2002         
|--------------------------------------------- | ---- | -------------
|                                              |      |              
|Net loss                                      |      | $ 534,771    
|Income tax rate                               |      | 42%          
|Expected income tax recovery                  |      | 225,000      
|Statutory rate change                         |      | (43,000      
|Share issue costs                             |      | (130,000     
|Temporary differences and other               |      | (16,000      
|Income adjustment on inter-company charges    |      | 276,000      
|Tax effect of foreign exchange gains that are |     
|not taxable for income tax purposes           |      | 488,000      
|Valuation allowance                           |      | (800,000     
|                                              |      |              
|Provision for income taxes                    |      | $          --
|                                              |      |              

The following table reflects future
income tax liabilities at July 31, 2003 and 2002.

|                                                   |  |              
|-------------------------------------------------- |  | -------------
|Accounting value of mineral properties and related |  |              
|deferred costs in excess of tax value              |  | $ 12,115,000 
|Deductible share issue costs                       |  | (312,000     
|Non-capital losses carried forward                 |  | (5,581,000   
|                                                   |  |              
|                                                   |  | 6,222,000    
|Valuation allowance                                |  | 3,208,000    
|                                                   |  |              
|Future income tax liabilities recognized           |  | $   9,430,000
|                                                   |  |              

| | 12
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 9.      Capital stock

Authorized:
Unlimited number of common shares

Unlimited number of non-cumulative,
dividends to be determined by the Board of Directors not to exceed 12%, non-participating,
non-voting, Class A preferred shares, redeemable at their paid-in value.

Unlimited number of non-cumulative,
dividends to be determined by the Board of Directors not to exceed 13%, non-participating,
non-voting, Class B preferred shares, redeemable at their paid-in value.

# Issued and outstanding:

|                                                   | Number of
Common Shares | Ascribed
Value
|-------------------------------------------------- | ----------------------- | --------------
|                                                   |                         |               
|Balance - July 31, 2001                            |                         | 20,680,066    
|Issued during the year ended July 31, 2002:        |                        
|Pursuant to joint venture agreement                |                        
|Minerals de Soyopa, S.A. de C.V. (Ocampo property) |                         | 5,000,000     
|For cash pursuant to private placements            |                         | 7,525,000     
|For cash upon exercise of share purchase options   |                         | 1,155,000     
|For cash upon exercise of special warrants         |                         | 519,250       
|For cash upon exercise of share purchase warrants  |                         | 1,410,700     
|For cash upon exercise of compensation warrants    |                         | 163,750       
|Less:  share issue costs                           |                         | --            
|                                                   |                         |               
|Balance - July 31, 2002                            |                         | 36,453,766    
|Issued during the year ended July 31, 2003:        |                        
|For cash upon exercise of share purchase options   |                         | 1,275,500     
|For cash upon exercise of share purchase warrants  |                         | 2,011,270     
|For cash upon exercise of compensation warrants    |                         | 293,750       
|Pursuant to agreement for professional services    |                        
|and exercise of share purchase options             |                         | 900,000       
|                                                   |                         |               
|Balance - July 31, 2003                            |                         | 40,934,286    
|                                                   |                         |               

| | (1) |  | Pursuant
to an agreement with Soyopa, the Company issued 5,000,000 shares to           Soyopa at a
price of $0.52 per share, representing the approximate trading value           at the
time the agreement was entered into.
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) |  | Pursuant
to professional services agreements, the Company issued 500,000 shares           at a
price of $1.01 per share, and 400,000 shares at a price of $0.93 per share,
          representing the approximate trading value at the time the agreement was
entered           into. Included in the ascribed value is $270,250, which was the fair
value of           the options at the time of the issuance.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 13
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 9.      Capital stock (continued)

Escrow shares
As at July 31, 2003, 1,123,976 (2002
 3,966,926) common shares issued to promoters of Gammon Lake Resources Inc. and
other investors are held in escrow and will be released subject to certain regulatory
approvals.

Share purchase warrants
A summary of the 2,349,780
outstanding warrants to purchase common shares as at July 31, 2003 is as follows:

|Number of
Common SharesUnder Warrant | Expiration Date | Exercise Price    | Total
|------------------------------------ | --------------- | ----------------- | -----
|640,000                              |                 | October 9, 2003   |      
|                                     |                 |                   |      
|1,709,780                            |                 | November 30, 2003 |      
|                                     |                 |                   |      

During the year ended July 31, 2003,
100,000 share purchase warrants expired.

Compensation warrants
With respect to a private placement
offering of October 12, 2001, the Company granted 197,500 non-assignable brokers
options entitling the underwriter to acquire from the Company, for no additional
consideration, prior to October 9, 2002, 197,500 compensation warrants. Each compensation
warrant entitled the underwriter to acquire one unit, each unit consisting of one common
share and one common share purchase warrant of the Company at a price of $0.61 per unit up
to October 9, 2003. By July 31, 2003, all of these compensation warrants had been
exercised.

With respect to a private placement
of May 31, 2002, the Company granted 260,000 compensation warrants. Each compensation
warrant entitles the underwriter to acquire one unit for $1.50 per unit. Each unit
consists of one common share and one half of a common share purchase warrant. Each
purchase warrant entitles the underwriter to acquire one common share of the Company at
$1.50 per share. By July 31, 2003 all of these compensation warrants and common share
purchase warrants had been exercised.

Stock options
The Company has a stock option plan
under which options to purchase common shares of the Company may be granted to directors,
senior officers, employees and service providers of the Company. The aggregate number of
common shares which may be reserved for issuance under the plan shall be 9,125,000. The
maximum number of common shares which may be reserved for issuance to any one person under
the plan shall be 5% of the shares outstanding at the time of grant (on a non-diluted
basis) less the aggregate number of shares reserved for issuance to such person under any
other option to purchase shares from treasury granted as a compensation or incentive
mechanism.

| | 14
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 9.      Capital stock (continued)

An aggregate of 12,853,300 options
have been granted pursuant to the Companys stock option plan of which 4,902,300 have
been exercised or have expired. Set forth below is a summary of the outstanding options to
purchase common shares as at July 31, 2003.

|Holder            | Number ofShares Under Option | Expiration Date | ExercisePrice | Total($)          
|----------------- | ---------------------------- | --------------- | ------------- | ------------------
|Director          |                              | 40,000          |               | January 31, 2005  
|Directors         |                              | 470,000         |               | April 25, 2006    
|Consultants and   |                             
|employees         |                              | 38,000          |               | April 25, 2006    
|Directors         |                              | 60,000          |               | September 26, 2006
|Consultants       |                              | 60,000          |               | September 26, 2006
|Directors         |                              | 400,000         |               | January 18, 2007  
|Consultants       |                              | 100,000         |               | March 1, 2007     
|Officers          |                              | 150,000         |               | February 7, 2007  
|Consultants       |                              | 75,000          |               | February 7, 2007  
|Directors         |                              | 700,000         |               | March 15, 2007    
|Consultants       |                              | 448,000         |               | March 15, 2007    
|Consultants       |                              | 35,000          |               | April 24, 2007    
|Consultant        |                              | 300,000         |               | May 21, 2007      
|Consultant        |                              | 25,000          |               | June 25, 2004     
|Directors         |                              | 1,150,000       |               | October 9, 2007   
|Directors         |                              | 2,347,000       | (1)           | July 4, 2008      
|Consultants       |                              | 1,540,000       | (1)           | July 4, 2008      
|Employees         |                              | 13,000          | (1)           | July 4, 2008      
|                  |                              |                 |               |                   
|                  |                             
|Total Outstanding |                              | 7,951,000       |               |                   
|                  |                              |                 |               |                   

(1)    
          Subject to shareholder approval at the next annual and special meeting.

|Fixed Options                    | July 31, 2003 | July 31, 2002
|-------------------------------- | ------------- | -------------
|                                 |               |              
|
|                                 |               |              
|Outstanding, beginning of year   |               | 4,576,500    
|Granted                          |               | 5,550,000    
|Expired                          |               | --           
|Exercised                        |               | (2,175,500   
|                                 |               |              
|Outstanding, end of year         |               | 7,951,000    
|                                 |               |              
|Options exercisable, end of year |               | 4,051,000    
|                                 |               |              

(1)    
          3,900,00 options granted during the year ended July 31, 2003 are subject to
          shareholder approval at the next annual and special meeting. (2) At July 31,
          2002 there were 2,205,000 options subject to shareholder approval.

| | 15
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 9.      Capital stock (continued)

The Company applies the intrinsic
value based method of accounting for stock-based compensation awards to employees and
accordingly no compensation cost is recognized. Had stock-based compensation for 3,510,000
options granted under the Plan since July 31, 2002 been determined on the basis of the
fair value at the date of grant in accordance with the fair value method of accounting for
stock-based compensation, and assuming the options subject to shareholder approval are
authorized, the Companys pro forma net earnings and earnings per share for the year
ended July 31, 2003 would have been as follows:

|            | Net Loss | LossPer Share
|----------- | -------- | -------------
|As reported |          | $  (534,771  
|Pro forma   |         
|2 years     |          | $(4,446,834  
|5 years     |          | $(6,079,329  

Due to uncertainty of the expected
life of the options granted during the year ended July 31, 2003, the Company has provided
a range for expected option life based on managements best estimate. For purposes of
the calculations on the foregoing table, the fair value of each option was estimated on
the date of grant using the Black-Scholes option pricing model with the following
assumptions used for grants:

|                        | 2 Year | 5 Year 
|----------------------- | ------ | -------
|Dividend yield          |        | 0%     
|Expected volatility     |        | 100%   
|Risk free interest rate |        | 3.13%  
|Expected life           |        | 2 years

During the year ended July 31, 2003,
500,000 options were granted to a consultant which has been based on the fair value of the
options on the date granted. For the purposes of this calculation, the fair value of
options was estimated using an expected life of two years. As a result, $270,250 was
recorded as professional fees.

No amount has been recorded with
respect to the 1,540,000 options granted under consulting agreements dated July 4, 2003 as
these services will be provided subsequent to July 31, 2003 and the options are subject to
shareholder approval at the next annual and special meeting.

---

# 10.      Loss per share

Loss per share is calculated based on
the weighted average number of shares outstanding during the year ended July 31, 2003 of
35,670,888 (2002  23,946,982). Escrow shares are not included in the weighted
average number of shares outstanding.

| | 16
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

10.      
          Loss per share (continued)

Diluted loss per share is based on
the assumption that options under the stock options plan and warrants have been exercised
on the later of the beginning of the year and the date granted. The treasury stock method
is used to determine the dilutive effect of stock options and warrants. The treasury stock
method assumes that proceeds received from the exercise of the in-the-money stock options
and warrants are used to repurchase shares at the average market rate. The diluted
weighted average number of shares for the year ended July 31, 2003 and 2002 were not
presented, as all factors are anti-dilutive.

11.     
          Supplemental cash flow information

|                                              | 2003 | 2002             
|--------------------------------------------- | ---- | -----------------
|                                              |      |                  
|Change in non-cash operating working capital: |      |                  
|Receivables                                   |      | $  (511,780      
|Prepaids                                      |      | (12,924          
|Payables and accruals                         |      | 1,040,274        
|                                              |      |                  
|                                              |      | $    515,570     
|Interest and income taxes paid:               |     
|Income taxes                                  |      | $             Nil
|                                              |      |                  
|Income taxes                                  |      | $             Nil
|                                              |      |                  

|                                      | July 31
2003 | July 31
2002
|------------------------------------- | ------------ | ------------
|                                      |              |             
|Cash and cash equivalents consist of: |              |             
|Cash on hand and balances with banks  |              | $   361,614 
|Temporary money market instruments    |              | 903,000     
|                                      |              |             
|                                      |              | $1,264,614  
|                                      |              |             

---

# 12.      Related party transactions

The Company paid the following
amounts to Directors and companies controlled by Directors:

|                                          | 2003 | 2002    
|----------------------------------------- | ---- | --------
|                                          |      |         
|Management fees                           |      | $282,938
|Mineral property exploration expenditures |      | 13,462  
|Promotional fees                          |      | --      
|Professional fees                         |      | 91,878  
|                                          |      |         
|                                          |      | $388,278
|                                          |      |         

At July 31, 2003 and included in the
Management fees above, the Company had bonuses payable to directors of $225,000.

| | 17
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

# 13.      Financial instruments

The Companys financial
instruments consisted of cash and cash equivalents, receivables, payables and long term
debt. Unless otherwise noted, it is managements opinion that the Company is not
exposed to significant interest or credit risks arising from these financial instruments.
Some of the Companys receivables and payables are denominated in Mexican Pesos and
the Companys long term debt is denominated in United States dollars and are
translated at the period end based on the Companys accounting policy as set out in
Note 2 to the consolidated financial statements. The long term debt creates a risk to the
Companys earnings that arises from fluctuations in foreign exchange rates and the
degree of volatility of these rates.

The Company estimates that the fair
value of its cash and cash equivalents, receivables, investment in affiliated company and
payables approximate their carrying values. There is no satisfactory market for the
Companys long term debt based on the nature of the transaction and the uncertainty
and potentially broad range of outcomes pertaining to the future cash outflows related
which renders the calculation of fair value with approximate reliability impractical.

---

# 14.      Comparative figures

Certain of the comparative figures
for July 31, 2002 have been reclassified to conform to the financial statement
presentation adopted for July 31, 2003.

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles

The following represents additional
information to the consolidated financial statements of the Company that were prepared in
accordance with accounting principles generally accepted in Canada (Canadian
GAAP). Set out below are the material adjustments to net loss for the years ending
July 31, 2003 and 2002 and to shareholders equity at July 31, 2003 and 2002 in order
to conform to accounting principles generally accepted in the United States (U.S. GAAP).

# Statement of loss:

|                                        
|----------------------------------------
|
|                                        
|Net loss for the year based on          
|Canadian GAAP                           
|Deferred exploration costs prior to the 
|establishment of proven and probable    
|mineral reserves a)                     
|Future income taxes relating to deferred
|exploration costs a)                    
|Amortization of mineral rights a)       
|Future income tax relating to the       
|amortization of mineral rights a)       

| | 18
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

# Statement of loss
(continued):

|                                        
|----------------------------------------
|
|                                        
|Foreign exchange gain on future income  
|taxes liability previously expensed     
|Stock based compensation c)             
|Interest expense on long term debt      
|adjusted to fair value f)               
|Foreign exchange gain on adjusted       
|long term debt f)                       
|Net loss for the year based on U.S. GAAP
|                                        
|Loss per share, basic and diluted       
|                                        

Shareholders' equity:

|                                        
|----------------------------------------
|
|                                        
|Shareholders' equity based on           
|Canadian GAAP                           
|Deferred exploration costs prior to the 
|establishment of proven and probable    
|mineral reserves a)                     
|Future income taxes relating to deferred
|exploration costs a)                    
|Amortization of mineral rights a)       
|Future income taxes relating to the     
|amortization of mineral rights a)       
|Foreign exchange gain on future income  
|taxes liability previously expensed     
|with exploration costs a)               
|Adjustment for exploration costs on     
|abandoned properties b)                 
|Interest expense on long term debt      
|adjusted to fair value f)               
|Foreign exchange gain on fair value     
|adjusted long term debt f)              
|                                        
|Shareholders' equity based on U.S. GAAP 
|                                        

| | 19
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

# Balance sheet
differences:

The following material balance sheet
differences exist between Canadian and U.S. GAAP.

1)    
          Mineral properties and related deferred costs

|                                             
|---------------------------------------------
|
|                                             
|Canadian GAAP                                
|Deferred exploration costs                   
|prior to the establishment of proven and     
|                                             
|probable mineral reserves a)                 
|                                             
|Amortization of mineral rights a)            
|Adjustment for exploration costs on abandoned
|properties b)                                
|Adjustment for mineral property purchase     
|at fair value f)                             
|U.S. GAAP                                    

2)     Long term debt

|                                             
|---------------------------------------------
|
|                                             
|Canadian GAAP                                
|Adjustment of long term debt to fair value f)
|Interest payable on long term debt           
|adjusted to fair value f)                    
|Foreign exchange gain on fair value          
|adjusted long term debt f)                   
|                                             
|U.S. GAAP                                    
|                                             

| | 20
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

3)    
          Future income taxes

|                                                
|------------------------------------------------
|
|                                                
|Canadian GAAP                                   
|Future income taxes relating to deferred        
|exploration costs a)                            
|Future income taxes relating to the amortization
|of mineral rights a)                            
|Foreign exchange gain on future income tax      
|liabilities previously expensed a)              
|                                                
|U.S. GAAP                                       
|                                                

a)    
          Mineral properties and related deferred costs

In March 2002, the Emerging Issues
Committee of the CICA issued EIC 126  Accounting by Mining Enterprises for
Exploration Costs which affects mining companies with respect to the deferral of
exploration costs. EIC 126 refers to CICA Handbook Section 3061 Property, Plant and
Equipment, paragraph .21 which states that for a mining property, the cost of the
asset includes exploration costs if the enterprise considers that such costs have the
characteristics of property, plant and equipment. EIC 126 then states that a mining
enterprise that has not established mineral reserves objectively, and therefore does not
have a basis for preparing a projection of the estimated cash flow from the property is
not precluded from considering the exploration costs to have the characteristics of
property, plant and equipment. EIC 126 also sets forth the Committees consensus that
a mining enterprise in the exploration stage is not required to consider the conditions
regarding impairment in determining whether exploration costs may be initially
capitalized. With respect to impairment of capitalized exploration costs, if an enterprise
has not established mineral reserves objectively, and therefore does not have a basis for
preparing a projection of the estimated cash flow from the property it is not obliged to
conclude that capitalized costs have been impaired. However, such an enterprise should
consider the conditions set forth in CICA Handbook Section 3061 in determining whether
subsequent write-down of capitalized exploration costs related to mining properties is
required.

The Company considers that
exploration costs have the characteristics of property, plant and equipment and,
accordingly, defers such costs. Furthermore, pursuant to EIC 126, deferred exploration
costs would not automatically be subject to regular assessment of recoverability, unless
certain conditions exist.

Under United States GAAP, exploration
costs are not considered to have the characteristics of property, plant and equipment and
accordingly are expensed prior to the Company determining that proven or provable mineral
reserves exist, after which time all such costs are capitalized. Prior to August 1, 1999,
the Company had capitalized $3,102,058 which is expensed for U.S. GAAP purposes.

| | 21
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

Further, pursuant to FAS 142,
effective August 2002, the costs of acquiring mineral rights are considered to be
intangible assets with finite lives and under US GAAP must be amortized over the useful
life of the mineral right. Accordingly, the Company has commenced amortizing the mineral
rights over their estimated useful lives of 6 years commencing August 1, 2002.

b)      
Adjustment for exploration costs on abandoned properties

The Company accounts for mineral
properties and related deferred expenditures as described in item (a). During the years
ended July 31, 2001 and 2000, $150,784 and $44,064 respectively was written-off as the
development was not considered economically feasible and therefore abandoned. Under U.S.
GAAP these costs would have been expensed in a prior period. The write-off of the mineral
rights under U.S. GAAP would be included in the expenses and the sub-total loss before
write-off would not be permitted.

# c)    Stock-based compensation

The Company accounts for its stock
based compensation under US GAAP in accordance with APB25 (intrinsic value method) for
employees and FAS No. 123 (fair value method) for non-employees. Under Canadian GAAP,
stock options granted to employees and non-employees prior to August 1, 2002 are accounted
for as capital transactions when the options are exercised. Subsequent to August 1, 2002,
under Canadian GAAP, stock options granted to employees continue to be accounted for as
capital transactions and stock options granted to non-employees are accounted for using
the fair value method.

Prior to August 1, 1999, the Company
had issued stock options to non-employees with a total fair value of $180,613 which is
expensed for U.S. GAAP purposes.

If the Company had accounted for its
stock-based compensation plan for employees under FAS No. 123, the pro forma impact would
have been as follows:

|                                        
|----------------------------------------
|
|                                        
|Net loss for the year based on U.S. GAAP
|Expense under FAS No. 123               
|                                        
|Pro forma net loss                      
|                                        
|Pro forma loss per share:               
|Basic and diluted                       
|                                        

| | 22
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

The Company estimates the fair value
of options granted using the Black-Scholes option price model using the following
assumptions:

|                              
|------------------------------
|
|                              
|Risk free interest rate       
|Expected life of options      
|Expected volatility of the    
|Company's share price         
|Expected dividend yield       
|                              
|Weighted average fair value of
|options granted               
|                              

d)    
          Statements of cash flows

As a result of the treatment of
mining interests under item (a) above, cash expended for exploration costs would be
classified as operating rather than investing, resulting in the following totals.

|                       
|-----------------------
|
|                       
|Cash used in operations
|                       
|Cash used in investing 
|                       

# e)    Comprehensive income

Effective for fiscal years beginning
after December 15, 1997, Statement of Financial Accounting Standards No. 130
Reporting Comprehensive Income (FAS 130), is applicable for US
GAAP purposes. FAS 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose financial
statements. FAS 130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a financial
statement.

| | 23
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

f)     Fair
value of long term debt

In consideration for the Soyopa
claims acquired in November, 2001 (Note 6(b)), the Company entered into a non-interest
bearing loan agreement as disclosed in Note 7. Under Canadian GAAP, this loan has been
presented at its face value of US $7,000,000. Under US GAAP, interest must be imputed on
this loan in accordance with APB 21. The reduction in the principal amount of the loan as
a result of imputing a market rate of interest also reduces the carrying values of the
companys mineral properties accordingly.

During the periods subsequent to
November, 2001, the interest imputed on the loan is recorded as a period expense.

g)    
          Recent accounting pronouncements

Foreign currency and
hedging

In November 2001, the CICA issued
Accounting Guideline 13, Hedging Relationships (AcG 13) which
establishes new criteria for hedge accounting and will apply to all hedging relationships
in effect for the Companys years ending on or after August 1, 2003. Effective August
1, 2003, the Company will reassess all hedging relationships to determine whether the
criteria are met or not and will apply the new guidance on a prospective basis. To qualify
for hedge accounting, the hedging relationship must be appropriately documented at the
inception of the hedge and there must be reasonable assurance, both at the inception and
throughout the term of the hedge, that the hedging relationship will be effective. The
Company does not currently have any hedging relationships.

Disposal of Long-Lived
Assets and Discontinued Operations

In December 2002, the CICA issued
Handbook Section 3475 for Disposal of Long-Lived Assets and Discontinued Operations with
the purpose of harmonizing Canadian GAAP with generally accepted accounting principles in
the Unites States of America (U.S. GAAP). The section is effective for
disposal activities initiated by a commitment to a plan on or after May 1, 2003, with
earlier adoption encouraged. The key aspects of Handbook Section 3475 are as follows:

| |  |  | a
 long-lived  asset to be  disposed  of other than by sale  should  continue  to be
 classified  as held and used until it is          disposed of;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | a
long-lived asset can only be classified as held for sale if certain criteria are met;
| | - |  | ---------------------------------------------------------------------------------------

| |  |  | an
asset classified as held for sale should be measured at the lower of its carrying amount
or fair value less costs to sell;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------

| |  |  | a
loss recognized on classification of an asset as held for sale does not include future
operating losses;
| | - |  | ----------------------------------------------------------------------------------------------------------

| |  |  | discontinued
operations are defined more broadly than previously. They comprise dispositions where the
operations and cash flows can be clearly distinguished, operationally and for financial
reporting purposes, from the rest of the enterprise;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | the
income statement display of discontinued operations is unchanged from previous display;
and
| | - |  | -----------------------------------------------------------------------------------------------

| |  |  | various
disclosures related to the disposal of long-lived assets is required.
| | - |  | -----------------------------------------------------------------------------

| | 24
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

The Company is currently assessing
the impact of Handbook Section 3475 on its financial position and results of operations.

Accounting for Severance
and Termination Benefits

In March 2003, the EIC issued EIC
Abstract 134 for Accounting for Severance and Termination Benefits, which addresses the
various types of severance and termination benefits related to the termination of an
employees services prior to normal retirement. The accounting treatment must be
applied prospectively to exit or disposal activities initiated after March 31, 2003. This
Abstract harmonizes Canadian GAAP and U.S. GAAP.

Costs associated with
exit or disposal activities

In July 2002, the FASB issued
Statement of Financial Accounting Standards No. 146 Accounting for Costs Associated with
Exit or Disposal Activities (FAS 146). FAS 146 addresses financial accounting
and reporting for costs associated with exit or disposal activities, and is effective for
exit or disposal activities initiated after December 31, 2002. FAS 146 nullifies Emerging
Issues Task Force Issue No. 94-3 (EITF 94-3) Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including Certain costs
Incurred in Restructuring). The principal difference between FAS 146 and EITF 94-3 relates
to the recognition of a liability for a cost associated with an exit or disposal activity.
FAS 146 requires that the cost associated with an exit or disposal activity be recognized
when the liability is incurred, whereas under EITF 94-3 the liability was recognized at
the date of an entitys commitment to an exit plan. This is substantially consistent
with the CICA EIC Abstract 135, Accounting for Costs Associated with Exit and Disposal
Activities (Including Costs Incurred in a Restructuring). This new guidance is effective
for fiscal years beginning after December 31, 2002, and will impact any exit or disposal
activities the company initiates after that date.

Guarantees

In November 2002, the FASB issued
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN
45), which requires certain disclosures to be made by a guarantor in its interim and
annual financial statements for periods ending after December 15, 2002 about its
obligations under guarantees. FIN 45 also requires the recognition of a liability by a
guarantor at the inception of certain guarantees entered into or modified after December
31, 2002. FIN 45 requires the guarantor to recognize a liability for a non-contingent
component of certain guarantees; that is, it requires the recognition of a liability for
the obligation to stand ready to perform in the event that specified triggering events or
conditions occur. The initial measurement of this liability is the fair value of a
guarantee at inception. This is substantially consistent with the CICA Accounting
Guideline AcG-14, Disclosure of Guarantees. The Company does not have any guarantees under
these standards.

| | 25
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

Variable interest entities

In January 2003, the FASB issued
Interpretation No. 46 Consolidation of Variable Interest Entities
(VIEs) (FIN 46) which requires that companies that control
another entity through interests other than voting interest should consolidate the
controlled entity. In the absence of clear control through a voting equity interest, a
companys exposure (variable interests) to the economic risk and the potential
rewards from a VIEs assets and activities are the best evidence of a controlling
financial interest. VIEs created after January 31, 2003 must be consolidated
immediately. VIEs existing prior to February 1, 2003 must be consolidated by the
Company commencing with its first quarter 2004 financial statements. The Company has not
yet determined whether it has any VIEs which will require consolidation.

Derivatives and hedging
activities

In April 2003, the FASB issued SFAS
No, 149 Amendment of SFAS No. 133 on Derivative Instruments and Hedging
Activities. SFAS 149 amends and clarifies accounting for SFAS No. 133
Accounting for Derivative Instruments and Hedging Activities. In particular,
it clarifies under what circumstances a contract with an initial net investment meets the
characteristics of a derivative as discussed in SFAS No. 133; clarifies when a derivative
contains a financing component; amends the definition of an underlying to conform it to
the language used in the FASB Interpretation No. 45; and amends certain other existing
pronouncements. This is substantially consistent with the CICA EIC Abstract 128,
Accounting for Trading, Speculative or Non-Hedging Derivative Financial Instruments.

SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. CICA EIC Abstract 128 is effective for fiscal years
beginning on or after July 1, 2003. The Company will adopt the provisions of SFAS No. 149
for U.S. GAAP purposes on August 1, 2003 and will adopt the provisions of CICA EIC 128 on
July 1, 2003 and is currently assessing the impact, if any, that the adoption of SFAS No,
149 will have on its results of operations and financial position.

Liabilities and equity

On May 15, 2003, the FASB issued
Statement No, 150, Accounting for Certain Financial Instruments with Characteristics of
Both Liabilities and Equity. The Statement requires issuers to classify as liabilities
(or assets in some instances) three classes of freestanding financial instruments that
embody obligations for the issuer.

Generally, the Statement is effective
for financial instruments entered into or modified after May 31, 2003 and is otherwise
effective at the beginning of the first interim period beginning after June 15, 2003. The
Company will adopt the provisions of the Statement on August 1, 2003. The Company is
currently assessing the impact of the new standard.

| | 26
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

15.      
          Differences between Canadian and U.S. generally accepted accounting
          principles (continued)

Asset Retirement
Obligations

In July 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 143, Accounting for Asset Retirement Obligations. This statement
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement costs. This
Statement applies to all entities. It applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development and/or the normal operation of a long-lived asset, except for certain
obligations of lessees. This Statement is effective for financial statements issued for
fiscal years beginning after June 15, 2002. This is substantially consistent with the CICA
Handbook Section 3110, Asset Retirement Obligations, which is effective for fiscal periods
beginning on or after January 1, 2004.

Stock-based employee
compensation

In December 2002, the FASB issued
Statement 148 (SFAS 148), Accounting for Stock-Based Compensation  Transition
and Disclosure: an amendment of FASB Statement 123 (SFAS 123), to provide
alternative transition methods for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS 148 amends the
disclosure requirements of SFAS 123 to require prominent disclosures in annual financial
statements about the method of accounting for stock-based employee compensation and the
pro forma effect on reported results of applying the fair value based method for entities
that use the intrinsic value method of accounting. The pro forma effect disclosures are
also required to be prominently disclosed in interim period financial statements. This
statement is effective for financial statements for fiscal years ending after December 15,
2002 and is effective for financial reports containing condensed financial statements for
interim periods beginning after December 15, 2002, with earlier application permitted. The
Company does not plan a change to the fair value based method of accounting for
stock-based employee compensation and believes that the accompanying financial statements
are consistent with the new guidance contained in SFAS 148.

| | 27
| | --

---

---

Gammon Lake Resources Inc.
Notes to the Consolidated Financial StatementsJuly 31, 2003 and 2002

---

16.      
          Subsequent events

(i)     Bolnisi Gold NL (Bolnisi)
and           Recursos Mineros S.A. de C.V. (Recursos)

On August 11th, 2003, the Company
entered into an agreement with Bolnisis wholly-owned Mexican subsidiary, Recursos
Mineros de Ocampo S.A. de C.V. (Recursos). The agreement provides for the
following:

| | a. |  | The
Company grants Recursos the exclusive right to explore and exploit certain mining
concessions in the Ocampo region of Chihuahua, Mexico within the terms of the mining law
in Mexico, including the construction of a plant and mine infrastructure.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b. |  | The
Company  confirms  that if debt  financing is required by Recursos or Bolnisi,  the
Company will give security to the debt provider over and in limited recourse to the
mining claims on terms which are commercially reasonable and customary in the industry.
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c. |  | The
agreement will be effective until one of the following events occur:
| | -- |  | ------------------------------------------------------------------------

| |  |  |  | the
date on which the Earn-in agreement terminates or
| |  | - |  | -----------------------------------------------------

| |  |  |  | the
date on which an interest in the mining claims is transferred to a nominee of the parent
company of Recursos according to the earn-in agreement.
| |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

# (ii)     Private placement
financing

On August 19, 2003, the Company
completed a fully subscribed private placement financing of $17,250,000 through BMO
Nesbitt Burns Inc. as the exclusive agent. The total offering, including the exercise of
the agents over-allotment option consisted of 5,390,625 common shares sold at $3.20
per share.

# (iii)    American Stock
Exchange

On September 4, 2003, the Company
commenced trading on the American Stock Exchange and became a registrant company of the
Securities and Exchange Commission (SEC) in the United States. Its shares are traded under
the symbol GRS.

| | 2
| | -

---

EXHIBIT 99.6

I,
Bradley H. Langille, certify that:

1
       I have reviewed this annual report on Form 40-F of Gammon Lake Resources Inc.;

2.       Based
on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the
period covered by this report;

3.       
Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in
this report;

4.       
The registrants other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the registrant and have:

| | (a)       
               Designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)       
               Evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)       
               Disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.       
The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions):

| | (a)       
               All significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | (b)       
               Any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date:  August 19, 2004

| | /s/ Bradley H. Langille
Bradley H. Langille
Chief Executive Officer
| | -------------------------------------------------------------------

---

I,
Leanne Dowe, certify that:

1.       
          I have reviewed this annual report on Form 40-F of Gammon Lake Resources Inc.;

2.       
          Based on my knowledge, this report does not contain any untrue statement of a
          material fact or omit to state a material fact necessary to make the statements
          made, in light of the circumstances under which such statements were made, not
          misleading with respect to the period covered by this report;

3.       
          Based on my knowledge, the financial statements, and other financial information
          included in this report, fairly present in all material respects the financial
          condition, results of operations and cash flows of the registrant as of, and
          for, the periods presented in this report;

4.       
          The registrants other certifying officer(s) and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

| | (a)       
               Designed such disclosure controls and procedures, or caused such disclosure
               controls and procedures to be designed under our supervision, to ensure that
               material information relating to the registrant, including its consolidated
               subsidiaries, is made known to us by others within those entities, particularly
               during the period in which this report is being prepared;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b)       
               Evaluated the effectiveness of the registrants disclosure controls and
               procedures and presented in this report our conclusions about the effectiveness
               of the disclosure controls and procedures, as of the end of the period covered
               by this report based on such evaluation; and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (c)       
               Disclosed in this report any change in the registrants internal control
               over financial reporting that occurred during the registrants most recent
               fiscal quarter (the registrants fourth fiscal quarter in the case of an
               annual report) that has materially affected, or is reasonably likely to
               materially affect, the registrants internal control over financial
               reporting; and
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

5.       
          The registrants other certifying officer(s) and I have disclosed, based on
          our most recent evaluation of internal control over financial reporting, to the
          registrants auditors and the audit committee of the registrants
          board of directors (or persons performing the equivalent functions):

| | (a)       
               All significant deficiencies and material weaknesses in the design or operation
               of internal control over financial reporting which are reasonably likely to
               adversely affect the registrants ability to record, process, summarize and
               report financial information; and
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

| | (b)       
               Any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal control over
               financial reporting.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date:  August 19, 2004

| | /s/ Leanne Dowe
Leanne Dowe
Chief Financial Officer
| | ---------------------------------------------------

---

EXHIBIT 99.7

# CERTIFICATION PURSUANT
TO
18 U.S.C. §1350, 
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Amendment No.
1 to the Annual Report on Form 40-F of Gammon Lake Resources Inc. (the
Company) for the period ended July 31, 2003, as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Bradley H. Langille,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

| | 1. |  | The
Report fully complies with the requirements of Section 13(a) or 15(d) of the
          Securities Exchange Act of 1934; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------

| | 2. |  | The
information contained in the Report fairly presents, in all material           respects,
the financial condition and results of operations of the Company.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Date:  August 19, 2004

| | /s/ Bradley H. Langille
Bradley H. Langille
Chief Executive Officer
| | -------------------------------------------------------------------

---

# CERTIFICATION PURSUANT
TO
18 U.S.C. §1350, 
AS ADOPTED PURSUANT TO 
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Amendment No.
1 to the Annual Report on Form 40-F of Gammon Lake Resources Inc. (the
Company) for the period ended July 31, 2003, as filed with the Securities and
Exchange Commission on the date hereof (the Report), I, Leanne Dowe, Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

| | 1. |  | The
Report fully complies with the requirements of Section 13(a) or 15(d) of the
          Securities Exchange Act of 1934; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------

| | 2. |  | The
information contained in the Report fairly presents, in all material           respects,
the financial condition and results of operations of the Company.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------

Date:  August 19, 2004

| | /s/ Leanne Dowe
Leanne Dowe
Chief Financial Officer
| | ---------------------------------------------------

---