EXHIBIT 99.1

# GAMMON LAKE RESOURCES
INC.

ANNUAL INFORMATION FORM

December 15, 2003

---

2

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

ANNUAL INFORMATION FORM 

TABLE OF CONTENTS

|                                                                        
|------------------------------------------------------------------------
|ANNUAL INFORMATION FORM                                                 
|
|ITEM 1:  CORPORATE STRUCTURE                                            
|
|ITEM 2:  GENERAL DEVELOPMENT OF THE BUSINESS                            
|
|ITEM 3:  NARRATIVE DESCRIPTON OF THE BUSINESS                           
|
|DESCRIPTION OF THE CORPORATION'S EXPLORATION PROJECTS                   
|Ocampo Project                                                          
|General                                                                 
|Soyopa Joint Venture                                                    
|Minera Fuerte Joint Venture                                             
|Bolnisi Earn-In Agreement                                               
|Bolnisi Termination Agreement                                           
|Property Description and Location                                       
|Accessibility, Climate, Local Resources, Infrastructure and Physiography
|History                                                                 
|Geology and Mineralization                                              
|Deposit Model                                                           
|Gold and Silver Mineralization                                          
|Exploration                                                             
|Metallurgy                                                              
|2001 Resource Estimate                                                  
|Data Collaboration                                                      
|2003 Resource Estimate                                                  
|Check Assay Program                                                     
|Geotechnical Studies                                                    
|Process Design Work                                                     
|Economic Assessment and Engineering Study by Pincock, Allen & Holt      
|Northeast Ocampo Scoping Study 2003                                     
|
|Santa Maria and La Cuesta Claims                                        
|Location and Access                                                     
|Geology                                                                 
|Current Exploration Results                                             
|Investment in Mexgold Resources Inc.                                    
|
|RISKS AND UNCERTAINTIES                                                 
|No History of Profitability                                             
|Exploration Stage Corporation                                           
|Foreign Operations                                                      
|Government Regulations                                                  
|Market Fluctuation and Commercial Quantities                            
|Mining Risks and Insurance                                              
|Environmental Protection                                                
|Capital Investment                                                      
|Conflicts of Interest                                                   
|Dependence on Key Personnel                                             
|Lack of Active Market                                                   

---

3

|                                                     |    |    | 
|---------------------------------------------------- | -- | -- | 
|Currency                                             |    | 26 | 
|Dividends                                            |    | 26 | 
|Competition                                          |    | 26 | 
|
|ITEM 4:  SELECTED CONSOLIDATED FINANCIAL INFORMATION | 27 |   
|ANNUAL INFORMATION                                   |    | 27 | 
|QUARTERLY INFORMATION                                |    | 27 | 
|DIVIDEND RECORD AND POLICY                           |    | 28 | 
|
|ITEM 5:  MANAGEMENT'S DISCUSSION AND ANALYSIS        | 28 |   
|OVERVIEW                                             |    | 28 | 
|DESCRIPTION OF BUSINESS                              |    | 28 | 
|RESULTS OF OPERATIONS                                |    | 28 | 
|FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES |    | 30 | 
|DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP           |    | 31 | 
|OUTLOOK                                              |    | 31 | 
|
|ITEM 6:  MARKET FOR SECURITIES                       | 33 |   
|
|ITEM 7:  OFFICERS AND DIRECTORS                      | 33 |   
|
|ITEM 8:  ADDITIONAL INFORMATION                      | 35 |   

---

4

# ANNUAL INFORMATION FORM 

for the twelve months ended July 31, 2002 
containing information as at November 8, 2002

ITEM 1:  CORPORATE
STRUCTURE

Gammon
Lake Resources Inc. (the Corporation) was incorporated under Part 1A of the
Companies Act (Quebec) on February 25, 1986, under the name Golden Rock
Explorations Inc.. In 1990, the Corporation became the subject of a cease trade
order issued by the Quebec Securities Commission for failure to file interim financial
statements. In 1998, the cease trade order was revoked and the Corporation was reactivated
through a series of reorganization transactions (the Reorganization
Transactions) which included the acquisition of all of the issued and outstanding
securities of Gammon Lake Resources Incorporated, a company with mineral
exploration interests in the State of Chihuahua, Mexico and the Province of Nova Scotia,
in exchange for securities of the Corporation on a one-for-one basis. As part of these
transactions, the Corporation also changed its name to its current form of name,
Gammon Lake Resources Inc., and consolidated its common shares on a 15:1 basis
immediately before the acquisition of Gammon Lake Resources Incorporated.

The
registered office of the Corporation is located at 1, Place Ville-Marie, Suite 3900,
Montreal, Quebec, H3B 4M7. The Corporations principal office is located at 202
Brownlow Avenue, Cambridge 2, Suite 306, Dartmouth, Nova Scotia, B3B 1T5.

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

|                                                                                                           
|-----------------------------------------------------------------------------------------------------------
|
|                                                                                                           
|Gammon Lake Resources (N.S.)                                                                               
|Inc. ("Gammon Lake Nova Scotia")                                                                           
|                                                                                                           
|                                                                                                           
|Gammon Lake de Mexico S.A. de                                                                              
|C.V. ("Gammon Lake Mexico")                                                                                
|                                                                                                           
|                                                                                                           
|Gammon Lake Resources (Barbados)                                                                           
|Inc. ("Gammon Lake Barbados")                                                                              
|                                                                                                           
|Notes:
     (1)    All of
the subsidiaries are sometimes referred to together herein as the "Corporation" .

ITEM 2:  GENERAL DEVELOPMENT OF THE
BUSINESS

The
Corporation is a mineral  exploration  company which is currently  engaged in the
exploration for gold and silver deposits in the State of Chihuahua, Mexico.

The
Corporation's  mineral  interests in the State of Chihuahua,  Mexico are comprised of 34
mining titles covering an area of approximately  2,541 hectares in the  municipality of
Ocampo in which the Corporation has a 100% interest with certain property payment
obligations  and another 9 mining titles in the  municipality  of Ocampo in which the
 Corporation has a 100% interest with no property payment obligations for a total of 43
mining titles encompassing  approximately  3,500 hectares  (collectively,  the "Ocampo
Project"), as well as a 100%  interest  and a 90%  interest,  respectively,  in two
mineral  claims  located in the  municipality  of Chinipas and covering an area of
approximately 150 hectares and 40 hectares, respectively (the "La Cuesta Claim" and the
Santa Maria Claim").

---

5

The
 Corporation  primary focus at this time is on the mining titles  comprising the Ocampo
Project.  The  Corporation  either owns or has an option to purchase an interest in all
such mining titles without any residual royalties.

ITEM 3:  NARRATIVE DESCRIPTION OF THE
BUSINESS

Description of the Corporation's
Exploration Projects

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 April 8, 2002,
prepared by Pincock Allen & Holt, Consulting Geologists ("PAH") entitled, "Ocampo
Gold-Silver Project Preliminary Assessment Chihuahua Mexico Technical Report" (the "PAH
Report"). The author of the PAH Report has made a site visit to examine the geology and
exploration work carried out on the exploration properties of the Corporation. The
PAH Report embodies work completed by the Corporation as at the date of the PAH Report
which includes updates of the results detailed in earlier technical reports. This
Annual Information Form reports on information contained in the PAH Report as
well as technical work completed subsequent to the PAH Report. Where appropriate,
references are made to the earlier technical reports completed prior to the PAH Report.

1.  Ocampo Project

General

The
Ocampo  Mining  District  is  located in the Sierra  Madre  Occidental  province.  The
Sierra  Madre is host to one of the largest epithermal  precious metal metallogenic
 provinces and includes some of the well-known  gold-silver  producing mining districts
in Mexico, such as Concheno,  Ocampo, Batopilas, San Dimas-Tayoltita,  Topia, Guanacevi,
 Bacis and recent discoveries of multi-million ounce deposits like Placer Dome's Mulatos,
Penole's Penos Altos and Francisco Gold's El Sauzal.

Soyopa Joint Venture

Pursuant
to the terms of an option and joint venture  agreement  dated March 1, 2000 (the "Soyopa
 Joint Venture  Agreement"), as amended by an option  buy-out  agreement  dated  August
17, 2000 (the  "Soyopa  Option  Buy-Out  Agreement")  and  further  amending agreements
dated April 24, 2001,  September 27, 2001 and November 24, 2001,  respectively (the
"Soyopa Amending  Agreements"),  entered into between the Corporation and Minerales de
Soyopa, S.A. de C.V.  ("Soyopa"),  the Corporation has acquired 17 mining claims covering
an area of approximately  2,064 hectares in the municipality of Ocampo in the
southwestern  area of the State of Chihuahua,  Mexico. In accordance  with the terms of
the  agreements,  the  Corporation  has made the  following  payments,  share  issuance
 and  exploration expenditures:  (i) U.S.  $500,000 payment on March 31, 2000; (ii) U.S.
 $250,000  payment on February 1, 2001;  (iii) U.S.  $100,000 on November 24, 2001;  (iv)
5,000,000  Common Shares issued at a deemed value of Cdn.  $2,600,000  ($0.52 per share)
on November 24, 2001; (v) U.S.  $100,000 on  exploration  prior to May 31, 2000;  and
(vi) U.S.  $125,000  payment on May 23, 2002.  The  Corporation is also required to make
an additional  payment of U.S.  $7,000,000 in two separate  installments of U.S.
 $3,500,000 on or before November 23, 2006 and U.S.  $3,500,000 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

---

6

U.S. $7,000,000 shall be due and
owing immediately.  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 Option Buy-Out Agreement, a balance of U.S.
$1,000,000 is due to Minera Global upon the sale of the Ocampo Project.  See "Risks and
Uncertainties - Capital Investment".

Minera Fuerte Joint Venture

Pursuant
to the terms of an option and joint  venture  agreement  dated  January 6, 1999 (the
 "Minera  Fuerte  Joint  Venture Agreement",  as amended by agreements  dated  December
2, 1999 and March 5, 2001 (the "Minera  Fuerte  Amending  Agreements"),  entered into
between the Corporation and Minera Fuerte Mayo, S.A. de C.V.  ("Minera  Fuerte"),  the
Corporation  acquired a 60% interest in and formed a joint venture on, a producing gold
and silver mineral  property  located in the  municipality of Ocampo,  in the
 southwestern area of the State of  Chihuahua,  Mexico.  The property is comprised of 17
mining claims and covers a total area of  approximately  477 hectares in the northern,
western and central parts of the Ocampo Mining District.

In
accordance  with the terms of the Minera Fuerte Joint Venture  Agreement,  the
 Corporation  completed an  exploration  and mine  development  program of U.S.
 $200,000,  which was required to be completed on or before July 6, 1999.  During the
option  phase, the  Corporation  paid to Minera Fuerte the amount of U.S.  $50,000 on
execution of the  agreement  and the amounts of U.S.  $30,000 on February  15, 1999 and
U.S.  $170,000 on June 6, 1999,  respectively.  Under the terms of the  agreement,
 500,000  Common  Shares were issued to Minera  Fuerte  effective  June 6, 1999 and a
payment in the amount of U.S.  $309,500  were made to Minera  Fuerte  effective December
23, 1999.

Upon
 completion  of the option  phase,  which  expired on June 6, 1999,  the  Corporation
 acquired  its 60%  interest in the property  and elected to form a joint  venture with
Minera  Fuerte,  with the  Corporation  participating  as to 60% and Minera  Fuerte
participating  as to 40%. Under the terms of the joint venture,  the  Corporation is the
operator of the property and 100% of the sales from  production on the property may be
applied to the cash payments due to Minera Fuerte in the joint venture  stage.  Pursuant
to the terms of the agreement,  a total of 2,000,000  Common Shares of the  Corporation
 were issued to Minera Fuerte as follows:  (i) 500,000 Common Shares on December 6, 1999;
 (ii) 500,000 Common Shares on July 6, 2000; and (iii)  1,000,000  Common Shares on
January 6, 2001. In  addition,  the  Corporation  made a total of U.S.  $288,474  in
 monthly  payments  to Minera  Fuerte,  and a lump sum  payment  of U.S.$199,500 on
February 1, 2000.  Under the terms of the agreement,  a balance of U.S.  $211,526 is due
to Minera Fuerte upon the sale of the Ocampo Project.

Pursuant
to an  agreement  dated March 31, 1999 (the  "Minera  Fuerte  Option  Buy-Out
 Agreement"),  entered into between the Corporation  and Minera Fuerte,  the  Corporation
has the right to acquire the 40% interest of Minera Fuerte in the Minera Fuerte Joint
Venture  Agreement for a sum equal to U.S.  $5.00 per ounce of gold and gold  equivalent
in the category of "Proven Ore".  For purposes of the foregoing,  the Minera Fuerte
Option Buy-Out  Agreement  provides that the  determination of "Proven Ore" shall be made
pursuant to a feasibility  report  prepared by an independent  third party  consulting
firm of  international  repute which is acceptable to the Corporation  and Minera
 Fuerte.  The buy-out may not occur until (a) all cash and share  payments to Minera
 Fuerte  prescribed by the Minera Fuerte Joint Venture  Agreement have been made, and (b)
the  Corporation has incurred at least Cdn. $ 1.0 million in exploration expenditures or
completed at least 5,000 metres of drilling on the property.  See "Risks and
Uncertainties - Capital Investment".

Bolnisi Earn-In Agreement

On
March 25,  2002,  the  Corporation  entered  into an Earn-In  Agreement  (the  "Earn-In
 Agreement")  with  Bolnisi Gold NL ("Bolnisi") with respect to the Plaza de Gallos,
Refugio,

---

7

Conico, Picacho and La Estrella
concessions forming part of the Ocampo Project.  Under the terms of the agreement,
Bolnisi will complete the Corporation's ongoing Feasibility Study and will place the
project into production, at its own expense, at a rate of not less than 1.25 million
tones of ore processed per year.  In addition, Bolnisi has agreed to pay to the
Corporation the sum of $30,000 per month until the project has attained the agreed rate
of production.  If the agreed rate of production is not attained within a period of
eighteen months of the due diligence period, Bolnisi will pay a penalty of $100,000 per
month to the Corporation, and if such rate of production is not attained within
twenty-four months of the due diligence period, the Corporation will retain 100%
ownership of the concessions.  Upon the agreed production levels being attained, Bolnisi
will earn a 60% interest in the concessions covered by the agreement.  Under the terms of
the Earn-In Agreement, Bolnisi was also granted a right of first refusal for the
development of the remaining Ocampo concessions in which the Corporation has retained a
100% ownership interest, with the Corporation reserving the right to develop the
concessions on its own.  In addition, all payments required to be made to Soyopa to
complete the Corporation's acquisition of Soyopa's concessions at Ocampo will be shared
60% by Bolnisi and 40% by the Corporation.

Bolnisi Termination Agreement

On
November 6, 2003, the  Corporation  entered into an agreement with Bolnisi and its
 100%-owned  Mexican  subsidiary to terminate all previous  agreements  between the
companies.  In return for  terminating  Bolnisi's right to earn a 60% interest in the
Ocampo project, the Corporation  agreed to pay $USD  5,000,000.  Bolnisi also agreed to
deliver all technical  reports and  information  related to the Ocampo project in its
possession.

Property Description and Location

The
 Corporation's  Ocampo Project is located in the  Municipality  of Ocampo,  State of
Chihuahua,  Mexico and consists of 41 mining  titles  encompassing  3,495.10  net
 hectares.  The  Corporation  either  currently  owns or has an option to  purchase  a
100% interest in all the mining  titles  without  any  residual  royalties.  Some of the
 Corporation's  concessions  comprising  the Ocampo Project are also subject to the
Earn-In  Agreement with Bolnisi in which Bolnisi has the right to acquire 60% of the
 concessions  upon bringing the concessions to an agreed rate of production.  See
"Bolnisi Earn-In Agreement",  Minera Fuerte Joint Venture",  and "Soyopa Joint  Venture".
 A location map is presented at the beginning of this  prospectus,  and the following
table lists the titles and their size.

|                                   
|-----------------------------------
|Ocampo Project - Listings of Claims
|                                   
|
|                                   
|El Penol*                          
|El Rayo                            
|Santo Nino                         
|La Resurreccion                    
|La Escalera                        
|Maria                              
|La Gloria                          
|San Amado                          
|El Mastuerzo                       
|Nuevo Jesus Maria y Jose           
|Cubiro                             
|San Martin                         
|El Rayo                            
|                                   

---

8

|                                                                                                                      |  |    |  |        |  |          | 
|--------------------------------------------------------------------------------------------------------------------- |  | -- |  | ------ |  | -------- | 
|                                                                                                                     
|Balvanera                                                                                                             |  | 14 |  | 192789 |  | 6.45     | 
|Mirasol                                                                                                               |  | 15 |  | 161866 |  | 10.00    | 
|La Fe*                                                                                                                |  | 16 |  | 212201 |  | 39.00    | 
|La Estrella                                                                                                           |  | 17 |  | 147793 |  | 9.00     | 
|Santa Ana                                                                                                             |  | 18 |  | 165663 |  | 14.26    | 
|El Provenir                                                                                                           |  | 19 |  | 212992 |  | 14.78    | 
|Alejandra                                                                                                             |  | 20 |  | 213422 |  | 469.87   | 
|Alejandra Uno                                                                                                         |  | 21 |  | 213423 |  | 505.67   | 
|Alma Fracc II                                                                                                         |  | 22 |  | 214374 |  | .92      | 
|Alma Fracc III                                                                                                        |  | 23 |  | 214375 |  | 4.00     | 
|El Hueco                                                                                                              |  | 24 |  | 189226 |  | 2.21     | 
|Santa Juliana                                                                                                         |  | 25 |  | 170141 |  | 10.10    | 
|Rosario de Oro                                                                                                        |  | 26 |  | 170142 |  | 8.00     | 
|Belen                                                                                                                 |  | 27 |  | 170143 |  | 16.00    | 
|Lluvia de Oro                                                                                                         |  | 28 |  | 170144 |  | 100.00   | 
|San Ramon                                                                                                             |  | 29 |  | 170145 |  | 16.00    | 
|Estanislao                                                                                                            |  | 30 |  | 170146 |  | 5.66     | 
|Candelaria                                                                                                            |  | 31 |  | 170147 |  | 3.99     | 
|Altagracia                                                                                                            |  | 32 |  | 170148 |  | 12.00    | 
|San Jose del Picacho                                                                                                  |  | 33 |  | 170149 |  | 4.59     | 
|Matulera                                                                                                              |  | 34 |  | 170150 |  | 9.47     | 
|San Jose y San Juan                                                                                                   |  | 35 |  | 170151 |  | 24.74    | 
|Belgrado                                                                                                              |  | 36 |  | 170152 |  | 7.28     | 
|Ampliacion de Altagracia                                                                                              |  | 37 |  | 170153 |  | 10.00    | 
|Kristal                                                                                                               |  | 38 |  | 204194 |  | 1,657.92 | 
|San Juan                                                                                                              |  | 39 |  | 191736 |  | 53.91    | 
|La Olvidada                                                                                                           |  | 40 |  | 192048 |  | 105.00   | 
|Buenos Aires*                                                                                                         |  | 41 |  | 212551 |  | 19.68    | 
|Diez Mayo                                                                                                             |  | 42 |  | 213571 |  | 23.79    | 
|El Faro                                                                                                               |  | 43 |  | 217082 |  | 4.46     | 
|                                                                                                                     
|Total net hectares                                                                                                    |  |    |  |        |  | 3495.10  | 
|                                                                                                                     
|*  The issuance of exploitation
concessions for El Pe&ntidle;ol, Buenos Aires and La Fe mining claims is in progress.

Accessibility, Climate,
Local Resources, Infrastructure and Physiography

The
Ocampo Gold Silver Project is located at approximate Latitude 28o 12 30
and Longitude of 108o 25 00". The project is 310 road kilometers west
northwest of the state capital, Chihuahuia. Access to the project is via Federal Highway
16, a major transportation route across the Sierra Madre, to Cahuisori followed by 27
kilometres of government maintained gravel road to the project area

The
project is located in the Sierra Madre Occidental physiographic province, near the eastern
edge of the Barranca (canyon) country, with project elevations ranging between 2,200 and
1,500 metres in elevation. The climate is temperate with cool winters and mild summers.
Average annual precipitation is approximately 800 mm, mainly during the summer monsoon
season. Vegetation consists of pine and mixed pine and deciduous forest.

The
nearest town,  Ocampo,  is located at the eastern edge of the project area and has an
estimated  population of 500 people. Ocampo is the seat of the areas Municipal
Government.  An

---

9

adequate work force, familiar with
mining, is present. Mining and forestry are the major industries in the area. Ocampo has
electric power from the national electrical grid.

History

The
Ocampo mining district was discovered in 1804. The two principle periods of production
were in the 1830s and 40s and between 1880 and 1912. By 1912, Robert Linton,
the chief engineer of Sierra Consolidated Mines Company, estimated the total production of
the Ocampo district up to this time had exceeded a value of U.S. $100,000,000 in gold and
silver. Shortly there after mining operations were curtailed due to the Mexican Revolution

Following
the end of the Mexican Revolution in 1918, small mining operations resumed on a sporadic
basis, hindered by a lack of capital and transportation difficulties. The district under
went a moderate revival in the late 1930s with the rise in official US gold price.

In
the 1980s, the Consejo de Resources Minerales, an agency of the federal government,
financed the construction of a nominal 200 tonne a day mill equipped with a flotation
circuit. This mill is currently operating on an irregular basis, processing production
from small operation mining operations in the general area when available.

In
1997 Mogul Mining NL entered into a joint venture with Soyopa. Mogul Mining completed
reverse circulation drilling programs in 1997 and 1998 and undertook a district scale
mapping and sampling program focusing on the western portion of the district.

In
1999, Augusta Resources Corporation entered into an agreement to acquire the interest of
Mogul Mining in the project, and drilled 11 reverse circulation holes and deepened one
existing hole. Mogul Mining and Augusta relinquished their interest in the joint venture
in late 1999.

In
1999, the Corporation, through its Mexican subsidiary, acquired an option to purchase 17
claims in the northern portion of the district. See Minera Fuerte Joint
Venture. In early 2000, the Corporation entered into a joint venture agreement with
Soyopa. See Soyopa Joint Venture. This agreement effectively consolidated the
entire Ocampo district for the first time. Since that time, the Corporation has executed a
series of purchase options, which will allow it to acquire a 100% ownership interest in
the joint venture land holdings.

Geology and Mineralization

(a)
   Geology

The
Ocampo project is located within the Sierra Madre Occidental Metallogenic Province. This
province extends from southwestern Mexico to the Arizona border with the United States and
is host to a multitude of precious and/or base metal deposits.

The
oldest rocks in the general Ocampo region are Triassic to Cretaceous sediments and
volcanics, or their metamorphosed counter parts, found in isolated erosional windows.

During
the Tertiary the area was the site of intense volcanic activity, producing a thick
sequence of volcanic flows, tuffs, agglomerates and related intrusives of andesitic to
rhyolitic composition. The volcanic stratigraphy of the Sierra Madre Occidental has been
broken into two main units; the Lower Volcanic Group (LVG) and the Upper
Volcanic Group (UVG).

The
LVG rocks are dominant in the immediate project area and consist predominantly of massive
andesitic to rhyolitic flows, tuffs, agglomerates and volcaniclastics. The LVG hosts the
majority of the Au-Ag deposits exploited in the Sierra Madras to date in the area.

---

10

The
overlying UVG rocks are predominantly felsic ignimbrites, tuffs, flows and
volcanoclastics. Intrusive dikes cut all rock types.

The
regional structural fabric has a general northwest trend. The LVG rocks are structurally
more complex, with the overlying UVG being comparatively undeformed. Within the immediate
project area the structural regime can be broken into two discrete areas; the PGR Trend
and the Ocampo Northeast Project area.

The
WNW striking PGR Trend extends from Altagracias in the southeast to beyond La Estrella in
the west. The PGR Trend consists of a series of NW trending faults cross cut by WNW
trending structures and is over 5 kilometers in overall length. Individual deposits within
the PGR, from east to west, are Picacho, Plaza de Gallos, Refugio, Conico and La Estrella.
This setting suggests that the PGR trend might be a NW trending, district scale, sigmoid
loop structural complex.

The
Ocampo Northeast Project area consists of numerous northwest trending faults cut by north
to northeast trending faults, which produce a rhombohederal structural pattern of horst
and grabens. Structural off set is relatively minor. Major mineralized structures include
Brenda, JM, La Zorra-Resureccion, Aventurero-Guaymas, San Juan-Belen, Maria and Santa
Julianna.

Geological
studies have documented six major periods of deformation that were produced by a
combination of the emplacement of a postulated intrusive beneath the district and
extensional regional tectonics. Both dip-slip and strike-slip movement accompanied each
phase of structural deformation. There are currently in excess of 27 kilometers of
identified mineralized structures.

Deposit Model

Ocampo
is a classic gold-silver epithermal district. Based on mineralogy and alteration,
gold-silver mineralization in the PGR Trend and the Ocampo Northeast Project Area is of
the low-sulphidation, quartz-adularia type. This system contains quartz vein stockworks,
and breccias carrying gold, silver, electrum, argentite and pyrite with lesser and
variable amounts of base metal sulfides deposited in a high-level (epizonal) to near
surface environment. The northwest portion of the Property hosts historic mines and
prospects in a high-sulphidation, quartz-enargite type system.

Examples
of low-sulphidation systems are Tayolita (recently purchased by Wheaton River), Bacis and
La Ceinagua in the state of Durango. Pinos Altos and Dolores, both in the state of
Chihuahua, are currently under development. Examples of high-sulphidation systems in the
development stages are Mulatos (Sonora), El Sauzal (Chihuahua) and Metates (Durango).

Gold and Silver
Mineralization

Epithermal
gold-silver mineralization in the Ocampo mining district is structurally controlled. Ore
grade mineralization is hosted in N, WNW, NW, NE and EW striking structures. Within the
PGR Trend, the WNW trending structural zone from Plaza de Gallos to La Estrella has been
the most productive, followed by the NW striking Picacho structure. In the Ocampo
Northeast Project Area Area, the greatest production has been derived from the northerly
striking Belen-San Juan and San Jose structures and the NE striking Santa Julian
structure.

Andesitic
agglomerates host the majority of the deposits found to date. This is believed to be a
function of exposed mineralization as opposed to the agglomerate being the preferred host
rock.

---

11

Structures
hosting potentially economic gold and silver mineralization are composed of a core of
quartz breccia surrounded by varying degrees of quartz stockworks and silification. In
some areas, such as Plaza de Gallos and Refugio, this mineralization can exceed 50 metres
in true thickness. An argillized halo is often present surrounding silicified structures.

Hydrothermal
mineralization was episodic and accompanied by structural movement. While gold and silver
mineralization is associated with quartz, not all quartz contains precious metals. Work
completed to date indicates that while quartz deposition accompanied all six phases of
structural deformation, gold and silver were deposited during the fifth and sixth
deformation events.

Precious
metal mineralization consists of electrum, native silver and argentite. Gold and silver
are of near equal economic importance at Ocampo. The gold to silver ratio varies somewhat
throughout the district but overall is on the order of 1 to 40. The base metals have no
economic importance and there does not appear to be an increase in concentration at depth.

Gold-silver
mineralization is present over an elevation range of at least 700 metres. The lowest known
productive levels of the Santa Juliana mine are at an elevation of approximately 1,400
metres and the outcrop of the highest point of mineralization at Plaza de Gallos is
approximately 2,150 metres. Other districts that contain similar elevational thickness are
the Comstock in Nevada, and Tayoltita and Guanajuato in Mexico.

Exploration

(a)
   General

The
Corporation initiated its exploration program in 1999, and by the end of the year had
completed geological mapping, sampling, limited underground test mining from historical
workings in the Brenda area, and the drilling of 50 core holes totalling about 3,500
metres in the NE Area.

During
2000, the Corporation conducted more detailed surface geological mapping, sampling,
trenching and road building. A large RC and core drilling program was also completed,
totaling approximately 180 holes. The company also obtained the Mogul and Augusta Drill
Hole data base of 70 reverse circulation holes.

During
2000 and 2001, underground mapping and sampling of accessible workings was under taken
along with the driving of an exploration drift. Ten additional exploration holes were
drilled in 2001.

In
2002 Bolnisi Gold NL, under its earn in agreement has completed 96 drill holes as of
November 8, 2002 with in the Joint Venture Project Area, along with metallurgical testing
and process design work. Bolnisis program is currently on going and a completed
feasibility study is expected shortly.

In
2002, Gammon Lake 13 holes had been completed in the Northeast Area totaling 4,064 meters.
As of July 31,2003 Gammon had completed a total of approximately 30,200 meters in 78
additional drill holes is the 100% owned Northeast Ocampo project area.

Exploration
to date shows that the Ocampo area is host to a very large, hydrothermal system containing
over 27 kilometers of mineralized structures.

(b)
   Drilling

The
following tabulates drilling totals as of November 8, 2003

---

12

|                         
|-------------------------
|
|                         
|Gammon Lake Resources    
|Mogul Mining NL          
|Augusta Resource Corp.   
|Bolnisi Gold NL          
|                         
|Total to November 8, 2002
|                         

Drilling
and sampling procedures have been conducted according to accepted industry practices.
Reverse circulation sampling interval has been 1.524 or 1.5 meters depending on the type
of drill pipe used. Core sampling interval was generally 4.5, 1.5, or 1 meters. Some of
the deeper holes were pre collared with reverse circulation and completed with core.

Aside
from the initial exploration holes, drill spacing was based on a nominal 50 meter with
holes on section lines at a nominal 25 meter spacing. In fill drilling on nominal 25 meter
fence line spacing has been completed portions of the Plaza de Gallos, Refugio, Conico and
Brenda deposits. Deep drilling currently being undertaken by the Corporation in the Ocampo
Northeast Project Area is a nominal 100 meter spacing on section with spacing on section
varying from 100 meters to 25 meters. Angle holes were drilled when ever logistically
possible in order to assess true width of the mineralized structures.

Downhole
surveying was completed on a majority of the core holes including re-entered reverse
circulation drill holes. Surveying revealed no significant systematic deviation in the
direction of holes aside from an overall steeping of angle holes with depth.

(c)
   Underground Workings and Surface Sampling

Gammon
Lake has gained access to historic underground workings in the Plaza de Gallos, Belen, San
Juan-Balvanera, Brenda, San Amado, La-Zorra-Resurreccion and Santa Juliana mine areas.
Limited surveying, mapping and sampling has been completed to date. During the 2000 and
2001 drill programs old workings were cleaned and drill stations constructed for the 14
underground drill holes completed to date. Approximately 200 meters of drifts were driven
in conjunction with this work. Presently, small-scale mining by a sub-lessor is taking
place at Santa Juliana.

Over
sixty five surface sample lines, totalling approximately 6,500 metres have been
chip-sampled. These lines were sampled across road exposures, available outcrop and
sub-crop or hand excavated trenches. Individual sample length was generally 3 meters. Due
to the availability of road cuts and/or outcrop, surface sample lines are not necessarily
continuous or located transverse to mineralized structures. The sample lines were surveyed
by tape and compass.

Metallurgy

Four
bulk samples ware taken by the Corporation between March and May, 1999 from underground
working in the Brenda and Balvanera underground workings. Mining widths were approximately
2 metres. The material was processed at the Ocampo custom flotation mill and the
concentrates were sold to Penoles. The following table summarizes the results of this
work.

---

13

|      
|------
|
|      
|
|      
|
|      
|1     
|2     
|3     
|4     
|      
|Totals
|      

Cyanide
amenability tests have been conducted by the Corporation and it predecessors. Additional
work by Bolnisi in ongoing and is discussed separately. Prior to Bolnisi entering in to
the earn-in agreement 48 bottle tests had been completed on composite samples derived from
drill holes, underground workings and surface cuts. Grind size was 80% -200 mesh. The
following details the results of that work.

|                                                                                                                                       
|---------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                       
|
|                                                                                                                                       
|Picacho                                                                                                                                
|Plaza de Gallos                                                                                                                        
|Refugio                                                                                                                                
|Conico                                                                                                                                 
|Brenda                                                                                                                                 
|Aventurero*                                                                                                                            
|Deep San Juan                                                                                                                          
|Total                                                                                                                                  
|                                                                                                                                       
|*   The Aventurero sample returned 98%
gold recovery and 84% silver recovery when run at slightly 
              higher cyanide levels.

During
2001 and 2002 Kappes, Cassiday & Associates ran a total of 14 column tests. Six
flooded column tests were completed in 2001 and 8 standard column tests were completed in
2002. The following tabulates the results of the column work completed to date.

|               
|---------------
|
|
|               
|Plaza de Gallos
|               
|               
|               
|               
|Refugio        
|               
|               
|               
|               
|Conico         
|               
|               
|Picacho        
|               
|               

Silver recoreries in all the test
were still increasing when column leaching was stopped.

The
metallurgical results to date indicate that high recoveries are possible using
conventional gold ore processing practices. The test work results indicate that processing
with a

---

14

conventional milling operation,
utilizing either flotation or cyanide extraction, or by heap leaching will yield good
recoveries of both gold and silver

2001 Resource Estimate

A
cross sectional resource estimate was prepared by the Corporation using standard
estimation techniques and audited by Watts, Griffis and McOuat (WGM), of
Toronto, Canada, in 2001. This work utilized data generated prior to January 2001. The
report entitled, Project Update and Feasibility Study Plan of the Ocampo Gold Silver
Project, Mexico for Gammon Lake Resources Inc., is available on the web at
www.sedar.com .

WGM
classified the blocks as measured or indicated in conformity with the final version of
National Instrument 43-101 (NI 43-101), which came into effect on
February 1, 2001. WGM followed the guidelines adopted by the Council of the Canadian
Institute of Mining Metallurgy and Petroleum (the CIM Standards) in arriving
at its classifications

The
information used for resource estimation consists of collar locations, down hole surveys,
raw assays, lithological and structural data. Some of the holes that did not intersect a
main mineralized zone or were isolated exploration holes were not used for the modeling
and resource estimation. The previously discussed sample line assay results were used to
aid in the projection of the zones to surface; however, they were not used in the grade
estimation procedures.

Classical
statistics were calculated and population distribution plots were created for the raw
(mostly 1.5 metre intervals) Au and Ag assays for the RC and core drill holes. The
following table summarizes the results.

|                     
|---------------------
|
|                     
|
|                     
|Au at a 0.30 cutoff  
|                     
|Ag at a 10 g/t cutoff
|                     

The
co-efficient of variation is low for both Au and Ag, giving additional confidence that the
grade distribution is robust and the sample population is adequate so as not to introduce
any major bias. WGM reviewed the statistics and cumulative frequency and probability plots
of the raw assays and decided that cutting of high grades was not warranted.

Cross
section for the resource calculation were constructed based on the drill hole fence lines.
Mineralized boundaries were digitized by the on cross sections using local geologic
control. An external cutoff grade of 0.50 g/t eAu was used for zone definitions.
Equivalent Au was defined at a 50:1 (Ag:Au) ratio, using a gold price of $260/oz and a
silver price of $5.20/oz. A minimum interval length of 2 samples (3.0 metres) was required
to produce an intersection that could be used to define a resource block. Up to 3 samples
(4.6 m) of internal waste could be incorporated into the composite, as long as the next
sample was above 0.50 g/t Eq. Au and the block grade exceeded the 0.50 g/t
cutoff. Intercept (block) grades for each drillhole were calculated as a length weighted
average.

The
digitized cross sectional outlines were divided into mineralized blocks, projecting half
the distance to adjacent drill holes on each section and between sections. Intercepts
below cutoff, or that did not meet the minimum length criteria, were used to assure zone
continuity and geometry, but were not used in the resource estimate.

---

15

Areas
of the blocks were determined and multiplied by the width of the block (i.e., the distance
between sections) and an average specific gravity of 2.5 (for all rock types) to estimate
tonnage. Tonnages and grades were estimated for each mineralized block on each section and
tabulated.

WGM
classified the blocks according to NI 43-101/CIM Standards. Blocks that were projected
25 metres or less from any drill hole between cross sections and had data support on
all four sides were categorized as a Measured Resource. Dip projections of these blocks
were generally limited to 25 metres. In some instances, dip projections of up to
50 metres were allowed if deeper drilling on adjacent sections supported the blocks.
The average total width of the blocks for the Measured Resources was 39 metres.

Indicated
Resources were projected up to a maximum of 50 metres from a drill hole and were
generally defined as blocks that had support on three sides or less or were at the open
end of the zone in terms of the drilling pattern. The open end of a zone could be either
the strike or down dip extension of the mineralization. The average total width of the
blocks for the Indicated Resources was 60 metres.

The
Measured and Indicated Resources as audited by WGM are summarized in the table below.

|                         
|-------------------------
|
|                         
|
|
|                         
|Measured Resources       
|Conico                   
|Brenda                   
|La Zorra                 
|Picacho                  
|Refugio                  
|Plaza de Gallos          
|                         
|Total Measured Resources 
|                         
|Indicated Resources      
|Conico                   
|Brenda                   
|La Zorra                 
|Picacho                  
|Refugio                  
|Plaza de Gallos          
|Adventurero              
|JM                       
|Resurreccion             
|Las Animas               
|Guaymas                  
|Maria                    
|Rosario del Oro          
|San Juan                 
|                         
|Total Indicated Resources
|                         

---

16

|                                                                                                         |  |            |  |      |  |    | 
|-------------------------------------------------------------------------------------------------------- |  | ---------- |  | ---- |  | -- | 
|                                                                                                        
|Total Measured and                                                                                       |  | 21,690,000 |  | 1.44 |  | 57 | 
|Indicated Resources                                                                                      | 
|                                                                                                        
|*   Equivalent Au is based on a ratio of 50:1 silver:gold
Note:   Numbers may not match due to rounding.

Inferred
Resources were estimated for six deposits that appeared to have good depth potential based
on the present drilling information and the presence of underground workings below the
lower limit of the drilling. The strike length and a depth extension were estimated for
each deposit and an average width was calculated from the present Measured and Indicated
Resource blocks. An assumption was made that 50% of the estimated tonnage would be
mineralized with the average grade of each deposit.

Because
the Aventurero and San Juan-Balvanera deposits are assumed to be underground targets,
underground criteria were used to calculate the composites used for Inferred Resources. An
Eq. Au cutoff of 4.0 g/t was required over a minimum core length of 3 metres (two
samples). Generally, only one sample (1.5 metres) of internal waste was allowed. Part of
the mini-bulk sample results from the 1999 underground test mining program were used to
further refine the San Juan-Balvanera average grade determination. The use of this higher
cutoff resulted in slightly higher grades for both the Indicated and Inferred Resources.
The following table summarizes the Inferred Resources.

|                                                                                                       
|-------------------------------------------------------------------------------------------------------
|
|
|                                                                                                       
|Plaza de                                                                                               
|Gallos &                                                                                               
|Refugio                                                                                                
|                                                                                                       
|Picacho                                                                                                
|                                                                                                       
|San Juan &                                                                                             
|Balvanera                                                                                              
|                                                                                                       
|Aventurero                                                                                             
|                                                                                                       
|Brenda                                                                                                 
|                                                                                                       
|Total                                                                                                  
|                                                                                                       
|*  Equivalent Au is based on a ration
of 50:1 silver:gold
Note:  Numbers may not match due to rounding.

The
following two tables show that portion of the resources contained the Ocampo Northeast
Project area and that portion of the resources contained in that portion of the project
subject to the Bolnisi Earn-In Agrement, respectively.

|                    
|--------------------
|
|
|                    
|Measured & Indicated
|Inferred            
|                    

|                    
|--------------------
|
|
|                    
|Measured & Indicated
|Inferred            
|                    

Data Collaboration

Data collaboration work has been
performed by WGM, PAH and Computer Aided Geosciences (CAG) of Lismore,
Australia at various times during the course of project work. At all time

---

17

these third party consultants
reported that the Corporations logging, sampling and storage procedures for core and
RC chips were done in a professional manner and are in accordance with standard industry
practice. The project database was found to be well organized. Both PAH and WGM undertook
collaborative check assays of drill cuttings and core finding the results to be with in
acceptable analytical variation. WGM examined the Corporations twinning of the RC
drilling with the core drilling and found that there is no appreciable difference
between the two drilling methods and that either method is suitable to determine the grade
of the deposit.

Complete and full copies of both the
PAH Report and WGM Report are available on the web at www.sedar.com .

2003 Resource Estimate

A cross sectional resource estimate
was prepared by the Corporation using standard estimation techniques and audited by
Pincock, Allen & Holt in June of 2003. This work utilized data generated prior to May
2003. The report entitled, Ocampo Gold-Silver Project, Northeast Area Resource
Update, Chihuahua, Mexico, Technical Report, is available on
the web at www.sedar.com. The following tabulates the results of this work and supersedes
all previous recourse estimates for the Northeast Ocampo Project Area.

|                                        
|----------------------------------------
|
|                                        
|
|                                        
|Aventurero                              
|                                        
|Rosario                                 
|                                        
|San Juan                                
|                                        
|Total Northeast Underground Measured    
|                                        
|Brenda Surface Measured                 
|                                        
|Total Northeast Ocampo Project Measured 
|                                        
|                                        
|                                        
|
|                                        
|Aventurero                              
|                                        
|Las Animas                              
|                                        
|Rosario                                 
|                                        
|Maria                                   
|                                        
|San Juan                                
|                                        
|Total Northeast Underground Indicated   
|                                        
|Total Northeast Surface Indicated       
|                                        
|Total Northeast Ocampo Project Indicated
|                                        
|Total Measured and Indicated            
|                                        
|                                        
|                                        
|                                        
|
|                                        
|
|                                        
|Aventurero                              
|                                        
|Las Animas                              
|                                        
|Rosario                                 
|                                        
|Maria                                   
|                                        
|San Juan                                
|                                        
|Total Underground Inferred              
|                                        
|San Juan Surface                        
|                                        
|Brenda Surface                          
|                                        
|Maria Surface                           
|                                        
|Total Surface Inferred                  
|                                        
|Total Inferred                          
|                                        

---

18

Check Assay Program

In addition to the collaborative
assay work performed by WGM the Corporation conducts a check assaying program during the
course of every drilling campaign. Work to date shows good reproducibility of gold and
silver values with no systematic laboratory or sampling errors being identified. To date
the contractor for all primary assay work has been Chemex Labs of Vancouver, B.C.

Geotechnical Studies

In March of 2001 Seegmiller
International of Salt Lake City, Utah, completed a report entitled Preliminary
Evaluation, Open Pit Slope Stability, Picacho, Plaza de Gallos & Refugio Pits, Ocampo
Project, Chihuahua, Mexico. This report concluded that the rock mass strength in the areas
examined were relatively high, geologic discontinuities are favorable and groundwater
pressurization conditions were low or absent. On the basis of this work Seegmiller
International recommended the use of 55o to 60o pit slopes for preliminary open
pit engineering and planning purposes. Additional test work was recommended prior to
finalization of mine plans.

Process Design Work

In March 2001, Kappes, Cassiday &
Associates completed a report entitled Heap Leach Pad & Ponds Preliminary Design
and Cost Estimate. This study was undertaken to locate a suitable pad , pond and
metallurgical plant site, develop a phased construction design plan and estimate the costs
of construction. Several suitable sites were located with an overall heap leach pad
capacity in excess of 21,000,000 tonnes of ore. While the focus was on a heap leach
processing method the sites pad sites would be suitable for tailings disposal also. The
first phase site was estimated to hold 7,000,000 tonnes or ore with construction costs for
pad and solutions ponds estimated at US$1.9 million dollars

Economic Assessment and
Engineering Study by Pincock, Allen & Holt

In March of 2002, the Corporation
commissioned a preliminary economic assessment and engineering study by Pincock, Allen
& Holt (herein referred to as PAH) of Lakewood, Colorado (herein referred
to as the PAH Report). The study was conducted at a scoping study level of
costing estimation accuracy. The study outlines the economics for a combined open pit and
underground mine, with a heap leach metallurgical plant, at Ocampo and was based on the
extensive project database, the resource study audited by PAH and metallurgical work and
engineering process design work completed by KCA. This was issued April 8, 2002 and is
available in its entirety at www.sedar.com .

Two cases were analyzed during the
study. The Base Case focused on measured and indicated resources with minimal reliance on
inferred resources, and produced a 6-year mine life. The second case (referred to as the
projected case) allowed more extensive development of the inferred resources, with an
operating life of 12 years and a heavier reliance on underground production.

The following two tables summarize
the results of this study.

---

19

|                             
|-----------------------------
|
|                             
|
|                             
|
|                             
|Life                         
|Ore Tonnes                   
|Au Grade                     
|Ag Grade                     
|Waste and LG                 
|                             
|Underground Data             
|Life                         
|Ore Tonnes                   
|Au g/t                       
|Ag g/t                       
|Waste and LG                 
|                             
|Processing & Heaps           
|Max Throughput               
|Gold Recovery                
|Silver Recovery              
|                             
|Operating Costs              
|Open Pit Mining (ore)        
|Underground Mining           
|Processing                   
|G&A and Closure              
|                             
|Mine Life Capital2           
|Open Pit                     
|Underground                  
|Process & Pads               
|Other                        
|Contingency                  
|                             
|TOTAL CAPITAL                
|                             
|Metal Production             
|Total Gold Production        
|Total Silver Production      
|Avg. Annual Gold Production  
|Avg. Annual Silver Production
|                             
|Production Costs             
|Eq. Gold Production3         
|Eq. Silver Production3       
|                             

1 - Case includes base case plus 6
years additional production.
 2 - Excludes working capital
 3 - Equivalency ratios - 65.2 silver to gold (price only basis) 
4 - All U.S. Dollars

|Ocampo Gold-Silver Project Preliminary Assessment
|-------------------------------------------------
|
|
|                                                 
|
|                                                 
|300$/oz                                          
|                                                 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                 

1   Case includes base case plus 6
years additional production.

---

20

The PAH report indicates the
potential to add an additional 1,950,000 ounces of gold and 106,500,000 ounces of silver
to the resource base with further exploration and development.

# Northeast Ocampo Scoping
Study, Chihuahua, Mexico, 500,000 Tonne Per Year CCD Mill 
June 2003 by Kappes Cassiday & Associates

In May of 2003, the Corporation
commissioned a preliminary economic assessment and engineering study by Kappes Cassidy
& Associates of Reno, Nevada. The study was conducted at a scoping study level of
costing estimation accuracy. The study outlines the economics for an underground mine,
with a conventional CCD metallurgical plant, at Ocampo and was based on the extensive
project database, the 2003 Northeast Ocampo resource study audited by PAH and
metallurgical work and engineering process design work completed by KCA. This was issued
June 2003 and is available in its entirety at www.sedar.com.

The study indicates an Internal Rate
of Return (IRR) of 247% at a gold price of $US 325/oz. and a silver price of $US 4.60/oz.,
and a mine payback of just 5 months, for the currently defined measured and indicated
underground resource of 660,500 oz./gold and 34-million oz./silver at the project. Annual
production is indicated at 92,400 ounces of gold and 4,615,000 ounces of silver over a
seven-year mine life. The cash cost of production is $US 84.93 per gold -equivalent ounce,
based on 70.65 grams of silver equaling 1 gram of gold.

The Preliminary Economic Scoping
Study also outlines the economic estimates for a 16-year mine life at the project. This
combines the currently developed inferred resource of 884,300 oz./gold and 43.2-million
ounce/silver with the above-cited currently developed measured and indicated resource. At
a gold price of $US 325/oz., and a silver price of $US 4.60, the 16-year mine life
scenario indicates an IRR of 252% with a mine payback of 4.9 months. Annual production is
indicated at 94,600 oz. gold and 4.6-million oz. silver. The cash cost of production is
$US 83.67 per gold-equivalent ounce.

The results of this work are
summarized in the following tables.

|                                     
|-------------------------------------
|
|
|                                     
|Crushing & Ore Reclamation           
|Grinding                             
|Thickening & Leaching                
|CCD Wash                             
|Tailings Disposal                    
|Precious Metals Recovery Plant       
|Reagents                             
|Process Solution & Water Distribution
|Infrastructure                       
|Shipping                             
|SUBTOTAL DIRECT FIELD COSTS          
|Indirect Field Costs                 
|EPCM                                 
|                                     

---

21

|                                   | 
|---------------------------------- | 
|                                  
|Working Capital, Initial Inventory | 
|                                  
|TOTAL CAPITAL COSTS                | 
|                                  
|Additional Studies                 | 
|                                  
|GRAND TOTAL                        | 
|                                  

|                                     
|-------------------------------------
|
|                                     
|
|                                     
|Labor                                
|Mining                               
|Crushing & Ore Reclamation           
|Grinding                             
|Thickening & Leaching                
|CCD Wash (4-stage)                   
|Metal Recovery                       
|Tailings Disposal                    
|Reagents                             
|Process Solution & Water Distribution
|Laboratory                           
|Reclamation & Closure                
|Service & Support                    
|G & A                                
|Refining                             
|                                     
|Total Operating Costs                
|                                     

|Design Parameters                                                                                                                                            
|-------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                             
|
|                                                                                                                                                             
|Mine Type                                                                                                                                                    
|                                                                                                                                                             
|Mine Life                                                                                                                                                    
|Plant Throughput                                                                                                                                             
|Gold Grade                                                                                                                                                   
|Silver Grade                                                                                                                                                 
|Gold Recovery                                                                                                                                                
|Silver Recovery                                                                                                                                              
|Initial Capital Cost                                                                                                                                         
|Mining and Processing Costs(1)                                                                                                                               
|Price of Gold                                                                                                                                                
|Price of Silver                                                                                                                                              
|                                                                                                                                                             
|                                                                                                                                                             
|                                                                                                                                                             
|
|                                                                                                                                                             
|
|                                                                                                                                                             
|Annual Gold Production                                                                                                                                       
|Annual Silver Production                                                                                                                                     
|Cash Cost/Oz eAu (1)                                                                                                                                         
|Cash Cost/Oz eAg                                                                                                                                             
|Total Production Cost/Oz eAu                                                                                                                                 
|Total Production Cost/Oz eAg                                                                                                                                 
|Payback                                                                                                                                                      
|Pre Tax Net Annual Cash Flow                                                                                                                                 
|Internal Rate of Return (IRR)                                                                                                                                
|NPV at 0% Discount Rate                                                                                                                                      
|NPV at 10% Discount Rate                                                                                                                                     
|                                                                                                                                                             
|(1)   Cash cost does not include capitalized annual underground development costs, but these
are included as costs when calculating the Net Annual Cash Flow.

---

22

2.  Santa Maria and La
Cuesta Claims

The
Corporation has a 100% interest and a 90% interest, respectively, in two mineral claims,
referred to herein as the La Cuesta Claim and the Santa Maria Claim located in the
municipality of Chinipas in the State of Chihuahua, Mexico. The La Cuesta Claim, and the
Santa Maria Claim cover an area of 150 hectares (approximately 370.5 acres) and 40
hectares (approximately 98.8 acres), respectively. Pursuant to the terms of the agreement
by which these Mexican properties were acquired, the vendor received 1,500,000 common
shares of the Corporation. The purchase agreement contained certain escrow requirements
for the vendor and certain expenditure requirements by the Corporation, all of which have
been waived.

Location and Access

The
Santa Maria and La Cuesta Claims are located in the southwestern part of the State of
Chihuahua, Mexico. The project areas are accessible via paved roads to the town of Alamos,
Mexico. From this town, a single-lane dirt road passes through the Sierra Madre Mountains
to the Santa Maria Property, a distance of approximately 100 kilometres. The Santa Maria
showing is located in a deep river valley, accessible by a narrow path 500 metres beyond
the road. The La Cuesta Claim is located ten kilometres north of the town of Guadelupe
Victoria and approximately fifteen kilometres east of the Santa Maria Claim and is only
accessible by horse.

Geology

The
geologic setting for the Santa Maria and La Cuesta claims is much the same as Ocampo.
Fissure and stockwork style quartz veins are the most common and economically significant
types of mineral deposit in this area. The LVG is host to gold and silver mineralization
in the project area.

Current Exploration
Results

The
quartz stockwork hosted gold and silver mineralization at the Santa Maria Claim is well
exposed in the Main Zone area. Intervals of more than five metres have returned ore grade
values of both gold and silver. Additional mineralization exposed along the extension of
the Main Zone at the Amethyst and Scorpion zones has returned high gold and silver values
in addition to significant base metal mineralization. The presence of similar
mineralization for over 300 metres east and west of the Main Zone suggests excellent
potential for the development of a larger strike length. The extent of the currently
outlined mineralization is generally a result of the confining nature of the deep river
valley and the limited regional focus. For this reason, the true width of the Main Zone
cannot be determined.

The
Santa Maria property offers potential for the development of significant amounts of high
grade gold and silver mineralization. The presence of lead and zinc mineralization
suggests the possibility of a base metal zones. Further work is necessary in order to
investigate the continuity of the outlined zones. Good potential exists to extend the
strike length of the currently outlined zone to over one kilometre. Detailed mapping of
the area is required in order to determine the relationship of all outlined zones. Diamond
drilling of the Main Zone mineralization to test the down dip extension of the zone is
also proposed. Significant potential

---

23

also exists to increase the strike
and dip extent of the high-grade intercepts at the Main Zone with a limited number of
drill holes.

While
the zone tested during the Corporations initial visits to the La Cuesta property was
limited to old workings and steep cliffs, the gold and silver values returned from
mineralized host volcanics suggest the potential for the development of a larger
mineralized zone. Significant alteration was noted in the area, including a zone
approximately one kilometre from the old workings. This zone was not investigated during
this visit; however, gold and silver have been reported at this location.

Additional
fieldwork is recommended on the La Cuesta property in order to fully evaluate the extent
of the high grade gold and silver values. Further work should concentrate on a systematic
evaluation of the area including the alteration zone noted one kilometre away. The flat
lying nature of the vein and the steep slopes suggest that mapping along the contour slope
may be the most effective way of assessing the claims. Favourable results would warrant
diamond drilling to test continuity of the zone within the mountain.

No
substantive work is planned on the Santa Maria and La Cuesta properties as at the date of
this report as the Corporation has placed primary emphasis on the development of its
Ocampo Project. See 1. Ocampo Project.

2.  Investment in Mexgold
Resources Inc.

In December 2002, the Corporation
made a strategic investment of 26.7% of the issued and outstanding shares of Mexgold
Resources Inc, a junior mining company listed on the TSX Venture Exchange. Mexgold is a
mineral exploration company engaged in locating, acquiring and exploring for gold and base
metals.

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

These mining titles comprise 439.24
hectares, containing a number of known structures, such as the Rosario fault complex, the
Nankin, the Concordia, and the El Sol, all of which have hosted considerable past
production. Since 1835, gold and silver has been an abundant source of income especially
from the Zorrilla and Pertenencia areas. From current data and previous work, we have been
able to estimate an inferred resource of 1.7 million ounces gold-equivalent at a 65:1
silver to gold ratio, as reported by Pincock, Allen and Holt (PAH), in a November 2002
report. PAH also estimates the tonnage and grade of this inferred resource at 11,800,000
tonnes containing 1,077,000 ounces of gold and 45,600,000 ounces of silver. Average grade
from recent and historic work is 2.8 g/t gold and 120g/t silver

The Company is planning an initial
drilling program that will evaluate the Guadalupe y Calvo gold/silver project. The major
focus will be the Rosario and Nankin Structures. Mexgold will initially drill 20 holes
using a combination of core and reverse circulation drilling methods, at an estimated cost
of $263,500. The second phase of the program will consist of another 20 holes estimated to
cost $291,500, and is contingent on the successful completion of the initial program.

Risks and Uncertainties

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

---

24

their investment.  Prospective
investors should carefully consider the risk factors described below.

1.  No History of
Profitability

The
Corporation is a development stage company 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 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 acquiring and exploring mineral properties in
the hope of locating economic deposits of minerals. The property interests of the
Corporation are in the exploration 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

A
significant part 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

---

25

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.

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 Description of
the Corporations Exploration Projects  1. Ocampo Project.

---

26

|                                     
|-------------------------------------
|
|                                     
|Minera Fuerte Joint Venture Agreement
|                                     
|Compania Minera Brenda S.A. de C.V   
|                                     
|                                     
|                                     
|                                     
|Soyopa Joint Venture Agreement       
|                                     
|                                     
|                                     

9.  Conflicts of Interest

Certain
of the directors of the Corporation also serve as directors of other companies involved in
natural resource exploration and development and consequently, the possibility of conflict
exists. 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. Bradley H. Langille and Fred George
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.

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: Selected
Consolidated Financial Information  Dividend Record and Policy.

14.  Competition

The
mining industry in Canada 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

---

26

exploration.    
          The Corporation will also be required to compete in the future directly with
          other companies that may have greater resources.

ITEM 4:  SELECTED
CONSOLIDATED FINANCIAL INFORMATION

Annual Information

1.  Twelve Months Ended
July 31, 2003, 2002 and 2001  Consolidated Balance Sheet Data

|                                                                                                                                                                                                                                                                                                                                                                                                       | 2003
($) | 2002
($)   | 2001
($)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------- | ---------- | --------
|                                                                                                                                                                                                                                                                                                                                                                                                      
|Working Capital                                                                                                                                                                                                                                                                                                                                                                                        |          | 727,517    |         
|Current Assets                                                                                                                                                                                                                                                                                                                                                                                         |          | 2,034,756  |         
|Capital Assets                                                                                                                                                                                                                                                                                                                                                                                         |          | 542,115    |         
|Mineral Properties and Related                                                                                                                                                                                                                                                                                                                                                                         |         
|Deferred Costs                                                                                                                                                                                                                                                                                                                                                                                         |          | 54,833,669 |         
|Current Liabilities                                                                                                                                                                                                                                                                                                                                                                                    |          | 1,307,239  |         
|Shareholders' Equity                                                                                                                                                                                                                                                                                                                                                                                   |          | 37,303,301 |         
|Deficit                                                                                                                                                                                                                                                                                                                                                                                                |          | (6,636,465 | )       
|                                                                                                                                                                                                                                                                                                                                                                                                      
|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.

2.  Twelve Months
Ended July 31, 2003, 2002 and 2001 - Consolidated Statement of Loss and Deficit Data

|                                              | 2003
($) | 2002
($)  | 2001
($)
|--------------------------------------------- | -------- | --------- | --------
|                                             
|Interest Income                               |          | 106,143   |         
|Management Fees                               |          | 360,000   |         
|Expenses                                      |          | 4,006,440 |         
|Foreign Exchange Gains                        |          | 3,005,526 |         
|Losses                                        |          | (534,771  | )       
|Write-off of Abandoned Mineral Properties and |         
|Related Deferred Costs                        |          | --        |         
|Net Loss                                      |          | (534,771  | )       
|Net Loss (per share)                          |          | (0.02     | )       
|Net Loss (per share, fully diluted)(1)        |          | (0.02     | )       
|                                             

Quarterly Information (2)

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Interest Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Net Earnings (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Net Earnings (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(per share)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Net Loss (per share,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|fully diluted)(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|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 except for the three month period ended January 31, 2003.
(2)   Quarterly information for the three months ended October 31, 2003 and 2002, January 31, 2003 and 2002, and April 30, 2003 and 2002
         was obtained from the Corporation's unaudited quarterly financial statements for these periods.

---

28

Dividend Record and Policy

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:  MANAGEMENTS
DISCUSSION AND ANALYSIS

# Overview

This document should be read in
conjunction with the consolidated financial statements of the Company for the year ended
July 31, 2003 and 2002 including all accompanying notes to the financial statements. The
following discussion and analysis provides a summary of selected consolidated financial
information for the year ended July 31, 2003 and 2002, and includes financial information
relating to the Company, as well as its direct and indirect wholly-owned subsidiaries. The
consolidated financial statements of the Company have been prepared in accordance with
Canadian generally accepted accounting principles (GAAP) (see Summary of Significant
Accounting Polices and Note 2: Basis of Presentation), which differ in certain material
respects from accounting principles generally accepted in the United States (US GAAP).
Differences between GAAP and US GAAP applicable to the Company are described in Note 15 to
the Consolidated Financial Statements.

The Company has ongoing advanced
stage exploration and development at its Ocampo project. As a result, the Company 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, as well as a
monthly payment for a definite term pursuant to an earn-in agreement with Bolnisi Gold NL.
Further details on the history of the Company, its mineral properties and the risk factors
associated with respect to the Company is can be found in its Annual Information Form.

# Description of the
Business

Gammon Lake Resources Inc. is a
mineral resource company engaged in the acquisition and development of mineral properties
in Mexico. The Companys resources are currently focused on the development of its
Ocampo Gold and Silver Project in Chihuahua State, Mexico. The property is divided into
two sections; a development project with Australian partner, Bolnisi Gold NL (Bolnisi),
and the 100% owned Northeast portion of the Ocampo district. Under an earn-in agreement
with the Company, Bolnisi is responsible for all expenditures associated with putting the
open pit mine into production; therefore, the Company has been concentrating its financial
resources on the Northeast Ocampo district. During the year, the Company also acquired a
26.7% stake in Mexgold Resources Inc. (Mexgold), a public junior natural resource company,
listed on the TSX Venture exchange (TSXV:MGR). Mexgold holds a 100% interest in a single
Mexican gold and silver mineral exploration property known as the Guadalupe
Gold-Silver Project The Company is traded on the Toronto Stock Exchange under the
symbol GAM. Subsequent to year-end, the Company listed on the American Stock
Exchange under the symbol GRS.

# Results of Operations

# Operations

During the year, the company posted a
net loss of $534,771 compared to the previous years net

---

29

loss of $2,207,661 with loss per
share of $0.02 compared to a loss per share in the prior year of $0.09.

Interest revenue increased by $83,104
due to the interest earned on the investment of the proceeds of a common stock issue of
$6.5 million completed in May 2002. The Company received 12 months of management fees
($360,000) in the current year pursuant to a joint venture agreement with Bolnisi Gold NL.
The agreement was not signed until March of last year therefore only four months of fees
were realized in the prior year ($120,000).

The Company has recorded an
unrealized foreign exchange gain of $3,005,526 in this fiscal year due to the favorable
fluctuation of the Canadian dollar against the Mexican peso and the US dollar. The Company
has a long-term debt instrument denominated US dollars. In addition, the assets and
liabilities of an integrated wholly owned subsidiary are denominated in Mexican Pesos. The
Company will continue to experience these fluctuations due to the exposure created by its
international corporate structure and long-term debt. To minimize the exposure to foreign
currency fluctuations, the company holds all surplus funds in Canadian dollars.

General and administrative and
professional fees have increased in 2003 by $1.15 million due to an increased marketing
and communications program. As the company draws closer to production, it has embarked on
this program to highlight the exceptional results it has received from its drilling
programs both in the Bolnisi-Gammon development project and the 100% owned Northeast
portion of the Ocampo district. This effort will continue at this level over the next year
as part of a focus to increase shareholder value through market exposure and continued
project success.

Wages and benefits have increased by
$116,858 due to additional staffing in the management and finance departments.
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.

Exploration and
Development

Bolnisi-Gammon
development project

The Bolnisi-Gammon development
project has moved forward to the mine development and construction stage. Bolnisi has
informed the Company that, while the final feasibility studies are still being reviewed
and optimized, a sufficient level of confidence has been reached to allow Bolnisi to
complete an indicative financial model of the project which justifies a decision to
proceed to meet all earn-in terms, and that Bolnisi is now accordingly commencing
negotiations for debt financing to construct the projects open pit mine. An
agreement has been signed with Bolnisis Mexican subsidiary, Recursos Mineros S.A. de
C.V.(Recursos) to allow Recursos the right to explore and exploit certain mining
concessions in Ocampo including the construction of a plant and mine infrastructure.

As all drilling and capital costs to
put the mine into production are covered by Bolnisi during this earn-in period, no
expenditures on this part of the property have been capitalized to the mineral properties.
Bolnisi has also reported that the average gold and silver grades of the master
metallurgical testwork composite samples and the Ocampo deposits within the Earn-In Area
at the Ocampo project area are approximately 2.6 g/t gold and 90 g/t silver. The weighted
average recoveries for gold and silver at the Ocampo area under development is reported as
96.6% and 95.4%, respectively, for flotation/cyanide leaching. The results have exceeded
the Companys expectations and should very favorably impact final feasibility.

Under the earn-in agreement entered
into by Bolnisi with the Company in March 2002, Bolnisi must place, at its sole expense,
the proposed joint venture open pit project into production at a

---

30

rate of not less than 1,250,000
tonnes per year of ore processed to earn its sixty percent (60%) interest. This must be
achieved by September 2003, or Bolnisi will be subject to a $100,000 per month penalty.
Bolnisi must also have the proposed joint venture open pit project in production at the
above level by March 2004 or it will not earn its interest.

# 100% Owned Northeast
Ocampo

The Company continues to focus its
financial resources on the 100% owned Northeast Ocampo district with expenditures during
the year of $6.2 million. The 25,000-meter drill program was recently completed along with
a resource calculation audited by Pincock Allan & Holt. On a gold-equivalent basis,
the newly outlined resource at the Companys 100%-owned Northeast Ocampo Project
contains about 1.35-million ounces in the measured and indicated categories and more than
1.6- million ounces in the inferred category, using a 65:1 silver to gold ratio
representing a gold price of $300/oz gold and $4.61/oz silver. In addition, the Company
recently released a preliminary scoping study prepared by Kappes Cassidy which shows
annual production of 92,400 oz. gold and 4.6 million oz. silver, with an IRR OF 247%, on
measured and indicated resource at the Companys 100%-owned Ocampo underground
project. The Company is currently driving 2.5 kilometres of underground development of
ramps and adits in the form of 4x4.5 meter tunnels. This will enable the Company to focus
underground drilling on the high-grade zones in order to better define and potentially
increase the size of the resource.

Recently, the Company announced a
65,000-meter drilling program and an extension of the underground ramps and tunnels from
2.5 km to 6 km. Approximately 70% of the drill program will be completed from underground
drilling stations. The focus of the current program is to upgrade the current resource
from inferred to measured and indicated and to proceed towards completion of a feasibility
study.

# Financial Condition,
Liquidity and Capital Resources

The Companys working capital
position at July 31, 2003 was $727,517 compared to July 31, 2002 at $6,573,133 for a
difference of $5,845,616. Subsequent to year-end, the Company completed a fully subscribed
private placement financing of $17,250,000. 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. The company currently has an adequate liquidity base with which to support its
general operations and exploration and development activities on the 100% owned Northeast
portion of the Ocampo district as it moves into the next phase of its operations and
program development.

Subsequent to year-end, the Company
became listed on the American Stock Exchange as part of its strategy to offer Investors
further liquidity for their shares and to facilitate access to the United States capital
market.

The Company has long-term debt
denominated in US dollars and some of the Companys receivables and payables are
denominated in Mexican Pesos.

The Company received $3,750,900
($8,915,793  2002) from the issuance of shares due to the exercise of options and
warrants during the period at an average price of $1.05 per share. During the year, the
Company invested $6.19 million in its Ocampo mineral property as a result of a
comprehensive 25,000-meter drilling program undertaken in the current fiscal year.
Previous years mineral property expenditures during the same period totaled $613,514. The
Company also acquired shares in a private company; Mexgold Resources Inc. Further details
on this acquisition can be found in Note 3 of the financial statements. The company
purchased mining equipment ($576,658) for the purpose of completing the development of the
ramps and tunnels on the Companys 100% owned Ocampo project. An additional $1.6
million was needed to support ongoing operational needs during the period and was less
than the previous years operational cash requirements of $2.37 million during the
same period due to the use of short-term working

---

31

capital facilities in the current
year.

As of July 31, 2003, the Company had
10,300,780 in-the-money options and warrants for a total value of $17,232,820 of which a
total of 2,349,780 in-the-money options and warrants with a value of $2,980,670 have
expiry dates in 2003 with the remaining expiring in the years 2004 to 2008.

The Company may require additional
funds for working capital, unanticipated business opportunities or expenditures. The
Company may also require additional financing to satisfy the cash payment obligations of
its joint venture agreements. If funding is required for any of these reasons, or if a
commercial body of ore is confirmed on any of the Companys properties and the
Company 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.

# Differences between
Canadian and United States Generally Accepted Accounting Principles

The differences between Canadian and
United States (U.S.) GAAP are found in Note 15 of the audited consolidated financial
statements.

In 2003, the net loss under Canadian
GAAP was $534,000 compared to a net loss under U.S. GAAP of $12,957,968. The significant
adjustments in the reconciliation are for exploration expenses, amortization of mineral
rights, interest expense on long-term debt, and the corresponding effects on future income
taxes and foreign exchange gain/loss.

The company considers that
exploration costs have the characteristics of property, plant and equipment, and
accordingly, defer such costs. Under U.S. GAAP, exploration expenses are not considered to
have these characteristics and are expensed prior to the Company determining that proven
or provable mineral reserves exist, after which time all such costs are capitalized. The
amount of exploration costs expensed in the current year under U.S. GAAP was $6,032,000
($1,059,799  2002).

Under U.S. GAAP, mineral rights are
considered intangible assets with finite lives that must be amortized over the useful life
of the mineral right. The Company has commenced amortizing the mineral rights effective
August 1, 2002, over their useful lives of six years. The current year amortization was
$6,373,596. There was a corresponding adjustment in future income tax of $1,561,531
relating to the amortization of the mineral rights.

Under Canadian GAAP, the
Companys long-term debt is recorded at the Canadian equivalent of its face value of
$US 7 million. Under U.S. GAAP, interest must be imputed on the loan and the carrying
value adjusted accordingly. The adjustment also reduces the mineral rights by a
corresponding amount. The adjustment to net income under Canadian GAAP for the current
years interest was $643,797 ($449,227  2002).

# Outlook

The Company continues to be
optimistic about both the Gammon-Bolnisi development and the 100% owned Northeast sector
Ocampo property in Mexico. The Gammon-Bolnisi project has entered the next stage of
development and Bolnisi has agreed to move forward to earning its 60% interest and to
commence the construction and development of the mine.

With the completion of 2 new studies
on the property and financing of $17 million available to the Company, the focus over the
next year will be on the Companys 100% owned Northeast Ocampo property. The goals
for the next year through the completion of the new drilling and underground development
programs is to move towards an expansion of the resource from inferred to
measured/indicated, an increase in the resource calculation as well as completion of a
feasibility study.

---

32

With the building of ramps and
tunnels on the Northeast Ocampo property, the Company will be in a position to start
extraction of the bulk samples and complete infill drilling from underground drill
stations. In addition, the Company 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. The Company will continue the drilling of targets
throughout its 100%-owned property position and will test for additional shallow surface
and underground deposits outside of the ramp development area with a focus on increasing
our resource base.

The discovery, development and
acquisition of mineral properties are in many instances unpredictable events and require
significant expenditures prior to achieving commercial production. There are no known
deposits of commercial minerals on any of the mineral exploration properties of the
Company and any activities of the Company thereon will constitute exploratory searches for
minerals. Future precious metal prices, the success of exploration programs and other
property transactions can have a significant impact on capital requirements. The Company
does not expect to receive significant income from any of the projects in the near term.

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

Forward-looking Statements

Certain information regarding the
Company 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 Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such expectations
will prove to have been correct. 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
Companys forward-looking statements are expressly qualified in their entirety by
this cautionary statement.

Related Party 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 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;
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. |  | As
at July 31, 2003, the Corporation had bonuses payable to directors and           officers
in the amount of $225,000;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------

| | 3. |  | 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
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

33

| | 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.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 6:  MARKET FOR
SECURITIES

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. 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. Between May 26, 1998 and
February 17, 2000, the Common Shares of the Corporation were quoted for trading on the
Canadian Dealing Network Inc. under the trading symbol GAML.

ITEM 7:  OFFICERS AND
DIRECTORS

The
management of the Corporation consists of six (6) executive officers and seven (7)
directors. The table presented below provides the names of and related information
concerning each executive officer and director.

|                         
|-------------------------
|
|                         
|Bradley H. Langille(3)(4)
|Halifax, Nova Scotia     
|                         
|                         
|                         
|Fred George              
|Bedford, Nova Scotia     
|                         
|Gregory K. Liller        
|Tucson, Arizona          
|                         
|L. Leanne Dowe           
|Halifax, Nova Scotia     
|                         
|                         
|Dale M. Hendrick(3)(4)   
|Toronto, Ontario         
|                         
|Alejandro Caraveo(3)(4)  
|Chihuahua City, Mexico   
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|                         
|Rodolfo Nieblas          
|Mexico City, Mexico      
|                         
|                         
|                         

---

34

Notes:

|(1) |  | All
of the  directors  hold office until the close of the next annual  meeting of
 shareholders  of the  Corporation  or until          their successors are duly elected
or appointed.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | See
 biographical  summaries below for  descriptions of the  occupations of the above-noted
 individuals  within the past five          years and for prior periods.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | The
information as to shares  beneficially owned or over which control or direction is
exercised not being within the knowledge of          the Corporation has been furnished
by the respective officers and directors  individually.  The percentage  ownership is
based          on  36,453,766  issued and  outstanding  Common  Shares as at November 8,
2002.  Executive  officers and  directors  also hold          options under the
Corporation's Stock Option Plan.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Member
of Audit Committee.
|--- |  | --------------------------

|(5) |  | Member
of Compensation Committee.
|--- |  | ---------------------------------

Bradley H. Langille

Mr.
Langille is the founder of the Corporation and assembled the Corporations
          first group of mineral claims. Between 1985 and 1990, Mr. Langille was
          Vice-President of Metro Insurance Services Limited, a medium-sized general
          insurance agency operating in Halifax, Nova Scotia. Prior to 1990, Mr. Langille
          operated a small wholesale and distribution business in Halifax. Since 1990,
Mr.           Langille has been employed as an airline pilot with Air Nova, a division of
Air           Canada Ltd. Mr. Langille studied geology at Saint Marys University in
          Halifax and has prospected mineral properties for the past seven years. He has
          experience in mineral prospecting, exploration techniques, project management
          and negotiation of mineral acquisitions. Most notably, he has been instrumental
          in the exploration of disseminated gold in Nova Scotia. Mr. Langille resides in
          Halifax, and devotes sixty percent of his time to the operations of the
          Corporation.

Fred George

Mr.
George has operated several retail business operations in Atlantic Canada since
          1975 and has been the President of the New Release Video Ltd., a chain of
retail           stores, for the past 15 years. Mr. George has significant experience in
          international commodity trading including, among other things, as President of
          Sugar Loaf Spring Ltd. (a supplier to Wal-Mart USA) from 1994 to 1996. Mr
George           has more than fifteen years experience as a financial and business
management           consultant and is fluent in three languages. Mr. George devotes his
full time to           the affairs and operations of the Corporation.

Gregory K. Liller

Mr.
Liller is a professional geologist with over 22 years experience in mineral
          exploration and mine development. He has a Bachelor of Science (Geology) degree
          from Western State College, Colorado. Active in Mexico since 1993, Mr. Liller
          served as exploration manager for a group of Canadian and Australian mining
          companies, including Santa Cruz Gold Inc. and Mogul Mining N.L. His major
          accomplishments during this period include overseeing the Lluvia de Oro gold
          mine, Sonora, Mexico, from initial exploration drilling through mine
          construction and managing the Magistral gold project from initial drilling
          through completion of a positive feasibility study. Mr. Liller devotes his full
          time to the affairs and operations of the Corporation.

L. Leanne Dowe

Joining
the company in 2003, Ms. Dowe is a Chartered Accountant with a Bachelor of Commerce
degree from Saint Marys University in Halifax, Nova Scotia. She has over 14 years
of financial management experience with a focus on strategic planning, management
reporting and financial policy. Her career has included financial management positions in
the public accounting, film/entertainment, and non-profit sectors in Halifax and
Vancouver. Ms. Dowe is also Chief

---

36

Financial Officer of Gammon Lake
Resources Inc., a junior mining company listed on the Toronto Stock Exchange.

Dale M. Hendrick

Mr.
Hendrick is a professional engineer educated in Geological Engineering at Ottawa
          University and Queens University. In his 45 year career, Mr. Hendrick has
          gained extensive experience in precious metal and base metal mineral
exploration           and development. He commenced his geology career in 1955 and joined
Kerr Addison           Mines Inc. in 1964, where he was Chief Geologist, Exploration from
1973 to 1988.           In 1989, Mr. Hendrick formed Dale M. Hendrick and Associates to
provide           technical and financial consulting services to resource companies. Mr.
Hendrick           has been a member of the Canadian Institute of Mining and Metallurgy
          (CIM) since 1970, and was awarded a CIM Fellowship in 1999.

Alejandro Caraveo

Mr.
Caraveo has executive level experience in the mineral resource exploration and
          development industry as well as valuable relationships with government and
          business leaders throughout Mexico. Mr. Caraveo is fluent in both English and
          Spanish and has pursued studies in the United States at the University of
          Michigan and in the business faculty of McMurray College in Abeline, Texas.
          Since 1994, Mr. Caraveo has been a Manager of Mining Concessions and Director,
          Minerales de Soyopa, S.A. de C.V., a Mexican mineral exploration and
development           company (Soyopa). Under his management, Soyopa
developed its Ocampo           mining concessions and between 1994 and 2000, Mr. Caraveo
directed the           production of between 30-40 tonnes per day from Soyopas
Ocampo project.           Mr. Caraveo also currently serves as the Managing Director of
the Service           Division of Grupo Chihuahua, a Mexican storage and assembly plants
business.

Rodolfo Nieblas

Mr.
Nieblas has played a strategic senior role in the industrial and business
          development of Mexico and Latin America for nearly three decades, where he has
          held significant leadership positions in several of Mexicos government
          ministries, as well as key steering and advisory roles with Mexicos
public           and private business and industry councils. Mr. Nieblas is currently
Chief of           Staff of the Office of the General Director for the Federal
Electricity           Commission of Mexico Prior to his appointment with the Federal
Electricity           Commission, Mr. Nieblas was Director of Airports and Auxiliary
Services for           Mexico (1998-1999) and prior thereto, he served as Senior
Technical Advisor to           the Secretary for Energy and Chief of Staff to the
Undersecretary for Energy for           Mexico. In addition, Mr. Nieblas, a trained
industrial engineer and fluent in           both English and Spanish, is senior advisor
to the boards of directors of           various public and private industrial commissions
and associations in Mexico,           including the Mineral Resources Council, the
Mineral Development Commission, the           Mexican Iron and Steel Industry Council,
the Electric Research Institute, the           Energy Saving Trust, and the Salt Export
and Transport Boards.

No
officer or director of the Corporation has (a) within the past 10 years, served in that
capacity or was a shareholder holding a sufficient number of securities of the issuer to
affect materially the control of any issuer which was the subject of a cease trade order
or was declared bankrupt or made a voluntary assignment in bankruptcy; (b) been subject to
a penalty or sanction relating to trading in securities, promotion or management of a
publicly trading issuer; or (c) within the past ten years, been declared or made a
voluntary assignment in to bankruptcy.

ITEM 8:  ADDITIONAL
INFORMATION

Additional
information, including directors and officers remuneration and indebtedness,
principal holders of the Corporations securities, options to purchase securities and
interests of

---

36

insiders in material transactions,
where applicable, is contained in the Corporations information circular for its most
recent annual and special meeting of shareholders that involved the election of directors,
and additional financial information is provided in the Corporations comparative
financial statements for its most recently completed financial year.

The
Corporation will provide to any person, upon request to the Secretary of the Corporation:

| |  | (a) |  | when
securities of the Corporation are in the course of a distribution pursuant           to a
short form prospectus or a preliminary short form prospectus has been filed           in
respect of a distribution of its securities:
| |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (i) |  | one
copy of the Annual Information Form of the Corporation, together with one
               copy of any document, or the pertinent pages of any document, incorporated
by                reference in the Annual Information Form;
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (ii) |  | one
copy of the comparative financial statements of the Corporation for its most
               recently completed financial year together with the report of the auditor
and                one copy of any interim financial statements of the Corporation
subsequent to                the financial statements for its most recently completed
financial year;
| |  | ---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (ii) |  | one
copy of the management information circular in respect of the most recent
               annual meeting of shareholders that involved the election of directors or
one                copy of any annual filing prepared in lieu of that information
circular, as                appropriate, and
| |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (iv) |  | one
copy of any other documents incorporated by reference into the preliminary
               short form prospectus or the short form prospectus not required to be
provided                under (i) to (iii) above; or at any other time, one copy of any
other documents                referred to in (a), (i), (ii) and (iii) above, provided
that the Corporation may                require the payment of a reasonable charge if the
request is made by a person                who is not a security holder of the
Corporation.
| |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---