3:

| | Consolidated Financial Statements of |  |  | 
| | ------------------------------------ |  |  | 
| |                                      |  |  | 
| |                                      |  |  | 
| | CALAIS RESOURCES INC.                |  |  | 
| |                                      |  |  | 
| |                                      |  |  | 
| | Years ended May 31, 2002 and 2001    |  |  | 
| | (In Canadian dollars)                |  |  | 



































|MANAGEMENTS STATEMENT OF RESPONSIBILITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                      
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|Management is responsible for the preparation of the accompanying consolidated financial statements 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 auditors have full rights to meet separately with the Audit Committee to discuss the results of their examination and their opinions on the adequacy of internal controls and the quality of financial reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|The Audit Committee of the Company reports their finding to the Board of Directors for its consideration in approving the financial statements for issuance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | "signed by Art Daher"
|Calais Resources Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                      
|Chilliwack, BC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                      
|October 18, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|AUDITORS' REPORT TO THE DIRECTORS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|We have audited the consolidated balance sheet of Calais Resources Inc. as at May 31, 2002 and the consolidated statements of operations and deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements as at May 31, 2001 and for the years ended May 31, 2001 and 2000 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.                                
|With respect to the consolidated financial statements for the year ended May 31, 2002, we conducted our audit in accordance with Canadian generally accepted auditing standards and United States generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
|In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at May 31, 2002 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. As required by the Company Act (British Columbia), we report that in our opinion these principles have been applied, after giving retroactive effect to the change in accounting for net loss per share explained in Note 2(j) to the financial statements, on a consistent basis.                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | "signed KPMG LLP"    
|Chartered Accountants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|Chilliwack, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                      
|October 18, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|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 18, 2002 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.                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | "signed by KPMG LLP" 
|Chartered Accountants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|Chilliwack, Canada                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      
|October 18, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                      

























|CALAIS RESOURCES INC.         |                               | 
|----------------------------- | ----------------------------- | 
|Consolidated Balance Sheets  
|Expressed in Canadian Dollars
|                              |                               | 
|May 31, 2002 and 2001        
|                              |                               | 
|                              |                               | 
|Assets                        |                               | 
|Current assets:               |                               | 
|                              | Cash                          | 
|                              | Restricted cash (Note 5)      | 
|                              | Advances receivable           | 
|                              | Other receivables             | 
|                              | Inventories                   | 
|                              | Prepaid expenses and deposits | 
|                              |                               | 
|Capital assets (Note 3)       |                               | 
|Mineral properties (Note 4)   |                               | 
|                              |                               | 
|                              |                               | 









|Liabilities and Shareholders' Equity                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------
|Current liabilities:                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Bank overdraft                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |               
|                                                                               | Accounts payable and accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |               
|                                                                               | Bank loan (Note 5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               
|                                                                               | Advances from shareholders, without interest or fixed terms of repayment; unsecured                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 546,138       
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Long-term debt (Note 6)                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Shareholders' equity:                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Share capital (Note 7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |               
|                                                                               | Deficit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|General and future operations (Note 1)                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Contingency (Note 10)                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Commitments (Note 13)                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Subsequent event (Note 15)                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|On behalf of the Board:                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|"A. Daher" Director                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|"M. Marten" Director                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|See accompanying notes to consolidated financial statements.                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|CALAIS RESOURCES INC.                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Consolidated Statement of Operations and Deficit
Expressed in Canadian Dollars |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Years ended May 31, 2002, 2001 and 2000                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Revenues                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ -           
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Expenses:                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Advertising                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               
|                                                                               | Amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |               
|                                                                               | Consulting fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Filing fees, licenses, permits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |               
|                                                                               | Foreign exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |               
|                                                                               | Insurance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               
|                                                                               | Interest and bank charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               
|                                                                               | Office and general                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               
|                                                                               | Professional fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               
|                                                                               | Rent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |               
|                                                                               | Telephone                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               
|                                                                               | Transfer agent fees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |               
|                                                                               | Travel                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |               
|                                                                               | Utilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               
|                                                                               | Wages and benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Loss before the undernoted                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (564,221)     
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Other income (expenses):                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Loss on abandonment of mineral properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               
|                                                                               | Gain on sale of capital assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |               
|                                                                               | Interest income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Rental income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Loss for the year                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (551,009)     
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Deficit, beginning of year                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (16,686,097)  
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Deficit, end of year                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $ (17,237,106)
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Net loss per common share, basic and diluted                                   | $(0.05)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $(0.08)       
|Weighted average common shares outstanding,                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|basic and diluted                                                              | 10,184,635                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 9,618,218     
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|See accompanying notes to consolidated financial statements.                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|CALAIS RESOURCES INC.                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Consolidated Statement of Cash Flows
Expressed in Canadian Dollars             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Years ended May 31, 2002, 2001 and 2000                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Cash provided by (used in):                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Operations:                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Loss for the year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               
|                                                                               | Items not involving cash:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               
|Amortization                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 7,043         
|Shares issued for services                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 141,300       
|Loss on abandonment of mineral properties                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -             
|Gain on sale of capital assets                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (7,142)       
|                                                                               | Change in non cash operating working capital:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |               
|Restricted cash                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (67,415)      
|Advances receivable                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -             
|Other receivables                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 818           
|Prepaid expenses and deposits                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -             
|                                                                               | Accounts payable and accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | (185,712)     
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Financing:                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Bank loan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |               
|                                                                               | Advances from (to) shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Long term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Investments:                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Mineral properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |               
|                                                                               | Proceeds from disposal of capital assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 7,412         
|                                                                               | Net additions to capital assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Increase (decrease) in cash                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (10,031)      
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Cash (bank overdraft), beginning of year                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 632           
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Cash (bank overdraft), end of year                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $(9,399)      
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Supplementary cash flow information:                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Interest paid                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $195,877      
|Income taxes paid                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | -             
|Interest received                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 3,092         
|Non cash transactions:                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               | Shares issued for mineral property development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 30,000        
|                                                                               | Amortization capitalized to mineral properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 36,645        
|                                                                               | Shares issued for repayment of shareholder                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               
|                                                                               | advances                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 75,000        
|                                                                               | Advances receivable reclassified to mineral                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |               
|                                                                               | properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|See accompanying notes to consolidated financial statements.                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|CALAIS RESOURCES INC.                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Notes to Consolidated Financial Statements                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Expressed in Canadian Dollars                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|Years ended May 31, 2002, 2001 and 2000                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|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 significant doubt about the appropriateness of the use of the going concern assumption because the Company experienced significant losses in 2002 and 2001 and has experienced significant negative cash flow from operations over a number of years. In addition, the Company recently had to seek an extension on repayment of a $1,200,000 US loan (see Note 5).
|                                                                               | Subsequent to the year end, the Company began seeking approximately $2,300,000 US in financing to repay the bank loan, trade creditors and provide operating funds. 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, 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. There is no certainty that these and other strategies will be sufficient to permit the Company to continue beyond May 31, 2003.                                                                                                                                                                                  
|                                                                               | 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., Recursos Calais S.A. de C.V., Calais Resources Nevada Inc., Calais Resources Colorado Inc. and Recursos Calais La Paloma S.A. de C.V. All material inter-company transactions and balances have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|(b)                                                                            | Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               
|                                                                               | The preparation of financial statements in conformity with Canadian 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. Actual results could differ from those estimates.                                                                                                                                                                                                                                                                                                                                 
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|(c)                                                                            | Cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |               
|                                                                              
|                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |               
|(d)                                                                            | Financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |               
|                                                                               | The Company's financial instruments consist of cash, restricted cash, other receivables, advances receivable, bank overdraft, accounts payable and accrued liabilities, bank loan, 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 translation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |               
|                                                                               | For domestic companies and integrated foreign operations, monetary assets and liabilities are translated into Canadian dollars at exchange rates prevailing at the balance sheet date. Other assets and liabilities are translated at exchange rates prevailing at the dates of the transactions. Income and expenses are translated at average exchange rates prevailing during the year. Exchange gains or losses are included in earnings for the year.                                                                                                                                                                                                                                                                                                                     

|(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.                                                                                                                                                                                                                                          
|    | 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |  | 
|    | During the year the company adopted the new provisions of CICA Handbook Section 3500, earnings per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. Diluted loss per share is computed using the weighted average number of common shares and potentially dilutive common shares outstanding during the period. As the Company has a net loss in the years ending May 31, 2001 and 2002, basic and diluted net loss per share are the same.                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  | 
|(k) | Stock based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  |  | 
|    | The Company has stock based compensation plans. 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.                                                                                              













|3                            | Capital assets:                                                                                                                  |  |           |           |        
|---------------------------- | -------------------------------------------------------------------------------------------------------------------------------- |  | --------- | --------- | -------
|                             |                                                                                                                                  |  |           |           |        
|                             |                                                                                                                                  |  |           | 2002      | 2001   
|                             |                                                                                                                                  |  |           |           |        
|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   | 508,642  
|Software                     |                                                                                                                                  |  | 6,260     | 6,024    
|                             |                                                                                                                                  |  |           | 619,235   | 628,653
|Accumulated depreciation     |                                                                                                                                  |  |           |          
|Furniture                    |                                                                                                                                  |  | 7,065     | 6,189    
|Computer equipment           |                                                                                                                                  |  | 30,502    | 27,968   
|Automotive equipment         |                                                                                                                                  |  | 47,506    | 43,970   
|Exploration/mining equipment |                                                                                                                                  |  | 401,825   | 374,834  
|Software                     |                                                                                                                                  |  | 6,121     | 6,024    
|                             |                                                                                                                                  |  |           | 493,019   | 458,985
|                             |                                                                                                                                  |  |           |           |        
|Net book value               |                                                                                                                                  |  | $ 126,216 | $ 169,668
|                             |                                                                                                                                  |  |           |           |        
|                             | Amortization of $36,645 (2001 - $57,346) related to exploration equipment was capitalized to mineral properties during the year.

|4   | Mineral properties:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  |  |             |            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | -----------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |             |            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  | 2002        | 2001       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |             |            
|    | Nevada U.S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |  | $ 3,297,789 | $ 3,004,902
|    | Colorado, U.S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  | 9,239,606   | 9,119,006  
|    | Panama, Central America                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  | 144,058     | 78,988     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |             |            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  | $12,681,453 | $12,202,896
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |             |            
|    | 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 anytime 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|(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, 2002. 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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  |  | 
|(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 anytime during the five-year option period for US $5,000,000. Upon completion of the purchase the 2% net smelter return would terminate. The Company is obligated to pay the annual taxes and holding fees during the option period.                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |  |  | 
|5   | Bank loan:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  | 
|    | Loan payable with interest only payments at 10.5% per annum. The loan principal of $1,200,000 US is due in full on September 12, 2002; and the loan is secured by deed of trust over mineral properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Cash of $67,415 is held in an escrow account for monthly interest payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Subsequent to May 31, 2002, the due date of the loan was extended to November 16, 2002 in exchange for a renewal fee. The bank has agreed to subsequent extensions beyond November 16, 2002 for monthly renewal fees, and has agreed to extend the loan for one year upon the Company paying down 10% of the principal (US$120,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 













|6   | Long-term debt:                                                                                                                                                                                                                                                                         |  |  |             |            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----------- | -----------
|    |                                                                                                                                                                                                                                                                                         |  |  |             |            
|    |                                                                                                                                                                                                                                                                                         |  |  | 2002        | 2001       
|    | Debentures payable, without interest, due May 2011, convertible to common shares at an exercise price of $1.23 at holders discretion; unsecured                                                                                                                                         |  |  | $ 5,097,105 | $ 5,442,018
|    | Promissory note payable, with interest at 11.5% per annum; unsecured                                                                                                                                                                                                                    |  |  | -           | 278,662    
|    |                                                                                                                                                                                                                                                                                         |  |  |             |            
|    |                                                                                                                                                                                                                                                                                         |  |  | $ 5,097,105 | $ 5,720,680
|    | 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.
|    |                                                                                                                                                                                                                                                                                         |  |  |             |            
|7   | Share capital:                                                                                                                                                                                                                                                                          |  |  |             |            
|    |                                                                                                                                                                                                                                                                                         |  |  |             |            
|(a) | Authorized: 100,000,000 Common shares without par value                                                                                                                                                                                                                                 |  |  |             |            
|(b) | Issued:                                                                                                                                                                                                                                                                                 |  |  |             |            

















| |                                                                                                                                                                        |            | 2002        |           | 2001       
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------- | ----------- | --------- | -----------
| | Common                                                                                                                                                                 | Number     |             | Number    |            
| | shares                                                                                                                                                                 | of shares  | Amount      | of shares | Amount     
| |                                                                                                                                                                        |            |             |           |            
| | Balance, beginning of year                                                                                                                                             | 9,855,718  | $22,076,307 | 9,655,718 | $22,016,307
| | Shares issued for debt or services                                                                                                                                     | 721,000    | 216,300     | 100,000   | 45,000     
| | Issued for acquisition of mineral                                                                                                                                      |            |             |           |            
| | property                                                                                                                                                               | 100,000    | 30,000      | 100,000   | 15,000     
| |                                                                                                                                                                        |            |             |           |            
| | Balance, end of year                                                                                                                                                   | 10,676,718 | $22,322,607 | 9,855,718 | $22,076,307
| |                                                                                                                                                                        |            |             |           |            
| | No shares were issued in the year ended May 31, 2000.                                                                                                                 
| | 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.

























|(c)  | Stock options:                                    |         |        |           |               
|---- | ------------------------------------------------- | ------- | ------ | --------- | --------------
|     |                                                   |         |        |           |               
|     |                                                   |         |        |           | Weighted      
|     |                                                   |         |        |           | average       
|     |                                                   |         |        |           | exercise price
|Date |                                                   |         | Number | per share
|     |                                                   |         |        |           |               
|     | Issued and outstanding, May 31, 2000 and 1999 (i) | 824,250 | $0.45 
|     | Issued in 2000                                    |         |        | 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          
|     |                                                   |         |        |           |               
|     | Balance, May 31, 2002                             |         |        | 1,025,250 | $0.47         





















|(i) | During 2001, these options were re-priced from $1.34 to $0.45. |           |               
|--- | -------------------------------------------------------------- | --------- | --------------
|    |                                                                |           |               
|    | Options outstanding at May 31, 2002 are as follows:            |           |               
|    |                                                                |           |               
|    |                                                                |           |               
|    |                                                                |           |               
|    |                                                                |           | Exercise price
|    |                                                                | Number    | per share     
|    |                                                                |           |               
|    | Director and employee options                                  | 116,250   | $0.45         
|    | Other                                                          | 60,000    | $0.77         
|    | Director and employee options                                  | 694,000   | $0.45         
|    | Director and employee options                                  | 155,000   | $0.45         
|    |                                                                |           |               
|    |                                                                | 1,025,250 |               
|    |                                                                |           |               
|    | All outstanding options are exercisable when issued.          

















|(d) | Warrants                                                        |         |         |           |               
|--- | --------------------------------------------------------------- | ------- | ------- | --------- | --------------
|    |                                                                 |         |         |           |               
|    |                                                                 |         |         |           | Weighted      
|    |                                                                 |         |         |           | Average       
|    |                                                                 |         |         |           | exercise price
|    |                                                                 |         |         | Number    | per share     
|    |                                                                 |         |         |           |               
|    | Issued and outstanding, May 31, 1999                            | 537,000 | $10.00 
|    | Expired in year                                                 |         |         | (537,000) | 10.00         
|    |                                                                 |         |         |           |               
|    | Balance, May 31, 2002, 2001 and 2000                            | -       | $ -    
|    |                                                                 |         |         |           |               
|    | Subsequent to the year end, the following warrants were issued: |         |        
|    |                                                                 |         |         |           |               
|    |                                                                 |         |         | Exercise  | Expiry        
|    |                                                                 |         | Number  | price     | Date          
|    |                                                                 |         |         |           |               
|    | In conjunction with share issuance                              |         | 62,500  | $0.80     | 09/12/2003    
|    | For services                                                    |         | 486,303 | $0.81     | 10/23/2004    













|8 | Income taxes:                                                                                                                                                                                                                                      |  |            |            |           
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | ---------- | ----------
|  | The Company has income tax loss carryforwards of approximately $3,049,000 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:
|  |                                                                                                                                                                                                                                                    |  |            |            |           
|  |                                                                                                                                                                                                                                                    |  | Canada     | U.S.       | Total     
|  | 2003                                                                                                                                                                                                                                               |  | $ 72,000   | $ -        | $ 72,000  
|  | 2004                                                                                                                                                                                                                                               |  | 547,000    | -          | 547,000   
|  | 2005                                                                                                                                                                                                                                               |  | 13,000     | -          | 13,000    
|  | 2006                                                                                                                                                                                                                                               |  | 105,000    | -          | 105,000   
|  | 2007                                                                                                                                                                                                                                               |  | 222,000    | -          | 222,000   
|  | 2008                                                                                                                                                                                                                                               |  | 150,000    | 496,000    | 646,000   
|  | 2009                                                                                                                                                                                                                                               |  | 264,000    | 255,000    | 519,000   
|  | 2020                                                                                                                                                                                                                                               |  | -          | 84,000     | 84,000    
|  | 2021                                                                                                                                                                                                                                               |  | -          | 398,000    | 398,000   
|  | 2022                                                                                                                                                                                                                                               |  | -          | 443,000    | 443,000   
|  |                                                                                                                                                                                                                                                    |  |            |            |           
|  |                                                                                                                                                                                                                                                    |  | $1,373,000 | $1,676,000 | $3,049,000















|   | 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.                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Future tax assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Operating loss carryforwards                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Capital assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Valuation allowance for future tax assets                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Net future tax assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|9  | Related party transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | During the year, the Company paid, primarily through the issuance of common stock, $82,500 (2001 - $45,000) to several directors for various services provided to the Company throughout the year. The Company also paid the spouse of a director $30,000 in stock (2001 - nil) for counter-signing the bank loan (see Note 5) and $19,800 in stock (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.                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10 | 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 USD $544,700 ($832,302 Cdn). Included in advances from shareholders is $383,430 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 such amounts are determinable.

|11  | Segmented information:                                                                                                                                                                                                                                                        |  |             |             |             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | ----------- | ------------
|    | The Company operates principally in the mining industry segment.                                                                                                                                                                                                             
|    | The Company's operations are in the following geographical locations:                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                               |  |             |             |             
|    |                                                                                                                                                                                                                                                                               |  | 2002        | 2001        | 2000        
|    |                                                                                                                                                                                                                                                                               |  |             |             |             
|    | Net loss for the year:                                                                                                                                                                                                                                                        |  |             |             |             
|    | Canada                                                                                                                                                                                                                                                                        |  | $ 261,143   | $ 487,017   | $ 11,730,509
|    | United States                                                                                                                                                                                                                                                                 |  | 289,866     | 260,851     | 64,534      
|    |                                                                                                                                                                                                                                                                               |  |             |             |             
|    |                                                                                                                                                                                                                                                                               |  | 551,009     | 747,868     | 11,795,043  
|    |                                                                                                                                                                                                                                                                               |  |             |             |             
|    | Identifiable assets at end of year:                                                                                                                                                                                                                                           |  |             |             |             
|    | Canada                                                                                                                                                                                                                                                                        |  | 291,993     | 295,978     | 445,728     
|    | United States                                                                                                                                                                                                                                                                 |  | 12,874,048  | 12,491,799  | 12,353,217  
|    |                                                                                                                                                                                                                                                                               |  |             |             |             
|    |                                                                                                                                                                                                                                                                               |  | $13,166,041 | $12,787,777 | $12,798,945 
|    |                                                                                                                                                                                                                                                                               |  |             |             |             
|12  | 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.

|(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.       
|    |                                                                                                                                                                                                                                                   |  |  |  | 
|13  | Commitments:                                                                                                                                                                                                                                      |  |  |  | 
|    | The Company is committed under option and lease agreements to expend on exploration expenditures and property option payments amounts as disclosed in Notes 4 (a), (b), and (c) in the form of cash and/or stock as detailed therein.            
|    |                                                                                                                                                                                                                                                   |  |  |  | 
|14  | Comparative figures:                                                                                                                                                                                                                              |  |  |  | 
|    | Certain balances in the preceding period have been reclassified to conform with the current year's financial statement presentation.                                                                                                             
|    |                                                                                                                                                                                                                                                   |  |  |  | 
|15  | Subsequent event:                                                                                                                                                                                                                                 |  |  |  | 
|    | Subsequent to May 31, 2002, the Company settled $36,889 of trade accounts payable with 67,500 common shares valued at $38,800.                                                                                                                   
|    |                                                                                                                                                                                                                                                   |  |  |  | 
|16  | Differences between Canadian and United States of America 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. 121 ("SFAS 121"), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" 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 121 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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Mineral exploration and development costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(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.
|    | Compensation expense (recovery) recognized for employee fixed and variable awards for the year ended May 31, 2002 would be $(65,940) (2001 - $123,638; 2000 - $nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|(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 of the shares as they become releasable. As at May 31, 2002, no shares are releaseable from escrow. No similar compensation expense would be recognized under Canadian GAAP.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(d) | 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.                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(e) | The following table presents the consolidated balance sheet, statement of operations and deficit, and cash flows under U.S. GAAP:                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Balance Sheet                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Total assets under Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Adjustments to mineral property exploration and development                                                                                                                                                                                                                                                                                                                                                                                                
|    | expenditures (a)                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Total assets under U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Total liabilities under Canadian and U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Share capital, Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Gain on sale of subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Stock-based compensation (b)                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Share capital, U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Accumulated deficit, U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Shareholders deficiency, U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Shareholders deficiency and liabilities under U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Statement of Operations and Deficit                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Net loss under Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Adjustments:                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Mineral property exploration                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | And development expenditures                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Loss on mineral property                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | exploration previously recorded                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | for U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Gain on sale of subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Net loss, being comprehensive loss, under U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Accumulated opening deficit under                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Ending deficit, U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Net loss per share, basic and diluted, U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(f) | 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:                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash used in operations under Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                                
|    | Adjustment for mineral exploration costs                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash used in operations under U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash provided by (used in) investments under
Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Adjustment for mineral exploration costs                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash provided by (used in) investments                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | under U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Financing activities under Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Increase (decrease) in bank overdraft                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Financing activities under U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Increase (decrease) in cash under Canadian GAAP                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Additional bank overdraft financing (repayment)                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Increase (decrease) in cash under U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash, beginning of year, U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash, end of year, U.S. GAAP                                                                                                                                                                                                                                                                                                                                                                                                                               

|(g) | 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)                                                                                                |  |              
|    |                                                                                                                                                              |  |               |  |               
|    |                                                                                                                                                              |  |               |  | Cumulative    
|    |                                                                                                                                                              |  |               |  | from inception
|    |                                                                                                                                                              |  |               |  | Dec 30, 1986  
|    |                                                                                                                                                              |  |               |  | to            
|    |                                                                                                                                                              |  |               |  | May 31, 2002  
|    |                                                                                                                                                              |  |               |  |               
|    | Operating, exploration and administrative expenses                                                                                                           |  | $(21,536,007)
|    | Loss on disposition of subsidiary                                                                                                                            |  |               |  | (12,107,072)  
|    | Other income                                                                                                                                                 |  |               |  | 4,096,822     
|    |                                                                                                                                                              |  |               |  |               
|    | Net loss for the period since inception to May 31, 2002                                                                                                      |  | $(29,546,257)

















| | Consolidated statements of cash flows                                               |        |              
| | ----------------------------------------------------------------------------------- | ------ | -------------
| |                                                                                     |        |              
| |                                                                                     |        |              
| |                                                                                     |        |              
| |                                                                                     |        |              
| |                                                                                     |        |              
| |                                                                                     |        |              
| |                                                                                     |        |              
| | Operating activities                                                                |        |              
| | Financing activities                                                                |        |              
| | Investing activities                                                                |        |              
| |                                                                                     |        |              
| | Net cash inflows from inception to May 31, 2002                                     |        |              
| |                                                                                     |        |              
| | Additional shareholders' equity disclosures required under FAS No. 7 would include:
| |                                                                                     |        |              
| |                                                                                     |        |              
| |                                                                                     |        | Common shares
| |                                                                                     |        | Number       
| |                                                                                     |        |              
| | Balance at inception                                                                |        | -            
| | Issued for cash                                                                     |        |              
| | December 1986                                                                       |        | 1            
| | January 1987                                                                        |        | 80,000       
| | April 1987                                                                          |        | 150,000      
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1987                                                                |        | 230,001      
| | Issued for cash                                                                     |        |              
| | September 1987                                                                      |        | 11,600       
| | March 1988                                                                          |        | 100,000      
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1988                                                                |        | 341,601      
| | Issued for cash                                                                     |        |              
| | August 1988                                                                         |        | 31,000       
| | Issued upon exercise of warrants                                                    |        |              
| | August 1988                                                                         |        | 20,000       
| | March 1989                                                                          |        | 5,000        
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1989                                                                |        | 397,601      
| | Issued for cash                                                                     |        |              
| | July 1989                                                                           |        | 40,000       
| | Issued upon exercise of options                                                     |        |              
| | August 1989                                                                         |        | 20,000       
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1990                                                                |        | 457,601      
| | Acquisition of Cinsonix Limited                                                     |        |              
| | July 1989                                                                           |        | 1,000,000    
| | Issued for finder's fee                                                             |        | 30,000       
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1991                                                                |        | 1,487,601    
| | Issued for mineral properties                                                       |        |              
| | April 1992                                                                          |        | 50,000       
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1992                                                                |        | 1,537,601    
| | Issued for cash                                                                     |        |              
| | July 1992                                                                           |        | 1,000,000    
| | March 1993                                                                          |        | 600,000      
| | Issued for debt settlement                                                          |        |              
| | August 1992                                                                         |        | 115,468      
| | Issued for finder's fee                                                             |        | 30,000       
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1993                                                                |        | 3,283,069    
| | Issued for mineral properties Oct. 1993                                             | 50,000 | 30,500       
| | Issued for exercise of warrants                                                     |        |              
| | June 1993                                                                           |        | 1,000,000    
| | September 1993                                                                      |        | 145,000      
| | Issued for cash January 1994                                                        |        | 170,000      
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1994                                                                |        | 4,648,069    
| | Issued for cash November 1994                                                       |        | 200,000      
| | Issued for exercise of warrants                                                     |        |              
| | October 1994                                                                        |        | 205,000      
| | December 1994                                                                       |        | 40,000       
| | January 1995                                                                        |        | 215,000      
| | May 1995                                                                            |        | 3,000        
| | Disposition of Cinsonix Limited                                                     |        | (905,209)    
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1995                                                                |        | 4,405,860    
| | Issued for cash                                                                     |        |              
| | June 1995                                                                           |        | 700,000      
| | December 1995                                                                       |        | 209,200      
| | April 1996                                                                          |        | 285,750      
| | May 1996                                                                            |        | 359,300      
| | Issued for mineral properties                                                       |        |              
| | June 1995                                                                           |        | 100,000      
| | Issued upon exercise of warrants                                                    |        |              
| | June 1995                                                                           |        | 81,500       
| | August 1995                                                                         |        | 141,500      
| | September 1995                                                                      |        | 8,000        
| | October 1995                                                                        |        | 73,500       
| | November 1995                                                                       |        | 300,000      
| | April 1996                                                                          |        | 43,500       
| | May 1996                                                                            |        | 36,500       
| | Issued for finder's fee, May 1996                                                   |        | 4,364        
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1996                                                                |        | 6,748,974    
| | Issued for cash September 1996                                                      |        | 199,820      
| | Issued for finder's fee September 1996                                              | 5,962  |              
| | Issued upon exercise of options                                                     |        |              
| | August 1996                                                                         |        | 10,000       
| | September 1996                                                                      |        | 3,000        
| | December 1996                                                                       |        | 1,000        
| | January 1997                                                                        |        | 1,000        
| | February 1997                                                                       |        | 7,000        
| | March 1997                                                                          |        | 500          
| | April 1997                                                                          |        | 75,900       
| | May 1997                                                                            |        | 81,000       
| | Issued upon exercise of warrants                                                    |        |              
| | June 1996                                                                           |        | 27,500       
| | February 1997                                                                       |        | 285,750      
| | March 1997                                                                          |        | 222,700      
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1997                                                                |        | 7,670,106    
| | Issued for October 1997                                                             |        | 537,200      
| | Issued upon exercise of options                                                     |        |              
| | July 1997                                                                           |        | 1,400        
| | August 1997                                                                         |        | 1,000        
| | September 1997                                                                      |        | 7,000        
| | October 1997                                                                        |        | 39,562       
| | May 1998                                                                            |        | 207,000      
| | Issued for mineral properties                                                       |        |              
| | February 1998                                                                       |        | 11,250       
| | March 1998                                                                          |        | 619,000      
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1998                                                                |        | 9,093,518    
| | Returned to Treasury                                                                |        |              
| | July 1998                                                                           |        | (22,039)     
| | Issued upon exercise of options                                                     |        |              
| | March 1999                                                                          |        | 25,000       
| | Issued for debt settlement                                                          |        |              
| | January 1999                                                                        |        | 105,125      
| | Issued for mineral properties                                                       |        |              
| | November 1998                                                                       |        | 80,364       
| | March 1999                                                                          |        | 288,750      
| | March 1999                                                                          |        | 10,000       
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 1999                                                                |        | 9,655,718    
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 2000                                                                |        | 9,655,718    
| | Issued under settlement of services                                                 |        |              
| | August 2000                                                                         |        | 100,000      
| | Issued under exercise of options                                                    |        |              
| | January 2001                                                                        |        | 100,000      
| | Stock-based compensation                                                            |        | -            
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 2001                                                                |        | 9,855,718    
| | Issued for debt settlement                                                          |        |              
| | October 2001                                                                        |        | 250,000      
| | Issued under settlement of services                                                 |        |              
| | October 2001                                                                        |        | 471,000      
| | Issued for mineral properties                                                       |        |              
| | October 2001                                                                        |        | 100,000      
| | Stock-based compensation                                                            |        | -            
| | Net loss for the year under U.S. GAAP                                               |        |              
| |                                                                                     |        |              
| | Balance May 31, 2002                                                                |        | 10,676,618   
| |                                                                                     |        |              
| | All of the above transactions have been included on a post-consolidation basis.     |