<PAGE>

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

                                    FORM 20-F

         (mark one)

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
    EXCHANGE ACT OF 1934
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
    For the fiscal year ended May 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
    For the transition period from __________ to __________

                         Commission file number 0-29392

                              CALAIS RESOURCES INC.
                              ---------------------

             (Exact name of Registrant as specified in its charter)

                            British Columbia, Canada
                            ------------------------

                 (Jurisdiction of incorporation or organization)

          8400 East Crescent Parkway, #675, Greenwood Village, CO 80111
          -------------------------------------------------------------
                    (Address of principal executive offices)

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

       Securities to be registered pursuant to Section 12(g) of the Act:
       -----------------------------------------------------------------
                        Common Shares, without par value
                        --------------------------------
                                (Title of Class)

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

         Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the
annual report: 11,193,385 shares as of May 31, 2003.

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

                                       1
<PAGE>

         Indicate by check mark which financial statement item the registrant
has elected to follow: Item 17 XXX Item 18 ___

                                       2
<PAGE>

                            Index to Exhibits on Page
                              CALAIS RESOURCES INC.
                                TABLE OF CONTENTS

<TABLE>
<S>              <C>
                                     PART I
Item 1           Identity of Directors, Senior Management and Advisers
Item 2           Offer Statistics and Expected Timetable
Item 3           Key Information
Item 4           Information on the Company
Item 5           Operating and Financial Review and Prospects
Item 6           Directors, Senior Management and Employees
Item 7           Major Shareholders & Related Party Transactions
Item 8           Financial Information
Item 9           The Offer and Listing
Item 10          Additional Information
Item 11          Quantitative and Qualitative Disclosures About Market Risk
Item 12          Description of Securities Other than Equity Securities

                                         PART II

Item 13          Defaults, Dividend Arrearages and Delinquencies
Item 14          Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15          Controls and Procedures
Item 16A         Audit committee financial expert
Item 16B         Code of Ethics
Item 16C         Principal Accountant Fees and Services
Item 16D         Exemptions from the Listing Standards for Audit Committees

                                        PART III

Item 17.         Financial Statements
Item 18.         Financial Statements
Item 19.         Exhibits
Signature Page
</TABLE>

                                       3
<PAGE>

                                  INTRODUCTION

         Calais Resources, Inc. is organized under the laws of British Columbia,
Canada. In this Annual Report, the "Company", "we," "our," and "us," refer to
Calais Resources, Inc. and its subsidiaries (unless the context otherwise
requires). Summary discussions of documents referred to in this Annual Report
may not be complete, and we refer you to the actual documents for more complete
information. Our principal corporate offices are located at 8400 East Crescent
Parkway, #675, Greenwood Village, CO 80111; our telephone number is
720-529-9500.

BUSINESS OF CALAIS RESOURCES, INC.

         We are a mineral exploration company engaged directly and indirectly
through subsidiaries, in the acquisition, exploration and development of mineral
properties. Our primary property is the Caribou Property (exploration) located
in Nederland, Colorado.

         We will not know that a commercially viable mineral deposit, a reserve,
or a resource, exists in the Caribou Property until sufficient and appropriate
exploration work is done and a comprehensive evaluation of such work concludes
economic and legal feasibility. Calais Resources, Inc also has exploration
properties in Nevada, and Panama.

FINANCIAL AND OTHER INFORMATION

         In this Annual Report, unless otherwise specified, all dollar amounts
are expressed in Canadian Dollars ("Cdn$" or "$"). The Government of Canada
permits a floating exchange rate to determine the value of the Canadian Dollar
against the U.S. Dollar (US$).

FORWARD-LOOKING STATEMENTS

         This Annual Report includes forward-looking statements, principally in
ITEM #4, "Information on the Company" and ITEM #5, "Operating and Financial
Review and Prospects." We have based these forward-looking statements largely on
our current expectations and projections about future events and financial
trends affecting our business. These forward-looking statements are subject to
risks, uncertainties and assumptions including, among other things, the factors
discussed in this Annual Report under ITEM #3, "Key Information, Risk Factors"
and factors described in documents that we may furnish from time to time to the
Securities and Exchange Commission.

         The words "believe," "may," "will," "estimate," "continue,"
"anticipate," "intend," "expect," and similar words are intended to identify
forward-looking statements. In light of these risks and uncertainties, the
forward-looking information, events and circumstances discussed in this Annual
Report might not occur. Our actual results and performance could differ
substantially from those anticipated in our forward-looking statements. We
undertake no obligation to update publicly or revise any forward-looking
statements because of new information, future events or otherwise.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

                                       4
<PAGE>

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.  KEY INFORMATION

3.A.     SELECTED HISTORICAL FINANCIAL DATA

Items 3.A(1) and 3.A(2) - Tabular information

         The selected financial data as of and for fiscal years ended May 31,
2003 and 2002 are derived from our consolidated financial statements which have
been audited by KPMG LLP, Independent Accountants, as indicated in their
auditors' report which is included elsewhere in this report. The selected
financial data as at May 31, 2001, 2000 and 1999 and for the years ended May 31,
2001, 2000 and 1999 have been extracted from our financial statements which were
audited by other auditors. The selected financial data as of May 31, 2000 and
1999 and for the years ended May 31, 2001, 2000, and 1999 have been extracted
from financial statements not included herein.

         You should read the selected financial data in conjunction with the
consolidated financial statements and other financial information included
elsewhere in this report.

         We have prepared our financial statements in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"). The application of
Canadian GAAP conforms in all material respects for the periods presented with
generally accepted accounting principles as applied in the United States ("US
GAAP") except as disclosed in footnotes to the financial statements.

                                       5
<PAGE>

                             Selected Financial Data
                      (Cdn$ in 000, except per share data)

<TABLE>
<CAPTION>
                                                       YEAR ENDED MAY 31
                                      2003        2002        2001        2000        1999
<S>                                 <C>         <C>         <C>         <C>         <C>
      CANADIAN GAAP
       Revenues                        Cdn$0       Cdn$0       Cdn$0       Cdn$0       Cdn$0
       Loss for the year            ($   592)   ($   602)   ($   748)   ($11,795)   ($   619)
       Loss per Share               ($  0.05)   ($  0.06)   ($  0.08)   ($  1.24)   ($  0.07)
       Dividends Per Share           $  0.00     $  0.00     $  0.00     $  0.00     $  0.00
       Weighted Avg. Shares (000)     10,813      10,184       9,618       9,505       9,126

       Working Capital Deficiency   ($ 3,135)   ($ 2,689)   ($ 1,262)   ($ 5,241)   ($ 5,334)
       Long-Term Debt                $ 4,625     $ 4,573     $ 5,721     $     0     $     0
       Mineral Properties            $13,207     $12,710     $12,203     $12,069     $21,589
       Shareholder's Equity          $ 5,542     $ 5,574     $ 5,390     $ 6,078     $17,873
       Total Assets                  $13,585     $13,194     $12,788     $12,799     $24,306

      US GAAP
      Mineral Properties (3)         $     0     $     0     $     0     $     0     $     0
      Shareholders deficiency       ($ 8,137)   ($ 7,660)   ($ 6,813)   ($ 5,992)   ($ 3,716)
      Total Assets                   $   378     $   485     $   585     $   729     $ 2,716

      Net Loss (1), (2)             ($   993)   ($ 1,184)   ($ 1,063)   ($ 2,275)   ($ 7,159)
      Loss per share                ($  0.09)   ($  0.12)   ($  0.11)   ($  0.24)   ($  0.78)

(1)   Cumulative Net Loss since incorporation is ($30,854).

(2)   Canadian GAAP Net Loss has been adjusted to US GAAP for the following:
      Canadian GAAP Net Loss        ($   592)    $   602)   ($   748)   ($11,795)    $  (619)
      Expensed exploration costs        (497)       (507)       (446)     (1,879)     (6,540)
      Previously expensed costs
        under U.S. GAAP written off
        for Canadian                       -           -         313      11,399           -
      GAAP
      Stock-based compensation            44        (126)       (183)          -           -
      Beneficial conversion option        52          51           -           -           -
--------------------------------------------------------------------------------------------
      US GAAP Net Loss              ($   993)   ($ 1,184)   ($ 1,063)   ($ 2,275)   ($ 7,159)

(3)   Canadian GAAP Mineral
         Properties                  $13,207      12,710      12,203      12,070      21,589
      Cumulative Expensed
         exploration costs          ($13,207)    (12,710)    (12,203)    (12,070)
--------------------------------------------------------------------------------------------
      US GAAP Mineral
         Properties                  $     0     $     0     $     0     $     0     $     0
</TABLE>

                                        6
<PAGE>

Item 3.A(3) - Exchange Rates

         In this Annual Report, unless otherwise specified, all dollar amounts
are expressed in Canadian Dollars (Cdn$). The Government of Canada permits a
floating exchange rate to determine the value of the Canadian Dollar against the
U.S. Dollar (US$).

         The following table sets forth the high and low rate of exchange for
the Canadian Dollar to the U.S. Dollar at the end of each of the five most
recent fiscal years ended May 31st, the average rates for the year, and the
range of high and low rates for each month in the last six months ended October
31, 2003.

         For purposes of this table, the rate of exchange means the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York. The table sets forth
the number of Canadian Dollars required under that formula to buy one U.S.
Dollar. The average rate means the average of the exchange rates on the last day
of each month during the period. The rate of exchange on October 31, 2003 was
Cdn$1.35, meaning that at that date Cdn$1.35 would purchase US$1.00, or US$.741
would purchase Cdn$1.00.

<TABLE>
<CAPTION>
MONTH ENDED                                                      HIGH              LOW
---------------------------------------------------------------------------------------
<S>                                                              <C>              <C>
October 31, 2003                                                 $1.35            $1.30
---------------------------------------------------------------------------------------
September 30, 2003                                               $1.38            $1.33
---------------------------------------------------------------------------------------
August 31, 2003                                                  $1.41            $1.38
---------------------------------------------------------------------------------------
July 31, 2003                                                    $1.41            $1.33
---------------------------------------------------------------------------------------
June 30, 2003                                                    $1.38            $1.33
---------------------------------------------------------------------------------------
May 31, 2003                                                     $1.44            $1.34
---------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
YEAR ENDED MAY 31                              AVERAGE           HIGH              LOW
---------------------------------------------------------------------------------------
<C>                                            <C>               <C>              <C>
2003                                            $1.46            $1.59            $1.33
---------------------------------------------------------------------------------------
2002                                            $1.57            $1.60            $1.52
---------------------------------------------------------------------------------------
2001                                            $1.52            $1.58            $1.47
---------------------------------------------------------------------------------------
2000                                            $1.47            $1.51            $1.44
---------------------------------------------------------------------------------------
1999                                            $1.51            $1.58            $1.45
---------------------------------------------------------------------------------------
</TABLE>

3.B.     CAPITALIZATION AND INDEBTEDNESS

Not applicable.

3.C.     REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

3.D.     RISK FACTORS

         An investment in and ownership of our common stock is one of high risk.
You should carefully consider the risks described below before deciding whether
to invest in or continue to hold our common stock. If any of the contingencies
discussed in the following paragraphs or other materially adverse events
actually occurs, the business, financial condition and results of operations
could be materially and adversely affected. In such case, the trading price of
our common stock could decline, and you could lose all or part of your
investment.

                                       7
<PAGE>

RISKS ASSOCIATED WITH OUR FINANCIAL RESULTS AND CAPITALIZATION:

OUR CONSOLIDATED FINANCIAL STATEMENTS RAISE DOUBT ABOUT OUR ABILITY TO CONTINUE
AS A GOING CONCERN BECAUSE OF OUR FINANCIAL CONDITION AND CONTINUING LOSSES.

         Note 1 to our consolidated financial statements included herein
expresses the following concerns about our ability to continue as a going
concern even following the US$4,500,000 loan we received in August 2003:

         The Company has experienced losses in 2003, 2002, and 2001 and has
         experienced negative cash flow from operations over a number of years.
         The Company is actively pursuing various options with potential lenders
         and investors which, if accepted, will in management's view, enable the
         Company to achieve its business plans. No agreements with potential
         lenders or investors have been reached yet, and there can be no
         assurance that such agreements will be reached.

         The ability of the Company to continue as a going concern and to
         realize the carrying value of its assets and discharge its liabilities
         when due is dependent on the successful completion of the actions taken
         or planned which management believes will mitigate the adverse
         conditions and events which raise doubt about the validity of the
         "going concern" assumption used in preparing these financial
         statements. As is common with companies with negative cash flows and
         losses, there is no certainty that these and other strategies will be
         sufficient to permit the Company to continue beyond May 31, 2004.

         The financial statements do not reflect adjustments that would be
         necessary if the "going concern" assumption were not appropriate. If
         the "going concern" basis was not appropriate for these financial
         statements, then adjustments would be necessary in the carrying value
         of assets and liabilities, the reported revenues and expenses, and the
         balance sheet classifications used.

         In view of the matters described in the preceding paragraphs,
recoverability of a major portion of the recorded asset amounts shown in our
consolidated financial statements is dependent upon our continued operations,
which in turn is dependent upon our ability to meet our financing requirements
on a continuing basis, to maintain present financing, and to succeed in our
future operations. The consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should we be unable to continue in existence.

WE HAVE HAD SIGNIFICANT WORKING CAPITAL SHORTAGES DURING THE PAST YEARS AND WE
ANTICIPATE A NEED FOR A ADDITIONAL FUNDING TO FINALIZE OUR EXPLORATION PLANS OR
TO COMMENCE ANY SIGNIFICANT DEVELOPMENT OR MINING WORK.

         Until we completed financing with accredited investors in August 2003,
we incurred significant working capital shortages, with negative working capital
at May 31, 2003 of approximately $(3,135,000). While the August financing made
approximately $3,500,000 net proceeds available to us, it is not likely that
this funding will be sufficient to achieve our business goals. We expect to need
additional funding within the next twelve to 24 months in order to carry out our
business plan, and we cannot offer any assurance that such funding will be
available on reasonable terms when required, if any funding is available at all.

         Our ability to exploit our mineral properties will be dependent upon
our ability to obtain financing through the joint venturing of projects,
conveying an interest in our properties to persons who will develop those
properties, obtaining investment from industry partners who want to develop the
properties through

                                       8
<PAGE>

Calais, debt financing, equity financing or other means. If we are unable to
obtain such financing on reasonable terms, our ability to develop and to exploit
our mineral prospects may be delayed or indefinitely postponed. Although our
goal is to continue exploration for mineral resources, ultimately if we are
unable to finance future exploration and development, we may lose our interest
in these properties.

THE VOLATILITY AND LOW TRADING VOLUME OF OUR COMMON STOCK IN THE PUBLIC MARKET
AND THE GENERAL CONDITION OF THE PUBLIC MARKET ITSELF MAY ADVERSELY AFFECT OUR
ABILITY TO RAISE ADDITIONAL CAPITAL.

         In recent years, the securities markets in the United States and Canada
have experienced a high level of price and volume volatility, and the market
price of securities of many companies, particularly small-capitalization
companies such as Calais, has experienced wide price fluctuations that have not
necessarily been related to the operations, performances, underlying asset
values, or prospects of such companies. For these reasons, you can anticipate
that our common shares will continue to be subject to volatility resulting from
market forces over which Calais will have no control.

THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO ACHIEVE ANY PRODUCTION.

         As described below, we cannot offer any assurance that we will be able
to achieve production of valuable minerals from any of our prospects. Unless we
are able to achieve such production within a reasonable period of time and in a
manner that results in revenues greater than the expenses incurred, we will not
be able to continue to finance our operations, and we will likely not be able to
attract further equity or debt investment when necessary.

WE HAVE RAISED CAPITAL AND ISSUED SHARES DURING THE YEARS ENDED MAY 31, 2003 AND
2002, WHICH HAS RESULTED IN DILUTION TO OUR EXISTING SHAREHOLDERS. THIS WAS
NECESSARY IN ORDER TO PROVIDE NECESSARY WORKING CAPITAL OR OBTAIN ASSETS AND
SERVICES, AND WE WILL LIKELY ISSUE MORE SHARES TO RAISE ADDITIONAL CAPITAL OR TO
OBTAIN OTHER SERVICES OR ASSETS, ANY OF WHICH MAY RESULT IN ADDITIONAL DILUTION.

         During the course of the last two fiscal years and subsequently, we
have been required to raise in excess of $5,000,000 of net working capital
(after expenses) to finance our business operations and acquisitions. We have
raised this capital by issuing shares of common stock and warrants to accredited
investors, secured loan, unsecured loans, and by issuing convertible debentures
to certain insiders. During this same period of time, we have issued common
stock warrants and shares of common stock to several persons in exchange for
their promises to perform services for us.

         If we are successful in raising additional working capital, we will
likely have to issue additional shares of our common stock and common stock
purchase warrants at prices that may dilute the interests of our existing
shareholders.

OUR OUTSTANDING SHAREHOLDERS MAY INCUR A DILUTION OF THEIR OWNERSHIP INTEREST
THROUGH FUTURE ISSUANCES OF SHARES TO OUR EMPLOYEES, DIRECTORS, AND CONSULTANTS.

         Because we anticipate that our success will be highly dependent upon
our employees and consultants, we may in the future grant to some or all of our
key employees, directors and consultants options to purchase common shares as
non-cash incentives. To the extent that significant numbers of such options may
be granted and exercised, the interests of the other shareholders of the Company
may be diluted.

                                       9
<PAGE>

         Furthermore, the exercise of our existing outstanding options, the
conversion of our convertible debentures, and the number of shares available for
future issuance may dilute the value of our common shares and the interest of
our shareholders.

         We have 100,000,000 shares of our common stock authorized, of which
11,193,385 shares were outstanding as of May 31, 2003 (19,627,703 were
outstanding at October 31, 2003). In addition, as of May 31, 2003 we have
reserved an additional 981,500 shares for issuance upon the exercise of options
and 548,803 shares for issuance upon exercise of warrants that were outstanding,
and we have reserved an additional 4,143,988 shares for issuance upon conversion
of outstanding convertible debentures.

         Although our Board of Directors has no present intention to do so, it
has the authority, without action by the shareholders, to issue authorized and
unissued shares of common stock and shares of preferred stock. Any series of
preferred stock, if and when established and issued, could also have rights
superior to shares of our common stock, particularly in regard to voting, the
payment of dividends and upon liquidation of Calais.

BROKER-DEALERS MAY BE DISCOURAGED FROM EFFECTING TRANSACTIONS IN OUR COMMON
SHARES BECAUSE THEY ARE CONSIDERED PENNY STOCKS AND ARE SUBJECT TO THE PENNY
STOCK RULES.

         Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act
of 1934, as amended, impose sales practice and disclosure requirements on NASD
broker-dealers who make a market in "a penny stock." A penny stock generally
includes any non-Nasdaq equity security that has a market price of less than
US$5.00 per share. Our shares are quoted on the OTC Bulletin Board and as a
result are considered to be "penny stocks" subject to these rules. The
additional sales practice and disclosure requirements imposed upon
broker-dealers may discourage broker-dealers from effecting transactions in our
shares, which could severely limit the market liquidity of the shares and impede
the sale of our shares in the secondary market.

         Under the penny stock regulations, a broker-dealer selling penny stock
to anyone other than an established customer or "accredited investor"
(generally, an individual with net worth in excess of US$1,000,000 or an annual
income exceeding US$200,000, or US$300,000 together with his or her spouse) must
make a special suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to sale, unless the
broker-dealer or the transaction is otherwise exempt.

         In addition, the penny stock regulations require the broker-dealer to
deliver, prior to any transaction involving a penny stock, a disclosure schedule
prepared by the US Securities and Exchange Commission relating to the penny
stock market, unless the broker-dealer or the transaction is otherwise exempt. A
broker-dealer is also required to disclose commissions payable to the
broker-dealer and the registered representative and current quotations for the
securities. Finally, a broker-dealer is required to send monthly statements
disclosing recent price information with respect to the penny stock held in a
customer's account and information with respect to the limited market in penny
stocks.

THE LACK OF TRADING VOLUME ASSOCIATED WITH OUR STOCK REDUCES THE LIQUIDITY OF
THE STOCK FOR OUR SHAREHOLDERS.

         We have historically had very little trading volume in our common
stock. The lack of trading volume of our shares reduces the liquidity of an
investment in our shares. The limited daily trading activity in our stock can
make it difficult for investors to readily sell their shares in the open market.

                                       10
<PAGE>

FOREIGN OPERATIONS ARE SUBJECT TO MANY RISKS.

         We are exploring mineral properties in the Republic of Panama and in
the past have focused on properties in Mexico. Foreign activities are subject to
the risks normally associated with conducting business in foreign countries,
including exchange controls and currency fluctuations, limitations on
repatriation of earnings, foreign taxation, foreign environmental law and its
enforcement, labor practices and disputes, and uncertain political and economic
environments, as well as risks of war and civil disturbances, or other risks
that could cause exploration or development difficulties or stoppages, restrict
the movement of funds or result in the deprivation or loss of contract rights or
the taking of property by nationalization or expropriation, without fair
compensation. Foreign operations could also be adversely impacted by laws and
policies of the United States affecting foreign trade, investment and taxation.

RISKS ASSOCIATED WITH OUR MANAGEMENT AND PRINCIPAL SHAREHOLDERS

WE ARE DEPENDENT UPON THE CONTINUED AVAILABILITY OF THE SERVICES OF OUR
PRESIDENT AND CHIEF EXECUTIVE OFFICER, OUR MOST SIGNIFICANT KEY MANAGEMENT
EMPLOYEE.

         While engaged in the business of exploiting mineral properties, the
nature of our business, our ability to continue planned exploration and
development of our mineral prospects, and to develop a competitive edge in the
marketplace, depends, in large part, on our ability to attract and maintain
qualified key management personnel. Competition for such personnel is intense
and the Company may not be able to attract and retain such personnel. The
Company's growth will depend primarily on the efforts of its President and Chief
Executive Officer Thomas S. Hendricks. Loss of Mr. Hendricks' services would
have a material adverse effect on our ability to continue operations. We do not
have any key-man life insurance and no written employment or consulting
agreements with Mr. Hendricks or with any other member of our management except
with Mr. Matt Witt, with whom we have a two-year employment agreement expiring
in October 2005.

         We are controlled by a limited number of our shareholders, and as a
result the public holders of our outstanding shares will have little ability to
influence our management or our direction.

         Our management, directors, and greater-than-five-percent stockholders
(and their affiliates), acting together, have the ability to control
substantially all matters submitted to the Company's stockholders for approval
(including the election and removal of directors and any merger, consolidation
or sale of all or substantially all of our assets) and to control our management
and affairs. Accordingly, this concentration of ownership may have the effect of
delaying, deferring or preventing a change in control of the Company, impeding a
merger, consolidation, takeover or other business combination involving the
Company or discouraging a potential acquirer from making a tender offer or
otherwise attempting to obtain control of Calais which in turn could materially
adversely affect the market price of our stock.

U.S. INVESTORS MAY NOT BE ABLE TO ENFORCE THEIR CIVIL LIABILITIES AGAINST CALAIS
OR AGAINST CERTAIN OF OUR DIRECTORS AND OFFICERS.

         We are incorporated in the province of British Columbia under the
British Columbia Companies Act. As such, a majority of our directors must be
residents of Canada. As a result, it may be difficult for U.S. holders of our
common shares to effect service of process on these persons within the United
States or to realize in the United States upon judgments rendered against them.
In addition, a shareholder should not assume that the courts of Canada (i) would
enforce judgments of U.S. courts obtained in actions against us or

                                       11
<PAGE>

such persons predicated upon the civil liability provisions of the U.S. federal
securities laws or other laws of the United States, or (ii) would enforce, in
original actions, liabilities against us or such persons predicated upon the
U.S. federal securities laws or other laws of the United States.

         When we first became subject to the reporting requirements of the
Securities Exchange Act of 1934 as a `foreign private issuer,' we became liable
for filing annual reports with the Securities and Exchange Commission on Form
20-F and other reports on Form 6-K as we filed reports with Canadian authorities
or issued press releases or proxy statements. While we have filed our annual
reports on Form 20-F, we have not had those reports reviewed by legal counsel
and do not know whether there are any deficiencies. Furthermore, we did not file
any Forms 6-K which were required by the Securities and Exchange Commission's
rules. Consequently, we may be subject to enforcement action from the Securities
and Exchange Commission or possible civil action from investors who may have
relied on reports that are subsequently judged to be incomplete or inaccurate in
any material respect. If any person or regulatory agency brings any action
against us, it will involve a significant amount of time and cost and will
distract our management from pursuing our business plan as described herein.

WE ARE NO LONGER CONSIDERED A "FOREIGN PRIVATE ISSUER" AND, THEREFORE, WE BECOME
SUBJECT TO ADDITIONAL REGULATION UNDER THE SECURITIES EXCHANGE ACT OF 1934, AND
POSSIBLE DUPLICATIVE REGULATION AND REPORTING REQUIREMENTS UNDER BRITISH
COLUMBIA AND CANADIAN LAW.

         As a result of completing a significant financing in August 2003, we no
longer meet the definition of a "foreign private issuer" under the Securities
Exchange Act of 1934. As a result, we will be required to file reports with the
Securities and Exchange Commission on Form 10-KSB (due within 90 days after the
completion of each fiscal year), Form 10-QSB (due within 45 days after the
completion of the first three fiscal quarters) and Form 8-K (due upon the
occurrence of certain defined and other material events). As a result of losing
`foreign private issuer' status, all of our financial information will now have
to be reconciled to US GAAP under Item 18 instead of under Item 17. We will also
be subject to regulation under the proxy rules (SEC Regulation 14A). These
requirements in the United States are in addition to similar reporting
obligations in Canada where the financial information will have to be set forth
in Canadian GAAP. As a result, we may incur additional expenses in complying
with the possible duplicative reporting requirements.

RISKS ASSOCIATED WITH OUR BUSINESS AND OPERATIONS

WE ARE SUBJECT TO ALL OF THE OPERATIONAL RISKS OF THE MINING INDUSTRY.

         Our operations are and will continue to be subject to all of the
hazards and risks normally associated with exploring for and developing mineral
resources. These risks include finding insufficient ore reserves, fluctuations
in production costs that may make the properties unattractive for further
development or mining; significant environmental and other regulatory
restrictions; labor disputes; geological problems; pit-walls or tailings dam
failures; force majeure events; and the risk of injury to persons, property or
the environment. Operating cost increases can have a negative effect on the
value of and ability to finance our properties and may require that we cease
operations on or abandon some properties.

THE MINING INDUSTRY IS SUBJECT TO ENVIRONMENTAL RISKS.

                                       12
<PAGE>

         Mineral exploration operations are subject to potential risks and
liabilities associated with pollution of the environment and the disposal of
waste products occurring as a result of mineral exploration and production.
Insurance against environmental risks (including potential liability for
pollution or other hazards as a result of the disposal of waste products
occurring from exploration and production) is not generally available to the
companies within the mining industry, such as the operators of the mines in
which we hold a royalty interest, at a reasonable price. To the extent that we
become subject to environmental liabilities, the satisfaction of any such
liabilities would reduce funds otherwise available to us and could have a
material adverse effect on our financial condition and operations. Laws and
regulations intended to ensure the protection of the environment are constantly
changing, and are generally becoming more restrictive and costly. We take great
pride in being proactive with all environmental laws and concerns, and will
continue to comply with any additional requirements that may be imposed in the
future to the best of its ability.

FEDERAL, STATE AND LOCAL GOVERNMENTAL REGULATIONS.

         The current operations of the Company, involves exploration and
development activities on its properties. These activities require permits from
federal, state and local governmental authorities in the United States. While we
believe that we have all permits that are necessary to perform our activities as
currently underway, laws change and there can be no assurance that any future
permits which we may require will be obtainable on reasonable terms or that such
laws and regulations, or that new legislation or modifications to existing
legislation, would not have an adverse effect on any exploration project which
we might undertake.

         Failure to comply with applicable laws, regulations and permitting
requirements may result in enforcement actions there under, including orders
issued by regulatory or judicial authorities causing operations to cease or be
curtailed, and may include corrective measures requiring capital expenditures,
installation of additional equipment or remedial actions. Parties engaged in
exploration operations may be required to compensate those suffering loss or
damage by reason of the exploration activities and may have civil or criminal
fines or penalties imposed for violation of applicable laws or regulations.

         Amendments to current laws, regulations and permits governing
operations and activities of exploration companies, or more stringent
implementation thereof, could have a material adverse impact on us and our
operations and cause increases in capital expenditures or require abandonment or
delays in the exploration of new properties.

THERE IS NO GUARANTEE OF CLEAR TITLE TO ANY OF OUR MINERAL PROPERTIES.

         Title to mining properties is complex and involves many issues (not all
of which are of record with the local clerk and recorder's office). We have
performed a large amount of work to provide us the greatest assurance that we
have good title to the patented and unpatented mining claims included within our
Caribou property. The Nevada properties are generally unpatented mining claims,
and such claims are subject to greater uncertainties than are associated with
patented mineral properties. Furthermore we do not own title of record to the
Nevada properties, although we are seeking to acquire record title in accordance
with our earlier agreements. We cannot offer any assurance that we will be able
to cause our predecessors in title to transfer their title to us,
notwithstanding what we believe is their contractual obligations. If we are
unable to obtain good title to the Nevada properties, we will not explore those
properties and we will not be able to benefit from the monies we have expended
on them to date. Our Panama properties are made up completely of concessions
from the government of Panama. Based on our review of the interests we acquired
in Panama, we believe that we have the right to explore, develop, and benefit
from those properties under Panamanian law.

                                       13
<PAGE>

WE HAVE NO PROVEN RESERVES ON ANY OF OUR PROPERTIES.

         Although we have performed a significant amount of exploration work on
our Caribou property and we have identified a significant amount of
mineralization in the Caribou property, we have not identified any mineral
reserves as that term is defined by the US Securities and Exchange Commission.
Our properties in Nevada and Panama are in the exploration stage and we have not
identified any mineral reserves on those properties, either. Properties on which
mineral reserves are not found will have to be discarded which will require that
we write each respective property off, thus sustaining an expense for accounting
purposes.

UNSUCCESSFUL EXPLORATION EFFORTS COULD HAVE A SIGNIFICANT NEGATIVE IMPACT ON OUR
FINANCIAL CONDITION AND OPERATIONS.

         If we are unable to identify mineralization that can be commercially
extracted, beneficiated, and sold, we will have spent a significant amount of
money with no return to our shareholders.

FLUCTUATION IN THE PRICE OF GOLD AND SILVER COULD HAVE MATERIAL ADVERSE IMPACTS
ON OUR OPERATIONS.

         Our primary exploration targets are gold and silver. Market prices for
commodities such as gold and silver have historically fluctuated and
occasionally have fluctuated widely. The market price of precious metals
fluctuates widely and is affected by numerous factors beyond the control of any
person. These factors include industrial and jewelry fabrication demand,
expectations with respect to the rate of inflation, the relative strength of the
U.S. dollar and other currencies, interest rates, gold sales and loans by
central banks, forward sales by gold producers, global or regional political,
economic or financial crises, and a number of other factors. The global price
for these precious metals and the volatility of the price may adversely impact
our ability to raise the necessary financing and, if we engage in production
operations, may adversely impact our revenues from operations.

FORWARD-LOOKING STATEMENTS MAY PROVE TO BE INACCURATE.

         In our effort to make the information in this report more meaningful,
this report contains both historical and forward-looking statements. All
statements other than statements of historical fact are forward-looking
statements within the meanings of Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
in this report are not based on historical facts, but rather reflect the current
expectations of our management concerning future results and events.

         The forward-looking statements generally can be identified by the use
of terms such as "believe," "expect," "anticipate," "intend," "plan," "foresee,"
"likely," "will" or other similar words or phrases. Furthermore, statements that
describe our objectives, plans, or goals are, or may be, forward-looking
statements.

         Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be different from any future results, performance and
achievements expressed or implied by these statements.

         These factors are not necessarily all of the important factors that
could cause actual results to differ materially from those expressed in the
forward-looking statements in this prospectus. Other unknown or unpredictable
factors also could have material adverse effects on our future results.

                                       14
<PAGE>

ITEM 4.  INFORMATION ON THE COMPANY

4.A.     HISTORY AND DEVELOPMENT OF THE COMPANY.

General Information

         Our legal name is Calais Resources Inc. We were incorporated under the
laws of British Columbia, Canada, on December 30, 1986 under the name "Millenium
Resources Inc." We changed our name to Calais Resources, Inc. on March 19, 1992.
We are engaged in the exploration and, when warranted, development of natural
resource properties. Our primary properties are the Caribou properties in
Colorado and mineral concessions in the Panama. We also claim interests in
certain properties in Nevada.

         Our principal executive office has moved to the United States and is
now located at 8400 East Crescent Parkway, #675, Greenwood Village, CO 80111;
(tel: 720-529-9500; fax: 720-529-9747) and the contact person at that address is
Matthew C. Witt. Previously it was located at 9482 Williams St., Chilliwack,
British Columbia, Canada V2P 5G1 (tel (604) 795-3383; fax (604) 792-3676). Our
registered office in British Columbia is 9482 Williams St., Chilliwack, British
Columbia, Canada V2P 5G1 (tel (604) 795-3383; fax (604) 792-3676).

         Our common shares trade on the OTC Bulletin Board under trading symbol
"CAAUF." Our fiscal year ends May 31st. The Company's consolidated financial
statements are stated in Canadian Dollars (Cdn$) and are prepared in accordance
with generally accepted accounting principles as they are applied in Canada
("Canadian GAAP"); nevertheless, the consolidated financial statements conform
in all material respects with generally accepted accounting principles as
applied in the United States ("US GAAP") except as disclosed in footnotes to the
consolidated financial statements.

         Herein, all references to "$" and "Cdn$" refer to Canadian Dollars and
all references to "US$" refer to United States Dollars. Unless otherwise
specified, all dollar amounts are expressed in Canadian Dollars (Cdn$). All
references to common shares refer to shares of our common stock (without par
value) unless otherwise indicated.

         We operate through various subsidiaries.

         Calais Resources Colorado, Inc., a Nevada corporation qualified to do
business in Colorado, owns our Caribou properties. We own 100% of the
outstanding capital stock of Calais Resources Colorado, Inc. Previously those
shares were owned through Calais International Inc. and Calais International
Colorado Inc. (both Barbados, West Indies corporations), but our agent in
Barbados did not maintain the corporate entities and, as a result, the offshore
entities dissolved and the Company now owns the subsidiaries directly.

         Calais Resources Nevada, Inc., a Nevada corporation, claims an interest
in the Manhattan properties in Nevada although that interest does not amount to
an ownership interest. We own 100% of the outstanding capital stock of Calais
Resources Nevada, Inc. As is the case with our Colorado subsidiary, we owned
those shares through Calais International Inc. and Calais International Nevada
Inc. (both Barbados, West Indies corporations). Our agent in Barbados did not
maintain the corporate entities and, as a result, the offshore entities
dissolved and the Company now owns the subsidiaries directly.

         The information contained in this Annual Report is current as at
October 31, 2003, except where a different date is specified. In response to
Item 4.A(7) of Form 20-F, there are no pending public takeover offers

                                       15
<PAGE>

by any third party in respect of our shares or otherwise, or by us in respect to
any other person's shares. To our knowledge, there have been no public takeover
offers in more than the last three fiscal years.

Subsequent to Fiscal 2003

         At the end of the 2003 fiscal year, we had negative working capital of
approximately Cdn$(3,135,000). During the 2003 fiscal year and subsequently, we
engaged in discussions with a large number of potential financing sources. On
August 1, 2003, we completed a financing with several accredited investors who
loaned US$4,500,000 to us and took a security interest in the Caribou property
to collateralize our repayment obligation. We also issued 8,181,818 shares of
our common stock to the accredited investors as a loan origination fee valued at
US$0.55 per share. One of the accredited investors, Matt Witt, is now our chief
financial officer and was appointed to that position as a result of the
transaction. Another one of the accredited investors, Steve A. Benaske, agreed
that if our common stock price exceeded US$3.00 per share, he would sell up to
1,500,000 shares of the original 8,181,818 shares for our benefit to repay the
loan in full. He will only be able to sell the shares to the extent that a
registration statement for the sale is effective or an exemption from
registration is available. The US$4,500,000 loan to us (bearing interest at
12.9% and due July 31, 2005 or upon the sale of 1,500,000 shares of common stock
by Stephen A. Benaske if the stock price reaches US$3.00) was used for the
following:

<TABLE>
<S>                                                            <C>
---------------------------------------------------------------------------
Prepayment of two-years interest to the lender                 US$1,161,000
---------------------------------------------------------------------------
Repayment of remaining amounts due to bank                     US$1,080,000
---------------------------------------------------------------------------
Repayment of interim mortgage due to Thomas S. Hendricks for   US$  587,680
funds he advanced
---------------------------------------------------------------------------
Repayment of trade payables                                    US$  700,000
---------------------------------------------------------------------------
Repayment of accrued compensation                              US$  223,822
---------------------------------------------------------------------------
Financing costs                                                US$   95,000
---------------------------------------------------------------------------
</TABLE>

         As a result, following the financing and the use of proceeds as
described above, we had US$652,498 remaining for working capital, which we plan
to use for exploration of our Caribou and Panamanian properties and for general
and administrative purposes.

         To secure the loan, we pledged our Caribou properties as collateral.

         After receiving the investment from the accredited investors, we
commenced a drilling program on our Caribou properties which we hope will expand
the mineral resources we have already identified on this property. During
September and October 2003 we have drilled two core holes at a cost of about
US$400,000, and (subject to the availability of additional financing) we expect
to drill up to an additional 100 holes at an estimated cost of US$2,600,000. In
addition, we are updating all of the geologic information about the Caribou
properties in a three-dimensional program which we expect will assist us in
determining future exploration activities, whether development drilling is
warranted, and whether to identify reserves (if any) and whether commencement of
commercial production is warranted.

         We have also sent a team to Panama to explore our Panamanian mineral
concessions in the Faja de Oro District and we are updating all of our
information on the Nevada properties.

                                       16
<PAGE>

Fiscal 2003 Natural Resource Property Acquisition/Exploration

         Because of working capital shortages, we did not perform any
significant drilling on our properties during fiscal 2003.

4.B. BUSINESS OVERVIEW

THE NATURE OF OUR BUSINESS OPERATIONS.

         We are in the business of researching, acquiring, exploring and, when
warranted, developing mineral prospects. Our corporate philosophy has been to
seek out and acquire other potential gold prospects.

         When we have identified prospects, we endeavor to acquire the rights to
the prospect and surrounding claims. During the acquisition process, we also
proceed through a due diligence period to the commencement of a full scientific
analysis of the district, followed by an exploration program and (where
warranted) a development program. Suitable results at each step in the process
are a prerequisite to further development. Upon suitable development of a
mineral deposit and reserve, we will then make the decision to either proceed
with the mining thereof, to joint venture with a major mining company, or to
sell outright.

         Exploration and development of mineral resources can be expensive.
Through the years, we have been accomplishing limited exploration activities
with funds provided through debt and equity investment. We have been using, and
expect to continue to use, the net proceeds from the August 2003 financing to
expand our drilling operations on our Caribou properties and to commence
exploration operations on our property in Panama. We do not expect to expend
significant proceeds on the Nevada properties, until we are satisfied with the
title to our patented an unpatented mining properties.

         When we reach the development and mining stages for any of our
properties, we plan to seek industry partners as well as other sources of
capital, and we may have to sell an interest in our properties, enter into joint
venture or development arrangements, or otherwise dilute our interest in our
properties in order to attract third party financing. We will likely only be
able to attract interest in our properties on commercially-reasonable terms if
we are able to show positive results from our exploration programs and our other
work (such as mapping) sufficient to attract third-party financing or industry
participants.

         Our activities on our three mineral properties are not affected by
seasonality.

         The raw materials that we need for our mineral exploration and
development activities consist of readily available consumables such as fuel and
equipment. We also contract with third parties for some of these activities,
such as the drilling that is currently proceeding. At this time, there is no
shortage of these materials or contractors at reasonable prices, and we do not
believe that the prices of these materials or services are volatile - with the
possible exception of fuel prices which fluctuate based on global market
conditions.

         Since we have not yet produced any gold or silver for sale, we have not
developed any marketing channels. If we commence mining our properties and do
produce precious metals (which cannot be assured), there are numerous outlets
for the sale of our production.

         Our operations and our prospective operations are not dependent on any
intellectual property patents or licenses, industrial, commercial, or financial
contracts, or new manufacturing processes.

REGULATIONS AND GOVERNMENT RULES

         The properties which we are exploring are subject to various federal,
state and local laws and regulations governing prospecting, exploration,
development, production, labor standards, occupational

                                       17
<PAGE>

health, mine safety, control of toxic substances, and other matters involving
environmental protection and taxation. U.S. and foreign environmental protection
laws address, among other things, the maintenance of air and water quality
standards, the preservation of threatened and endangered species of wildlife and
vegetation, the preservation of certain archaeological sites, reclamation, and
limitations on the generation, transportation, storage and disposal of solid and
hazardous wastes. There can be no assurance that all the required permits and
governmental approvals necessary for any mining project with which we may be
associated can be obtained on a timely basis, or maintained as required by the
operator of the project.

         The Company is not aware of any proposed or existing United States or
Panamanian regulations pertaining to environmental matters which might have a
material impact on our future financial performance. Nevertheless, the
applicable governmental bodies can change the current rules and regulations in
accordance with their procedural requirements, and certain governmental
employees may interpret existing rules and regulations in a manner that we do
not believe is consistent with the intent of those rules or regulations. Should
the regulations or their interpretation change, the changes may have a material
adverse impact on our operations.

COMPETITION

         There are a large number of other companies in the United States and
abroad that are engaged in the exploration and development of properties for
gold and silver. Many of these companies have achieved production and therefore
have cash flow and have financial strength that exceeds our financial strength.

         Nevertheless, the market for our possible future production of minerals
tends to be commodity oriented, rather than company oriented. Accordingly, we
expect to compete by keeping our production costs low through judicious
selection of which portions of the property to develop and by keeping overhead
charges within industry standards.

4.C.     ORGANIZATIONAL STRUCTURE.

         The Company is the parent company in the corporate group and owns
various wholly owned subsidiaries either directly or indirectly. All material
inter-company transactions and balances have been eliminated in the consolidated
financial statements included in this Annual Report. The active subsidiaries of
the Company are described above under Item 4.A (General Information).

4.D.     PROPERTY, PLANT AND EQUIPMENT.

EXECUTIVE OFFICES

         On August 1, 2003 we opened a US corporate office in Greenwood Village
Colorado in an office we have rented on a month-to-month basis for rent of
US$1,450 per month. We are looking for more permanent space.

         Our Canadian offices are located in premises of approximately 900
square feet at 9482 Williams St., Chilliwack V2P 5G1. We began occupying this
facility in March 1998. We expect to be moving substantially all of the
operations of the Canadian office to our Englewood office, but we expect to
maintain our Canadian office as required by the local statutes.

                                       18
<PAGE>

CARIBOU PROPERTY, COLORADO, USA; GOLD/SILVER EXPLORATION/DEVELOPMENT

Acquisition Details

         The Caribou Consolidated District, located near Nederland, Colorado, is
a 3.5 square mile consolidated precious metals district accessible all year
(except occasionally during the winter as the result of extremely heavy
snowfall) through paved and maintained gravel roads. Historic production in the
district dates back to 1869. Production between 1977 and 1985 totaled $5 million
through exploration and development work and old mine dump reclamation. The
district consists of three modern surface plants, roads, power lines and is
fully permitted. 150,000 feet of diamond drilling has been completed to date
with a modern core library. All data is in the Vulcan/Maptek program and has an
extensive database. The mine has high grade vein widths from 3 feet to 50 feet,
going to significant depths and significant strike lengths. The Caribou district
has recorded production dating back to 1869 of 300,000 oz. gold and 20,000,000
oz. silver. We owe royalty obligations to related and to unrelated parties as
described below under "Royalty Obligations on Caribou Property."

         We have acquired interests in additional, neighboring properties since
the original acquisition in 1998. In all cases, these additional properties were
acquired from unaffiliated third parties. The property we own includes 128
patented and 100 unpatented mining claims. The unpatented mining claims are
located on federal lands and are subject to federal as well as state
jurisdiction, and the requirements of the U.S. General Mining Law.

         Of the 128 patented claims in our land position, six claims represent
fractional ownership, and an additional eight claims represent ownership of the
subsurface minerals only, together with either a partial interest in the
surface, and/or a mining easement in favor of the Company. Four properties of
the 128 are leased interests. Calais and by an affiliated company, Aardvark
Enterprises, Inc. has fee ownership of some 376 net surface acres, and
approximately 564.3 net mineral acres. Approximately 12.5 acres of these mineral
lands are leased lands. The difference between the net mineral acres and net
surface acres represents lands where the Company owns the subsurface and a
mining easement upon the surface, but not the entire surface interest. Aardvark
is owned by Calais' chairman, Marlowe Harvey. Following a series of transactions
between Aardvark, Mr. Harvey, Calais, and Mr. Hendricks which resulted in
litigation brought by Mr. Hendricks against Mr. Harvey, Mr. Harvey, Aardvark,
Mr. Hendricks and Calais entered into a mutual release and settlement agreement
effective July 18, 2000. This agreement provides that Calais has the right to
reacquire the claims held by Aardvark for a debenture (which Calais has already
paid to Aardvark) and for a payment from Calais to Aardvark "equal to pay the
capital gains triggered by the" reconveyance of the property to Calais. (The
cash payment will be deducted from the debenture.) Although the original
agreement estimated the payment to be about US$750,000, currently the parties
estimate the tax obligation (which arises as a result of a ss.1031 exchange
completed by Aardvark) to be about US$500,000. See Item 7.B, Major Shareholders
and Related Party Transactions.

         Calais and its predecessors located the 100 unpatented claims under the
general mining laws of the United States. Each of these claims is generally 20
acres in size, less any previously patented lands lying within their boundaries.
The net acreage controlled by these unpatented claims is approximately 1,525
additional acres. We are engaged in the location of additional unpatented mining
claims. There is no guarantee that additional federal lands will remain open to
location, or that the General Mining Law will not be repealed or amended.

         The vast majority of exploration to date on the Company's lands has
taken place on patented claims. Under the General Mining Law, as amended,
unpatented claims may only be validly located by the making of a discovery,
within the meaning of that law, upon open lands within the exterior boundaries
of the claims. Though mineralization has been encountered on some of the
unpatented claims, there can be no guarantee

                                       19
<PAGE>

that there is a valid discovery on any of those claims. The patenting of mining
claims, done with relative ease during the period 1872-1920, is now very
difficult, and most patent applications are either suspended or prohibited from
being filed. Thus, there is no likelihood of the acquisition of a fee title to
any of the unpatented lands, and unpatented claims now held are held subject to
potentially adverse changes in laws and regulations governing them.

Royalty Obligations on Caribou Properties

         The majority of the properties that Calais acquired from the former
Hendricks Mining Co. ("HMC") in 1998, or acquired within five years thereafter,
are subject to net smelter return royalties in amounts varying from 2.0% to 0.5%
of net smelter returns in favor of the former shareholders of Hendricks Mining
Co. (which include Thomas S. Hendricks (as to 85.354%), Mr. Hendricks' mother
(10.101%), and Mr. Hendricks' attorney (4.545%) who has continued as attorney
for Calais; see Item 7, Major Shareholders and Related Party Transactions). The
period for which Calais was obligated to make further royalty grants as to new
acquisitions expired in April, 2003. The royalty grants now outstanding and of
record are effective for a period of 20 years after the date of the grants, with
expiration of the royalties beginning in March 2018, and ending in April 2023.
These individuals own the net smelter return royalty covering substantially all
of the Caribou properties. (The net smelter return does not include properties
acquired since April 2003.)

         The royalty grants to the former Hendricks Mining Co. shareholders are
subject to a partial buyout option exercisable by the Company at any time during
the term of the grants. The buyout option gives the Company the right to buy out
and retire 1% out of the 2% royalty grants (being 50% of the outstanding grants)
for an exercise price of US$750,000. Whether or not the exercise of the buyout
option would be advantageous to the Company cannot be determined from
information currently available to the Company.

         Several of the properties acquired by the Company or Aardvark are
subject to royalty reservations in favor of prior owners of those properties. A
total of nine of the patented properties bear net smelter return royalties in
amounts varying from 1.325% to 3.5% of net smelter returns. The terms of these
royalties vary from perpetual to a lifetime interest only. To date, Calais has
not made any attempt to negotiate the re-acquisition of any of these outstanding
royalty interests, all of which are held by parties not affiliated with Calais.

           The payment of royalties upon production, if it occurs, can
negatively affect the economics of a prospective mining operation, and may
hinder the ability of Calais to finance such operations. As no production
decision has been reached as to Calais' properties at Caribou, the impact of
existing royalty agreements upon Calais' ability to develop any mineralization
discovered has not been determined.

Property description/location/access/climate, Plant and Equipment

         The property includes the Cross Gold Mine, the Potosi Mine and several
other district properties. The property is on the east flank of the Front Range
Mountains, approximately 23 miles west of Boulder Colorado. It is reached by a
five-mile all-weather graded road from the small town of Nederland, which
connects with Boulder via paved State Highway 119. The project area encompasses
claims with additional Federal claims on public lands north and west of the
Cross Mine. Gold and silver mineralization occurs in a broad, west-northwest
trending zone that includes the Cross Mine and extends about 2,500 feet on the
property.

         Three-phase power, sufficient to service a 500 tpd (tons per day) mine
and mill complex, is installed and active on the property. An 18-gauge rail
haulage system and equipment, hoisting equipment,

                                       20
<PAGE>

compressed air, water and ventilation services are installed and maintained in
good working condition in the Cross Mine. Mine water treatment facilities are
currently operating in compliance and were upgraded in recent years.

         The Cross Mine is fully permitted through the Colorado State Health
Department, the Colorado Division of Mines, Mine Safety and Health
Administration, and the Colorado Mined Land Reclamation Division. Permitting
includes a water discharge permit.

         There are three sheet metal buildings located on the Caribou
properties. Calais uses these buildings for its mine offices, warehouse space,
laboratory, and a garage for some of its vehicles.

         Calais also has a number of small generators which supplements the
electricity received from the local public utility.

         Other mining equipment includes three bulldozers, a back-hoe, a
front-end loader, water trucks, several other trucks, a Boart Longyear
diamond-tippped core drill and three smaller drills.

         All of the buildings, equipment and vehicles are in operational
condition and is maintained regularly. We believe that the building, equipment
and vehicles are sufficient to continue our exploration program on the Caribou
properties.

Mine structure

         The Cross Mine is an underground mine with 4 levels of tunnels.
Drilling depths are 2180 feet below the surface. The Cross and Caribou mines are
located 25 miles west of the city of Boulder, in Boulder County, Colorado. The
property consists of approximately 3,000 acres of patented and unpatented mining
claims situated in the Grand Island Mining District. The Caribou mine was the
largest historical producer in the district, having produced 20,000,000 ounces
of silver, with lesser production of gold and silver from the Cross mine. Pine
forested mountain slopes predominate the area, with elevations ranging from
9,500 to 10,500 feet above sea level.

         The property lies near the northeast end of the Colorado Mineral Belt,
a regional trend of mineralization extending across Colorado, resulting from
deep seated crustal structures. At the Cross mines, gold and silver
mineralization is contained within a series of veins occurring near the contact
between biotite gneiss of the Precambrian age Idaho Springs Formation and quartz
monzonite of an early Tertiary age intrusive stock. The veins are hosted by both
rocks types and pass undisrupted across the contact. The Cross mine occurs
largely within the gneiss and is dominated by gold mineralization, while the
Caribou mine occurs in the monzonite and is dominated by silver mineralization.

         Primary veins in the area trend to the northeast and subordinately to
the west-northwest, both with steep dips to the north. In the area of the Cross
and Caribou mines, northeast trending structures include the Anaconda, Rare
Metals, Pegmatite Reef, No Name, East Nelson, and the West Nelson veins, which
can be traced for hundreds to thousands of feet along strike and down dip. Other
veins have been identified in the drilling, but remain to be adequately
delineated.

         Individual veins range in width from inches to tens of feet, but
generally average between two to ten feet, and consist of sheared zones
containing quartz and disseminated sulfides. Altered host rock within and
adjacent to veins shows limited sulfide mineralization, due to lesser amount of
rock fracturing. Primary sulfides include fine grained pyrite, galena,
chalcopyrite and sphalerite in a quartz and carbonate gangue.

                                       21
<PAGE>

The gold and silver are generally microscopic and are associated with the
sulfide minerals. Precious metal grades in the Cross mine typically run 0.05 to
1.0 ounces of gold per ton and 0.1 to 30.0 ounces of silver per ton, while in
the Caribou mine they run 0.05 to 0.5 ounces of gold per ton and 0.5 to 200.0
ounces of silver per ton. Surface weathering has partially oxidized sulfide
minerals to depths of approximately 100 feet below the surface.

Previous work

         Silver ore was discovered in the region in 1869. A wagon road was
completed in 1870 and mining developed rapidly over the next few years with the
highest production coming from the Caribou and No-Name veins. The Cross ore
deposit was discovered in 1873 and had minor intermittent production until 1939.

         HMC began the task of reopening the mine in 1974. Between 1977 and
1985, HMC produced 27,000 short tons of ore from four mine levels. HMC explored
the property by drifting, drilling from both the surface and underground and by
mapping and sampling. The mine workings in the Cross Mine have been expanded.

Proposed Work (fiscal 2004) for the Caribou Properties

         We are currently expanding our exploration of our Caribou properties
through increased core drilling at a total estimated cost of US$400,000 during
September and October 2003. With this expenditure we drilled about 3,500 feet in
two different core holes through October 31, 2003. Subject to the availability
of additional financing, we plan to drill up to an additional 100 holes during
the balance of our 2004 fiscal year (ending May 31, 2004) at an additional cost
of up to approximately US$2,600,000. Generally we anticipate that our core
drilling will be to depths of from 1,400 to 1,600 feet below the surface,
although occasionally the holes may exceed those depths. Although we believe
that we will be able to obtain the necessary financing on reasonable terms, we
cannot offer any assurance that we will be able to do so.

MANHATTAN PROJECT; NEVADA, USA; GOLD EXPLORATION

Acquisition Details

         The Manhattan project is located around the old mining town of
Manhattan, Nevada, USA. Manhattan is 15 miles southeast of Round Mountain,
Nevada, located on Highway 376, 20 miles from Carvers, Nevada, and 43 miles from
Tonopah, Nevada. The project covers approximately 4,600 acres of patented and
unpatented Bureau of Land Management ("BLM") and US Forest Service ("USFS")
land.

         In December 1994, we paid Marlowe Harvey US$1,176,000 and granted him a
5% net smelter return royalty for an interest in various properties known as the
Manhattan project. It appears that Mr. Harvey owned no interest in these
properties at that time, although he believes that he had and still has rights
to acquire interests in those properties. We are attempting to determine title
to these properties. We have recently (October 2003) received some title
information relating to these properties which consist of 28 patented mining
claims and 147 unpatented mining claims. Certain of these claims overlie other
claims. Based on the preliminary research done to date, the claims appear to be
owned of record by one or more of the following:

         Argus Resources, Inc. (a Nevada corporation controlled by Marlowe
         Harvey who advises us that he owns 52% of the outstanding Argus
         Resources stock),

                                       22
<PAGE>

         Nevada Manhattan Mines, Inc. (a publicly-held Nevada corporation which
         appears not to have filed any reports with the Securities and Exchange
         Commission since April 10, 2000),

         White Cap Mines, Inc. (a Nevada corporation owned by Marlowe Harvey),
         and

         an individual named Anthony Selig (Las Vegas, Nevada) and various
         entities owned by Mr. Selig. Based on a preliminary review of the
         documents, it appears that Calais has at best a right to acquire the
         properties.

         We entered into an agreement and settlement dated September 7, 2000
with Nevada Manhattan Mining Incorporated ("NMMI") to settle and purchase its
interest in the property. (NMMI is not affiliated with us.) We agreed to make
four annual payments of US$75,000. During the term of the agreement the Company
has agreed to pay NMMI a 2% net smelter return royalty. The Company can purchase
the entire NMMI interest and royalty for US$7.5 million, payable over 30 years.
The total amount payable would be reduced by any production royalties paid.

         Notwithstanding Calais' lack of any direct ownership interest in those
properties, Calais has continued to maintain those properties for several years
by paying property taxes on the patented mining claims, the assessment work
obligations on the unpatented claims (US$14,700 per year) and the annual
payments made to NMMI under the settlement agreement (US$151,215 in 2003).

         Based on a preliminary review of this information, it appears that the
record ownership of the various properties is as follows:

         The 28 patented mining claims appear to be owned by Argus Resources,
         Inc. (controlled by Mr. Harvey) as to a 60% undivided interest, and by
         NMMI as to a 40% undivided interest.

         42 unpatented mining claims appear to be owned by White Cap Mines, Inc.
         (owned by Mr. Harvey).

         57 unpatented mining claims appear to be owned by Mr. Selig or entities
         associated with Mr. Selig.

         The remaining claims appear to be owned by Argus Resources or by Argus
         Resources and NMMI in the 60-40 ratio described above for the patented
         claims.

         Mr. Selig has denied any obligation to convey any portion of the claims
to Calais, notwithstanding agreements that can be interpreted to require such
conveyance. The agreements are, however, unclear. We are in communication with
Mr. Selig and his counsel in an effort to resolve the situation. We believe that
the settlement of the NMMI litigation results in NMMI being obligated to convey
its interest in the properties to Calais (through Argus), but we have not been
able to locate any person with authority to act for NMMI to do this conveyance.
Finally, we believe that Mr. Harvey is obligated to convey the Argus and White
Cap interests to Calais, but we have not yet commenced discussions with him to
accomplish this.

         As indicated above, we have only recently been able to commence any
title review of the property. The record title consists of a number of
inconsistent and incompatible documents. Consequently there can be no assurance
that the preliminary conclusions reached above are accurate or complete, and we
cannot offer any assurance that we will be able to obtain legal title to the
properties that we believed we acquired in December 1994. We do not intend to
expend any funds on exploration of this property until the title situation has
been resolved to our satisfaction. In November 2003, Marlowe Harvey resigned
from the Board of Directors of Calais and threatened to convey his interest in
the Nevada properties to third parties. Calais intends to review this situation
and make appropriate decisions as necessary.

         We have not accomplished a significant amount of exploration work on
the properties constituting the Manhattan project. Based on work performed by
others on these properties and in the district, we believe that the properties
may contain gold and silver resources. Until we obtain greater assurances as to
title to the properties, however, we do not intend to perform any exploration
work to confirm or locate any such mineralization.

                                       23
<PAGE>

Previous Work

         The historic mining in the area extends from 1866 to present with the
major activity taking place in the late 1860's, between 1906 and 1921, and from
the 1960's until present. Placer and lode mining took place principally in the
Reliance, White Caps, Union Amalgamated, Manhattan Consolidated, Earle, Big
Four, and April Fool mines. There has been significant production in recent
years from adjoining property.

Proposed Work (fiscal 2004)

         As discussed above, we do not intend to perform any significant work on
the properties constituting the Manhattan project until (if ever) the
uncertainties relating to the title to those properties are resolved.
Consequently we have not allocated an exploration budget for those properties in
our 2004 fiscal year.

TITLE OF MINING CLAIMS IN THE UNITED STATES

         It has been our practice to obtain policies of title insurance upon its
patented properties as they have been acquired. However, title insurance has
generally been acquired in the amount of the purchase price of properties
acquired. Such coverage would not afford adequate protection against the loss of
mineral values, or the expenditure of funds on exploration should a title defect
create a loss. If commercial mineral deposits were discovered on our patented
properties, the value of such deposits would almost certainly greatly exceed the
original purchase price of those properties, as the purchase price which was
often predicated on then current surface values. Title insurance coverage would
almost certainly be inadequate to compensate for the loss of such values. The
value of land surface in the area of our patented mineral claims has tended to
increase substantially with time, making it more difficult to establish a loss
should a defect to title be discovered.

         Calais, its predecessors and their joint venture partners, have
periodically dedicated substantial time and effort to detect and to cure any
title problems which have been identified concerning the patented properties.
These past efforts have included full record title searches on key properties.
These searches have focused, however, on the Caribou Mine properties and the
Cross Mine properties, which were the subject of past or historical mining
activity and have not focused to any great extent on our properties in Nevada.
The Caribou properties compromise by area approximately 30% of the patented
mineral acreage owned or controlled by Calais. We have relied upon title
insurance as to the remaining Caribou acreage, and upon title searches focusing
on the period 1974 to date, and/or updating information contained in the title
policies as issued or re-issued.

         It is possible that more exhaustive title work could reveal defects in
title on one or multiple claims, which could ultimately entail a substantial
loss of mineral values. Even if additional work was done, there is no guarantee
that all potential defects could be located or satisfactorily cured. Local law
affords some protection where land is physically occupied for seven or more
years by a party paying the property taxes. Still, several acquisitions by
Calais are less than seven years old, and there is no guarantee that Calais has
effectively achieved physical occupation of all of its properties, which are
numerous and extensive. The General Mining Law of the United States would
provide no protection against co-tenants of record other than in cases of actual
ouster.

         As described in more detail above, we cannot offer any assurance that
we can obtain good title to the 28 patented mining claims that constitute a
portion of the Manhattan project.

                                       24
<PAGE>

         Of the 100 unpatented claims in the Caribou properties, 90 were located
by Calais' predecessor Hendricks Mining Co., and ten were acquired during the
acquisition of patented and unpatented lands of the Aquarius Mining Company. We
recently located five claims and we are in the process of recording the title
documents for these properties. The record title to these properties is believed
to be secure, as the title chains running to Calais are exceedingly short.

         Our title to the 147 unpatented mining claims included in the Manhattan
project is (as described above) much less certain. There are unavoidable risks
in holding unpatented mining claims located under the General Mining Law,
including potential challenges to the validity of any claimed discovery, a
challenge as to whether claimed discoveries would satisfy the prudent man rule,
potential errors in location or recording, and the risk of changes in the law or
regulations. Claims upon which no actual discovery exists are held by virtue of
the doctrine of pedis possessio, which involves the occupation of claimed mining
ground while engaged in a diligent search for a discovery of valuable minerals.
There can be no guarantee that pedis possessio rights would be recognized as to
any or all of our unpatented properties in Colorado or Nevada if challenged by a
third party. There can be no guarantee that any claimed discovery on unpatented
grounds would survive challenge by the federal government, if the government
sought to challenge our title or right to occupy the ground. No challenges are
currently outstanding either by adverse locators, or by the Federal government.

PANAMA PROJECT; GOLD EXPLORATION

Acquisition Details

         Pursuant to an agreement dated October 6, 2000, we received an option
to purchase a 40,000 acre mineral concession in an historic gold producing
district of Panama with Panama Mining of Golden Cycle of Panama Incorporated. We
acquired concessions to 61,000 acres in the eastern Veraguas district of Panama
in 2001 through a five-year lease agreement with Panama Mining of Golden Cycle
Incorporated ("PMGC"). We issued 100,000 shares of stock to PMGC and we are
obligated to pay PMGC a 2% net smelter return up to a maximum of US$5,000,000 on
any hard rock mineral production. We can purchase the concessions from PMGC at
any time prior to August 31, 2004 for US$2,500,000 (the "early purchase"). If we
complete the early purchase, the 2% net smelter return will be reduced to 0.5%.
Under our agreement with PMGC, we are obligated to pay the annual taxes and
holding fees (which we estimate to be approximately US$10,000).

         In addition to the 2% net smelter return on any hard rock mineral
production, we are obligated to pay PMGC a 6% gross royalty on all placer mining
production to a maximum of US$5,000,000. After we have paid US$5,000,000
pursuant to this royalty, the gross royalty percentage is reduced to 1% for the
remaining life of the placer production.

         We acquired additional hard rock mining concessions of 13,590 acres in
the eastern Veraguas district from PMGC in 2003. We completed this acquisition
through a new ten year agreement with PMGC which amended and replaced the
previous five-year agreement discussed above. Under this new agreement, we
issued an additional 100,000 shares to PMGC, paid US$10,000 to PMGC, and assumed
US$15,750 of payables from PMGC. We are also required to spend US$500,000 on
exploration of this property by February 28, 2004 under the terms of this new
agreement.

Previous Work

                                       25
<PAGE>

         Gold has been produced by primitive methods from streams and high-grade
veins in the region since the time of Columbus. There has been no modern day
systematic gold exploration to evaluate the resource potential of the veins on
the concession. We have not performed any exploration or other work on this
property.

Proposed Work (fiscal 2004)

         In October 2003, we formed a Panamanian corporation wholly-owned by
Calais Resources, Inc named Calais Resource Panama. We hired a geologist
familiar with our property, and hired an experienced placer operations manager.
We have also hired five local workers to work on the placer operation. There was
a base camp built for accommodations. Our goal is to commence work on the
property with a small scale placer operation. We are required by our property
leasehold to expand into hard rock exploration in 2004, and have committed to a
$250,000 initial hard rock exploration budget during calendar year 2004. We are
engaged in discussions with other parties for the financing necessary to meet
this obligation, although we cannot offer any assurance that the required
financing will be available to us.

Title to the Panamanian Property.

         The Panamanian property is a government concession originally granted
to Paul Zook. When Mr. Zook's concessions expired, his son Gary Zook acquired
3,000 hectares of the original concessions under the name of Golden Cycle of
Panama. Gary Zook later acquired an additional 21,000 hectares under the name of
Panama Mining of Golden Cycle. Panama Mining of Golden Cycle also has an
agreement with Golden Cycle of Panama for the original 3,000 hectares. Calais
Resources has an agreement with Panama Mining of Golden Cycle for the total
24,000 hectares. The concessions currently include river marine placer, off
shore marine placer, and hard rock.

EXPLORATION EXPENDITURES

         We have spent exploration funds as follows in each of the last three
years and our budget for fiscal 2004 is as follows:

<TABLE>
<CAPTION>
                                     Proposed
                                       2004            Actual 2003             Actual 2002        Actual 2001
                                       ----            -----------             -----------        -----------
<S>                              <C>                   <C>                     <C>                <C>
Manhattan Property               None anticipated      Cdn$151,215             Cdn$292,886        Cdn$176,175
Colorado Property                  US$3,000,000        Cdn$198,206             Cdn$120,601        Cdn$190,566
Panama Property                    US$  500,000        Cdn$147,260             Cdn$ 65,070        Cdn$ 78,988
</TABLE>

         As discussed below in Item 5, we are seeking the financing necessary
for our budgeted programs on our Colorado and Panama properties. We cannot offer
any assurance that we will be able to obtain the necessary debt or equity
financing, on reasonable terms, if at all.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

         Our consolidated financial statements have been prepared in accordance
with generally accepted accounting principles as applied in Canada. There are
several differences in determining expenses and net

                                       26
<PAGE>

loss between Canadian GAAP and US GAAP. Revenues remain the same at nil under
both Canadian and US GAAP.

         Under US GAAP our loss is approximately $993,000 which is down $191,000
from the 2002 loss of $1,183,000. The decrease in loss under US GAAP in 2003 is
primarily due to a reduction in stock based compensation of $170,000 over 2002.
The primary reasons for the increase in loss under US GAAP over Canadian GAAP is
due to the following:

-        exploration and development expenditures are capitalized under Canadian
         GAAP, but expensed under US GAAP. In each of the last two years,
         exploration and development costs approximated $500,000.

-        stock based compensation for variable and fixed based plans are
         recognized under US GAAP, but not under Canadian GAAP.

-        the fair value of the conversion option is being expensed under
         Canadian GAAP. No beneficial conversion option is recognized under US
         GAAP.

         These differences are explained in much greater detail in note 18 to
the consolidated financial statements attached to this report.

SUMMARY

         We are in the business of acquiring and exploring mineral properties
with the aim of participating in the development of them to a stage where they
can be exploited at a profit. At that stage, our operations would to some extent
be dependent on the world market prices of any mineral produced. We do not have
any properties with mineral reserves or with any material production of
minerals. Operations on our properties are exploratory searches for commercially
producible deposits.

         Nearly all of our activities are directed to exploration and
development programs. Yearly variations in individual property expenditures
generally reflect increases or decreases in specific exploration and development
costs based on previous results and our decisions regarding the allocation of
exploration expenditures between projects.

Geographic Segments

<TABLE>
<CAPTION>
NET LOSS/YEAR:                         2003                  2002               2001
                                       ----                  ----               ----
<S>                                <C>                   <C>                <C>
Canada                             $  (468,604)          $  (312,347)       $  (487,017)
United States                      $   123,255)          $  (289,866)       $  (260,851)
                                    ----------            ----------        -----------
TOTAL                              $  (591,859)          $  (602,213)       $  (747,868)
</TABLE>

IDENTIFIABLE ASSETS AT YEAR END:

<TABLE>
<CAPTION>
                                       2003                  2002               2001
                                       ----                  ----               ----
<S>                                <C>                   <C>                <C>
Canada                             $   290,092           $   291,993        $   295,978
United States                      $13,294,607           $12,902,466        $12,491,799
                                   -----------           -----------        -----------
TOTAL                              $13,584,699           $13,194,415        $12,787,777
</TABLE>

         Net losses for Fiscal 2003 were (Cdn$591,859). Loss per share for
Fiscal 2003 was (Cdn$0.05). Under US GAAP, net loss for 2003, would have been
(Cdn$992,596). Under US GAAP, loss per share for fiscal 2003 would have been
(Cdn$0.09).

                                       27
<PAGE>

5.A.     OPERATING RESULTS.

         During the last five fiscal years we have not achieved any revenues
from operations and we do not expect to receive any such revenues in the near
future until such time, if ever, we produce precious metals which we can market.
There is a possibility that we may produce gold from placer operations that we
expect to undertake on our Panamanian properties during the fiscal year ending
May 31, 2004, but even if we achieve such revenues we anticipate that we will
reinvest them in our Panamanian operations, reducing the capital that will be
required from our United States operations. It is not likely that any revenues
obtained from the anticipated Panamanian placer operations will exceed the cost
of those operations until we have the capital necessary to expand the operations
beyond the phase that we currently anticipate.

         Although our aggregate expenses have remained approximately constant at
about Cdn$600,000 during the last two fiscal years, the components of those
expenses have changed significantly. The following discuss the more significant
changes:

         Consulting fees reduced by about Cdn$45,000 because we had less working
         capital available and consequently less ability to retain and pay for
         consultants in our operations.

         We had a gain on foreign currency of approximately Cdn$250,000 during
         the 2003 fiscal year as compared to a loss of about Cdn$5,000 in the
         2002 fiscal year. This gain was based on conversion between United
         States and Canadian currency because most of our operations occur in US
         dollars while our financial statements are set forth in Canadian
         dollars. Consequently this is not a gain we can anticipate recurring in
         the future and it provides no additional capital to us.

         Interest and bank charges increased from about Cdn$319,000 during
         fiscal 2002 to Cdn$624,000 during fiscal 2003. These costs increased by
         almost double because we had to finance our operations during fiscal
         2003 through the use of debt, in part with high-interest credit cards
         and a default rate of 24% per annum on our bank loan, while we were
         seeking more cost-effective financing. While we had to finance our
         operations with debt during fiscal 2002 as well, the total amount of
         debt outstanding (and therefore the interest charges) were Cdn$400,000
         greater during fiscal 2003.

         We were able to reduce our professional fees and expenses by about
         Cdn$30,000 during fiscal 2003 as compared to fiscal 2002 because we
         were unable to retain and utilize professionals because we had no
         resources from which to pay them for their services.

         As a result of these factors, our loss for the 2003 fiscal year was
about the same as our loss for the 2002 fiscal year. Had we not realized the
Cdn$250,000 gain on foreign currency during 2003, our actual loss would have
been significantly greater during 2003 than during 2002.

         We anticipate that the 2004 fiscal year will result in greater
operating losses than realized in fiscal 2002 or 2003, since we received the
loan from accredited investors in August 2003 (resulting in a net of US$652,498
after payment of prepaid interest, bank loan, financing costs and pre-existing
obligations) and we intend to increase our operations on our Caribou and
Panamanian properties. Furthermore, because we lost our status as a foreign
private issuer under the United States securities laws, we will incur additional
expenses in complying with the duplicative reporting requirements in the United
States and Canada. We also have increased our general and administrative
expenses by opening our administrative office in Englewood, Colorado and have
assumed the administrative costs associated with that office and our new chief
financial officer, expenses we had not incurred in previous fiscal years.

                                       28
<PAGE>

5.B.     LIQUIDITY AND CAPITAL RESOURCES.

         We have had working capital deficits during each of our last two fiscal
years of (Cdn$3,135,000) at May 31, 2003 and (Cdn$2,689,000) at May 31, 2002.
These working capital deficits have derived from:

         increasing accounts payable (Cdn$975,000 at May 31, 2003 as compared to
         Cdn$659,000 at May 31, 2002);

         a Cdn$96,000 note payable at May 31, 2003 which did not exist at the
         end of the prior fiscal year:and an increase in loans from shareholders
         of $151,000 to help fund operations for the year.

         Offsetting these increased short-term liabilities was a Cdn$190,000
reduction in short-term bank indebtedness at May 31, 2003 as compared to May 31,
2002.

         Our working capital deficit during the past two fiscal years (and
previously) have adversely affected our ability to carry on our property
acquisition and mineral exploration operations. We were also unable to retain
professional help needed to fully comply with our reporting obligations in
Canada and in the United States, we were required to incur significantly greater
interest and bank charges than would have otherwise been required, and generally
we were forced to choose between capital expenditures.

         We were actually able to achieve positive cash flow from our operations
during fiscal 2003, primarily because of increasing short term liabilities which
had a positive effect on cash flow from operations. We also issued shares and
warrants in exchange for services, expenses that did not involve the use of our
limited cash. During our 2002 fiscal year, we used Cdn$(662,000) cash in our
operations.

         We had positive cash flow from financing activities in both 2002
(Cdn$934,000) and 2003 (Cdn$219,000). The 2002 positive cash flow from financing
activities was due primarily to a Cdn$1,833,000 bank loan we obtained and used
to pay off certain other long-term and short-term obligations. The 2003 positive
cash flow from financing activities was due to the issuance of capital stock and
loans received from certain of our shareholders. Our positive cash flow from
financing activities allowed us to finance our negative cash flow from
operations and investing activities.

         As noted, we also had negative cash flows from investing activities in
both our fiscal 2003 (Cdn$262,000) and fiscal 2002 (Cdn$282,000) years. In both
cases, these expenditures related to investment in our mineral properties during
the respective fiscal years.

         We expect that we will have positive cash flow during our 2004 fiscal
year even though we also anticipate increased negative cash flow from operations
and investing activities. Our positive cash flow will be due primarily to the
August 2003 loan of US$4,500,000 received from six accredited investors. In the
future we expect that we will continue to be dependent on our financing
activities to finance anticipated continuing negative cash flows from operating
and investing activities. Alternatively we will have to find joint venture
partners or industry partners who are willing to invest funds in our properties
or in Calais itself to fund our continuing operations. After we have established
mineralization or reserves through our exploration activities, we may be able to
attract joint venture partners, industry partners, or other investors who will
be willing to provide us the necessary capital on commercially-reasonable terms.

Material Capital Commitments/Significant Uncertainties

                                       29
<PAGE>

         We are a party to a lease for temporary office trailer at the Caribou
mine site at a cost of US$350 per month for approximately two more years

         At May 31, 2003, we were the borrower from Peak National Bank in the
amount of US$1,081,000. We paid this loan in full on August 1, 2003.

         There is a US$4,500,000 first mortgage lien taken on the Caribou
property as of August 4, 2003. This loan is due July 31, 2005.

         We have a two-year employment agreement with Matt Witt, our chief
financial officer. This employment agreement is through August 2005 and provides
for compensation to Mr. Witt of US$130,000 annually.

         We have a year-to-year contract with Panama Mining of Golden Cycle to
spend US$250,000 on placer exploration or production, and an additional
US$250,000 of hard rock exploration per calendar year on our Panama property.

5.C.     RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

NOT APPLICABLE.

5.D.     TREND INFORMATION.

         See Item 5.A, "Operating Results" and Item 5.B "Liquidity and Capital
Resources," above.

Critical Accounting Policies and Effect of New Accounting Pronouncements

         The Company's discussion and analysis of its financial condition and
results of operations, including the discussion on liquidity and capital
resources, are based on its consolidated financial statements that have been
prepared in accordance with Canadian generally accepted accounting principles.
The preparation of these financial statements requires management to make
estimates and judgments that affect reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, management re-evaluates its estimates and
judgments, particularly those related to the determination of the impairment of
long-lived assets. Management bases its estimates and judgments on historical
experience, contractual arrangements and commitments and on various other
assumptions that it believes are reasonable in the circumstances. Changes in
these estimates and judgments will impact the amounts recognized in the
consolidated financial statements, and the impact may be material. Management
believes the following critical accounting policies require more significant
estimates and judgments in the preparation of the consolidated financial
statements.

         The consolidated financial statements have been prepared on the going
concern basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of operations. If the Company was not to
continue as a going concern, it would likely not be able to realize on its
assets at values comparable to the carrying value or the fair value estimates
reflected in the balances set out in the preparation of the consolidated
financial statements. As described elsewhere in this report, at May 31, 2003,
there were certain conditions that currently exist which raise substantial doubt
about the validity of this assumption. The Company anticipates

                                       30
<PAGE>

the need to raise additional private placement debt or equity funds or through
joint venture arrangements to accomplish its budgeted expenditures. These
private placements are not assured. Failure to raise additional funds may result
in the Company being unable to complete its planned programs, to comply with its
obligations relating to its Panamanian properties, curtailing operations or
writing down its assets.

         For Canadian GAAP purposes, the Company capitalizes exploration costs
incurred. The recoverability of the capitalized costs includes considerations
primarily of management's exploration, development and holding plans and
expectations with respect to the property, potential mineralization, costs to
recovery, commodity prices and the potential for third party agreements on
development. Certain of these factors are beyond the Company's control. Other
factors, such as management's plans and expectations, while supporting continued
capitalization at this time may change and that change may be material to the
financial statements.

         In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The provisions of SFAS No. 143
are effective for fiscal years beginning after June 15, 2002. We have not yet
determined the impact of the adoption of this statement.

         In April 2002 the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." FASB No. 4 required all gains or losses from the retirement of
debt to be classified as extraordinary items net of income taxes. The standard
requires that gains and losses from the retirement of debt be classified as
ordinary items unless they are unusual or infrequent or meet the specific
criteria for treatment as an extraordinary item. This statement is effective
January 1, 2003. We do not anticipate that the adoption of this statement will
have a material effect on its financial position or results of operations.

         In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses financial
accounting and reporting for costs associated with exit or disposal activities.
This Statement requires recognition of a liability for a cost associated with an
exit or disposal activity when the liability is incurred, as opposed to when the
entity commits to an exit plan. This statement is to be applied prospectively to
exit or disposal activities initiated after December 31, 2002. As we have had no
exit or disposal activities subsequent to December 31, 2002, the adoption of
this statement has had no impact on our consolidated financial statements.

         In December 2002, the FASB approved Statement of Financial Accounting
Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure - an amendment of FASB Statement No. 123." This amends Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123) to provide alternative methods of transition for a
voluntary change to the fair value based method of accounting for stock-based
employee compensation. This Statement also amends the disclosure requirements to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. It is effective for financial
statements for fiscal years ending after December 15, 2002. We will continue to
account for stock based compensation using the methods detailed in the
stock-based compensation accounting policy.

         The provisions of FASB Statement No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities," are effective for contracts
entered into or modified after June 30, 2003 and hedging relationships
designated after June 30, 2003. Except for the provisions related to FASB
Statement no. 133, "Accounting for Derivative Instruments and Hedging
Activities," all provisions of this Statement should be applied prospectively.
The provisions of the Statement related to Statement 133 implementation issues
that have been cleared by the Board and that have been effective for fiscal
quarters

                                       31
<PAGE>

that began prior to June 15, 2003, should continue to be applied in accordance
with their respective effective dates. We do not expect any material changes as
a result of adopting this Statement.

         The provisions of FASB Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity," are
effective for financial instruments entered into or modified after May 31, 2003,
and otherwise are effective at the beginning of the first interim period
beginning after June 15, 2003. This Statement is to be implemented by reporting
the cumulative effect of a change in an accounting principle for financial
instruments created before May 15, 2003 and still existing at the beginning of
the interim period of adoption. Restatement is not permitted. This Statement may
impact Calais if the existing convertible debentures are modified.

         FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities," applies immediately to enterprises that hold a variable interest in
variable interest entities created after January 31, 2003. It applies in the
first fiscal year or interim period beginning after June 15, 2003 to enterprises
that hold a variable interest in variable interest entities created before
February 1, 2003. The Interpretation applies to public enterprises as of the
beginning of the applicable interim or annual period, and it applies to
non-public enterprises no later than the end of the applicable annual period.
This Interpretation may be applied prospectively with a cumulative-effect
adjustment as of the date on which it is first applied, or by restate previously
issued financial statements for one or more years with a cumulative-effect
adjustment as of the beginning of the first year restated. We do not expect a
material change as a result of adopting this Interpretation.

5.E      OFF-BALANCE SHEET ARRANGEMENTS.

         Not applicable inasmuch as we do not have off-balance sheet
arrangements, and the disclosure is required for fiscal years ending after June
15, 2003.

5.F      TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS.

<TABLE>
<CAPTION>
                                                         Payment due by period
--------------------------------------------------------------------------------------------------------
                                                  Less than 1
Contractual obligations                 Total         year      1-3 years  3-5 years   More than 5 years
--------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>           <C>        <C>         <C>
Long-term debt obligations            $6,267,116   $1,642,200      $ -         $ -         $4,624,916
-----------------------------------------------------------------------------------------------------
Capital (Finance) lease obligations   $        -   $        -      $ -         $ -
-----------------------------------------------------------------------------------------------------
Operating lease obligations           $   16,500   $   16,500      $ -         $ -         $        -
-----------------------------------------------------------------------------------------------------
Purchase obligations                  $        -   $        -      $ -         $ -         $        -
-----------------------------------------------------------------------------------------------------
Other long-term liabilities
reflected on our balance sheet
under the GAAP of the primary         $  697,753   $  697,573      $ -         $ -         $        -
financial statement
-----------------------------------------------------------------------------------------------------
Total                                 $6,981,209   $2,356,293      $ -         $ -         $4,624,916
-----------------------------------------------------------------------------------------------------
</TABLE>

    See disclosure in Section 5.B, "Material Capital Commitments/Significant
                             Uncertainties," above.

                                       32
<PAGE>

5.G      SAFE HARBOR.

         See "Introduction - Forward-Looking Statements."

ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A      DIRECTORS AND SENIOR MANAGEMENT.

         The following table lists, as of October 31, 2003, the names of all of
our directors and senior management. Our directors generally serve in their
respective capacities from their election on the day of our Annual General
Meeting (last held on November 14, 2002) and will serve until the next Annual
General Meeting or until a successor is duly elected, unless the office is
vacated in accordance with our Articles.

         Interim vacancies on the Board of Directors are filled by the remaining
directors and the persons filling those vacancies hold office until the next
Annual General Meeting at which time they may be re-elected or replaced. Our
senior management (executive officers) are appointed by the Board of Directors
and hold office indefinitely at the pleasure of the Board of Directors.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                                                             DATE FIRST ELECTED OR
NAME                                   AGE     POSITIONS HELD                      APPOINTED
--------------------------------------------------------------------------------------------------
<S>                                    <C>     <C>                           <C>
Marlowe Harvey*                        50      Chairman of the Board                  1992
------------------------------------------------------------------------------------------
Thomas S. Hendricks                    54      Director, president, chief
                                               executive officer                      1998
------------------------------------------------------------------------------------------
Art Daher                              71      Director, Secretary                    1995
------------------------------------------------------------------------------------------
Robert Akright                         79      Vice President                         1998
------------------------------------------------------------------------------------------
Matt Witt                                      Chief Financial Officer                2003
------------------------------------------------------------------------------------------
Melvin Martin                          63      Director                               1992
------------------------------------------------------------------------------------------
Thomas Patton                          60      Director                               2000
------------------------------------------------------------------------------------------
</TABLE>

* resigned on November 11, 2003.

         No director or executive officer has been the subject of any order,
judgment, or decree of any governmental agency or administrator or of any court
or competent jurisdiction, revoking or suspending for cause any license, permit
or other authority of such person or of any corporation of which he is director
or executive officer, to engage in the securities business or in the sale of a
particular security or temporarily or permanently restraining or enjoining any
such person or any corporation of which he is an officer or director from
engaging in or continuing any conduct, practice, or employment in connection
with the purchase or sale of securities, or convicting such person of any felony
or misdemeanor involving a security or any aspect of the securities business or
of theft or of any felony.

         While some of our directors and executive officers are involved in
other business ventures and do not spend full time on our business and affairs,
we believe that each devotes as much time to our business and affairs as are
required to satisfactorily carry out their duty.

         There are no family relationships between any two or more directors and
executive officers. There are no arrangements or understandings between any two
or more directors and executive officers pursuant to which he was selected as a
director or executive officer except that Matt Witt became chief financial
officer following and as a result of the August 2003 investment by six
accredited investors.

                                       33
<PAGE>
         Marlowe Harvey was president of Calais Resources from 1992 until 2000;
he has been a director and chairman of the board of Calais Resources since 1992
until he resigned on November 11, 2003. Mr. Harvey did not fulfill any of these
positions on a full time basis, and for more than the past five years has
primarily been involved in managing his own real estate investments in the
United States and Canada from Mr. Harvey's offices in Chilliwick British
Columbia. Mr. Harvey is not an officer or a director of any other company whose
shares are registered under the Securities Exchange Act of 1934, as amended.

         Thomas S. Hendricks has been one of our directors since we acquired the
assets of Hendricks Mining Company ("HMC") in 1998, a company that Mr. Hendricks
formed and operated in 1976 for the purpose of acquiring and operating the Cross
Mine and neighboring properties. Mr. Hendricks has been engaged in exploring,
developing, and limited mining operations at the Cross Mine and neighboring
properties (now referred to as the "Caribou properties") on a full time basis
since 1975. Mr. Hendricks is not an officer or a director of any other company
whose shares are registered under the Securities Exchange Act of 1934, as
amended.

         Mr. Daher has been secretary and a director of Calais Resources since
1992. Mr. Daher is retired and has been managing his own real estate investments
for more than the past five years. Mr. Daher has worked with Mr. Harvey in the
management of Mr. Harvey's investments as well, from Mr. Daher's offices in
Chilliwick British Columbia. Mr. Daher is not an officer or a director of any
other company whose shares are registered under the Securities Exchange Act of
1934, as amended.

         Robert Akright has been a geologist for several companies in the
mineral industry for his entire professional life. He has worked with Calais
Resources since 1998. Mr. Akright has been working as a self-employed consulting
geologist for more than the past five years from his office in Littleton,
Colorado. Mr. Akright is not an officer or a director of any other company whose
shares are registered under the Securities Exchange Act of 1934, as amended.

         Mr. Witt joined Calais Resources as its chief financial officer in
August 2003. Before joining Calais, Mr. Witt was a vice president of operations
for two privately-held mortgage bankers specializing in commercial and
residential mortgages. These were Broadway Mortgage (from April 2003 until
joining Calais in August 2003) and Professional Mortgage Alliance (mid-2000
until April 2003). From 1996 through mid 2000, Mr. Witt was an account executive
at Cendant Mortgage. Mr. Witt is not an officer or a director of any other
company whose shares are registered under the Securities Exchange Act of 1934,
as amended.

         Mr. Martin has been a member of Calais Resources' board of directors
since 1992. Mr. Martin is currently retired. Mr. Martin retired in 1998 as a
school teacher in Vancouver, British Columbia, a position he held for thirty
years. Mr. Martin is not an officer or a director of any other company whose
shares are registered under the Securities Exchange Act of 1934, as amended.

         Thomas Patton has been a director of Calais Resources since June 2000.
Mr. Patton has been president, director, and chief operating officer of Western
Silver Corp. (formerly Western Copper Holdings, Ltd.) for more than the past
five years. Western Silver Corp. is a publicly-held company exploring for silver
and gold in Chile. Western Silver's shares are registered under the Securities
Exchange Act of 1934 and its shares are trading on the American Stock Exchange
under the symbol "WTZ" and on the Toronto Stock Exchange.

6.B.     COMPENSATION.

Compensation Table
                                       34
<PAGE>


         The following chart (in Cdn$) sets forth information regarding the
compensation paid to our chief executive officer and our other executive
officers during the most recent three fiscal years ended May 31, 2003, 2002, and
2001. This includes all compensation paid to each by Calais and any subsidiary:

<TABLE>
<CAPTION>
                                                                             LONG-TERM
                                                                        COMPENSATION AWARDS
                                                                        -------------------
                                                                        AWARDS
                              ANNUAL COMPENSATION                       ------      SECURITIES
                              -------------------                        ($)        UNDERLYING    PAYOUT
     NAME AND       FISCAL       ($)         ($)             ($)      RESTRICTED     OPTIONS &    ------        ALL OTHER
PRINCIPAL POSITION   YEAR      SALARY       BONUS          OTHER(a)     AWARDS        SARs (#)     LTIP        COMPENSATION
------------------   ----      ------       -----          --------     ------        --------                 ------------
<S>                 <C>        <C>          <C>            <C>        <C>           <C>           <C>          <C>
Thomas S.            2001         0           0               0           0              0            0              0
Hendricks,           2002         0           0               0           0              0            0              0
President and CEO    2003         0           0               0           0              0            0              0
</TABLE>

         We did not pay any salary to Mr. Hendricks for the 2001, 2002 or 2003
fiscal years because we did not have the cash to do so. We accrued his salary at
the rate of US$50,000 per year for 42 months until we were able to pay him the
past due salary in August 2003 - when Mr. Hendricks received a payment of
US$163,690.

         For the current fiscal year (ending May 31, 2004), we plan to pay
salaries to our president (US$150,000 per year), chief financial officer
(US$130,000 per year), and chairman (US$10,000) together with discretionary
bonuses and other compensation as the board of directors may determine. We also
plan to discuss employment agreements, benefits, and other forms of compensation
for these individuals in addition to the two year employment agreement with our
chief financial officer which provides for his salary as stated above.

Compensation of directors

         We have no formal plan for compensating our directors for their service
in their capacity as directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of the Board of Directors. The Board of Directors may
award special remuneration to any director undertaking any special services on
our behalf other than services ordinarily required of a director. Other than
indicated below no director received any compensation for his services as a
director, including committee participation and/or special assignments.

Employee benefits

         We are in the process of instituting a health insurance plan for our
employees. We may consider other benefit plans, such as life insurance,
retirement plans, profit sharing plans, bonus and other plans as the
circumstances warrant.

Stock options - plans and grants

                                       35
<PAGE>

         We have not adopted any formal plans for the grant of stock options to
directors, executive officers, or employees. We are authorized to grant stock
options to directors, executive officers and employees under our governing
statutes, and we have done so. Refer to "Options to Purchase Securities from
Registrant or Subsidiaries," below.

Change of control arrangements

         We have previously had no plans or arrangements in respect of
remuneration received or that may be received by any person employed by us to
compensate such person in the event of termination of employment (as a result of
resignation, retirement, change of control) or a change of responsibilities
following a change of control.

6.C      BOARD PRACTICES.

         Our directors generally serve in their respective capacities from their
election on the day of our Annual General Meeting (last held on November 14,
2002), and will serve until our next Annual General Meeting or until a successor
is duly elected, unless the office is vacated in accordance with our Articles.

         Interim vacancies on the Board of Directors are filled by the remaining
directors and the persons filling those vacancies hold office until our next
Annual General Meeting at which time they may be re-elected or replaced.

         We do not have any formal service contracts with our directors.

         The members of the audit committee are the following persons: Marlowe
Harvey, Melvin Martin, and Tom Patton. The audit committee does not have a
formal charter. The members of the audit committee are not independent as that
term is defined in the US securities laws, and the audit committee has not
designated an "audit committee financial expert."

         We do not have a compensation committee or other committee responsible
for compensation decisions. These matters are addressed by the board of
directors, and or (with respect to non-executive employees) Tom Hendricks
President and CEO.

6.D      EMPLOYEES.

         As of the end of each of our last three fiscal years, we had no
employees. Because of working capital shortages, all of our officers and others
worked for us as independent contractors. We have used independent contractors
for most of our business operations, including a part-time administrative
assistant who has assisted at our corporate office in Canada. With the funding
recently made available, we anticipate retaining employees as necessary to
assist with administrative duties at our principal place of business in
Colorado, at our Caribou properties, and elsewhere as necessary.

6.E      SHARE OWNERSHIP.

Share Ownership Information

         The following table sets forth information regarding the ownership of
our common stock as of September 30, 2003 by: (i) each director or nominee for
director; (ii) each of the executive officers named in

                                       36
<PAGE>

the Summary Compensation Table; (iii) all executive officers and directors of
the Company as a group; and (iv) all those known by us to be beneficial owners
of more than five percent of our common stock based on the total of 19,627,703
shares outstanding as of October 31, 2003.

<TABLE>
<CAPTION>
                                                                          BENEFICIAL OWNERSHIP
BENEFICIAL OWNER                                                            NUMBER OF SHARES         PERCENT OF TOTAL
----------------                                                            ----------------         ----------------
<S>                                                                       <C>                        <C>
Marlowe Harvey(1)                                                               5,192,488                  22.6%
Thomas S. Hendricks(2)                                                          1,693,864                   8.3%
Art Daher(3)                                                                      376,750                   1.9%
Robert Akright(4)                                                                 181,368                   0.9%
Matt Witt(5)                                                                    2,600,000                  12.6%
Melvin Martin (6)                                                               1,471,422                   7.2%
Thomas Patton(7)                                                                  100,000                   0.5%

All executive officers and directors as a group (7 persons). The
address for all of the above directors and executives officers is:
8400 E Crescent Parkway #675 Greenwood Village CO 80111                        10,718,970                  42.7%

Stephen A. Benaske(8)
1625 Larimer Street, Suite 2407
Denver, CO  80202                                                               5,415,455                  27.6%
</TABLE>

(1)      Mr. Harvey owns options to acquire 82,500 shares of Calais common
stock, exercisable through November 15, 2004 at Cdn$1.26 per share. Calais is
investigating whether, in fact, these options are outstanding. Mr. Harvey's
beneficial ownership includes 1,766,000 shares of our common stock as well as
convertible debentures (as follows), each of which are convertible into common
stock at the conversion price of Cdn$1.23 through May 11, 2011:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
Name of Holder (relationship to Mr.
Harvey)                                           Amount (Cdn$)            Underlying shares
--------------------------------------------------------------------------------------------
<S>                                               <C>                      <C>
Judy Harvey (wife)                                 $3,149,955                 2,560,939
--------------------------------------------------------------------------------------------
Argus Resources, Inc.                              $  215,422                   175,140
--------------------------------------------------------------------------------------------
Aardvark Agencies, Inc.                            $  747,728                   607,909
--------------------------------------------------------------------------------------------
</TABLE>

Except as disclosed in the preceding table, no other member of Mr. Harvey's
family owns any shares or rights to acquire shares. Of the debentures owned by
Mrs. Harvey, she is holding Cdn$1,103,214 for Melvin Martin and disclaims any
interest in debentures in that amount and the underlying shares.

(2)      Mr. Hendricks' beneficial ownership includes 893,864 shares of stock
and a convertible debenture in the total amount of Cdn$984,000 which is
convertible into common stock at Cdn$1.23 per share through May 11, 2011. No
other member of Mr. Hendricks' family owns any shares or rights to acquire
shares.

(3)      Mr. Daher's ownership includes options to acquire 50,000 shares
exercisable at Cdn$.45 per share through August 11, 2005. No other member of Mr.
Daher's family owns any shares or rights to acquire shares.

(4)      Mr. Akright's beneficial ownership includes 81,368 shares of stock and
options to acquire 100,000 shares of Calais common stock, exercisable at Cdn$.45
per share through August 1, 2008.

                                       37
<PAGE>

(5)      Mr. Witt's beneficial ownership includes 1,600,000 shares of stock and
options to acquire 1,000,000 shares (of which 500,000 are exercisable at US$3.00
and the remaining are exercisable at US$5.00 per share through August 11, 2013)
which the board of directors granted to him in connection with his employment as
our chief financial officer (subject to compliance with the Canadian regulatory
requirements). No other member of Mr. Witt's family owns any shares or rights to
acquire shares.

(6)      Mr. Martin's beneficial ownership includes 896,922 shares of stock
owned with his wife and ownership of convertible debentures in the total amount
of Cdn$1,103,214 which is held in the name of Mrs. Harvey, and which is
convertible into common stock at Cdn$1.23 per share through May 11, 2011. No
other member of Mr. Martin's family owns any shares or rights to acquire shares.
Mr. Martin disclaims any affiliation with Mr. or Mrs. Harvey and with the
entities they control.

(7)      Mr. Patton's beneficial ownership consists entirely of options to
acquire 100,000 shares at an exercise price of Cdn$0.45 per share through August
11, 2005.

(8)      Mr. Benaske's beneficial ownership includes 1,500,000 shares which he
owns, but which he has committed to sell for the benefit of and on behalf of
Calais to repay the US$4,500,000 debt that Calais owes to certain accredited
investors (including Mr. Angelo) who loaned us money in August 2003. Mr. Angelo
may only sell the shares if a registration statement permitting the sale of
those shares is effective or if there is an exemption for the transaction
available, and if our common stock is trading at an average price of US$3.00 per
share over an average of five business days.

Options to purchase securities from registrant or subsidiaries

         We are authorized to grant options to purchase shares of our common
stock to our directors, executive officers, and employees on terms and
conditions acceptable to the regulatory authorities in Canada, notably the
Canadian Venture Exchange and the British Columbia Securities Commission. We
have no formal written stock option plan.

         Under the applicable rules, we may grant stock options for up to 10% of
the number of issued and outstanding common shares provided that stock options
in favor of any one individual may not exceed 5% of the issued and outstanding
common shares. No stock option granted under the stock option program is
transferable by the optionee other than by will or the laws of
descent/distribution and each stock option is exercisable during the lifetime of
the optionee only by such optionee. Furthermore, the exercise price of all stock
options granted under the stock option program must be at least equal to the
fair market value (subject to regulated discounts) of such common shares on the
date of grant, and the maximum term of each stock option may not exceed five
years.

         The exercise prices for stock options are determined in accordance with
OTC Bulletin Board ("OTCBB") guidelines and reflect the average closing price of
our common shares for the ten trading days on the OTCBB immediately preceding
the day on which the directors grant and publicly announce the stock options
(subject to a regulatory-acceptable discount), but no less than $0.45 exercise
price per share.

Options/SAR Grants in Last Fiscal Year

         We granted stock options to the executive officers named in the
compensation table (above) during the fiscal years ended May 31, 2003 and 2002
or during the current fiscal year. We did not grant any stock appreciation
rights to any person during fiscal years 2002, 2003 or subsequently.

                                       38
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
NAME                                 NUMBER OF OPTIONS             EXERCISE PRICE                   TERM
--------------------------------------------------------------------------------------------------------------
<S>                                  <C>                           <C>                         <C>
Fiscal 2002 grants
--------------------------------------------------------------------------------------------------------------
none
--------------------------------------------------------------------------------------------------------------
Fiscal 2003 grants
--------------------------------------------------------------------------------------------------------------
Marlowe Harvey                            82,500+                      US$1.26                  November, 2004
--------------------------------------------------------------------------------------------------------------
Subsequent grants
--------------------------------------------------------------------------------------------------------------
Matt Witt                                500,000*                      US$3.00                 August 11, 2013
                                         500,000*                      US$5.00                 August 11, 2013
--------------------------------------------------------------------------------------------------------------
Robert Akright                           100,000                      Cdn$0.45                  August 1, 2008
--------------------------------------------------------------------------------------------------------------
</TABLE>

*        Mr. Witt's grant was in connection with his employment at Calais as our
         chief financial officer (in August 2003). This grant has not yet been
         approved by the Canadian regulatory authorities, and is subject to such
         approval.

+        Calais is investigating whether in fact these options are outstanding.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values

Fiscal year end values

         No officer exercised employee stock options during the fiscal years
ended May 31, 2002 or 2003.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                        Number of Unexercised   Value of unexercised
                                                                        securities underlying       in the money
                                                                           options/SARs at         options/SARs at
                                                        Value realized     5/31/2003 (#)          5/31/2003 ($) (a)
                                 Shares acquired on           ($)           Exercisable/            Exercisable/
Name                                exercise (#)              (a)          unexercisable            unexercisable
-----------------------------------------------------------------------------------------------------------------------
<S>                              <C>                    <C>             <C>                     <C>
Marlowe Harvey                            0                    $0                0/0                 $0/$0
---------------------------------------------------------------------------------------------------------------
Thomas S. Hendricks                       0                    $0            100,000(b)/0            $45,000/$0
---------------------------------------------------------------------------------------------------------------
Art Daher                                 0                    $0            100,000(c)/0            $45,000/$0
---------------------------------------------------------------------------------------------------------------
Robert Akright                            0                    $0            100,000(d)/0            $45,000/$0
------------------------------------------------------------------------------------------------------------
Mel Martin                                0                    $0                  0                 $     0
---------------------------------------------------------------------------------------------------------------
Thomas Patton                             0                    $0            100,000(e)/0            $45,000/$0
---------------------------------------------------------------------------------------------------------------
Persons who are neither
officers nor directors but
who are providing services                0                    $0                     0/0                   0/0
to us
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(a)      "Value realized" is equal to the market price less the exercise price
         times the number of shares acquired. At May 31, 2003, the market price
         for our common stock was US$0.35 per share (Cdn$0.48).

(b)      Mr. Hendricks exercised these options on August 29, 2003 at Cdn$0.45
         per share.

(c)      Mr. Daher's exercised one-half (50,000) of these options on October 24,
         2003, at Cdn$0.45. The remaining 50,000 options (also with an exercise
         price of Cdn$.45 per share expire on August 11, 2005.

                                       39
<PAGE>

(d)      Mr. Akright's options described in this table expired on October 26,
         2003. Effective August 2003, the Board granted new options to Mr.
         Akright to purchase 100,000 shares which are exercisable at US$0.32 per
         share and which expire on August 1, 2008.

(e)      Mr. Patton's options are exercisable at Cdn$0.45 per share and expire
         on August 11, 2005.

Subsequent exercises

         No officer exercised employee stock options during the fiscal years
ended May 31, 2002 or 2003. Thomas S. Hendricks exercised an option as follows
after the fiscal year end:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
                                                                      Number of Unexercised   Value of unexercised
                                                                      securities underlying       in the money
                                                                         options/SARs at        options/SARs at
                                                     Value realized       10/31/2003 ($)         10/31/2003 ($)
                           Shares acquired on             ($)              Exercisable/           Exercisable/
Name                           exercise (#)               (a)             unexercisable          unexercisable
------------------------------------------------------------------------------------------------------------------
<S>                        <C>                       <C>              <C>                     <C>
Thomas S.Hendricks             100,000(b)               US$168,000                0/0                      0/0
--------------------------------------------------------------------------------------------------------------
Art Daher                       50,000(c)               US$ 54,000           50,000/0              US$59,000/0
--------------------------------------------------------------------------------------------------------------
</TABLE>

(a)      "Value realized" is equal to the market price less the exercise price
         times the number of shares acquired. The market price at October 31,
         2003 is US$1.50 per share.

(b)      Mr. Hendricks exercised these options on August 29, 2003, for an
         exercise price of US$.32 per share when the market price reported by
         the OTCBB was US$2.00 per share. The exercise price for these options
         was Cdn$.45 per share (as reported in our 2002 Form 20-F).

(c)      Mr. Daher exercised these options on October 24, 2003 for an exercise
         price of US$.32 per share when the market price reported by the OTCBB
         was US$1.40 per share

Warrants and convertible securities that are outstanding

         We have no outstanding warrants to purchase our common stock held by
our officers or directors. We have issued warrants to purchase our common stock
to an investment banker that we expected to provide certain services to us. At
May 31, 2003, there were warrants held by that investment banker to purchase
486,303 shares of our common stock at an average exercise price of Cdn$0.81. We
reached a settlement with that investment banker (described below in Item 8.A(7)
"Legal Proceedings") which resulted in the issuance of additional shares and the
cancellation of the warrants.

         In July 2000, we issued convertible debentures to Judy Harvey, Argus
Resources, and Aardvark Agencies in the total amount of Cdn$5,442,018. We
reissued those convertible debentures in May 2001, and it is the May 2001
debentures that are currently outstanding. Judy Harvey is Marlowe Harvey's wife;
Mr. Harvey controls both Argus Resources and Aardvark Agencies. The debentures
are all non-interest bearing and are due May 11, 2011. The debentures were
convertible into common shares at Cdn$1.23 per share. The following chart sets
forth the beneficial owners of the convertible debentures and the number of
shares underlying such debentures as of May 31, 2003. To our knowledge, there
have been no further transfers of any

                                       40
<PAGE>

debentures during the fiscal year ended May 31, 2003 or subsequently. No person
has converted any of the debentures into common stock. During fiscal 2002,
Cdn$344,913 of the debentures were repaid to Mrs. Harvey.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
         Name                   Original Principal amount         Accrued Interest    Underlying shares
-------------------------------------------------------------------------------------------------------
<S>                             <C>                               <C>                 <C>
Marlowe Harvey(a)                     Cdn$4,113,105                    $0                 3,343,988
-------------------------------------------------------------------------------------------------------
Thomas S. Hendricks (b)               Cdn$  984,000                    $0                 1,306,036
-------------------------------------------------------------------------------------------------------
Melvin Martin(c)                      Cdn$1,103,214                    $0                   896,922
-------------------------------------------------------------------------------------------------------
</TABLE>

(a)      Owned of record by Mr. Harvey's wife, Judy Harvey and entities
         affiliated with or controlled by Mr. Harvey. Of these debentures, Mrs.
         Harvey is holding Cdn$1,103,214 for the benefit of Mr. Martin. Mrs.
         Harvey disclaims any interest in the debentures (or the shares
         underlying the debentures) she is holding for Mr. Martin.

(b)      Mr. Hendricks acquired these debentures from Mrs. Harvey in settlement
         of litigation he had brought against Mr. Harvey, not sure if it was
         against Calais or Harvey.

(c)      Mrs. Harvey is holding debentures in this amount for the benefit of Mr.
         Martin. Mr. Martin disclaims any affiliation with Mrs. Harvey, Mr.
         Harvey, or entities they control.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

         We are a publicly owned corporation. Our shares are owned by Canadian
and US residents as well as residents of other countries. We are not owned or
controlled directly or indirectly by another corporation or any foreign
government.

7.A      MAJOR SHAREHOLDERS.

         1.       Major Shareholders.

         The table above in Item 6.E (Share ownership) sets forth the only
persons known to us to be holding 5% or more beneficial interest in our
outstanding stock, and also includes the beneficial ownership of all of our
directors and executive officers.

         Until August 2003, there were no significant transactions in our common
stock or significant changes in the percentage ownership by any of our principal
shareholders. In August 2003, we issued 8,181,818 shares to six accredited
investors as a loan origination fee (valued at US$0.55 per share) in connection
with a loan in the amount of US$4,500,000 they made to Calais (net US$652,498 to
Calais after payment of prepaid interest, repayment of a bank loan and
pre-existing obligations, and financing costs). At the time they made the loan,
none of the accredited investors was an affiliate of Calais, directly or
indirectly. As a result of the loan transaction,

                                       41
<PAGE>

         Matthew C. Witt became owner of greater than 5% of our outstanding
         common stock and was hired as our chief financial officer; and

         Stephen A. Benaske became owner of greater than 5% of our outstanding
         common stock.

         The completion of this transaction reduced the percentage ownership by
the previous shareholders by approximately 71 %.

         To collateralize the repayment of this US$4,500,000, Calais granted the
lenders a security interest in its Caribou properties. The total amount includes
two years prepaid interest at a rate of 12.9% per annum or approximately US
$1,000,000. The Company also issued 8,181,818 shares of stock at a deemed price
of US $0.55 per share for a total financing fee of US $4,500,000. The financing
fee will be recorded in the first quarter of fiscal 2004. 1,500,000 of these
shares are to be placed in escrow by the lender and are to be used to satisfy
the debt if and when the Company's average share price reaches US $3.00 per
share. The loan, if not repaid from the sale of escrowed shares, is due in full
on July 31, 2005.

         2.       Compliance with Shareholder Reporting Requirements of Sections
13(d) and 16(a) of the Securities Exchange Act of 1934, as amended

         Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires our directors, executive officers and persons who own more than ten
percent of a registered class of our equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of Calais. Officers, directors and greater than ten
percent shareholders are required by SEC regulation to furnish us with copies of
all Section 16(a) forms they file.

         To our knowledge, based upon a review of the copies of such reports
furnished to us and based upon written representations that no other reports
were required, all Section 16(a) filing requirements applicable to Calais'
officers, directors and greater than ten percent beneficial owners were complied
with during the fiscal year ended May 31, 2003 except for those listed below. To
our knowledge, none of the named persons below have completed transactions
subsequent to September 1, 2003 and, therefore, we do not believe that any
additional reports are due.

         -        Mr. Hendricks filed a Form 3 on September 25, 2003, which was
                  due on September 3, 2003. As such, he filed one report late.

         -        Mr. Witt filed a Form 3 on September 26, 2003, which was due
                  on September 3, 2003. As such, he filed one report late.

         -        Mr. Harvey's Form 3 was due on September 3, 2003 and has not
                  yet been filed. In addition, we have received information that
                  Mr. Harvey has sold shares on September 3, 4, 8, 9, and 15
                  (45,700 shares in September), and October 6 and 14 (21,700
                  shares), and November 6 (58,000 shares). Mr. Harvey has not
                  reported any of these transactions on Form 4 and, therefore,
                  eight Form 4s have not been filed. Mr. Harvey or persons
                  affiliated with him may have sold additional shares of our
                  common stock without the knowledge of Calais for which he has
                  not filed a Form 4

         -        Mr. Daher's Form 3 was due on September 3, 2003 and has not
                  yet been filed. Mr. Daher sold some shares of our common stock
                  in October 2003 for which he has not filed a Form 4.

         -        Mr. Akright's Form 3 was due on September 3, 2003. Furthermore
                  he sold some shares of our common stock in September and
                  October 2003. He filed three reports late.

         -        Mr. Martin's Form 3 was due on September 3, 2003 and has not
                  yet been filed.

                                       42
<PAGE>

         -        Mr. Patton's Form 3 was due on September 3, 2003 and has not
                  yet been filed.

         -        Mr. Benaske filed a Form 3 on September 29, 2003, which was
                  due on September 3, 2003. As such, he filed one report late.

         In addition, certain persons were required to file a Schedule 13D, when
Calais began filing 1934 Act reports in approximately March 1998 or upon
becoming a beneficial owner of greater than 5% of the outstanding stock. Mr.
Harvey is the only person known to us who has been obligated to, but who has
failed to, file a Schedule 13D as of the date of this report.

7.B      RELATED PARTY TRANSACTIONS.

         The following are the only transactions since June 1, 2001, or proposed
transactions, which have materially affected or will materially affect us in
which any director, executive officer, or beneficial holder of more that 10% of
the outstanding common shares, or any of their respective relatives, spouses,
associates or affiliates has had or will have any direct or indirect interest.
Our board of directors believes the transactions referenced below were on terms
at least as favorable to us as we could have obtained from unaffiliated parties.

Resignation of Marlowe Harvey

         On November 11, 2003, Mr. Harvey resigned as an officer and director of
Calais, demanding a return of the Cdn$984,000 debenture Mrs. Harvey assigned to
Mr. Hendricks and also advising Calais that he intends to enter into an
agreement to vend the Nevada properties, or a portion thereof, to third parties.
Calais intends to assert its rights as appropriate.


Purchases of Common Shares by Officers/Directors

         During fiscal 2003 and subsequently, we issued 111,667 common shares
and 150,000 common shares (respectively) for services provided or to settle
debts valued at Cdn$61,733 and Cdn$67,500 (respectively) to directors or to
companies controlled by our directors. During fiscal 2002, we issued 441,000
common shares for services provided or to settle debts valued at $132,300 to
directors or to companies controlled by our directors. The following chart
describes these transactions in greater detail:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                    Subsequent to fiscal 2003       Fiscal 2003                Fiscal 2002
------------------------------------------------------------------------------------------------
                     # of shares  Cdn$ value   # of shares  Cdn$ value   # of shares  Cdn$ value
------------------------------------------------------------------------------------------------
<S>                  <C>          <C>          <C>          <C>          <C>          <C>
Marlowe Harvey(a)           --           --           --           --      166,000       49,800
-----------------------------------------------------------------------------------------------
Thomas S
Hendricks(b)           100,000      $45,000       91,667      $40,333      100,000       30,000
-----------------------------------------------------------------------------------------------
Art Daher(b)            50,000      $22,500       20,000      $21,400       75,000       22,500
-----------------------------------------------------------------------------------------------
Robert Akright              --           --           --           --      100,000      $30,000
-----------------------------------------------------------------------------------------------
Thomas Patton               --           --           --           --           --           --
-----------------------------------------------------------------------------------------------
Melvin Martin               --           --           --           --           --           --
-----------------------------------------------------------------------------------------------
</TABLE>

(a)      issued to Judy Harvey, Marlowe's wife.

(b)      Exercise of options for Cdn$0.45 per share in September (Mr. Hendricks)
         and October (Mr. Daher) 2003.

                                       43
<PAGE>

Loans to Calais

         Directors, their family members, or companies controlled by our
directors have lent the company funds on various terms and conditions over the
last three years as follows:

         -        the convertible debentures described above in Item 6.E (Share
                  ownership - warrants and convertible securities that are
                  outstanding)

         -        Cdn$70,000 payable (with interest at 12%) to Mr. Harvey for a
                  loan made by him to Calais for working capital purposes in
                  2003 which was due May 22, 2003 (paid in August 2003), and
                  which was secured by our inventories and was convertible into
                  our common stock at Cdn$0.60 per share. As consideration to
                  Mr. Harvey for making this loan, we provided him with options
                  to purchase 82,500 shares of stock at an exercise price of
                  Cdn$1.26, exercisable through November, 2004.

         -        In June 2003, Thomas S. Hendricks obtained a personal mortgage
                  from a bank using his personal collateral in the amount of
                  US$587,680 in order to permit Calais to meet certain of its
                  obligations. The amount advanced included prepaid interest and
                  fees to the lender of US$87,680, providing a net of US$500,000
                  funding to Calais. Proceeds of the August 2003 financing were
                  used to repay this amount and to reimburse Mr. Hendricks for
                  his expenses in obtaining this loan. Mr. Hendricks provided
                  this credit facility to us at no cost.

         -        From time-to-time during fiscal years ending May 31, 2003 and
                  2002, and previously, Mr. Hendricks used his personal credit
                  cards to advance funds to Calais as necessary for Calais'
                  working capital purposes. The amounts outstanding that are
                  attributed to Mr. Hendricks at May 31, 2003 and 2002 reflect
                  those amounts together with interest accrued to the credit
                  card issuers. Mr. Hendricks did require Calais to pay his
                  interest expense, but did not charge Calais any other costs or
                  receive any compensation for advancing this credit.

         -        This loan and in the following table (which table does not
                  include amounts owed pursuant to the convertible debentures).

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                             AMOUNT OWED BY CALAIS ON
-----------------------------------------------------------------------------------------------------------
NAME                           INTEREST RATE  SEPTEMBER 30, 2003       MAY 31, 2003            MAY 31, 2002
-----------------------------------------------------------------------------------------------------------
<S>                            <C>            <C>                      <C>                     <C>
Tom Hendricks                        0%              $0                  US$94,281               US$28,987
----------------------------------------------------------------------------------------------------------
Marlowe and Judy Harvey             12%              $0                 Cdn$70,000                 $     0
----------------------------------------------------------------------------------------------------------
</TABLE>

Royalty Interests.

         Based on our understanding with Marlowe Harvey (our chairman and a
significant shareholder and creditor), he will own a 5% net smelter royalty
interest in the Nevada properties after we have acquired the interests which
have not yet been conveyed to us. As discussed above, the title to the Nevada
properties is unclear, and we are attempting to determine what steps to take to
resolve the issues identified to date and whether there are other issues that
must be dealt with. Based on our preliminary determination of the economics of
the property, it appears that the existence of the net smelter royalty interest
makes the property not economical to develop or mine.

         The majority of the properties that Calais acquired from the former
Hendricks Mining Co. ("HMC") in 1998, or acquired within five years thereafter,
are subject to net smelter return royalties in amounts varying from 2.0% to 0.5%
of net smelter returns in favor of the former shareholders of Hendricks Mining

                                       44
<PAGE>

Co. (which include Thomas S. Hendricks (as to 85.354%), Mr. Hendricks' mother
(10.101%), and Mr. Hendricks' attorney (4.545%) who has continued as attorney
for Calais; see Item 7, Major Shareholders and Related Party Transactions). The
period for which Calais was obligated to make further royalty grants as to new
acquisitions expired in April, 2003. The royalty grants now outstanding and of
record are effective for a period of 20 years after the date of the grants, with
expiration of the royalties beginning in March 2018, and ending in April 2023.
These individuals own the net smelter return royalty covering substantially all
of the Caribou properties. (The net smelter return does not include properties
acquired since April 2003.) Calais, Aardvark, and Mr. Harvey acknowledged the
validity of these royalties in the July 2000 settlement of the litigation Mr.
Hendricks brought against Mr. Harvey and Aardvark. See further discussion above
in Item 4.D, "Property, Plant and Equipment - Caribou Property."

Aardvark Enterprises, Inc.

         Aardvark Enterprises, Inc. is a Washington corporation primarily
engaged in the real estate business in Denver and elsewhere. Aardvark is
controlled by Marlowe Harvey and his wife, Judy Harvey. Shortly after the
acquisition of the Hendricks Mining Co. assets by Calais in 1998, Calais
encountered a cash shortfall which would have prevented it from exercising an
advantageous option to acquire the Caribou Mine properties, and to continue its
drilling program at the Caribou project.

         The necessary funds were advanced by Aardvark from Aardvark's sale of
unrelated real estate, including $500,000 plus costs to acquire the Caribou
properties and additional funds to continue the drilling programs. Aardvark
completed the sales and the acquisition of its interest in the Caribou
properties in a tax-deferred ss.1031 exchange. The entire Aardvark interest in
the Caribou properties is subject to exploration and mining concessions in favor
of Calais, and a contractual right held by Calais to re-acquire the properties
on terms described in a July 2000 agreement reached to settle litigation brought
by Mr. Hendricks against Mr. Harvey and Aardvark. (Originally the transaction
was structured differently, including a promissory note from Aardvark to Calais
in the amount of US$2,300,000, a deed of trust securing Calais' interest in the
Aardvark ownership, and other relationships between Calais and Aardvark. The
settlement agreement clarified these relationships and provides that Calais has
the right to reacquire the claims held by Aardvark for a debenture (which Calais
has already paid to Aardvark) and for a payment from Calais to Aardvark in an
amount "equal to pay the capital gains triggered by the" reconveyance of the
property to Calais. (The cash payment will be deducted from the debenture.)
Although the original agreement estimated the payment to be about US$750,000,
currently the parties estimate the tax obligation (which would arise as a result
of the deferred capital gains as a result of the ss.1031 exchange) to be about
US$500,000. The settlement agreement provides that Calais will have an unlimited
time to exercise its option for transfer.

Litigation

         In 2000, Thomas Hendricks brought litigation against Marlowe Harvey,
Aardvark, and Calais relating to certain information allegedly not disclosed to
Mr. Hendricks at the time that his company, HMC, was acquired by Calais.
Generally the complaints related to interests that Calais had in property in
Mexico and the lack of funding for continuing exploration of the Caribou
properties. The parties resolved this litigation shortly after it was commenced
by entering into a mutual release and settlement agreement. As a result of the
agreement,

         a.       Mr. Harvey paid certain funds to Mr. Hendricks;

         b.       Mr. Harvey's wife transferred a Cdn$984,000 debenture (which
                  had been issued to her by Calais) to Mr. Hendricks;

                                       45
<PAGE>

         c.       Calais reimbursed Mr. Hendricks for one-half of his legal
                  expenses incurred in bringing the litigation;

         d.       Calais agreed to sell its interest in the mining equipment
                  located in Mexico and apply the funds to repayment of Calais'
                  obligations;

         e.       Aardvark agreed to transfer its interest in the Caribou
                  properties to Calais as described above;

         f.       Calais agreed to honor the royalties granted to the former HMC
                  shareholders;

         g.       Mr. Harvey agreed to resign as president and chief executive
                  officer of Calais and Mr. Hendricks agreed to accept
                  appointment to those positions; and

         h.       Mr. Hendricks has a right to approve financing for Calais'
                  development of the Caribou properties.

         On November 11, 2003, Marlowe Harvey made certain allegations which, if
he pursues, may result in legal action. It is premature to reach any conclusions
with respect to Mr. Harvey's allegations at this time.

C.       INTERESTS OF EXPERTS AND COUNSEL

         John Henderson, Esq., a partner of the law firm Vranesh & Raisch, LLP,
was a 4.515% owner of HMC at the time Calais acquired the Consolidated
Caribou-Cross-Comstock-Pandora district mine area from HMC. As a result, he owns
4.515% of the net smelter royalty (ranging from 0.5% to 2.0%) that HMC retained
in the transaction. Vranesh & Raisch, LLP continues to serve as legal counsel to
Calais and Vranesh & Raisch, LLP bills Calais for its legal services and
expenses advanced at its normal hourly rates.

         As described in Item 8.A(7), below, Devlin Jensen of Vancouver, British
Columbia, had filed litigation against Calais for services provided in the
amount of $63,368. Calais did not dispute the delivery of the services, but did
not have the funds to pay Devlin Jensen until after the August 2003 financing
was completed. These amounts have been paid in full. Devlin Jensen continues to
provide legal advice to Calais.

         None of the other experts or legal counsel to Calais have engaged in
related party transactions with Calais.

         ITEM 8. FINANCIAL INFORMATION

8.A(1-6) - Financial Statements

         Our consolidated financial statements are stated in Canadian Dollars
(Cdn$) and are prepared in accordance with Canadian GAAP, the application of
which, in our case, conforms in all material respects for the periods presented
with US GAAP, except as disclosed in footnotes to the financial statements.

         The audited financial statements for the year ended May 31, 2003 and
2002 as required under ITEM #17 are included hereto immediately following the
text of this Annual Report. The auditors' report of KPMG LLP, Independent
Accountants, are included herein immediately preceding the financial statements.

                                       46
<PAGE>

8.A(7) - Legal proceedings.

         Other than discussed below, we know of no material, active or pending
or (to our knowledge) threatened legal proceedings against them. Other than
discussed below, we are not involved as a plaintiff in any material proceeding
or pending litigation.

         A Writ of Summons and Statement of Claim was filed in Supreme Court of
British Columbia on May 21, 2002 re monies owing and payable to Devlin Jensen
for services provided in the amount of $63,368 plus interest and costs incurred
therein. This debt has been fully paid and Devlin Jensen has released its
claims.

         A Claim made in Alberta by BDO Dunwoody for services provided in the
amount of $48,864 plus interest and costs incurred therein. This amount has been
paid.

         In November 2002 Calais entered into an agreement with National Capital
Companies for the performance of investor relations services. Included in the
consideration we paid National Capital at the time were 480,000 common stock
purchase warrants and 150,000 shares of restricted stock. We did not believe
that National Capital performed on their obligations. As a result of settlement
discussions with National Capital, in October 2003 we agreed to allow National
Capital to retain 37,500 of the originally-issued 150,000 shares and agreed to
issue to National Capital an additional 25,000 restricted shares. National
Capital agreed to return the remaining 112,500 shares and the warrants for
cancellation. We are in the process of documenting this agreement which will not
be binding until executed by the parties. We have not recognized any liability
or contingent liability for this in our financial statements.

8.A(8)   Our policy on dividends

         We have not declared any dividends since incorporation and we do not
anticipate that we will declare any dividends in the foreseeable future. Our
present policy is to retain future earnings (if any) for use in our operations
and the expansion of our business.

         Because of our outstanding lending arrangement with the accredited
investors entered into in August 2003, we are prohibited from declaring or
paying any dividends until the loan has been repaid in full. There are no other
restrictions on our ability to pay dividends.

8.B      SIGNIFICANT CHANGES.

         The only significant change that has occurred since the date of our
annual financial statements (May 31, 2003) is the completion of a financing, in
August 2003, with six accredited investors which provided a US$4,500,000 loan to
us (bearing interest at 12.9% and due July 31, 2005 or the sale of 1,500,000 by
Stephen A. Benaske if the stock price reaches US$3.00). The net funds have been
used or allocated for use as follows:

                                       47
<PAGE>

<TABLE>
<S>                                                            <C>
---------------------------------------------------------------------------
Prepayment of two years interest expense                       US$1,161,000
---------------------------------------------------------------------------
Repayment of remaining amounts due to bank                     US$1,080,000
---------------------------------------------------------------------------
Repayment of interim mortgage due to Thomas S. Hendricks for   US$ 587,6800
funds he advanced
---------------------------------------------------------------------------
Repayment of trade payables                                    US$  700,000
---------------------------------------------------------------------------
Financing costs                                                US$   95,000
---------------------------------------------------------------------------
</TABLE>

         As a result, following the financing and the use of proceeds as
described above, we had US$652,498 remaining for working capital, which we plan
to use for exploration of our Caribou and Panamanian properties and for general
and administrative purposes.

         To secure the loan, we pledged our Caribou properties as collateral.

ITEM 9. THE OFFER AND LISTING

9.A      OFFER AND LISTING DETAILS.

9.A(1-3)         Information required for an offer of securities

         Not applicable, inasmuch as this is being used as our annual report on
Form 20-F.

9.A(4)           Price history for our common stock

         Our common shares were approved for trading on the OTC Bulletin Board
in the United States, under the symbol "CAAUF" on February 1, 1999. The Company
voluntarily de-listed from trading on the Vancouver Stock Exchange, now known as
the TSX Venture Exchange, effective March 15, 1999.

         The high and low sales prices on the OTC Bulletin Board for actual
trades of the Company's common shares from date of listing is as follows and
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions:

MOST RECENT SIX MONTHS

<TABLE>
<CAPTION>
                                HIGH                  LOW
<S>                            <C>                  <C>
October 2003                   US$1.52              US$1.13
September 2003                 US$2.00              US$1.33
August 2003                    US$2.50              US$0.12
July 2003                      US$0.40              US$0.30
June 2003                      US$0.45              US$0.35
May 2003                       US$0.46              US$0.38
</TABLE>

                                       48
<PAGE>

<TABLE>
<CAPTION>
                                                               QUARTER ENDED
2003 FISCAL YEAR                  AUG 31, 2002       NOV 30, 2002        FEB 28, 2003        MAY 31, 2003
                                  ------------       ------------        ------------        ------------
<S>                               <C>                <C>                 <C>                 <C>
Common Stock
   High                             US$1.00            US$0.70              US$0.85             US$0.53
   Low                              US$0.20            US$0.25              US$0.20             US$0.20
</TABLE>

<TABLE>
<CAPTION>
                                                               QUARTER ENDEDED
2002 FISCAL YEAR                  AUG 31, 2001       NOV 30, 2001        FEB 28, 2002        MAY 31, 2002
                                  ------------       ------------        ------------        ------------
<S>                              <C>                 <C>                 <C>                 <C>
Common Stock
   High                             US$0.48            US$0.40              US$0.20             US$0.38
   Low                              US$0.18            US$0.08              US$0.05             US$0.06
</TABLE>

<TABLE>
<CAPTION>
  MOST RECENT FIVE YEARS
     YEAR ENDED MAY 31              HIGH                  LOW
<S>                               <C>                   <C>
2003  (OTCBB)                      US$1.00               US$0.20
2002  (OTCBB)                      US$0.38               US$0.05
2001  (OTCBB)                      US$0.44               US$0.06
2000  (OTCBB)                      US$0.44               US$0.05
1999 (TSX Venture Exchange)       Cdn$2.50              Cdn$0.71
</TABLE>

         There are no pre-emptive rights associated with our shares.

         The Company's common shares are issued in registered form and the
following information is taken from the records of CIBC Mellon Trust Company,
located in Vancouver, British Columbia, Canada, the registrar and transfer agent
for the common shares, although we are in the process of considering other
transfer agents.

         On 10/31/02, the shareholders' list for the Company's common shares
showed 341 registered shareholders and 10,744,218 common shares outstanding. 38
of these shareholders were U.S. residents, holding 1,958,967 shares representing
18.2% of the issued and outstanding common shares.

         The Company has researched the indirect holding by depository
institutions and estimates that there are 38 "holders of record" resident in the
United States, holding the aforementioned 1,958,967 common shares. Based on this
research and other research into the indirect holdings of other financial
institutions, the Company believes that it has in excess of 750 beneficial
owners of its common shares.

                                       49
<PAGE>

         The Company's common shares are not registered to trade in the United
States in the form of American Depository Receipts (ADR's) or similar
certificates.

9.A(5-6) Not applicable.

9.A(7) Information with respect to securities other than common or ordinary
shares.

         Although applicable to annual reports on Form 20-F, this is not
applicable to Calais.

9.B      PLAN OF DISTRIBUTION.

         Not applicable to annual reports on Form 20-F.

9.C      MARKETS.

         Not applicable to annual reports on Form 20-F.

9.D      SELLING SHAREHOLDERS.

         Not applicable to annual reports on Form 20-F.

9.E      DILUTION.

         Not applicable to annual reports on Form 20-F.

9.F      EXPENSES OF THE ISSUE.

         Not applicable to annual reports on Form 20-F.

ITEM 10. ADDITIONAL INFORMATION

10.A     SHARE CAPITAL.

         Not applicable to annual reports on Form 20-F.

10.B     MEMORANDUM AND ARTICLES OF ASSOCIATION.

         Our authorized capital is 100,000,000 common shares without par value
of which 11,193,385 shares were outstanding as of May 31, 2003 (19,627,703 were
outstanding at October 31, 2003). All of our authorized common shares are of the
same class and, once issued, rank equally as to dividends, voting powers, and
participation in assets. Holders of common shares are entitled to one vote for
each share held of record in all matters to be acted upon by the shareholders.
Holders of common shares are entitled to receive such dividends as may be
declared from time to time by the Board of Directors, in its discretion, out of
funds legally available therefore. Our articles of association do not permit us
to authorize any class or series of preferred stock.

         Upon liquidation, dissolution or winding up, holders of our common
shares are entitled to receive pro rata our assets, if any, remaining after
payments of all debts and liabilities. No shares have been issued subject

                                       50
<PAGE>

to call or assessment. There are no pre-emptive or conversion rights and no
provisions for redemption or purchase for cancellation, surrender, or sinking or
purchase funds.

         We are not aware of any restrictions or limitations on the rights of
non-resident or foreign owners to hold, vote, or receive remittance on our
securities, other than those discussed in "Exchange Controls and Other
Limitations Affecting Security Holders."

         Although our articles of association provide for no restrictions on our
ability to repurchase or redeem our common shares while there is any arrearage
in the payment of dividends or sinking fund installments, our loan agreement
with the Broadway investors (Mr. Benaske) prohibits the redemption of any shares
until Calais repays this loan in full.

         Provisions as to the modification, amendment or variation of such
shareholder rights or provisions are contained in the Company Act of British
Columbia. Unless the Company Act or our Articles or bylaws otherwise provide,
any action to be taken by a resolution of the members may be taken by an
ordinary resolution or by a vote of a majority or more of the shares represented
at the shareholders' meeting.

         Our Articles and the B.C. Company Act contain provisions, which require
a "special resolution" for effecting certain corporate actions. Such a "special
resolution" requires a three-quarters vote of shareholders rather than a simple
majority for passage. The principle corporate actions that require a "special
resolution" include:

         a.       Transferring Company's jurisdiction from British Columbia to
                  another jurisdiction;

         b.       Giving material financial assistance to executive officers
                  and/or directors;

         c.       Material conflicts of interest by Directors;

         d.       Disposing of all or substantially all of our assets;

         e.       Removing a director before the expiration of his term of
                  office;

         f.       Certain alterations of share capital, including:

                  (1)      increasing the number of authorized shares;

                  (2)      subdivision, consolidation and/or changes in shares;

                  (3)      reduction in capital

         g.       Changing our name;

         h.       Altering any restrictions on our business; and

         i.       Amalgamations with another company.

10.C     MATERIAL CONTRACTS.

         Calais' material contracts described throughout this report can be
summarized as follows (including a cross reference to the discussion of the
contract elsewhere herein). See also Item 5.B, "Liquidity and Capital Resources
- Material Capital Commitments/Uncertainties," above.

         -        Loan to Calais from Peak National Bank, in default as of May
                  31, 2003, repaid in full in August 2003 (see Item 5.B and Item
                  13).

         -        Loan to Calais from six accredited investors (see Item 4.A,
                  "History and Development of the Company - General Information
                  - Subsequent to Fiscal 2003," Item 5.B, "Liquidity and Capital
                  Resources," Item 7.A, "Major Shareholders," and Item 8.B,
                  "Significant Changes."

                                       51
<PAGE>

         -        Royalty Agreements with Mr. Hendricks and others (see Item
                  4.D, "Property, plant and equipment -- Caribou property,
                  Colorado, USA; gold/silver exploration/development -- Royalty
                  Obligations on Caribou Properties," and Item 7.B, "Related
                  Party Transactions - Royalty Interests").

         -        Acquisition of the Nevada properties from Marlowe Harvey and
                  affiliated entities (see Item 4.D, "Property, plant and
                  equipment - Manhattan project, Nevada USA - Acquisition
                  Details."

         -        Contractual rights with respect to the interest of Aardvark
                  Enterprises (an affiliate of Mr. Harvey) in the Caribou
                  properties (see Item 4.D, "Property, plant and equipment --
                  Caribou property, Colorado, USA; gold/silver
                  exploration/development - Acquisition Details," and Item 7.B,
                  "Related Party Transactions - Aardvark Enterprises, Inc.").

         -        Acquisition of the Panama project (see Item 4.D, "Property,
                  plant and equipment - Panama Project - Acquisition Details").

         -        Employment agreement with Matthew C. Witt(see Item 6.B,
                  "Compensation - Compensation Table").

         -        Mutual Release effective July 18, 2000, between Marlowe
                  Harvey, Aarvark Agencies, Inc., Calais Resources Colorado,
                  Inc., Calais Resources, Inc., on the one part, and Thomas S.
                  Hendricks (see Item 4.D, "Property, plant and equipment --
                  Caribou property, Colorado, USA; gold/silver
                  exploration/development - Acquisition Details," and Item 7.B,
                  "Related Party Transactions - Litigation").

         -        Convertible debentures dated May 11, 2001 (see Item 6.E,
                  "Share Ownership - Share Ownership Information," Item 6.E,
                  "Share Ownership - Warrants and Convertible Securities
                  Outstanding," and Item 7.B, "Related Party Transactions -
                  Loans to Calais").

10.D     EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS.

         There is no law or government decree of regulation in Canada that
restricts the export or import of capital, or that affects the remittance of
dividends, interest or other payments to a non-resident holder of common shares,
other than withholding tax requirements. See Item 10.E, "Taxation," below.

         There is no limitation imposed by Canadian law or by our Articles of
Incorporation or our other charter documents on the right of a non-resident to
hold or vote shares of our common stock, other than as provided in the
Investment Canada Act (Canada), as amended (the "Investment Act").

         The Investment Act generally prohibits implementation of a reviewable
investment by an individual, government or agency thereof, corporation,
partnership, trust or joint venture that is a "non-Canadian" as defined in the
Investment Act, unless, after review the Minister responsible for the Investment
Act is satisfied that the investment is likely to be of net benefit to Canada.
If an investment by a non-Canadian is not a reviewable investment, it
nevertheless requires the filing of a short notice which may be given at any
time up to 30 days after the implementation of the investment.

         An investment in our common shares by a non-Canadian that is a "WTO
investor" (an individual or other entity that is a national of, or has the right
of permanent residence in, a member of the World Trade Organization, current
members of which include the European Community, Germany, Japan, Mexico, the
United Kingdom and the United States, or a WTO investor-controlled entity, as
defined in the Investment Act) would be reviewable under the Investment Act if
it were an investment to acquire direct control, through a purchase of assets or
voting interests, of Calais and the value of our assets equalled or exceeded
$218 million, the threshold established for 2001, as indicated on our financial
statements for our fiscal year immediately preceding the implementation of the
investment. In subsequent years, such threshold amount may be increased or
decreased in accordance with the provisions of the Investment Act.

         An investment in our common shares by a non-Canadian, other than a WTO
investor, would be reviewable under the Investment Act if it were an investment
to acquire direct control of Calais and the

                                       52
<PAGE>

value of the assets were $5.0 million or more, as indicated on our financial
statements for our fiscal year immediately preceding the implementation of the
investment.

         A non-Canadian, whether a WTO investor or otherwise, would acquire
control of Calais for the purposes of the Investment Act if he, she or it
acquired a majority of our common shares or acquired all or substantially all of
the assets used in our business. The acquisition of less than a majority, but
one-third or more of our common shares would be presumed to be an acquisition of
control of Calais unless it could be established that Calais was not controlled
in fact by the acquirer through the ownership of the common shares.

         The Investment Act would not apply to certain transactions in relation
to shares of our common stock, including:

         (a)      an acquisition of shares of our common stock by any person if
                  the acquisition were made in the ordinary course of that
                  person's business as a trader or dealer in securities;

         (b)      an acquisition of control of Calais in connection with the
                  realization of security granted for a loan or other financial
                  assistance and not for any purpose related to the provisions
                  of the Investment Act; and

         (c)      an acquisition of control of Calais by reason of an
                  amalgamation, merger, consolidation or corporate
                  reorganization following which the ultimate direct or indirect
                  control in fact of Calais, through the ownership of voting
                  interests, remains unchanged.

10.E     TAXATION.

         The following summary of the material Canadian federal income tax
consequences generally applicable in respect of the common stock reflects the
opinion of our management. We have not received any opinion about these issues
from any tax professional in the United States or Canada. The tax consequences
to any particular holder of common stock will vary according to the status of
that holder as an individual, trust, corporation or member of a partnership, the
jurisdiction in which that holder is subject to taxation, the place where that
holder is resident and, generally, according to that holder's particular
circumstances. This summary is applicable only to holders who are resident in
the United States, have never been resident in Canada, deal at arm's length with
us, hold their common stock as capital property and who will not use or hold the
common stock in carrying on business in Canada. Special rules, which are not
discussed in this summary, may apply to a United States holder that is an issuer
that carries on business in Canada and elsewhere.

         This summary is based upon the provisions of the Income Tax Act of
Canada and the regulations there under (collectively, the "Tax Act" or "ITA")and
the Canada-United States Tax Convention (the "Tax Convention") as at the date
hereof and the current administrative practices of Canada Customs and Revenue
Agency. This summary does not take into account provincial income tax
consequences.

         MANAGEMENT URGES EACH HOLDER TO CONSULT HIS OWN TAX ADVISOR WITH
RESPECT TO THE INCOME TAX CONSEQUENCES APPLICABLE TO HIM IN HIS OWN PARTICULAR
CIRCUMSTANCES.

Canadian Federal Income Tax Considerations

         The summary below is restricted to the case of a holder (a "Holder") of
one or more common shares ("Common Shares") who for the purposes of the Tax Act
is a non-resident of Canada, holds his Common Shares as capital property and
deals at arm's length with us.

                                       53
<PAGE>

         Dividends. A Holder will be subject to Canadian withholding tax ("Part
XIII Tax") equal to 25%, or such lower rates as may be available under an
applicable tax treaty, of the gross amount of any dividend paid or deemed to be
paid on his Common Shares. Under the Tax Convention, the rate of Part XIII Tax
applicable to a dividend on Common Shares paid to a Holder who is a resident of
the United States is, if the Holder is a company that beneficially owns at least
10% of the voting stock of the Company, 5% and, in any other case, 15% of the
gross amount of the dividend. The Company will be required to withhold the
applicable amount of Part XIII Tax from each dividend so paid and remit the
withheld amount directly to the Receiver General for Canada for the account of
the Holder.

         Disposition of Common Shares. A Holder who disposes of Common Shares,
including by deemed disposition on death, will not be subject to Canadian tax on
any capital gain thereby realized unless the common Share constituted "taxable
Canadian property" as defined by the Tax Act. Generally, a common share of a
public corporation will not constitute taxable Canadian property of a Holder
unless he held the common share as capital property used by him carrying on a
business in Canada, or he or persons with whom he did not deal at arm's length
alone or together held or held options to acquire, at any time within the 60
months preceding the disposition, 25% or more of the issued shares of any class
of the capital stock of the Company.

         A Holder who is a resident of the United States and realizes a capital
gain on disposition of Common Shares that was taxable Canadian property will
nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax
thereon unless (a) more than 50% of the value of the Common Shares is derived
from, or from an interest in, Canadian real estate, including Canadian mineral
resources properties, (b) the Common Shares formed part of the business property
of a permanent establishment that the Holder has or had in Canada within the 12
months preceding disposition, or (c) the Holder (i) was a resident of Canada at
any time within the ten years immediately preceding the disposition, and for a
total of 120 months during any period of 20 consecutive years, preceding the
disposition, and (ii) owned the Common Shares when he ceased to be resident in
Canada.

         After October 18, 2000, a Holder who is subject to Canadian tax in
respect of a capital gain realized on disposition of Common Shares must include
one half of the capital gain ("taxable capital gain") in computing his taxable
income earned in Canada. The Holder may, subject to certain limitations, deduct
one half of any capital loss ("allowable capital loss") arising on disposition
of taxable Canadian property from taxable capital gains realized in the year of
disposition in respect to taxable Canadian property and, to the extent not so
deductible, from such taxable capital gains of any of the three preceding years
or any subsequent year.

United States Taxation

         The following is a discussion of material United States Federal income
tax consequences, under the law, generally applicable to a U.S. Holder (as
defined below) of common shares of the Company. This discussion does not cover
any state, local or foreign tax consequences. The following discussion is based
upon the sections of the Internal Revenue Code of 1986, as amended ("the Code"),
Treasury Regulations, published Internal Revenue Service ("IRS") rulings,
published administrative positions of the IRS and court decisions that are
currently applicable, any or all of which could be materially and adversely
changed, possible on a retroactive basis, at any time. In addition, the
discussion does not consider the potential effects, both adverse and beneficial,
or recently proposed legislation, which, if enacted, could be applied, possibly
on a retroactive basis, at any time. The discussion is for general information
only and it is not intended to be, nor should it be construed to be, legal or
tax advice to any holder or prospective holder of common shares of the Company
and no opinion or representation with respect to the U.S. federal income tax
consequences to any such holder or prospective holder is made. Management urges
holders and prospective holders of our common shares to consult their own tax
advisors about the federal, state, local, and foreign tax consequences of
purchasing, owning and disposing of our common shares.

                                       54
<PAGE>

         U.S. Holders. As used herein, a ("U.S. Holder") includes a holder of
common shares of the Company who is a citizen or resident of the United States,
a corporation created or organized in or under the laws of the United States or
of any political subdivision thereof, an estate whose income is taxable in the
United States irrespective of source or a trust subject to the primary
supervision of a court within the United States and control of a United States
fiduciary as described in Section 7701(a)(30) of the Code. This summary does not
address the tax consequences to, and U.S. Holder does not include, persons
subject to special provisions of Federal income tax law, such as tax-exempt
organizations, qualified retirement plans, financial institutions, insurance
companies, real estate investment trusts, regulated investment companies,
broker-dealers, non-resident alien individuals, persons or entities that have a
"functional currency" other than the U.S. dollar, shareholders who hold common
shares as part of a straddle, hedging or conversion transaction, and
shareholders who acquired their common shares through the exercise of employee
stock options or otherwise as compensation for services. This summary is limited
to U.S. Holders who own common shares as capital assets. This summary does not
address the consequences to a person or entity holding an interest in a
shareholder or the consequences to a person of the ownership, exercise or
disposition of any options, warrants or other rights to acquire common shares.

         Distribution on Our Common Shares. U.S. Holders receiving dividend
distributions (including constructive dividends) with respect to our common
shares are required to include in gross income for United States Federal income
tax purposes the gross amount of such distributions equal to the U.S. dollar
value of such distributions on the date of receipt (based on the exchange rate
on such date), to the extent that we have current or accumulated earnings and
profits, without reduction for any Canadian income tax withheld from such
distributions. Such Canadian tax withheld may be credited, subject to certain
limitations, against the U.S. Holder's United States Federal Income tax
liability or, alternatively, individuals may be deducted in computing the U.S.
Holder's United States Federal taxable income by those individuals who itemize
deductions. (See more detailed discussion at "Foreign Tax Credit" below). To the
extent that distributions exceed current or accumulated earnings and profits of
the Company, they will be treated first as a return of capital up to the U.S.
Holder's adjusted basis in the common shares and thereafter as gain from the
sale or exchange of the common shares. Dividend income will be taxed at marginal
tax rates applicable to ordinary income or at preferential rates applicable to
dividends. Preferential tax rates for long-term capital gains are applicable to
a U.S. Holder which is an individual, estate or trust. There are currently no
preferential tax rates for a U.S. Holder, which is a corporation.

         In the case of foreign currency received as a dividend that is not
converted by the recipient into U.S. dollars on the date of receipt, a U.S.
Holder will have a tax basis in the foreign currency equal to its U.S. dollar
value on the date of receipt. Generally any gain or loss recognized upon a
subsequent sale of other disposition of the foreign currency, including the
exchange for U.S. dollars, will be ordinary income or loss.

         Dividends paid on our common shares will not generally be eligible for
the dividends received deduction provided to corporations receiving dividends
from certain United States corporations. A U.S. Holder which is a corporation
may, under certain circumstances, be entitled to a 70% deduction of the United
States source portion of dividends received from Calais (unless we qualify as a
"foreign personal holding company" or a "passive foreign investment company," as
defined below) if such U.S. Holder owns shares representing at least 10% of the
voting power and value of the Company. The availability of this deduction is
subject to several complex limitations, which are beyond the scope of this
discussion.

         Under current Treasury Regulations, dividends paid on our common
shares, if any, generally will not be subject to U.S. information reporting, and
generally will not be subject to U.S. backup withholding tax. However, dividends
and the proceeds from a sale of our common shares paid in the U.S. through a
U.S. or U.S. related paying agent (including a broker) will be subject to U.S.
information reporting requirements and may also be subject to the 31% U.S.
backup withholding tax, unless the paying agent is furnished with a duly
completed and signed Form W-9. Any amounts withheld under the U.S. backup
withholding tax rules will be

                                       55
<PAGE>

allowed as a refund or a credit against the U.S. Holder's U.S. federal income
tax liability, provided the required information is furnished to the IRS.

         Foreign Tax Credit. For individuals whose entire income from sources
outside the United States consists of qualified passive income, the total amount
of creditable foreign taxes paid or accrued during the taxable year does not
exceed $300 ($600 in the case of a joint return) and an election is made under
section 904(j), the limitation on credit does not apply.

         A U.S. Holder who pays (or has withheld from distributions) Canadian
income tax with respect to the ownership of our common shares may be entitled,
at the option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces United States Federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income
subject to tax. This election is made on a year-by-year basis and applies to all
foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from)
the U.S. Holder during the year. There are significant and complex limitations
which apply to the credit, among which is the general limitation that the credit
cannot exceed the proportionate share of the U.S. Holder's United States income
tax liability that the U.S. Holder's foreign source income bears to his/her or
its worldwide taxable income in the determination of the application of this
limitation. The various items of income and deduction must be classified into
foreign and domestic sources. Complex rules govern this classification process.
In addition, this limitation is calculated separately with respect to specific
classes of income such as "passive income," "high withholding tax interest,"
"financial services income," "shipping income," and certain other
classifications of income. Dividends (if any) that we distribute will generally
constitute "passive income" or, in the case of certain U.S. Holders, "financial
services income" for these purposes. The availability of the foreign tax credit
and the application of the limitations on the credit are fact specific and
management urges holders and prospective holders of our common shares to consult
their own tax advisors regarding their individual circumstances.

Other Considerations

         In the following circumstances, the above sections of the discussion
may not describe the United States Federal income tax consequences resulting
from the holding and disposition of our common shares.

         Foreign Personal Holding Company. If at any time during a taxable year
more than 50% of the total combined voting power or the total value of our
outstanding shares is owned, actually or constructively, by five or fewer
individuals who are citizens or residents of the United States and 60% (50%
after the first tax year) or more of our gross income for such year was derived
from certain passive sources (e.g. from interest income received from its
subsidiaries), we would be treated as a "foreign personal holding company." In
that event, U.S. Holders that hold our common shares would be required to
include in gross income for such year their allocable portions of such passive
income to the extent we do not actually distribute such income.

         We do not believe that the Company currently has the status of a
"foreign personal holding company." However, there can be no assurance that we
will not be considered a foreign personal holding company for the current or any
future taxable year.

         Foreign Investment Company. If 50% or more of the combined voting power
or total value of our outstanding shares are held, actually or constructively,
by citizens or residents of the United States, United States domestic
partnerships or corporations, or estates or trusts other than foreign estates or
trusts (as defined by the Code Section 7701(a)(31), and we are found to be
engaged primarily in the business of investing, reinvesting, or trading in
securities, commodities, or any interest therein, it is possible that we might
be treated as a "foreign investment company" as defined in Section 1246 of the
Code, causing all or part of any gain

                                       56
<PAGE>

realized by a U.S. Holder selling or exchanging our common shares to be treated
as ordinary income rather than capital gains.

         We do not believe that the Company has the status of a "foreign
investment company." However, there can be no assurance that we will not be
considered a foreign investment company for the current or any future taxable
year.

         Passive Foreign Investment Company. As a foreign corporation with U.S.
Holders, we could potentially be treated as a passive foreign investment company
("PFIC"), as defined in Section 1297 of the Code, depending upon the percentage
of our income which is passive, or the percentage of our assets which is held
for the purpose of producing passive income.

         Management believes that we are not a PFIC. Additionally, we believe
that the anticipated development of our business would not include any
activities, which would cause us to fall under the criteria of a Passive Foreign
Investment Company. However, there can be no assurance that our determination
concerning its PFIC status will not be challenged by the IRS, or that it will be
able to satisfy record-keeping requirements, which will be imposed of QEFs.

         Certain United States income tax legislation contains rules governing
PFICs which can have significant tax effects on U.S. shareholders of foreign
corporations. These rules do not apply to non-U.S. shareholders. Section 1297
(a) of the Code defines a PFIC as a corporation that is not formed in the United
States and, for any taxable year, either

         (i) 75% or more of its gross income is "passive income," which includes
         interest, dividends and certain rents and royalties or

         (ii) the average percentage, by fair market value (or, if the company
         is a controlled foreign corporation or makes an election, by adjusted
         tax basis), of its assets that produce or are held for the production
         of "passive income" is 50% or more.

         THE TAXATION OF A US SHAREHOLDER WHO OWNS STOCK IN A PFIC IS EXTREMELY
COMPLEX AND IS THEREFORE BEYOND THE SCOPE OF THIS DISCUSSION. MANAGEMENT URGES
US PERSONS TO CONSULT WITH THEIR OWN TAX ADVISORS WITH REGARDS TO THE IMPACT OF
THESE RULES.

         Controlled Foreign Corporation. A Controlled Foreign Corporation
("CFC") is a foreign corporation more than 50% of whose stock by vote or value
is, on any day in the corporation's tax year, owned (directly or indirectly) by
U.S. Shareholders. If more than 50% of the voting power of all classes of stock
entitled to vote is owned, actually or constructively, by citizens or residents
of the United States, United States domestic partnerships and corporations or
estates or trusts other than foreign estates or trusts, each of whom own
actually or constructively 10% or more of the total combined voting power of all
classes of our stock could be treated as a "controlled foreign corporation"
under Subpart F of the Code. This classification would effect many complex
results, one of which is the inclusion of certain income of a CFC which is
subject to current U.S. tax.

         The United States generally taxes United States Shareholders of a CFC
currently on their pro rata shares of the Subpart F income of the CFC. Such
United States Shareholders are generally treated as having received a current
distribution out of the CFC's Subpart F income and are also subject to current
U.S. tax on their pro rata shares of the CFC's earnings invested in U.S.
property. The foreign tax credit described above may reduce the U.S. tax on
these amounts. In addition, under Section 1248 of the Code, gain from the sale
or exchange of shares by a U.S. Holder of common shares of the Corporation which
is or was a United States

                                       57
<PAGE>

Shareholder at any time during the five-year period ending with the sale or
exchange is treated as ordinary income to the extent of our earnings and profits
(accumulated in corporate tax years beginning after 1962, but only while the
shares were held and while the Company was "controlled") attributable to the
shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the
foreign corporation generally will not be treated as a PFIC with respect to the
United States Shareholders of the CFC. This rule generally will be effective for
taxable years of United States Shareholders beginning after 1997 and for taxable
years of foreign corporations ending with or within such taxable years of United
States Shareholders. The PFIC provisions continue to apply in the case of PFIC
that is also a CFC with respect to the U.S. Holders that are less than 10%
shareholders. Because of the complexity of Subpart F, a more detailed review of
these rules is outside of the scope of this discussion.

         The amount of any backup withholding will not constitute additional tax
and will be allowed as a credit against the U.S. Holder's federal income tax
liability.

         Filing Information Returns. Under a number of circumstances, United
States Investor acquiring our common shares may be required to file an
information return with the Internal Revenue Service Center where they are
required to file their tax returns with a duplicate copy to the Internal Revenue
Service Center, Philadelphia, PA 19255. In particular, any United States
Investor who becomes the owner, directly or indirectly, of 10% or more of the
shares of the Company will be required to file such a return. Other filing
requirements may apply, and management urges United States Investors to consult
their own tax advisors concerning these requirements.

10.F     DIVIDENDS AND PAYING AGENTS.

         See Item 8.A(8) - "Our policy on dividends." We have no dividend paying
agents.

10.G     STATEMENT BY EXPERTS.

         Not applicable to annual reports filed on Form 20-F.

10.H     DOCUMENTS ON DISPLAY.

         The documents referenced herein may be inspected at our principal place
of business as set forth on the cover page of this report.

10.I     SUBSIDIARY INFORMATION.

         See Item 4.A - History and Development of the Company - General
Information.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We do not engage in hedging transactions. Our functional currency is
the Canadian dollar. However, we incur significant expenditures in the U.S
dollar. Accordingly, Calais bears the risk of changes between the Canadian and
U.S. dollar exchange rates. In the year ended May 31, 2003, such exchange rate
changes resulted

                                       58
<PAGE>

in a foreign exchange gain of approximately Cdn.$250,000. To date, Calais has
not entered into any derivative or other financial instruments to mitigate the
impact of future exchange rate changes.

         Furthermore, we are a small business issuer as that term is defined in
Rule 405 under the Securities Act of 1933 and Rule 12b-2 under the Securities
Exchange Act of 1934 and, therefore, we are not required to make the disclosures
required by Item 11. See Item 11(e).

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN DEBT SECURITIES

         Not applicable to annual reports on Form 20-F.

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

         At the end of our 2003 fiscal year, we were in default in our bank
indebtedness to Peak National Bank. As a result, it was charging us the default
rate of interest of 24%. This was renegotiated in June 2003 and repaid in full
in August 2003.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
         PROCEEDS

14.A-D   MATERIAL MODIFICATIONS.

         The Company has not materially altered the rights of security holders
since the last annual report.

14.E             USE OF PROCEEDS.

         Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

15(a)    EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

         As required by Rule 13a-15 under the Securities Exchange Act of 1934,
within the 90 days prior to the filing date of this report, our management
carried out an evaluation of the effectiveness of the design and operation of
its disclosure controls and procedures. This evaluation was carried out under
the supervision and with the participation of our principal executive officer as
well as our principal financial officer, who concluded that our disclosure
controls and procedures are effective.

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

                                       59
<PAGE>

the Exchange Act is accumulated and communicated to management, including our
principal executive officer and our principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure.

15(b)    CHANGES IN INTERNAL CONTROLS.

         There were no changes in our internal controls or in other factors that
could significantly affect these internal controls subsequent to the date of
their evaluation.

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

         Calais has not appointed an audit committee financial expert.

ITEM 16B CODE OF ETHICS

         We have not yet adopted a code of ethics that applies to our principal
executive officer, principal financial officer, controller, or persons
performing similar functions. We have not done so because of the press of other
business activities. We expect that the board of directors will consider such a
code in the future.

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

(a)      AUDIT FEES.

         Our principal accountant, KPMG LLP, billed us aggregate fees in the
amount of approximately Cdn$25,000 for the fiscal year ended May 31, 2003 and
approximately Cdn$29,000 for the fiscal year ended May 31, 2002. These amounts
were billed for professional services that KPMG LLP provided for the audit of
our annual financial statements, review of the financial statements included in
our report on Form 20-F, review of the financial information contained in our
filings made pursuant to Canadian regulatory requirements, and other services
typically provided by an accountant in connection with statutory and regulatory
filings or engagements for those fiscal years.

(b)      AUDIT-RELATED FEES.

         KPMG LLP billed us no fees for the fiscal years ended May 31, 2003 and
2002 for assurance and related services that were reasonably related to the
performance of the audit or review of our financial statements.

(c)      TAX FEES.

         KPMG LLP billed us aggregate fees in the amount of approximately
Cdn$7,000 for the fiscal year ended May 31, 2003 and approximately Cdn$7,000 for
the fiscal year ended May 31, 2002, for tax compliance, tax advice, and tax
planning.

(d)      ALL OTHER FEES.

         KPMG LLP billed us no fees for the fiscal years ended May 31, 2003 and
2002 for other fees.

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<PAGE>

(e)      AUDIT COMMITTEE'S PRE-APPROVAL PRACTICE

         Section 10A(i) of the Securities Exchange Act of 1934 prohibits our
auditors from performing audit services for us as well as any services not
considered to be "audit services" unless such services are pre-approved by the
audit committee of the Board of Directors, or unless the services meet certain
de minimis standards. The audit committee does not have a charter and
consequently has not adopted a formal pre-approval policy. The audit committee
has pre-approved KPMG's audit and audit-related services for fiscal 2003.

ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

         Not applicable.

                                    PART III

ITEM 17. FINANCIAL STATEMENTS

         Our financial statements are stated in Canadian Dollars (Cdn$) and are
prepared in accordance with Canadian GAAP, the application of which, in our
case, conforms in all material respects for the periods presented with US GAAP,
except as disclosed in footnotes to the financial statements.

         The audited financial statements for the year ended May 31, 2003 as
required under ITEM #17 are included hereto immediately following the text of
this annual report. The audit report of KPMG LLP, Independent Auditors, are
included herein immediately preceding the financial statements.

ITEM 18. FINANCIAL STATEMENTS

         Not applicable. The Company has elected to file under Item 17.

ITEM 19. EXHIBITS

(A) AUDITED FINANCIAL STATEMENTS

-        Auditor's Report, dated October 9, 2003

-        Consolidated Balance Sheets at May 31, 2003 and 2002

-        Consolidated Statements of Operations and Deficit for the Years ended
         May 31, 2003, 2002 and 2001

-        Consolidated Statements of Cash Flows for the Years ended May 31, 2003,
         2002 and 2001

-        Notes to Consolidated Financial Statements

(B)  EXHIBITS

Exhibits Pursuant to Item 601 of Regulation S-B:

                                       61
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        TITLE
------        -----
<S>           <C>
3.01*         Memorandum

3.02*         Articles of Incorporation

3.03*         Special Resolution filed March 19, 1992

10.01*        Loan agreement dated August 1, 2003 with accredited investors

10.02*        Mutual Release effective July 18, 2000, between Marlowe Harvey, Aarvark Agencies, Inc., Calais Resources Colorado,
              Inc., Calais Resources, Inc., on the one part, and Thomas S. Hendricks
10.03*        Form of convertible debentures

10.04*        Purchase Option Agreement dated February 28, 2003 by and between Calais Resources,  Inc. and Golden Cycle of Panama,
              Inc. and Panama Mining of Golden Cycle, Inc.

10.05*        Grant of Royalty Interest For Fixed Term, Modification of Prior Royalty Grants and Assignment of Royalty Buyout
              Rights Under Prior Grants dated March 1998 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks,
              Marjorie J. Hendricks, and John R. Henderson.

10.06*        Right to Redeem and Re-Acquire Agreement dated March 26, 1999 between Aardvark Agencies, Inc. and Calais Resources
              Colorado, Inc.

10.07*        Right to Redeem and Re-Acquire  Agreement dated July 20, 2000 between Aardvark  Agencies,  Inc. and Calais Resources
              Colorado, Inc.

10.08*        Grant of Royalty Interest For Fixed Term by Calais Resources Colorado, Inc. and Aardvark Agencies, Inc. dated July
              2000 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks, Marjorie J. Hendricks, and John R.
              Henderson

10.09*        Employment Agreement with Matthew C. Witt

21*           List of subsidiaries.

31*           Certification pursuant to Rule 13a-14(a)

32*           Certification pursuant to 18 U.S.C.Section 1350
</TABLE>

*        Filed herewith.

                                       62
<PAGE>

                                 SIGNATURE PAGE

         The Registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and has duly caused and authorized the undersigned to
sign this annual report on its behalf by the undersigned, thereunto duly
authorized.

                   Calais Resources Inc.: SEC File No. 0-29392
                   -------------------------------------------
                                   Registrant

         Dated November 10, 2003              By /s/ Thomas S. Hendricks
                                              ----------------------------------
                                                 Thomas S. Hendricks, President

                                       63
<PAGE>

                    MANAGEMENT'S STATEMENT OF RESPONSIBILITY

     Management of Calais Resources Inc. is responsible for the preparation of
the accompanying consolidated financial statements and the preparation of all
information in the annual report and for their integrity and objectivity. The
consolidated statements have been prepared in accordance with Canadian generally
accepted accounting principles and are considered by management to present
fairly the financial position and operating results of the Company. The
significant accounting policies followed are described in the notes to the
consolidated financial statements.

     Management has established internal control systems to provide reliable
accounting records and safeguard Company assets. The consolidated financial
statements have been audited by the independent auditors KPMG LLP, Chartered
Accountants, whose report outlines the scope of their examination and their
opinion on the consolidated financial statements.

     The Company's independent auditors have full rights to meet separately with
the Audit Committee to discuss the results of their examination.

     The Audit Committee of the Company reports their finding to the Board of
Directors for its consideration in approving the financial statements for
issuance.

/s/ Art Daher
Director, Calais Resources Inc.
Chilliwack, BC

October 9, 2003

                                        64
<PAGE>

                       AUDITORS' REPORT TO THE DIRECTORS

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

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

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

     The consolidated financial statements for the year ended May 31, 2001,
prior to the adjustments described in Note 3, were audited by another auditor
who expressed an opinion without reservation on those statements in their report
dated October 17, 2001, except as to Note 5 which was as of November 21, 2001.
We have audited the adjustments to the 2001 consolidated financial statements
and in our opinion, such adjustments, in all material respects, are appropriate
and have been properly applied.

                                          KPMG LLP

Chartered Accountants
Chilliwack, British Columbia

October 9, 2003

                                        65
<PAGE>

    COMMENTS BY AUDITOR FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCE

     In the United States, reporting standards require the addition of an
explanatory paragraph (following the opinion paragraph) when the financial
statements are affected by conditions and events that cast substantial doubt on
the Company's ability to continue as a going concern, such as those described in
note 1 to the consolidated financial statements. Our report to the directors
dated October 9, 2003 is expressed in accordance with Canadian reporting
standards which does not permit a reference to such events and conditions in the
auditors' report when these are adequately disclosed in the financial
statements.

                                          KPMG LLP

Chartered Accountants
Chilliwack, Canada

October 9, 2003

                                        66
<PAGE>

                             CALAIS RESOURCES INC.

                          CONSOLIDATED BALANCE SHEETS
                         EXPRESSED IN CANADIAN DOLLARS
                             MAY 31, 2003 AND 2002

<Table>
<Caption>
                                                                  2003            2002
                                                              ------------   --------------
                                                                              (RESTATED --
                                                                                NOTE 3)
<S>                                                           <C>            <C>
                                          ASSETS
Current assets:
  Restricted cash (Note 7)..................................  $         --    $     67,415
  Inventories...............................................       283,301         283,301
  Prepaid expenses and deposits.............................            --           7,612
                                                              ------------    ------------
                                                                   283,301         358,328
Capital assets (Note 4).....................................        94,846         126,216
Mineral properties (Note 5).................................    13,206,552      12,709,871
                                                              ------------    ------------
                                                              $ 13,584,699    $ 13,194,415
                                                              ============    ============

                           LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Bank overdraft............................................  $      7,586    $      9,399
  Accounts payable and accrued liabilities..................       974,816         659,154
  Note payable (Note 6).....................................        95,795              --
  Bank loan (Note 7)........................................     1,642,200       1,832,616
  Advances from shareholders, without interest or fixed
     terms of repayment; unsecured..........................       697,573         546,138
                                                              ------------    ------------
                                                                 3,417,970       3,047,307
Long-term debt (Note 8).....................................     4,624,916       4,573,136
Shareholders' equity:
  Share capital (Note 9)....................................    23,457,480      22,897,780
  Deficit...................................................   (17,915,667)    (17,323,808)
                                                              ------------    ------------
                                                                 5,541,813       5,573,972
                                                              ------------    ------------
Future operations (Note 1)..................................
Contingency (Note 12).......................................
Commitments (Note 15).......................................
Subsequent events (Note 16).................................
                                                              $ 13,584,699    $ 13,194,415
                                                              ============    ============
</Table>

     On behalf of the Board:

       /s/ THOMAS S. HENDRICKS
--------------------------------------
               Director

            /s/ ART DAHER
--------------------------------------
               Director

          See accompanying notes to consolidated financial statements.

                                        67
<PAGE>

                             CALAIS RESOURCES INC.

               CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
                         EXPRESSED IN CANADIAN DOLLARS
                    YEARS ENDED MAY 31, 2003, 2002 AND 2001

<Table>
<Caption>
                                                          2003           2002           2001
                                                      ------------   ------------   ------------
                                                                     (RESTATED --   (RESTATED --
                                                                       NOTE 3)        NOTE 3)
<S>                                                   <C>            <C>            <C>
Revenues............................................  $         --   $         --   $         --
Expenses:
  Advertising.......................................         3,846          1,947          4,523
  Amortization......................................         5,433          7,043         10,694
  Consulting fees...................................        44,789         91,500         71,727
  Filing fees, licenses, permits....................         1,044          2,586          2,924
  Foreign exchange loss (gain)......................      (249,440)         4,699         75,207
  Insurance.........................................           451          2,591          1,303
  Interest and bank charges.........................       624,073        318,553         35,288
  Office and general................................        18,314          8,889         15,807
  Professional fees.................................        99,681        128,478        133,999
  Rent..............................................        13,503         19,800             --
  Telephone.........................................        12,750         13,997         12,871
  Transfer agent fees...............................         3,939          2,521          3,551
  Travel............................................         2,649          2,001          7,211
  Utilities.........................................        12,360         10,820          2,456
  Wages and benefits................................            --             --         58,639
                                                      ------------   ------------   ------------
                                                           593,392        615,425        436,200
                                                      ------------   ------------   ------------
Loss before the undernoted..........................      (593,392)      (615,425)      (436,200)
Other income (expense):
  Loss on abandonment of mineral properties.........                                    (312,749)
  Gain on sale of capital assets....................            --          7,142             --
  Interest income...................................           600          3,092          1,081
  Rental income.....................................           933          2,978             --
                                                      ------------   ------------   ------------
                                                             1,533         13,212       (311,668)
                                                      ------------   ------------   ------------
Loss for the year...................................      (591,859)      (602,213)      (747,868)
Deficit, beginning of year (Note 3).................   (17,323,808)   (16,721,595)   (15,973,727)
                                                      ------------   ------------   ------------
Deficit, end of year................................  $(17,915,667)  $(17,323,808)  $(16,721,595)
                                                      ============   ============   ============
Net loss per common share, basic and diluted........  $      (0.05)  $      (0.06)  $      (0.08)
                                                      ============   ============   ============
Weighted average common shares outstanding, basic
  and diluted.......................................    10,812,795     10,184,635      9,618,218
                                                      ============   ============   ============
</Table>

          See accompanying notes to consolidated financial statements.

                                        68
<PAGE>

                             CALAIS RESOURCES INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                         EXPRESSED IN CANADIAN DOLLARS
                    YEARS ENDED MAY 31, 2003, 2002 AND 2001

<Table>
<Caption>
                                                             2003          2002           2001
                                                           ---------   ------------   ------------
                                                                       (RESTATED --   (RESTATED --
                                                                         NOTE 3)        NOTE 3)
<S>                                                        <C>         <C>            <C>
Cash provided by (used in):
Operations:
  Loss for the year......................................  $(591,859)  $  (602,213)    $(747,868)
  Items not involving cash:
     Accretion expense...................................     51,780        51,204            --
     Amortization........................................      5,433         7,043        10,694
     Shares issued for services..........................    143,234       141,300        45,000
     Loss on abandonment of mineral properties...........         --            --       312,749
     Warrants issued for services........................    205,645            --            --
     Gain on sale of capital assets......................         --        (7,142)           --
     Loss on settlement of accounts payable and accrued
       liabilities with issuance of shares...............      1,911            --            --
     Foreign exchange loss (gain)........................   (249,440)        4,699            --
  Change in non-cash operating working capital:
     Restricted cash.....................................     67,415       (67,415)           --
     Advances receivable.................................         --            --        65,594
     Other receivables...................................         --           818         5,218
     Prepaid expenses and deposits.......................      7,612            --         7,343
     Accounts payable and accrued liabilities............    307,499      (190,411)       80,293
     Note payable........................................     95,795            --            --
                                                           ---------   -----------     ---------
                                                              45,025      (662,117)     (220,977)
Financing:
  Bank loan..............................................         --     1,832,616            --
  Advances from (to) shareholders........................    129,184      (274,755)      330,292
  Long term debt.........................................         --      (623,575)      278,662
  Issue of capital stock.................................     90,021            --            --
                                                           ---------   -----------     ---------
                                                             219,205       934,286       608,954
Investments:
  Mineral properties.....................................   (262,030)     (289,106)     (373,383)
  Proceeds from disposal of capital assets...............         --         7,412            --
  Net additions to capital assets........................       (387)         (506)       (1,416)
                                                           ---------   -----------     ---------
                                                            (262,417)     (282,200)     (374,799)
                                                           ---------   -----------     ---------
Increase (decrease) in cash..............................      1,813       (10,031)       13,178
Cash (bank overdraft), beginning of year.................     (9,399)          632       (12,546)
                                                           ---------   -----------     ---------
Cash (bank overdraft), end of year.......................  $  (7,586)  $    (9,399)    $    (632)
                                                           =========   ===========     =========
Supplementary cash flow information:
  Interest paid..........................................  $ 107,790   $   195,877     $  35,288
                                                           =========   ===========     =========
  Income taxes paid......................................         --            --            --
                                                           =========   ===========     =========
  Interest received......................................        600         3,092         1,081
                                                           =========   ===========     =========
  Non cash transactions:
     Shares issued to settle accounts payable and accrued
       liabilities.......................................  $  38,800   $        --     $      --
                                                           =========   ===========     =========
     Shares issued for mineral property development......     82,000        30,000        15,000
                                                           =========   ===========     =========
     Amortization capitalized to mineral properties......     26,324        36,645        57,346
                                                           =========   ===========     =========
     Accrued costs capitalized to mineral properties.....    126,327        28,418            --
                                                           =========   ===========     =========
     Shares issued for repayment of shareholder
       advances..........................................         --        75,000            --
                                                           =========   ===========     =========
     Advances receivable allocated to mineral
       properties........................................         --       122,806            --
                                                           =========   ===========     =========
</Table>

          See accompanying notes to consolidated financial statements.

                                        69
<PAGE>

                             CALAIS RESOURCES INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         EXPRESSED IN CANADIAN DOLLARS
                    YEARS ENDED MAY 31, 2003, 2002 AND 2001

1.  GENERAL AND FUTURE OPERATIONS

     Calais Resources Inc. (the "Company") was incorporated under the laws of
the Province of British Columbia on December 30, 1986. The Company is currently
in the process of exploring and developing various mineral properties to
determine whether these properties contain ore reserves that are economically
recoverable. The recoverability of the amounts shown for the mineral properties
and related deferred costs is dependent upon the existence of economically
recoverable reserves, the ability of the Company to obtain necessary financing
to complete their development and upon future profitable production.

     These consolidated financial statements have been prepared on a going
concern basis in accordance with Canadian generally accepted accounting
principles. The going concern basis of presentation assumes that the Company
will continue in operation for the foreseeable future and be able to realize its
assets and discharge its liabilities and commitments in the normal course of
business. There is doubt about the appropriateness of the use of the going
concern assumption because the Company experienced losses in 2003, 2002 and 2001
and has experienced negative cash flow from operations over a number of years.
In addition, the Company was in default on its US$1,200,000 bank loan as of May
31, 2003. (See Notes 7 and 16)

     Subsequent to the year end, the Company acquired US$4,500,000 in financing
to repay the bank loan, trade creditors and provide operating funds (as
described in Note 16). The Company is actively pursuing various additional
options with potential lenders and investors which, if accepted, will in
management's view, enable the Company to achieve its business plans. No
agreements with potential lenders or investors have been reached yet and there
can be no assurance that such agreements will be reached.

     The ability of the Company to continue as a going concern and to realize
the carrying value of its assets and discharge its liabilities when due is
dependent on the successful completion of the actions taken or planned, some of
which are described above, which management believes will mitigate the adverse
conditions and events which raise doubt about the validity of the "going
concern" assumption used in preparing these financial statements. As is common
with companies with negative cash flows and losses, there is no certainty that
these and other strategies will be sufficient to permit the Company to continue
beyond May 31, 2004.

     The financial statements do not reflect adjustments that would be necessary
if the "going concern" assumption were not appropriate. If the "going concern"
basis was not appropriate for these financial statements, then adjustments would
be necessary in the carrying value of assets and liabilities, the reported
revenues and expenses, and the balance sheet classifications used.

2.  SIGNIFICANT ACCOUNTING POLICIES

  (a) BASIS OF CONSOLIDATION

     These financial statements include the accounts of the Company and its
wholly-owned subsidiaries, Calais International Inc., Calais Resources Nevada
Inc., and Calais Resources Colorado Inc. All material inter-company transactions
and balances have been eliminated.

  (b) USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
Significant areas requiring the use of management estimates relate to the
determination of the net recoverable value of assets, including inventory
obsolescence provisions, asset impairment and provisions for contingencies.
Actual results could differ from those estimates.

                                        70
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  (c) CASH EQUIVALENTS

     Cash equivalents consist of short-term deposits with terms to maturity of
ninety days or less when acquired.

  (d) FINANCIAL INSTRUMENTS

     The Company's financial instruments consist of cash, accounts receivable,
accounts payable, note payable, bank loans, long-term debt and advances from
shareholders. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit risks arising
from these financial instruments. The fair values of these financial instruments
approximate their carrying values, unless otherwise noted.

  (e) INVENTORIES

     Inventories consist of mining equipment held for resale. Inventories are
recorded at the lower of cost or net realizable value.

  (f) MINERAL PROPERTIES

     The Company is engaged in the acquisition, exploration and development of
mineral properties. All acquisition, exploration and related direct overhead
expenditures are deferred and will be depleted over the estimated life of the
property. The estimated life of a property depends on whether the property
contains economically recoverable reserves that can be brought into production.
The costs relating to a property abandoned are written off when the decision to
abandon is made.

     The total amount recorded for mineral properties and deferred exploration
expenditures represents costs incurred to date and does not reflect present or
future values.

     Proceeds from disposition of mineral properties are normally credited to
the capitalized costs with no gain or loss being recognized unless the sale is
significant to the capitalized property costs. For such significant
dispositions, a gain or loss would be recognized.

  (g) CAPITAL ASSETS AND AMORTIZATION

     Capital assets are recorded at cost and are amortized over the estimated
useful life on the declining balance method at rates of 20% to 30% per annum.
Amortization related to exploration and mining equipment is capitalized as a
mineral property cost.

  (h) FOREIGN CURRENCY

     Monetary items denominated in foreign currency are translated to Canadian
dollars at exchange rates in effect at the balance sheet date and non-monetary
items are translated at rates of exchange in effect when the assets were
acquired or obligations incurred. Revenues and expenses are translated at rates
in effect at the time of the transactions. Foreign exchange gains and losses are
included in income.

  (i) INCOME TAXES

     The Company follows the asset and liability method of accounting for income
taxes. Under this method, current taxes are recognized for the estimated income
taxes payable for the current period. Future income taxes are provided based on
the estimated future tax effects of temporary differences between financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases as well as the benefit of losses available to be carried
forward to future years for tax purposes.

                                        71
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Future tax assets and liabilities are measured using enacted or
substantively enacted tax rates that are expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or
settled. The effect on future tax assets and liabilities of a change in tax
rates is recognized in operations in the period that includes the enactment or
substantive enactment date. A valuation allowance is recorded for future tax
assets when it is not more likely than not that such future tax assets will be
realized.

  (j) NET LOSS PER SHARE

     Basic net loss per share is computed using the weighted average number of
common shares outstanding during the year. Diluted loss per share is computed
using the weighted average number of common shares and potentially dilutive
common shares outstanding during the year. As the Company has a net loss in the
years ending May 31, 2003, 2002 and 2001, basic and diluted net loss per share
are the same.

  (k) STOCK-BASED COMPENSATION

     The Company has no formal stock-based compensation plans. Prior to April 1,
2002 the Company applied the settlement method for all stock-based compensation
awards. Under the settlement method, no compensation expense is recognized for
these plans when stock or stock options are issued to employees. Consideration
paid by employees on the exercise of stock options is credited to common shares.
For consideration paid to an employee for the repurchase of stock options, the
excess of the consideration paid over the carrying amount of the stock option
cancelled is charged to retained earnings.

     Effective April 1, 2002, the Company adopted new CICA section 3870,
"Stock-Based Compensation and Other Stock-Based Payments". This section
establishes standards for the recognition, measurement and disclosure of
stock-based compensation and other stock-based payments made in exchange for
goods and services. The standard requires the fair value based method of
accounting for certain, but not all, stock-based transactions. The standard
permits, and the Company has elected, for stock option grants to employees and
directors to continue to be accounted for using the settlement method.

     No options issued on or after April 1, 2002 were issued to employees, as a
result, no pro-forma disclosures are provided.

3.  PRIOR PERIOD ADJUSTMENTS

     During the year ended May 31, 2003, it was determined that the following
had not been recorded in previously issued financial statements:

          (a) A fair value conversion option related to the convertible
     debentures as described in Note 8.

          (b) Payable to a director for services related to the companys'
     mineral properties.

          (c) Costs related to a previously abandoned mineral property.

     Accordingly, the prior year's figures have been retroactively restated.

                                        72
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The impact on previously reported amounts is as follows:

<Table>
<Caption>
                                                    2002
                                                 PREVIOUSLY                   2002 AS
                                                  REPORTED     ADJUSTMENT     RESTATED
                                                ------------   ----------   ------------
<S>                                             <C>            <C>          <C>
Mineral properties............................  $ 12,681,453   $  28,418    $ 12,709,871
                                                ============   =========    ============
Accounts payable and accrued liabilities......       595,238      63,916         659,154
                                                ============   =========    ============
Long-term debt................................     5,097,105    (523,969)      4,573,136
                                                ============   =========    ============
Share capital.................................    22,322,607     575,173      22,897,780
                                                ============   =========    ============
Deficit, end of year..........................   (17,237,106)    (86,702)    (17,323,808)
                                                ============   =========    ============
Interest and bank charges.....................       267,349      51,204         318,553
                                                ============   =========    ============
Loss for year.................................       551,009      51,204         602,213
                                                ============   =========    ============
Net loss per common share, basic and
  diluted.....................................         (0.05)                      (0.06)
                                                ============                ============
</Table>

<Table>
<Caption>
                                                    2001
                                                 PREVIOUSLY                   2001 AS
                                                  REPORTED     ADJUSTMENT     RESTATED
                                                ------------   ----------   ------------
<S>                                             <C>            <C>          <C>
Accounts payable and accrued liabilities......  $    780,994   $  35,498    $    816,492
                                                ============   =========    ============
Long-term debt................................     5,720,680    (575,173)      5,145,507
                                                ============   =========    ============
Share capital.................................    22,076,307     575,173      22,651,480
                                                ============   =========    ============
Deficit, end of year..........................   (16,686,097)    (35,498)    (16,721,595)
                                                ============   =========    ============
</Table>

4.  CAPITAL ASSETS

<Table>
<Caption>
                                                                2003       2002
                                                              --------   --------
<S>                                                           <C>        <C>
Cost:
  Land......................................................  $  8,215   $  8,215
  Furniture.................................................    10,947     10,947
  Computer equipment........................................    37,494     37,494
  Automotive equipment......................................    57,331     57,331
  Exploration/mining equipment..............................   498,988    498,988
  Software..................................................     6,647      6,260
                                                              --------   --------
                                                               619,622    619,235
Accumulated depreciation:
  Furniture.................................................     7,783      7,065
  Computer equipment........................................    32,378     30,502
  Automotive equipment......................................    50,172     47,506
  Exploration/mining equipment..............................   428,149    401,825
  Software..................................................     6,294      6,121
                                                              --------   --------
                                                               524,776    493,019
                                                              --------   --------
Net book value..............................................  $ 94,846   $126,216
                                                              ========   ========
</Table>

                                        73
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Amortization of $26,324 (2002 -- $36,645) related to exploration equipment
was capitalized to mineral properties during the year.

5.  MINERAL PROPERTIES

<Table>
<Caption>
                                                                2003          2002
                                                             -----------   -----------
                                                                            (NOTE 3)
<S>                                                          <C>           <C>
Nevada U.S.A. .............................................  $ 3,449,004   $ 3,297,789
Colorado, U.S.A. ..........................................    9,466,230     9,268,024
Panama, Central America....................................      291,318       144,058
                                                             -----------   -----------
                                                             $13,206,552   $12,709,871
                                                             ===========   ===========
</Table>

     Title to mining properties involves certain inherent risks due to the
difficulties of determining the validity of certain claims as well as the
potential for problems arising from the frequently ambiguous conveyancing
history characteristics of many mining properties. The Company has investigated
title to all of its mineral properties and, to the best of its knowledge, title
to all of its properties are in good standing. The majority of the properties in
which the Company has committed to earn an interest are located outside Canada.
The Company is therefore relying on title opinions by legal counsel who are
basing such opinions on the laws of the respective country.

  (a) NEVADA, U.S.A.

     In December 1994, the Company acquired a 51% interest in certain patented
and unpatented claims located in Nevada from a company controlled by directors
for $1,176,000 US plus a 5% net smelter royalty. The Company can also acquire a
100% interest in a further 89 claims in this property under this agreement.

     The Company entered into an agreement and settlement dated September 7,
2000 with Nevada Manhattan Mining Incorporated to settle and purchase Nevada
Manhattan Mining Incorporated's 24.5% interest in the property. The Company
agreed to make four annual payments of US$75,000 each for a total of US$300,000.
During the term of the agreement the Company has agreed to pay Nevada Manhattan
Mining Incorporated a 2% net smelter return royalty. The Company can purchase
the entire Nevada Manhattan Mining Incorporated interest and royalty at any time
over a thirty-year period for US$7,500,000, which would include production
royalties.

     The Company also holds a 100% interest in 42 unpatented claims in the
Manhattan Mining district by staking.

     The Company is in the process of investigating its title to the above
properties. After a preliminary review of the title information, it appears that
title of the above claims are owned by companies controlled by directors of the
Company or other individuals, although it appears that, based on agreements
these titles should be conveyed to the Company. The Company has commenced
discussions in an effort to resolve the situation, the results of which are
undeterminable at this time. Adjustments, if any, to the properties will be
recorded when title to the properties have been resolved.

  (b) COLORADO, U.S.A.

     Included in the Colorado properties is a 100% working interest in the
Consolidated Caribou-Cross-Comstock-Panadora district mine area which the
Company acquired in 1997 for US$4,000,000 in stock, cash and final property
payments. After acquisition of 100% working interest the seller retains a 2% net
smelter royalty interest in the property. The Company has the right to buy back
half of the net smelter royalty (1%) for US$750,000. The seller has not sold any
of the issued shares for this acquisition through May 31, 2003. During 2000, the
Company acquired 100% ownership of 10 patented claims that are continuations of
the historic Boulder County and Cardinal vein systems. The Colorado properties
contain a well-documented mineral resource of 424,500 ounces of gold and
11,725,000 ounces of silver.

                                        74
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  (c) PANAMA, CENTRAL AMERICA

     The Company owns hard rock mining concessions to 61,000 acres (24,686
hectares) in the eastern Veraguas District of Panama in Central America in 2001.
The acquisition was made through a five-year agreement with Panama Mining of
Golden Cycle Incorporated, the seller. The Company issued 100,000 shares of
stock to the seller. The Company is obligated to pay the seller a 2% net smelter
return on any hard rock mineral production. The Company can purchase the
concessions from the seller at any time up to August 31, 2004 for US$2,500,000
(the "early purchase"). Upon completion of the early purchase the 2% net smelter
return is reduced to 0.5%. The Company is obligated to pay the annual taxes and
holding fees.

     The Company is also obligated to pay the seller a 6% gross royalty ("GSR")
on all placer gold mining production to a maximum GSR fee of US$5,000,000. Upon
the total payment under the GSR reaching US$5,000,000, the GSR percentage is
reduced to 1% for the balance of the life of placer production.

     The Company acquired additional hard rock mining concessions of 13,590
acres (5,500 hectares) in the above-mentioned location in 2003. The acquisition
was made through a new ten-year agreement with the seller, which replaces or
amends the above-mentioned five-year agreement. Under this new agreement, the
Company issued an additional 100,000 shares of stock, paid US$10,000 in cash and
assumed US$15,750 of payables from the seller. The Company is also required to
spend US$500,000 on exploration by February 28, 2004, under the terms of this
new agreement.

6.  NOTE PAYABLE

     Note payable, to a director for US$70,000 (2002 -- $nil) plus interest at
12% per annum due May 22, 2003; secured by inventories, convertible to 116,667
shares at US$0.60 per share. As consideration for note, the director was also
provided with 82,500 stock options with an exercise price of $1.26.

     Subsequent to May 31, 2003, the note was repaid in full.

7.  BANK LOAN

     Loan payable with interest only payments at 10.5% per annum. Principal of
US$1,200,000 due in full on December 16, 2002; secured by deed of trust over
mineral properties. At May 31, 2003 the Company was in default with respect to
this loan and, as a result, the interest rate on the loan was increased to 24%
per annum.

     Subsequent to May 31, 2003, the Company reached an agreement with the bank,
and paid all arrears interest and a US$120,000 principal repayment. As a result
of this agreement the due date of the loan was extended to December 16, 2003 and
the interest rate reduced to 10.5% from 24%.

     During August 2003, the balance outstanding on the loan of US$1,080,000
plus accrued interest was repaid in full (see Note 16).

     Cash of $nil (2002 -- $67,415) is held in an escrow account for monthly
interest payments.

8.  LONG-TERM DEBT

<Table>
<Caption>
                                                                 2003         2002
                                                              ----------   ----------
                                                                            (NOTE 3)
<S>                                                           <C>          <C>
Debentures payable, without interest, due May 2011,
  convertible to common shares at an conversion price of
  $1.23 per share at holders discretion; unsecured..........  $5,097,105   $5,097,105
Less: Cumulative accretion remaining........................    (472,189)    (523,969)
                                                              ----------   ----------
                                                              $4,624,916   $4,573,136
                                                              ==========   ==========
</Table>

                                        75
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Accretion expense to the face value of the debt of $51,780
(2002 -- $51,204; 2001 -- $nil) has been included in interest and bank charges
for the year.

     All debentures are held by companies or persons related to a shareholder
and director. It is not practicable to determine the fair value of the
debentures and advances from shareholders due to their related party nature and
the absence of a secondary market for such instruments.

9.  SHARE CAPITAL

  (a) AUTHORIZED: 100,000,000 COMMON SHARES WITHOUT PAR VALUE

  (b) ISSUED AND OUTSTANDING SHARES

<Table>
<Caption>
                                                                        2002
                                                              ------------------------
                                                              NUMBER OF
                                                                SHARES       AMOUNT
                                                              ----------   -----------
<S>                                                           <C>          <C>
Balance, May 31, 2000.......................................   9,655,718   $22,015,767
Issued for services.........................................     100,000        45,000
Issued under exercise of stock options......................     100,000        15,000
Fair value conversion option on convertible debentures......          --       575,713
                                                              ----------   -----------
Balance, May 31, 2001.......................................   9,855,718    22,651,480
Issued to settle debt.......................................     250,000        75,000
Issued for services.........................................     471,000       141,300
Issued for acquisition of mineral properties................     100,000        30,000
                                                              ----------   -----------
Balance, May 31, 2002.......................................  10,676,718    22,897,780
Issued to settle debt.......................................      67,500        38,800
Issued for cash.............................................      62,500        78,771
Issued on exercise of options...............................      25,000        11,250
Issued for services.........................................     261,667       143,234
Issued for acquisition of mineral properties................     100,000        82,000
Warrants issued for services................................          --       205,645
                                                              ----------   -----------
Balance, May 31, 2003.......................................  11,193,385   $23,457,480
                                                              ==========   ===========
</Table>

     Included in issued and outstanding capital stock are 150,000 contingently
cancelable shares that are held in escrow and may not be traded without
regulatory approval.

                                        76
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  (c) STOCK OPTIONS

<Table>
<Caption>
                                                                        WEIGHTED AVERAGE
                                                                         EXERCISE PRICE
                          DATE                               NUMBER        PER SHARE
                          ----                              ---------   ----------------
<S>                                                         <C>         <C>
Issued and outstanding, May 31, 2000.....................     824,250       $  0.45(i)
Issued in the year.......................................     155,000          0.45
Expired in the year......................................     (14,000)        (0.45)
                                                            ---------       -------
Issued and outstanding, May 31, 2001.....................     965,250          0.45
Issued in the year.......................................      60,000          0.77
                                                            ---------       -------
Issued and outstanding, May 31, 2002.....................   1,025,250          0.47
Issued in the year.......................................      82,500          1.26
Issued in the year.......................................      15,000          0.45
Exercised in the year....................................     (25,000)        (0.45)
Expired in the year......................................    (116,250)        (0.45)
                                                            ---------       -------
Balance, May 31, 2003....................................     981,500       $  0.54
                                                            =========       =======
</Table>

     Options outstanding at May 31, 2003 are as follows:

<Table>
<Caption>
                                           EXERCISE PRICE                   WEIGHTED AVERAGE
                                 NUMBER      PER SHARE       EXPIRY DATE     REMAINING LIFE
                                 -------   --------------    -----------    ----------------
<S>                              <C>       <C>              <C>             <C>
Other..........................   60,000       $0.77        June 2003          0.1 years
Director and employee
  options......................  684,000       $0.45        October 2003       0.4 years(ii)
Director options...............   82,500       $1.26        November 2004      1.5 years
Director and employee
  options......................  155,000       $0.45        August 2005        2.3 years(iii)
                                 -------                                       ---------
                                 981,500                                       0.8 years
                                 =======                                       =========
</Table>

---------------

All outstanding options are exercisable when issued.

(i)  During 2001, these option were repriced from $1.34 to $0.45.

(ii) 185,000 of these options were exercised subsequent to year-end.

(iii)5,000 of these options were exercised subsequent to year-end.

  (d) WARRANTS

<Table>
<Caption>
                                                                        WEIGHTED AVERAGE
                                                                         EXERCISE PRICE
                                                              NUMBER       PER SHARE
                                                              -------   ----------------
<S>                                                           <C>       <C>
Issued and outstanding, May 31, 2001 and May 31, 2002.......       --       $     --
Issued in the year for services.............................  548,803       US$ 0.81
                                                              -------       --------
Balance, May 31, 2003.......................................  548,803       US$ 0.81
                                                              =======       ========
</Table>

                                        77
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Warrants outstanding at May 31, 2003 are as follows:

<Table>
<Caption>
                        EXERCISE PRICE                    WEIGHTED AVERAGE
       NUMBER            PER WARRANT      EXPIRY DATE      REMAINING LIFE
       ------           --------------    -----------     ----------------
<C>                     <C>              <S>              <C>
        62,500             US$0.80       September 2003      0.3 years(i)
       486,303             US$0.81       October 2004        1.4 years
       -------             -------                           ---------
       548,803             US$0.81                           1.3 years
       =======             =======                           =========
</Table>

---------------

(i)These warrants were exercised subsequent to year-end.

10.  INCOME TAXES

     The Company has income tax loss carryforwards of approximately $2,828,000
which are available to reduce future taxable income. The benefits of the losses
have not been recognized in the financial statements. The losses will expire as
follows:

<Table>
<Caption>
                                                     CANADA        U.S.        TOTAL
                                                   ----------   ----------   ----------
<S>                                                <C>          <C>          <C>
2004.............................................  $  547,000   $       --   $  547,000
2005.............................................      13,000           --       13,000
2006.............................................     105,000           --      105,000
2007.............................................     222,000           --      222,000
2008.............................................     150,000           --      150,000
2009.............................................     259,000           --      259,000
2010.............................................     210,000           --      210,000
2018.............................................          --      444,000      444,000
2019.............................................          --      160,000      160,000
2020.............................................          --       76,000       76,000
2021.............................................          --      356,000      356,000
2022.............................................          --      259,000      259,000
2023.............................................          --       27,000       27,000
                                                   ----------   ----------   ----------
                                                   $1,506,000   $1,322,000   $2,828,000
                                                   ==========   ==========   ==========
</Table>

     Significant components of the Company's future tax assets are shown below.
A valuation allowance has been recognized to fully offset the net future tax
assets as realization of such net assets is uncertain.

<Table>
<Caption>
                                                                2003          2002
                                                             -----------   -----------
<S>                                                          <C>           <C>
Future tax assets:
  Operating loss carryforwards.............................  $ 1,120,000   $ 1,186,000
  Capital assets...........................................           --        27,000
                                                             -----------   -----------
                                                               1,120,000     1,213,000
Valuation allowance for future tax assets..................   (1,109,000)   (1,213,000)
                                                             -----------   -----------
                                                                  11,000            --
Future tax liabilities:
  Capital assets...........................................      (11,000)           --
                                                             -----------   -----------
Net future tax assets......................................  $        --   $        --
                                                             ===========   ===========
</Table>

                                        78
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11.  RELATED PARTY TRANSACTIONS

     During the year, the Company paid, through the issuance of common stock,
$21,400 (2002 -- $82,500; 2001 -- $43,119) to a director for various services
provided to the Company throughout the year. The Company also paid a director
$12,000 (2002 -- $19,800; 2001 -- $nil) for office rent.

     These transactions are in the normal course of operations and are measured
at the exchange amount, which is the amount of consideration established and
agreed to by the related parties.

     Subsequent to year-end, a director obtained a personal mortgage (the
"interim mortgage" -- see Note 16(a)) in the amount of $587,680 in order to meet
certain obligations of the Company. The interim mortgage was subsequently repaid
by the Company (see Note 16(b)).

12.  CONTINGENCY

     The Company is negotiating with a shareholder and director of the Company
for claims of past wages, salary remuneration and expenses in the approximate
amount of US$544,700 ($745,400 Cdn). Included in advances from shareholders is
$343,400 Cdn provided for this claim. The claim is under negotiation, the
outcome of which is undeterminable. Accordingly, no additional provision has
been recorded. Additional amounts, if any, will be recorded in the period the
claim is settled.

13.  SEGMENTED INFORMATION

     The Company operates principally in the mining industry segment.

     The Company's operations are in the following geographical locations:

<Table>
<Caption>
                                                   2003          2002          2001
                                                -----------   -----------   -----------
<S>                                             <C>           <C>           <C>
Net loss for the year:
  Canada......................................  $   468,604   $   312,347   $   487,017
  United States...............................      123,255       289,866       260,851
                                                -----------   -----------   -----------
                                                $   591,859   $   602,213   $   747,868
                                                ===========   ===========   ===========
Identifiable assets at end of year:
  Canada......................................  $   290,092   $   291,949   $   295,978
  United States...............................   13,294,607    12,902,466    12,491,799
                                                -----------   -----------   -----------
                                                $13,584,699   $13,194,415   $12,787,777
                                                ===========   ===========   ===========
</Table>

14.  FINANCIAL INSTRUMENTS

     The Company holds various forms of financial instruments. The nature of
these instruments and the Company's operations expose the Company to foreign
currency risk, interest rate risk and industry credit risk.

  (a) FOREIGN CURRENCY RISK

     A significant portion of the Company's operations are located in the United
States and the Company manages its exposure to foreign currency fluctuations by
maintaining U.S. currency bank accounts and denominates its commitments and
contracts in U.S. dollar equivalents.

                                        79
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  (b) CREDIT RISK

     The Company's receivables are mainly for cost recoveries from related
parties. The Company has no significant credit risk as it has the ability to net
amounts receivable against accounts payable for services rendered by these
parties.

15.  COMMITMENTS

     (a) The Company is committed under option and lease agreements to expend on
exploration expenditures and property option payments amounts as disclosed in
Notes 5 (a), (b), and (c) in the form of cash and/or stock as detailed therein.

     (b) On October 23, 2002, the Company entered into a one year advisory
services agreement with a financial consulting firm. Under the terms of this
agreement, the Company issued 150,000 shares that were restricted from trading
for one year and provided a warrant for 486,303 shares at an exercise price of
US$0.81.

     A director of the Company also transferred 91,667 free-trading,
non-encumbered shares to be held as collateral against 12 monthly payments of
US$5,000 in consulting fees for a total of US$60,000. The Company replaced the
directors free-trading shares with a new allotment of 91,667 shares that are
restricted from trading for a one year period.

16.  SUBSEQUENT EVENTS

     (a) In June 2003, a director obtained a personal mortgage for US$587,680 to
pay various liabilities on behalf of the Company. Prepaid interest and fees of
US$87,680 were withheld, providing net cash funding of US$500,000 to the Company
(the "interim mortgage").

     The interim mortgage was used in part to rectify the default under the
Company's bank loan (Note 7). The interim mortgage was repaid in full with the
proceeds of the financing described in Note 16(b).

     (b) In August 2003, the Company obtained US$4,500,000 in financing by way
of a first mortgage on the Colorado, USA mineral properties. The total amount
includes two years prepaid interest at a rate of 12.9% per annum or
approximately US$1,000,000 providing net cash funding to the Company of
approximately $3,500,000.

     The net cash proceeds of US$3,500,000 were used as follows:

<Table>
<S>                                                            <C>
Repayment of remaining bank loan (Note 7)...................   US$1,080,000
Repayment of interim mortgage (Note 16(a))..................        588,000
Repayment of trade payables.................................        700,000
Working capital.............................................      1,037,000
Financing costs.............................................         95,000
                                                               ------------
                                                               US$3,500,000
                                                               ============
</Table>

     As consideration for this financing, the Company also issued 8,181,818
shares of stock at a deemed price of US$0.55 per share for a total financing fee
of US$4,500,000. The financing fee will be recorded in the first quarter of
fiscal 2004. 1,500,000 of these shares are to be placed in escrow by the lender
and are to be used to satisfy the debt if and when the Company's average share
price reaches US$3.00 per share. The loan, if not repaid from the sale of
escrowed shares, is due in full on July 31, 2005.

17.  COMPARATIVE FIGURES

     Certain balances in the preceding period have been reclassified or restated
(Note 3) to conform with the current year's financial statement presentation.

                                        80
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18.  RECONCILIATION WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

     Generally accepted accounting principles ("GAAP") and practices in the
United States of America ("U.S. GAAP") differ in certain respects from Canadian
GAAP. Differences which may materially affect these consolidated financial
statements are:

  (a) MINERAL PROPERTY EXPLORATION AND DEVELOPMENT EXPENDITURES

     Statement of Financial Accounting Standards No. 144 ("SFAS 144"),
"Accounting for the Impairment or Disposal of Long-Lived Assets" in the U.S.
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In performing the review for recoverability, the Company is to
estimate the future cash flows expected to result from the use of the asset and
its eventual disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying amount of
the asset, an impairment loss is measured, equal to the excess of the carrying
amount over the fair value of the assets. United States Security and Exchange
Commission staff have indicated that their interpretation of SFAS 144 requires
mineral property exploration and development costs to be expensed as incurred
until commercially minable deposits are determined to exist within a particular
property as cash flows cannot be reasonably estimated prior to such
determination.

     Accordingly, for all periods presented, the Company has expensed
exploration and development costs incurred for U.S. GAAP purposes. Once proved
and probable reserves are established, capitalization of related costs would
commence. This is significantly different from the accounting policy under
Canadian GAAP, as detailed in the mineral properties significant accounting
policy note.

     Under U.S. GAAP, additional exploration costs for mineral properties that
would be written off are as follows:

<Table>
<Caption>
                                                         2003       2002       2001
                                                       --------   --------   --------
                                                                  (NOTE 3)   (NOTE 3)
<S>                                                    <C>        <C>        <C>
Mineral exploration and development costs............  $496,681   $506,975   $445,729
                                                       ========   ========   ========
</Table>

  (b) STOCK-BASED COMPENSATION

     Statement of Financial Accounting Standards No. 123 ("SFAS 123") requires
that stock-based compensation be accounted for based on a fair value
methodology, although it allows the effects to be disclosed in the notes to the
financial statements rather than in the statement of operations for employee
awards. SFAS 123 allows an entity to continue to measure compensation costs for
employee stock-based compensation plans using the intrinsic value based method
of accounting as prescribed by APB Opinion No. 25 ("APB 25") and related
interpretations. The Company has elected to measure compensation cost for those
employee plans using APB 25. As such, compensation expense under fixed plans is
recorded only if the market value of the underlying stock at the date of
granting exceeds the exercise price. If the exercise price of a fixed option
award is reduced, the award is accounted for as a variable award from the date
of modification to the final measurement date upon which the award is exercised,
is forfeited, or expires unexercised. Compensation cost is adjusted in
subsequent periods up to the measurement date for changes in the quoted market
price. The Company follows the settlement method under Canadian GAAP and as a
result no compensation expense is recognized for employee awards.

     Compensation expense (recovery) recognized for employee fixed and variable
awards for the year ended May 31, 2003 would be $(44,164) (2002 -- $125,917;
2001 -- $183,079) under US GAAP.

  (c) THE COMPANY HAS 150,000 COMMON SHARES HELD IN ESCROW

     The release of the shares is contingent on certain performance conditions.
Compensation under U.S. GAAP, if any, is recognized when the contingency is
resolved and the shares are released from escrow based upon value

                                        81
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of the shares as they become releasable. As at May 31, 2003, no shares are
releasable from escrow. No similar compensation expense would be recognized
under Canadian GAAP.

  (d) FAIR VALUE CONVERSION OPTION

     Under Canadian GAAP a fair value conversion option is recorded for all
convertible debentures. Under U.S. GAAP, a beneficial conversion option is only
recorded if the option is in the money at the date of the transaction.

  (e) UNDER CANADIAN GAAP, FUTURE TAX ASSETS AND LIABILITIES ARE RECORDED AT
      SUBSTANTIALLY ENACTED TAX RATES

     Under U.S. GAAP, deferred tax assets and liabilities are recorded at
enacted tax rates. Recording Canadian deferred tax assets and liabilities at
enacted tax rates would not change recorded net assets or shareholders' equity
under U.S. GAAP.

  (f) THE FOLLOWING TABLE PRESENTS THE CONSOLIDATED BALANCE SHEET, STATEMENT OF
      OPERATIONS AND DEFICIT, AND CASH FLOWS UNDER U.S. GAAP

  Balance Sheet

<Table>
<Caption>
                                                               2003           2002
                                                           ------------   ------------
                                                                            (NOTE 3)
<S>                                                        <C>            <C>
Total assets under Canadian GAAP.........................  $ 13,584,699   $ 13,194,415
Adjustments to mineral property exploration and
  development expenditures(a)............................   (13,206,552)   (12,709,871)
                                                           ------------   ------------
Total assets under U.S. GAAP.............................  $    378,147   $    484,544
                                                           ============   ============
Total liabilities under Canadian GAAP....................  $  8,042,886   $  7,620,443
Fair value conversion option(d)..........................       472,189        523,969
                                                           ------------   ------------
Total liabilities under U.S. GAAP........................     8,515,075      8,144,412
Share capital, Canadian GAAP.............................    23,457,480     22,897,780
Gain on sale of subsidiary...............................      (430,000)      (430,000)
Stock-based compensation(b)..............................       264,832        308,996
Fair value conversion option(d)..........................      (575,173)      (575,173)
                                                           ------------   ------------
Share capital, U.S. GAAP.................................    22,717,139     22,201,603
Accumulated deficit, U.S. GAAP...........................   (30,854,067)   (29,861,471)
                                                           ------------   ------------
Shareholders' deficiency, U.S. GAAP......................    (8,136,928)    (7,659,868)
                                                           ------------   ------------
Shareholders' deficiency and liabilities under U.S.
  GAAP...................................................  $    378,147   $    484,544
                                                           ============   ============
</Table>

                                        82
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Statement of Operations and Deficit

<Table>
<Caption>
                                  CUMULATIVE
                                FROM INCEPTION    YEAR ENDED     YEAR ENDED     YEAR ENDED
                                  TO MAY 31,       MAY 31,        MAY 31,        MAY 31,
                                     2003            2003           2002           2001
                                --------------   ------------   ------------   ------------
                                                                  (NOTE 3)       (NOTE 3)
<S>                             <C>              <C>            <C>            <C>
Net loss under Canadian
  GAAP........................   $(17,915,667)   $   (591,859)  $   (602,213)  $   (747,868)
Adjustments:
  Mineral property exploration
     and development
     expenditures.............    (13,206,552)       (496,681)      (506,975)      (445,729)
  Loss on mineral property
     exploration previously
     recorded for U.S. GAAP...             --              --             --        312,749
  Gain on sale of
     subsidiary...............        430,000              --             --             --
  Stock-based compensation....       (264,832)         44,164       (125,917)      (183,079)
Fair value conversion
  option......................        102,984          51,780         51,204             --
                                 ------------    ------------   ------------   ------------
Net loss, being comprehensive
  loss, under U.S. GAAP.......    (30,854,067)       (992,596)    (1,183,901)    (1,063,927)
Accumulated opening deficit
  under U.S. GAAP.............             --     (29,861,471)   (28,677,570)   (27,613,643)
                                 ------------    ------------   ------------   ------------
Ending deficit, U.S. GAAP.....   $(30,854,067)   $(30,854,067)  $(29,861,471)  $(28,677,570)
                                 ============    ============   ============   ============
Net loss per share, basic and
  diluted, U.S. GAAP..........                   $      (0.09)  $      (0.12)  $      (0.11)
                                                 ============   ============   ============
</Table>

                                        83
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  (g) STATEMENT OF CASH FLOWS

     For Canadian GAAP, cash flows relating to mineral property exploration and
development expenditures are reported as investing activities. For U.S. GAAP
purposes, these costs would be characterized as operating activities. Under U.S.
GAAP financing activities would include financing through the Company's bank
overdraft. Accordingly, the effect of these differences on the statements of
cash flows are summarized as follows:

<Table>
<Caption>
                                                       2003        2002        2001
                                                     ---------   ---------   ---------
                                                                 (NOTE 3)    (NOTE 3)
<S>                                                  <C>         <C>         <C>
Cash provided by (used in) operations under
  Canadian GAAP....................................  $  45,025   $(662,117)  $(220,977)
Adjustment for mineral exploration costs...........   (262,030)   (289,106)   (373,383)
                                                     ---------   ---------   ---------
Cash used in operations under U.S. GAAP............   (217,005)   (951,223)   (594,360)
Cash provided by (used in) investments under
  Canadian GAAP....................................   (262,417)   (282,200)   (374,799)
Adjustment for mineral exploration costs...........    262,030     289,106     373,383
                                                     ---------   ---------   ---------
Cash provided by (used in) investments under U.S.
  GAAP.............................................       (387)      6,906      (1,416)
Financing activities under Canadian GAAP...........    219,205     934,286     608,954
Increase (decrease) in bank overdraft..............     (1,813)      9,399     (12,546)
                                                     ---------   ---------   ---------
Financing activities under U.S. GAAP...............    217,392     943,685     596,408
                                                     ---------   ---------   ---------
Increase (decrease) in cash under Canadian GAAP....      1,831     (10,031)     13,178
Additional bank overdraft financing (repayment)....     (1,831)      9,399     (12,546)
                                                     ---------   ---------   ---------
Increase (decrease) in cash under U.S. GAAP........         --        (632)        632
Cash, beginning of year, U.S. GAAP.................         --         632          --
                                                     ---------   ---------   ---------
Cash, end of year, U.S. GAAP.......................  $      --   $      --   $     632
                                                     =========   =========   =========
</Table>

  (h) DEVELOPMENT STAGE ENTERPRISE

     The Company meets the definition of a Development stage enterprises under
FAS No. 7. The following additional disclosures would be required under U.S.
GAAP.

  Consolidated statements of operations and deficit (U.S. GAAP)

<Table>
<Caption>
                                                                 CUMULATIVE
                                                               FROM INCEPTION
                                                                DEC. 30, 1986
                                                                 TO MAY 31,
                                                                    2003
                                                               ---------------
<S>                                                            <C>
Operating, exploration and administrative expenses..........    $(22,809,852)
Loss on disposition of subsidiary...........................     (12,107,072)
Other income................................................       4,062,857
                                                                ------------
Net loss for the period since inception to May 31, 2003.....    $(30,854,067)
                                                                ============
</Table>

                                        84
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Consolidated statements of cash flows

<Table>
<Caption>
                                                                  CUMULATIVE
                                                                FROM INCEPTION
                                                               DEC. 30, 1986 TO
                                                                 MAY 31, 2003
                                                               ----------------
<S>                                                            <C>
Operating activities........................................     $(10,185,965)
Financing activities........................................       15,913,132
Investing activities........................................       (5,727,167)
                                                                 ------------
Net cash inflows from inception to May 31, 2003.............     $         --
                                                                 ============
</Table>

     Additional shareholders' equity disclosures required under FAS No. 7 would
include:

<Table>
<Caption>
                                                     COMMON SHARES             DEFICIT
                                                ------------------------     ACCUMULATED
                                                  NUMBER       AMOUNT      SINCE INCEPTION
                                                ----------   -----------   ---------------
<S>                                             <C>          <C>           <C>
Balance at inception..........................          --   $        --
  Issued for cash:
     December 1986............................           1             1
     January 1987.............................      80,000       100,000
     April 1987...............................     150,000         7,500
Net loss for the year under U.S. GAAP.........          --            --    $   (108,647)
                                                ----------   -----------    ------------
Balance, May 31, 1987.........................     230,001       107,501        (108,647)
  Issued for cash:
     September 1987...........................      11,600        14,500
     March 1988...............................     100,000       150,000
Net loss for the year under U.S. GAAP.........          --            --         (42,412)
                                                ----------   -----------    ------------
Balance, May 31, 1988.........................     341,601       272,001        (151,059)
  Issued for cash:
     August 1988..............................      31,000        54,250
  Issued upon exercise of warrants:
     August 1988..............................      20,000        40,000
     March 1989...............................       5,000        10,000
Net loss for the year under U.S. GAAP.........          --            --        (185,968)
                                                ----------   -----------    ------------
Balance, May 31, 1989.........................     397,601       376,251        (337,027)
  Issued for cash:
     July 1989................................      40,000       136,000
  Issued upon exercise of options:
     August 1989..............................      20,000        75,000
Net loss for the year under U.S. GAAP.........          --            --         (54,515)
                                                ----------   -----------    ------------
Balance, May 31, 1990.........................     457,601       587,251         391,542
</Table>

                                        85
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                     COMMON SHARES             DEFICIT
                                                ------------------------     ACCUMULATED
                                                  NUMBER       AMOUNT      SINCE INCEPTION
                                                ----------   -----------   ---------------
<S>                                             <C>          <C>           <C>
  Acquisition of Cinsonix Limited:
     July 1989................................   1,000,000       750,000
  Issued for finder's fee.....................      30,000        90,000
Net loss for the year under U.S. GAAP.........          --            --      (1,179,904)
                                                ----------   -----------    ------------
Balance, May 31, 1991.........................   1,487,601     1,427,251      (1,571,446)
  Issued for mineral properties:
     April 1992...............................      50,000        20,000
Net loss for the year under U.S. GAAP.........          --            --         (71,702)
                                                ----------   -----------    ------------
Balance, May 31, 1992.........................   1,537,601     1,447,251      (1,643,148)
  Issued for cash:
     July 1992................................   1,000,000       150,000
     March 1993...............................     600,000       132,000
  Issued for debt settlement:
     August 1992..............................     115,468        23,094
  Issued for finder's fee.....................      30,000        26,100
Net loss for the year under U.S. GAAP.........          --            --        (118,136)
                                                ----------   -----------    ------------
Balance, May 31, 1993.........................   3,283,069     1,778,445      (1,761,284)
  Issued for mineral properties Oct. 1993.....      50,000        30,500
  Issued for exercise of warrants:
     June 1993................................   1,000,000       150,000
     September 1993...........................     145,000        31,900
  Issued for cash:
     January 1994.............................     170,000       102,000
Net loss for the year under U.S. GAAP.........          --            --        (329,175)
                                                ----------   -----------    ------------
Balance, May 31, 1994.........................   4,648,069     2,092,845      (2,090,459)
  Issued for cash:
     November 1994............................     200,000       150,000
  Issued for exercise of warrants:
     October 1994.............................     205,000        55,000
     December 1994............................      40,000        10,400
     January 1995.............................     215,000        55,900
     May 1995.................................       3,000         2,250
  Disposition of Cinsonix Limited.............    (905,209)     (430,001)
Net loss for the year under U.S. GAAP.........          --            --        (231,833)
                                                ----------   -----------    ------------
Balance, May 31, 1995.........................   4,405,860     1,936,394      (2,322,292)
  Issued for cash:
     June 1995................................     700,000       700,000
     December 1995............................     209,200       796,142
</Table>

                                        86
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                     COMMON SHARES             DEFICIT
                                                ------------------------     ACCUMULATED
                                                  NUMBER       AMOUNT      SINCE INCEPTION
                                                ----------   -----------   ---------------
<S>                                             <C>          <C>           <C>
     April 1996...............................     285,750     1,091,565
     May 1996.................................     359,300     1,372,526
  Issued for mineral properties:
     June 1995................................     100,000       300,000
  Issued upon exercise of warrants:
     June 1995................................      81,500        61,125
     August 1995..............................     141,500        97,635
     September 1995...........................       8,000         6,800
     October 1995.............................      73,500        66,215
     November 1995............................     300,000       300,000
     April 1996...............................      43,500        36,975
     May 1996.................................      36,500        31,025
  Issued for finder's fee:
     May 1996.................................       4,364            --
Net loss for the year under U.S. GAAP.........          --            --      (2,149,041)
                                                ----------   -----------    ------------
Balance, May 31, 1996.........................   6,748,974     6,796,402      (4,471,333)
  Issued for cash:
     September 1996...........................     199,820     2,038,163
  Issued for finder's fee:
     September 1996...........................       5,962
  Issued upon exercise of options:
     August 1996..............................      10,000        13,000
     September 1996...........................       3,000         3,900
     December 1996............................       1,000         1,300
     January 1997.............................       1,000         1,300
     February 1997............................       7,000        16,520
     March 1997...............................         500           650
     April 1997...............................      75,900        98,670
     May 1997.................................      81,000       105,300
  Issued upon exercise of warrants:
     June 1996................................      27,500        23,375
     February 1997............................     285,750     1,428,750
     March 1997...............................     222,700     1,113,500
Net loss for the year under U.S. GAAP.........          --            --      (2,928,560)
                                                ----------   -----------    ------------
Balance, May 31, 1997.........................   7,670,106    11,640,830      (7,399,893)
  Issued for October 1997.....................     537,200     2,686,000
  Issued upon exercise of options:
     July 1997................................       1,400         1,820
     August 1997..............................       1,000         1,300
</Table>

                                        87
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                     COMMON SHARES             DEFICIT
                                                ------------------------     ACCUMULATED
                                                  NUMBER       AMOUNT      SINCE INCEPTION
                                                ----------   -----------   ---------------
<S>                                             <C>          <C>           <C>
     September 1997...........................       7,000         9,100
     October 1997.............................      39,562        61,823
     May 1998.................................     207,000        60,030
  Issued for mineral properties:
     February 1998............................      11,250        97,538
     March 1998...............................     619,000     3,683,050
Net loss for the year under U.S. GAAP.........          --            --     (10,779,708)
                                                ----------   -----------    ------------
Balance, May 31, 1998.........................   9,093,518    18,241,491     (18,179,601)
  Returned to Treasury:
     July 1998................................     (22,039)           --
  Issued upon exercise of options:
     March 1999...............................      25,000        33,500
  Issued for debt settlement:
     January 1999.............................     180,125       270,188
  Issued for mineral properties:
     November 1998............................      80,364       478,166
     March 1999...............................     288,750     2,503,462
     March 1999...............................      10,000        59,500
Net loss for the year under U.S. GAAP.........          --            --      (7,158,555)
                                                ----------   -----------    ------------
Balance, May 31, 1999.........................   9,655,718    21,586,307     (25,338,156)
Net loss for the year under U.S. GAAP.........          --            --      (2,275,487)
                                                ----------   -----------    ------------
Balance, May 31, 2000.........................   9,655,718    21,586,307     (27,613,643)
  Issued under settlement of services:
     August 2000..............................     100,000        45,000
  Issued under exercise of options:
     January 2001.............................     100,000        15,000
  Stock-based compensation....................          --       183,079
Net loss for the year under U.S. GAAP.........          --            --      (1,063,927)
                                                ----------   -----------    ------------
Balance, May 31, 2001.........................   9,855,718    21,829,386     (28,677,570)
  Issued for debt settlement:
     October 2001.............................     250,000        75,000
  Issued under settlement of services:
     October 2001.............................     471,000       141,300
  Issued for mineral properties:
     October 2001.............................     100,000        30,000
  Stock-based compensation....................          --       125,917
Net loss for the year under U.S. GAAP.........          --            --      (1,183,901)
                                                ----------   -----------    ------------
Balance, May 31, 2002.........................  10,676,718    22,201,603     (29,861,471)
</Table>

                                        88
<PAGE>
                             CALAIS RESOURCES INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                     COMMON SHARES             DEFICIT
                                                ------------------------     ACCUMULATED
                                                  NUMBER       AMOUNT      SINCE INCEPTION
                                                ----------   -----------   ---------------
<S>                                             <C>          <C>           <C>
  Issued for debt settlement:
     June 2002 and August 2002................      67,500        38,800
  Issued under settlement of services:
     October 2002 and January 2003............     261,667       143,234
  Issued for mineral properties:
     February 2003............................     100,000        82,000
  Issued under exercise of options:
     January 2003.............................      25,000        11,250
  Issued for cash
     October 2002.............................      62,500        78,771
  Warrants issued under settlement of
     services:
     October 2002.............................          --       205,645
Stock based compensation......................          --       (44,164)
Net loss for the year under U.S. GAAP.........          --            --        (992,596)
                                                ----------   -----------    ------------
Balance, May 31, 2003.........................  11,193,385   $22,717,139    $(30,854,067)
                                                ==========   ===========    ============
</Table>

     All of the above transactions have been included on a post-consolidation
basis.

                                        89
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER        TITLE
------        -----
<S>           <C>
3.01*         Memorandum

3.02*         Articles of Incorporation

3.03*         Special Resolution filed March 19, 1992

10.01*        Loan agreement dated August 1, 2003 with accredited investors

10.02*        Mutual Release effective July 18, 2000, between Marlowe Harvey, Aarvark Agencies, Inc., Calais Resources Colorado,
              Inc., Calais Resources, Inc., on the one part, and Thomas S. Hendricks
10.03*        Form of convertible debentures

10.04*        Purchase Option Agreement dated February 28, 2003 by and between Calais Resources,  Inc. and Golden Cycle of Panama,
              Inc. and Panama Mining of Golden Cycle, Inc.

10.05*        Grant of Royalty Interest For Fixed Term, Modification of Prior Royalty Grants and Assignment of Royalty Buyout
              Rights Under Prior Grants dated March 1998 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks,
              Marjorie J. Hendricks, and John R. Henderson.

10.06*        Right to Redeem and Re-Acquire Agreement dated March 26, 1999 between Aardvark Agencies, Inc. and Calais Resources
              Colorado, Inc.

10.07*        Right to Redeem and Re-Acquire  Agreement dated July 20, 2000 between Aardvark  Agencies,  Inc. and Calais Resources
              Colorado, Inc.

10.08*        Grant of Royalty Interest For Fixed Term by Calais Resources Colorado, Inc. and Aardvark Agencies, Inc. dated July
              2000 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks, Marjorie J. Hendricks, and John R.
              Henderson

10.09*        Employment Agreement with Matthew C. Witt

21*           List of subsidiaries.

31*           Certification pursuant to Rule 13a-14(a)

32*           Certification pursuant to 18 U.S.C. Section 1350
</TABLE>

*        Filed herewith.